UPI Most Preferred Mode Of Financial Transaction; People Desire To Learn Financial Management: EY-CII Report

Unified Payments Interface (UPI) is the most preferred option for financial transactions, according to the ‘Financial Inclusion through Technology and Literacy in India: Strategies for Sustainable Growth’ report by EY and the Confederation of Indian Industry (CII). Of the 1,033 respondents surveyed, 96 per cent across rural, semi-urban, and urban areas showed a strong inclination toward saving and investing, while 55 per cent expressed a desire to learn more about financial management.

The survey included 22 per cent of women and 73 per cent of respondents were from rural areas across states, including Delhi, Maharashtra, Uttar Pradesh, Karnataka, Bihar, and Tamil Nadu, among others.

Here are the key findings of the report:

UPI Is The Most Preferred Mode

The study revealed that around 38 per cent of respondents in rural and semi-urban areas use UPI. It is their preferred mode of transaction. Younger individuals aged 18 to 35 years make up the largest user base. However, 11 per cent of respondents did not prefer UPI for payments, and approximately 19 per cent still preferred only cash, according to the study.

Saving And Investment

As per the study, 96 per cent of respondents are inclined toward saving and investing, yet more than half (55 per cent of respondents) feel the need for better financial understanding. According to the report, this indicates an opportunity for financial institutions to offer tailored investment products. Among the three demographic groups—rural, semi-urban, and urban—semi-urban areas had the highest awareness of financial products.

Financial Awareness And Technology Usage Among Women

The report highlights that financial awareness among women remains low, with only 18 per cent aware of financial inclusion schemes. While 69 per cent of women use digital banking, only 44 per cent use it for regular transactions, reflecting a lack of comfort with digital modes. This underscores the need for targeted awareness programs to enhance digital and financial literacy among women.

Awareness Of Government Schemes

Among financial inclusion and investment schemes, the Pradhan Mantri Jan Dhan Yojana (PMJDY) had the highest awareness, with 84 per cent of respondents familiar with it. It was followed by the Atal Pension Yojana (APY) with 74 per cent awareness. Other schemes, such as Sukanya Samriddhi Yojana and Pradhan Mantri Suraksha Bima Yojana (PMSBY), were also recognised.

Brick-And-Mortar Branches Remain Preferred

Despite the high penetration of smartphones, 94 per cent in rural and urban areas and nearly 100 per cent in semi-urban areas, around 86 per cent of account holders in rural and semi-urban India still prefer visiting branches for credit-related and other financial needs. The report shows that 60 per cent of borrowers continue to trust traditional banking channels over digital options.

Financial Literacy And Effective Utilisation Of Financial Products

The report emphasises the connection between financial literacy and the effective use of financial instruments. It states, "Higher literacy enables individuals to understand and utilise financial products effectively." This applies across products, including investments, insurance, and credit. Many people still avoid credit facilities due to a lack of knowledge about required documentation, collaterals, and other details.

Saurabh Chandra, Senior Partner and Financial Services Consulting Head (Domestic), EY India, said, “As India moves towards becoming a $5 trillion economy, financial inclusion must be at the core of this growth strategy. Our report’s findings suggest fertile ground for financial institutions to introduce innovative saving and investment solutions, particularly in rural and semi-urban India, where there is a strong inclination to learn about financial management. Technology, coupled with financial literacy, has the potential to empower millions of individuals. However, for true inclusion to occur, the ecosystem must prioritise both education and accessibility in its approach.”

Vijay Rai, Chairman of CII, added, “Technology and financial literacy are transforming India's financial landscape. While the shift towards digital payments is evident, we must empower under-banked communities with the tools and knowledge they need to thrive in this evolving ecosystem. This report provides a timely analysis of the progress made in digital financial inclusion in India and offers expert insights for policymakers, practitioners, and the industry at large.”

Recommendations: The report also makes short- and long-term recommendations:

Short-term: Focus on understanding the unbanked and under-banked segments and implement financial literacy and technology-driven initiatives targeted at these groups.

Long-term: Develop a technology-driven ecosystem with advanced AI and automation, offering personalised services to financial product users.