Key trends accelerating India's transition to a digital economy

We are living in an intriguing era marked by constant changes on the socioeconomic front. On one hand, there is massive disruption caused by technological advancement, while on the other hand, business dynamics and customer preferences are evolving.The disruptions are characterised by rapidly changing social, economic, environmental, and technological trends. Hence, today's industry leaders' goalsinclude creating long-term value for all stakeholders through a multi-dimensional approach of adopting these trends and riding the wave of transformation.Businesses are realigning their risk radars and recalibrating their investment strategies in response to today's highly dynamic and competitive environment. With these factors, we are witnessing the emergence of Megatrends, which have the potential to alter the entire economic ecosystem and set the pace for Indian economic growth for decades to come.‘Megatrends’ that are disrupting our economy are:  

DX, intelligent use of data and India’s move to a data-led economy 

The Indian economy started its transformational journey to a knowledge-based economy a couple of decades back with an increased focus on digital transformation. Over the years the economy has gradually shifted to a service-led economy marked by extensive reliance on data. As per Statista,globally, data has been doubling every three years and is expected to reach close to180 Zettabytes (ZBs) by 2025. Evidently, there is an abundance of data, and organisations must use the mountains of data intelligently. The right application of the wealth of information data provides opens a plethora of opportunities for businesses to embrace and promote a truly data-driven culture within their organisations. Data's impact is redefining 'intelligence' across industries, guiding them toward innovation, growth, and well-being.Indeed, various organisations in India, particularly those in the healthcare sector, are doing so to improve patient outcomes, and internal processes, and provide the best possible care to millions of Indians. Apollo Hospitals, Aster DM Healthcare, Fortis Hospitals, and Indira IVF are among these data-driven healthcare organisations. These healthcare providers are utilising intelligent cloud-native applications to streamline, advance, and optimise their internal and external operations, thereby unleashing the true potential of data and contributing to the larger goal of a data-led economy.  

Financial inclusion using embedded finance capabilities 

The rise of e-commerce, delivery platforms, and online payment methods such as mobile wallets, UPIs, and embedded payment gateways have transformed the entire sale and purchase ecosystem.  A significant shift has occurred in India's digital banking and payment ecosystem, and one trend that has been slowly gaining traction is 'Embedded Finance,' which is a payment option that allows non-financial establishments to embed financial services such as payments, lending, investments, and insurance onto their platforms. Simply put, embedded finance is a new, ecosystem-based innovation that enables the delivery of financial services directly into non-financial websites, mobile apps, and business processes. Players across sectors are adopting Embedded Finance capabilities; McKinsey estimated that from 2020 to 2025, embedded finance could grow by as much as 60% a year in products ranging from embedded payments to insurance and lending. 

Embedded Finance is expected to drive financial inclusion for millions of Indians while also creating long-term value by enabling customers to gain access to the necessary financial services when they need the most. With changing consumer purchasing habits, banks want to provide banking services where the customers are.For examples, an e-commerce platform that handles thousands of sales per day, across the world accepts a variety of 'Pay Later' or 'EMI' payments through their in-built payment platforms. Consider visiting a bank every time you need to create an EMI model or make a late payment to obtain loans. It would be extremely difficult, putting additional strain on banks and individuals alike. This is where Embedded Finance technology comes into play.

Recognizing the importance of Embedded Finance and its vast potential for growth, technology players have begun to integrate it as an embedded capability with technologies such as AI, ML, and Data Analytics. Cloud has become an enabler of Embedded Finance adoption, with cloud players developing capabilities to embed financial services as part of solutions and offerings alongside other smart technologies. 

Mega trends and advancement of new trends 

We are living in interesting times, with consistently evolving social-economic and technology dynamics. If one were to look closely, these Megatrends are interconnected with various other trends that shape our economy and society. For example, the data-led economy promotes trends such as high cloud analytics adoption, data science and analytics adoption by organisations as part of their daily operations, and many more. Similarly, Embedded Finance promotes trends such as digital lending, payments, and pay later options, among other things. Therefore, these trends are dubbed "Megatrends" as they encompass a wide range of other factors that give rise to various other trends, thereby shaping the way businesses operate for decades to come.

Prasad Rai

---

Prasad Rai is the Vice President of Global Strategic Clients Group at Oracle India