Fintech ecosystem and digital literacy in Nepal are two sides of the same coin, and the synergy between them is undeniable. Together, they hold the key to fostering financial inclusion, improving socio-economic mobility and modernising the country's economy
Nepal, like many countries around the world, is witnessing a slow but steady transformation in its financial and technological landscape, with the fintech ecosystem and digital literacy at the forefront of this change. Fintech, short for financial technology, integrates digital tools into financial services to increase accessibility, efficiency and innovation. Digital literacy, on the other hand, refers to the ability to use digital tools effectively. While both these terms represent distinct concepts, they are intricately interrelated and together play a pivotal role in Nepal's drive toward financial inclusion and economic growth.
Nepal's journey towards digital literacy is still in its early stages, and the country faces significant challenges, particularly due to a stark urban-rural divide. While cities like Kathmandu have seen impressive strides in digital adoption, rural areas still lag far behind. Digital platforms for education and e-commerce, and digital payments have flourished in cities, enabling individuals to participate in the growing fintech ecosystem. However, the majority of Nepal's population lives in the rural areas, where digital literacy remains low due to factors such as poor infrastructure, limited access to technology and socio-economic barriers. In these areas, many people still rely on cash transactions. This lack of digital literacy not only prevents individuals from utilising fintech services but also hinders the broader development of the fintech ecosystem, especially in the rural agricultural sector.
Despite the challenges, Nepal's fintech industry has experienced rapid growth in recent years. With the rise in smartphone penetration and improved internet connectivity, platforms such as eSewa, Khalti and IME Pay have become household names, offering a range of services from mobile wallet transactions to online money transfers.
The COVID-19 pandemic further accelerated this shift to digital payments, highlighting the need for contactless and cashless transactions. However, the full potential of fintech in Nepal remains untapped, particularly in rural areas where digital literacy is low. As fintech solutions become more advanced, there is a growing need for individuals to develop the necessary digital skills to navigate these platforms confidently. In this sense, digital literacy is both a prerequisite for fintech adoption and a beneficiary of its growth. By making digital financial services accessible, fintech platforms encourage individuals to improve their digital skills, creating a cycle of inclusion and empowerment.
The relationship between fintech and digital literacy is symbiotic. "Digital literacy drives fintech: Higher literacy enables more confident use of fintech platforms, enhancing trust and inclusion." At the same time, "Fintech promotes digital literacy: Exposure to user-friendly digital tools motivates individuals to acquire digital skills, fostering financial inclusion." For Nepal, this relationship is particularly crucial. With a predominantly agrarian economy employing over 60 per cent of its population contributing significantly to the country's GDP, empowering farmers with digital literacy is key to accelerating the country's digital transformation.
Despite the country's dire need for fintech inclusion in the agriculture, the sector faces numerous challenges that hinder the seamless adoption of fintech solutions, including low levels of digital literacy, reliance on traditional approach of cash transactions, inadequate internet connectivity, financial exclusion and limited access to financial services, limited knowledge of fintech benefits, and regulatory and policy gaps.
To overcome these challenges, it is essential to focus on rural areas and farmers in particular. By improving digital literacy in these rural communities, especially among farmers, Nepal can create a digitally inclusive agricultural economy. With tailored solutions like voice-assisted fintech apps, USSD payment platforms and community-based digital literacy programmes, Nepal can empower its farmers to leverage fintech. To fully leverage the potential of fintech and digital literacy, the government and relevant institutions must take proactive steps to create an inclusive digital ecosystem.
Some key policies that should be implemented by the government might include investing in digital infrastructure, incorporating digital literacy into education, supporting rural digital literacy initiatives, promoting fintech in agriculture, enhancing public awareness and strengthening regulatory frameworks. If successful, fintech can revolutionise Nepal's farming sector, improve farmers' financial stability and contribute to the nation's overall economic growth.
To conclude, fintech ecosystem and digital literacy in Nepal are two sides of the same coin, and the synergy between them is undeniable. Together, they hold the key to fostering financial inclusion, improving socio-economic mobility and modernising the country's economy. While fintech provides the tools to revolutionise financial services, digital literacy ensures that these tools are accessible and effectively utilised by the population. The twin concepts of digital literacy and the fintech ecosystem are central to this transformation as Nepal continues its journey towards a more digitally inclusive society. Nepal's current scenario reflects a mix of progress and persistent challenges. With the right investments in infrastructure, education and awareness, Nepal has the opportunity to set an example for other developing nations, showcasing how digital literacy and fintech can work together to drive inclusive economic transformation.
Rauniyar holds a PhD in Enterprise Management from Zhejiang University, China