Households with Phygital Channels Demonstrate Stronger Financial Outcomes: Report

Households with access to both physical and digital (phygital) financial channels demonstrate stronger financial outcomes than those relying only on digital channels, according to a report.

For over a decade, India's financial inclusion story has been measured in accounts opened and cards issued. The next chapter has to be measured differently, said PwC India's survey in partnership with Dvara Research Foundation.

The survey titled 'Rethinking financial health for meaningful impact' covers 4,000 households across 18 districts in seven states.

According to the report, households in the South report the highest multi-service digital financial services adoption at over 70%. It also showed that 37% of households in the East have never sought financial advice, while 78% of informal loans come from a single source.

"The South is network-driven. 44% of advice comes from third-party providers and 40% from social networks; formal financial services providers (FSPs) provide only 13%. DFS multi-service adoption exceeds 70%," it said.

In Western part of the country, the survey found that digital financial services (DFS) acceptance exceeds 95%, yet 65% of formal credit users report having faced denial at some point.

It further said the North faces self-exclusion and rural infrastructure gaps.

"40 per cent lack physical access within walking distance, and newer customers show low trust and convert poorly from access to engagement. DFS acceptance is the lowest of all regions at 75.67%," it said.

The survey further said 37% of households in the East have never sought financial advice, 23% sought but did not receive it.

India's financial services ecosystem has made remarkable progress in expanding access and the next frontier is financial health, said Vivek Belgavi, Partner and Leader, Financial Services Advisory, PwC India.

"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," he said.

Financial health, as defined in the report, is a state where households have enough financial security to meet current needs, plan for the future, and handle financial shocks with confidence.

"India's inclusion story has delivered dramatic expansion in account ownership and credit, yet high rates of dormant accounts and the ongoing NPA stress in microfinance show that product ownership has not reliably translated into suitable use or improved financial lives," said Misha Sharma, Lead, Dvara Research.

The survey also said income volatility is the single biggest drag on financial health.