Impact of Digitalization on Financial Planning in India

For the past few years, India has gradually experienced a dramatic transformation in its financial system through the evolution of digital services. Due to this dramatic shift, you might have noticed that different aspects of your finances have been fundamentally changed. Think about the way you use UPI for daily transactions, or how you can invest in a variety of products directly from your smartphone. Even getting instant personal loans has become dramatically easier. These changes have altered the way you approach financial planning as a whole.

In this article, we will closely examine the influence of digitalization on financial planning in India, while taking a look at how it has also positively impacted insurance and investment purchases.

An Overview of Digitalization of Financial Services

The digital revolution in the Indian financial sector has been fuelled by various factors, among which are increased internet penetration, growing smartphone adoption, and governmental steps aimed at popularizing digital payments and financial inclusion. Hence, digital platforms now provide a variety of financial products and services, thereby enabling you to access these previously unavailable offerings conveniently throughout the country. You can even make all your financial decisions online with the help of mobile banking apps and online investment platforms.

For example, life insurance companies have made it extremely simple to buy a suitable policy from the comfort of your home. You can understand what different types of life insurance policies mean, compare details using online calculators, get e-KYC done and purchase the policy. This improved accessibility also reflects in the increase in insurance penetration that India has seen in the last decade.

Digital Insurance Purchases

Let us take an example in this case. Term insurance is a crucial aspect of financial planning and contributes to your family’s financial security in case of any unexpected mishap, in addition to providing tax benefits. The opening of digital options like online term plans has simplified the insurance buying process, making it more accessible and convenient for you.

Today, the internet gives you more opportunities to research, compare, and buy term insurance quickly. Digital platforms provide an interactive interface where you can put in the required info, obtain a quote, and select optional coverage within a short time. Moreover, these platforms also offer educational materials and help you find the type of plan and amount of coverage that is suitable for you. You can also manage your policies online, make timely premium payments, and submit claims quickly with no manual paperwork requirements. This saves you time and energy, while lowering administrative hassles for insurers as well.

Investment Decisions

Let us take another example in terms of investments. ELSS (mutual funds) is one of the most popular investment choices in the country today. Yet, going ahead with these investments may be tough, especially for beginners. Digital platforms have completely democratized mutual fund access, thereby helping you choose the right products, compare fund options, and take informed decisions in a more personalized manner. There are several apps and websites that will help you get access to all the information, research insights, and analysis that you need, including fund features, historical fund performance, NAV updates, and more. You can thus decide on fund allocation depending on your

financial goals in the future and overall risk appetite. It is now possible to invest in products like online SIPs, with easy live tracking of performance and complete transparency.

Tax-Saving Instruments

Tax-saving instruments have also been transformed with the advent of digitalization. For instance, risk-averse investors have been choosing options like FDs and PPF for years in order to save taxes. These tools are now more conveniently available online, opening them up to more investors for tax savings.

You can easily manage both PPF and FDs along with other tax-saving options like life insurance, health insurance, ELSS, ULIPs, Term Insurance, Guaranteed Income Plans, and other investments online. You can make use of automated online renewal choices and pay premiums digitally. In fact, insurers like Edelweiss Tokio Life Insurance off plethora of tax saving life insurance plans that can be purchased and managed online. Investment withdrawals are also possible online, along with using calculators to work out returns and tax implications of investments in a jiffy. All of these aspects greatly help you optimize tax planning at every stage in life.

Income Tax Filing

Digitization in tax planning could be the main factor that contributes to easier income tax filing processes. Earlier, filing income tax returns meant a lot of paperwork and manual calculations, as well as trips to tax offices. In contrast, electronic tax filing sites and mobile applications have now improved this procedure, making it speedy, accurate, and convenient for you.

Digital platforms enable you to navigate the whole process of tax filing from income declaration to tax calculation and e-filing. Advanced algorithms and data validation methods are precise and compliant with tax regulations, thus minimizing the possibility of errors. Moreover, you will receive reminders and updates when your filing is due, thereby preventing the possibility of late filings or penalties.

Conclusion

Financial Planning in India has undergone a dramatic change due to the digitalization of financial services, allowing you to streamline your strategies and ensure a prosperous future. Digital platforms enable the commissioning of insurance and access to investment, insurance, and tax-saving instruments, as well as streamlined income tax filing processes which ultimately result in financial optimization.

With the continuous development of technology, it is obvious that the field will keep on introducing more innovations and upgrades that make it easier for the end user to make and manage a financial plan, paving the way for a more financially secure future for you and your family.

 

Aastha Mestry - Portfolio Manager 

An Author and a Full-Time Portfolio Manager, Aastha has 6 years of experience working in the Insurance Industry with businesses globally. With a profound interest in traveling, Aastha also loves to blog in her free time.