A joint report by PwC India and Dvara Research recommends that India's financial inclusion agenda should shift from expanding access to formal financial services to improving households' financial health. According to the report, while India has made significant progress in expanding account ownership over the past decade, access alone has not ensured improved financial well-being. The report emphasizes that product ownership alone has not reliably translated into suitable use or improved financial lives, highlighting a critical gap between financial access and meaningful outcomes. Vivek Belgavi, Partner and Leader, Financial Services Advisory at PwC India, stated that "India's financial services ecosystem has made remarkable progress in expanding access. The next frontier is financial health. That means designing products around real household cash flows, combining digital scale with human support, and measuring success through resilience, meaningful usage and long-term customer outcomes."
The latest survey findings reveal that households with access to both physical and digital (phygital) financial channels demonstrate stronger financial outcomes than those relying only on digital channels. Based on a survey of 4,000 households sharing a kitchen across 18 districts in seven states, the report found that phygital services deliver better financial outcomes than digital-only access. The study establishes that phygital wins over digital-only, with households having access to both physical and digital channels showing the highest usage and outcome scores. As per the report, digital channels drive enrolment while human touchpoints sustain engagement and trust, making this approach essential for meaningful financial inclusion progress.
The comprehensive survey revealed that access drives usage but not resilience, with some groups with relatively modest access to formal finance reporting stronger financial resilience than customer segments with greater access. The report identified income volatility as one of the biggest impediments to financial health, noting that households with stable incomes and predictable expenses displayed stronger savings habits, smoother loan repayments, and greater confidence in meeting future financial needs. The survey also found that income volatility is the biggest factor undermining financial health, with many financial products continuing to be designed around fixed monthly salaries, making rigid EMIs, recurring deposits, and annual insurance premiums unsuitable for households with irregular incomes. The report establishes a baseline against which future waves will measure progress, with the findings carrying a direct message for financial service providers that account openings and digital onboarding are necessary but no longer sufficient.
The study revealed significant regional variations in financial access and usage patterns across India. In eastern India, 65% of renters said they would be unable to mobilise ₹30,000 in an emergency, underscoring the financial vulnerability of this growing urban population. In eastern India, 37% of households had never sought financial advice, while 23% had sought but failed to receive it. Informal borrowing remained highly concentrated, with 78% of informal loans sourced from a single lender. In western India, digital financial services acceptance exceeded 95%, but nearly two-thirds of formal credit users reported having faced loan rejection at some point. Southern India emerged as the most network-driven region, with 44% of financial advice coming from third-party providers and 40% through social networks, while adoption of multiple digital financial services exceeded 70%. Northern India faced infrastructure challenges, with 40% of respondents lacking physical access to financial services within walking distance, and digital financial services acceptance at 75.67% being the lowest among all regions.
The report defines financial health as a household's ability to meet current financial needs, prepare for the future, and withstand economic shocks with confidence. It follows an input-output-outcome framework, where inputs measure access to financial products, outputs track usage, and outcomes assess whether products improve financial security and enable long-term planning. The report calls for financial institutions to measure customer resilience and the quality of product usage alongside traditional metrics such as customer acquisition and portfolio growth. It recommends that financial products should be better aligned with household cash-flow patterns through flexible repayment schedules, episodic savings products, and pay-per-use insurance. The report also argues that informal finance should be viewed as complementary to formal finance rather than as a competing system, suggesting that partnerships with self-help groups, community lenders, and local intermediaries could deepen financial inclusion and improve repayment outcomes. According to the report, this approach aligns with the Reserve Bank of India's National Strategy for Financial Inclusion (2025-30), which emphasizes meaningful financial outcomes over simple access metrics. The findings show that phygital services deliver superior outcomes, with households having access to both physical and digital channels showing the highest usage and outcome scores.
