South India Leads Digital Financial Services Adoption: Report

"Informal finance complements formal finance sources as households using both formal and informal sources often show deeper formal engagement," the report said.

The report was prepared from a survey of 4,000 households across 18 districts in seven states.

On regional trends, the report said that in the East, 37 per cent of households never sought financial advice and 23 per cent sought but did not receive it, while 78 per cent of informal loans came from a single source, creating high concentration risk.

The West showed a sharp activation gap — digital financial services acceptance exceeds 95 per cent but 65 per cent of formal credit users reported having faced denial.

Newer customers have the highest access scores but the lowest usage scores, the report added.

The South is network‑driven, where 44 per cent of advice came from third‑party providers and 40 per cent from social networks; formal providers provided only 13 per cent of the financial advice. 

The North faces self-exclusion and rural infrastructure gaps as 40 per cent lacked physical access within walking distance, and newer customers showed low trust and conversion was poor from access to engagement.

DFS acceptance in the North is the lowest of all regions at 75.67 per cent, the report said.

The findings suggested that account openings and digital onboarding are necessary but no longer sufficient.

“FSPs must redesign credit, savings, and insurance products around irregular cash flows, pair digital channels with trusted human touchpoints, and measure success through resilience and lived outcomes,” the report said.

"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," said Vivek Belgavi, Partner and Leader, Financial Services Advisory, PwC India.