Nithin Kamath Flags Challenges of Digital Onboarding for Rural Users on Fintech Platforms

 

Zerodha co-founder Nithin Kamath has highlighted both the successes and limitations of digital onboarding in India’s fintech sector. While digital tools have greatly expanded financial inclusion, particularly in rural areas, Kamath warns that challenges remain for users outside urban centers. He advocates for technology that is user-focused and designed to minimize disruptions for vulnerable communities.

 

In a post on X (formerly Twitter), Kamath wrote, “The Indian financial services industry, including Zerodha, has benefited immensely from digital onboarding through Aadhaar e-Sign, eKYC, and related tools. This has been a major driver of financial inclusion in Tier 2 and 3 cities and rural areas, reaching people who had never interacted with the formal financial system before.”

 

Digital Hurdles for Rural Users

 

Kamath pointed out that despite the advantages, city dwellers often underestimate the difficulties faced by rural users. “Being in a city like Bengaluru, I was surprised by the challenges people face with OTP verification and biometric processes,” he said.

 

While digitization has reduced fraud, leakages, and inefficiencies, no system is flawless. Kamath noted that regulators such as SEBI require brokers to offer services through multiple channels, rather than relying solely on apps. Biometric devices can fail even under ideal conditions, and mobile connectivity issues in remote areas often delay verification and benefit disbursal. These issues disproportionately affect the economically vulnerable.

 

Balancing Technology and Accessibility

 

Kamath emphasized the need to design digital systems with a “graceful degradation” approach — ensuring alternatives exist when technology fails. He argued that public-facing technology must consider limitations, carefully plan fallback solutions, and maintain the benefits of financial inclusion.

 

Public Reaction

 

Social media users widely agreed with Kamath’s observations. One user wrote, “Digital onboarding has widened access, but in rural areas, network issues and failed biometrics push people back into queues. Systems must be designed with offline paths and local support.”