Fintech And Financial Inclusion In India: A Data-Driven Analysis Of Digital Payments And Banking Access

Abstract

Financial inclusion has long been a priority for India’s development strategy. In recent years, fintech innovations—especially digital payments—have emerged as powerful levers to deepen access to financial services for underserved populations. This paper empirically investigates the impact of fintech adoption on financial inclusion in India, focusing on two dimensions: digital payment adoption (especially UPI) and expansion of banking access. Using panel data across Indian states from 2015 to 2024, we construct a multidimensional Financial Inclusion Index (incorporating access, usage, and quality) and estimate fixed‐effects and instrumental variables models to address endogeneity. The analysis is enriched with heterogeneity checks (rural vs. urban, low-income states, gender gaps) and mechanism tests. Our updated results show that a 10 % increase in digital payment adoption is associated with a ~7.8 % increase in the inclusion index, with stronger gains in less developed states. The study also highlights that the fintech infrastructure (e.g., mobile banking penetration, agent networks) plays a complementary role. Policy simulations suggest that targeted expansion of UPI-enabled banking access in rural regions can substantially narrow inclusion gaps. The paper contributes both updated empirical evidence and policy-relevant insights for regulators, fintech firms, and development agencies in India’s evolving digital finance landscape.