Women in India’s low-income and remote communities often manage finances for their households and businesses, but lack the tools, expertise, and confidence to use digital channels such as payments, mobile banking, and online services. Without access or capacity to engage in digital financial services, millions of cash-reliant women risk being left further behind and remaining excluded from formal financial systems. Lack of digital access prevents women from achieving financial independence and limits their ability to grow their businesses and manage their household incomes with credit, savings, and government support.

Meanwhile, financial institutions serving low-income people are challenged by the higher dependency on cash payments and the need to deploy significant human resources to maintain regular physical touchpoints with customers. This results in delayed repayments, which can strain the institution and the customer. Digitizing payments reduces loan officer workloads, lowers operational costs, and streamlines bookkeeping.

Recognizing the transformative potential of digital finance, Accion worked to scale digitization of loan repayments and collection processes in microfinance institutions, with support from HSBC India. In collaboration with microfinance partners over three years, we aimed to increase financial inclusion while building the digital capabilities of low-income women across India by transitioning women borrowers from cash-based to digital loan repayments through customized training and capacity-building programs.

The project was rolled out in six states: Rajasthan, Maharashtra, Tamil Nadu, West Bengal, Bihar, and Uttar Pradesh, selected based on various factors, including women’s education, income levels, and livelihoods. The selection process informed how external factors would impact digital capability building, enabling us to develop customized interventions.

Gaining time, confidence, and independence

At the project’s outset, we chose pilot branches specifically because of their low digital transaction rates. After implementing targeted interventions, including hands-on digital training, financial literacy drives, and process simplifications, we observed an uptick in digital repayment activity at these branches, indicating considerable progress. Even more notable was the scale of first-time adoption: 456,807 customers made their first digital loan repayment during the project, representing nearly half a million women taking their first independent step into the digital financial ecosystem.

When asked, 100 percent of customers who adopted digital payments last year reported saving time and finding the process more convenient. These seemingly simple advantages are profound for women juggling household responsibilities, businesses, and community roles.

Regular digital payers also reported a boost in financial confidence. Many began using digital tools for other transactions, such as sending money to relatives or shopping online. As women’s digital confidence improves, they’re more likely to engage with a wider array of digital tools, opening them to opportunities such as accepting digital payments in their businesses and saving for household or business expenses.

However, despite this progress, the journey to independent usage continues. Post-training, 58 percent of women made a digital payment independently without assistance from family members. This gap emphasizes that while initial barriers to adoption can be overcome, sustained usage and true financial agency require ongoing support.

Barriers to digitization

The project’s impact study also identified these key challenges:

• Smartphone access: Limited access to personal smartphones remains a roadblock. In many households, smartphones are shared, making consistent digital engagement difficult, especially for women who often must seek permission to use devices.
• Fear of fraud: Fear of scams and distrust of digital platforms remain significant deterrents. In Bihar, Madhya Pradesh, and Maharashtra, up to 64 percent of customers we spoke to cited fear of fraud as their top concern.
• Digital capability gaps: Lack of familiarity with smartphone functions and digital apps is a common hurdle. Only 24 percent of customers in last year’s focus group discussions reported typing messages on WhatsApp, while the majority relied solely on voice calls.
• Cash-based incomes: Many women earn their income in cash, making the leap to bank-based digital repayment a difficult shift, both behaviorally and logistically.
• Social dependence: Nearly half of customers depended on family members to complete digital transactions, limiting true financial autonomy.

Interestingly, group influencers, or early adopters within borrowing groups, could play a powerful role in encouraging wider adoption. However, this potential remains underleveraged. Tapping into peer influence could significantly impact future interventions.

Insights from microfinance institutions

One of the important dimensions of this project was our collaboration with microfinance institutions, which gave us critical insights into institutional readiness for digital transformation. Newer institutions demonstrated a greater openness to adopting digital tools and were often quicker to experiment with new repayment mechanisms and processes. 

We also observed that institutions that invested in intuitive, multilingual, and mobile-friendly platforms saw higher adoption rates. Simpler user interfaces helped reduce customer drop-offs and boosted first-time digital transactions. Moreover, microfinance institutions that proactively evaluated various digital payment modes like UPI, BBPS, and QR codes, not just from a convenience perspective but also from the lens of customer-facing risks (like fraud or failed transactions) and internal operational liabilities, were able to better manage reliability concerns. 

One size doesn’t fit all

The project’s geographic spread across the country demonstrated the importance of region-specific strategies. In the northern region, digital adoption was promising, particularly among women with access to remittances and smartphones, though concerns about fraud remained a key barrier. The eastern region showed a mix of smartphone and agent access but continued to struggle with strong cash preferences and low digital literacy.

In contrast, central parts of the country had slower uptake of digital payments primarily due to limited digital skills and a general reluctance to move away from cash, highlighting the need for more sustained, grassroots-level engagement. The western region, despite having better infrastructure and relatively higher awareness, still saw limited behavioral shifts, suggesting that capacity building alone is insufficient to drive change. In the south,  moderate literacy challenges and limited interaction with banking agents hampered digital engagement, reinforcing the ongoing reliance on cash-based systems.

These nuanced insights underscore that there is no universal solution to shifting to digital loan repayments. It is not just a change in how rural women manage their finances; it involves broader empowerment. As women adopt digital tools, they also create valuable digital footprints that can unlock future opportunities. Their record of digital transactions integrates them into formal financial systems, increasing their eligibility for larger loans, insurance products, and other financial services that were previously out of reach.

Digital familiarity also opens opportunities for women to expand and diversify their livelihoods. Continued investment in digital capacity building and design of customer-centric financial products is key to ensuring that early adopters stay engaged and more women follow their lead. With the right support, rural women who once faced barriers to financial inclusion can become leaders in a rapidly digitizing economy — independent, connected, and ready to drive change in their communities.