Introduction
The COVID-19 pandemic has redefined the skill landscape in India in more ways than one. The pandemic-induced lockdowns moved most activities online such as jobs, payments, education, and businesses, and accelerated the growth of digitalisation across the country. Due to this massive shift to the online ecosystem, the demand for
digital skills is at an all-time high. However, the supply of digitally skilled workers is still low with reports suggesting that only
12 percent of India’s workforce is digitally skilled. By skilling its youth, India has the opportunity to ride the wave of the ‘Fourth Industrial Revolution (4IR)’ and become the biggest supplier of tech talent in the world.
The digital skill gap and the absence of digitally skilled workers have the potential to hamper the growth of many tech-intensive industries including the fintech sector.
The digital skill gap and the absence of digitally skilled workers have the potential to hamper the growth of many tech-intensive industries including the fintech sector. In this light, this piece assesses the existing digital skill gap in India concerning fintech and provides recommendations for reducing the same.
India’s fintech landscape
India is home to one of the
fastest-growing fintech markets in the world. The fintech adoption rate in India stands at
87 percent, almost 23 percent ahead of the global average of 64 percent. In 2020, India captured an enormous number of US$
25.5 billion in real-time online transactions propelled by an increase in the use of fintech applications that covered huge populations that were previously unbanked, under its garb. While other sectors experienced a downfall during the pandemic, the fintech industry prospered as it expects to become a 150
-billion industry by 2023 given the increase in global investment and mushrooming fintech ventures.
One of the major components identified in the literature as a
fintech growth enabler is the development of skills. There is, however, a huge dearth of skilled youth to keep pace with India’s growing fintech sectors. More than
60 percent of Indian fintech ventures report not having a digitally skilled workforce.
India’s digital skill landscape
According to a report by
Amazon Web Services Inc. by 2025, an average worker in India would require seven new digital skills as the unskilled workforce is expected to increase nine folds at the current rate. A report by
Accenture predicts that if the current digital skill gaps are not redressed, G20 countries would be at a loss of up to US$11.5 trillion of cumulative gross domestic product (GDP) growth by 2028.
India’s digital skills gap appears to be at the greatest GDP growth risk (2.3 percentage points on average per year) followed by South Africa and Mexico in the league of G20 nations. With respect to fintech skills specifically, the
Global Skill Report 2022 signals a significant surge in the fintech skills of India but India’s rank has overall slipped from 64 to
68.
India captured an enormous number of US$25.5 billion in real-time online transactions propelled by an increase in the use of fintech applications that covered huge populations that were previously unbanked, under its garb.
Barriers to digital skilling
Unequal access to digital skills and inadequate digital infrastructure create barriers to equitable adoption of digital technology and prevent countries and industries from reaching their full growth potential. There is a range of factors that contribute to the ever-widening divide in digital skills.
Conventional understanding has evolved to not just include the absence of digital infrastructure—the first-level divide as a barrier—but also take into account the lack of digital skills or literacy—a second-level divide. Recently, the concept has metamorphosed to include 'digital skills' used to leverage the full potential of technology and Internet services as well.
When we delve deeper,
digital inequalities reinforce social inequalities and tend to surface in various ways as barriers to access and resilience of the workforce and eventually automation risks. During the pandemic alone, a spectrum of barriers came up that manifested differently for the different kinds of workers. There appeared a clear distinction between the kinds of workers who could work from home and those who needed to be physically present. Similarly, affordability became a big barrier when education moved online. The digital divide seems to be expanding and becoming more complex with increased internet and technology penetration. Post the pandemic the digital divide covers both, the infrastructural and well as skill-based hurdles.
Digital inequalities reinforce social inequalities and tend to surface in various ways as barriers to access and resilience of the workforce and eventually automation risks.
Gendered divide in digital skills is also quite apparent evidenced by
a report from UNESCO, which states that women are 25 percent less likely than men to know how to leverage digital technology for basic purposes. Therefore, policy responses that focus on mending the second-level divides are much more relevant to India’s position as an emerging economy.
Skilling for the future of work
There has been a strong hue and cry over the ‘inclusivity’ aspect of the digital transition. The pandemic proved to be an inflection point for reengineering the future of work, reassessing skill gaps, and redesigning an inclusive post-pandemic economic recovery. The brisk transition to digitalisation, exacerbated by the need to go digital and contactless, has brought to the fore the mismatch between academic learning and the skills required to chart the industry’s future. The fact that a huge disparity exists brings our focus on the skilling and reskilling initiatives for the youth that could aid this process to make the workforce more diverse and resilient.
Digital transformation by equipping the youth with necessary digital skills and attempting to close the digital skills gap could open up more opportunities for the marginal sections of society.
Redressing the skills gap
The digital skills gap is a complex dynamic phenomenon that has become much more apparent due to rapid digitalisation during the pandemic and the fact that it feeds off existing socio-economic inequalities doesn’t help.
Below are a few recommendations to bridge the skills gap in fintech:
- Encouraging regular organisation-backed upskilling and reskilling of the workforce due to the ever-changing nature of the fintech industry. It would help retain the existing experienced workers who are adept with technology
- Creating specific pathways to fintech at a graduate level: The fintech industry could benefit if centres of excellence are created to leverage collaborative networks amongst stakeholders.
- Making use of platforms that encourage hiring workers based on skill assessments rather than conventional methods such as formal education degrees would help mitigate discrepancies within the hiring process.
- The mismatch between academia and industry can be redressed by implementing a uniform framework that works as a skill-based common ground for employees to communicate with each other and the organisation.
- Promoting fintech and STEM subjects in universities and schools, along with parallel apprenticeship programmes.
- Organisations can take initiatives to have inclusive digital programmes to help develop digital skills in marginalised groups. This would also provide an opportunity to overcome certain first-level divides of access and infrastructure and build a resilient workforce.
- Forging dynamic partnerships between various stakeholders (academic institutions and technology companies) could also help in creating an ecosystem of solutions to complex demand and supply-side barriers.
Thus, tackling these complex and wide-ranging concerns will require an active concentrated policy and research response that involves private and public stakeholders alike. The policy perspectives must also be multidimensional and include
educational, technological, social, and economic redressal mechanisms to bridge the skilling gap witnessed in the fintech industry
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