By Abel Taddele

India’s progress in digital financial inclusion is often described through its technology platforms. But what stands out more clearly is the system behind them: identity, payments and last-mile access channels working together to expand trust, reduce friction and bring millions into the formal financial system.

During my recent benchmarking visit to India, one question stayed with me: how did a country of continental scale move hundreds of millions of people into the digital financial system in just over a decade?

By the end of the visit, it was clear that the answer was not a single innovation, policy reform or technology platform. India’s progress rests on a deliberately constructed digital public infrastructure ecosystem, where identity, payments, rules, institutions and last-mile delivery channels reinforce each other. What impressed me most was not any individual platform, but how intentionally the different parts of the system fit together.

This piece builds on my earlier reflections on India’s policy and institutional architecture, but focuses more specifically on the infrastructure driving innovation, access and usage: India Stack, now more commonly discussed as digital public infrastructure.

India’s financial inclusion story is often explained through the JAM Trinity: Jan Dhan bank accounts, Aadhaar digital ID and mobile connectivity. Before the visit, this sounded like a familiar phrase from conference presentations. Seeing how it works in practice gave it a much deeper meaning.

Identity as Trust Infrastructure

Although I did not physically visit Aadhaar, our discussions with officials from the National Payments Corporation of India showed how digital identity has become part of everyday life. It is not treated as a niche financial-sector tool. Citizens use digital credentials to access services, store official documents through DigiLocker and authenticate themselves in ways that increasingly reduce the need for paper-based processes.

The significance goes beyond convenience. When digital identity becomes part of everyday interactions, trust in digital systems grows naturally. Financial onboarding then becomes a by-product of broader digital adoption, rather than a standalone challenge.

This is one of the lessons that strongly resonates with Ethiopia’s own digital transformation journey. Adoption of Fayda, Ethiopia’s digital ID, is likely to accelerate when it solves everyday problems, not only financial onboarding. The more frequently people use digital identity in their daily lives, the easier it becomes to extend its value into financial services.

From a market systems perspective, this matters because digital ID is not only a technology layer. It is trust infrastructure. It can reduce verification costs, improve customer onboarding, strengthen service delivery and allow market actors to design more inclusive products.

Payments as Shared Market Infrastructure

If identity provides the foundation, payments provide the momentum. Much of our visit focused on understanding the role of the National Payments Corporation of India and how India treated payments as a public good. This policy choice appears to have fundamentally shaped the country’s financial inclusion trajectory.

India began its modern digital payments journey with instant bank transfers more than a decade ago, but the real breakthrough came with the Unified Payments Interface. What stands out is how intentionally the system removed friction for ordinary users. Payments no longer require long account numbers or complicated codes. They can be completed using simple identifiers such as a mobile number, virtual payment address or QR code. For many users, this is the difference between digital payments feeling intimidating and becoming intuitive.

Equally important is how the system brought small merchants into the digital economy. Across cities and villages, street vendors, taxi drivers and small shops accept QR payments without the need for expensive point-of-sale devices. This widespread merchant acceptance is often the missing piece in cash-to-digital transitions. When small merchants accept digital payments, customers have a stronger reason to leave cash behind.

One small but powerful innovation I observed was the use of voice-enabled payment confirmation devices. These devices notify merchants, in local languages, when a payment has been received. This addresses a practical trust and literacy challenge, especially for small merchants who may not be comfortable checking digital transaction records manually.

The institutional design behind this system deserves attention. NPCI operates as a not-for-profit entity established by the central bank and the banking sector. Its mandate focuses on interoperability, low cost and reinvestment into innovation. This reflects a powerful policy choice: India did not wait for the market alone to deliver inclusive payment infrastructure. It built shared rails and allowed private actors to compete and innovate on top of them.

For Ethiopia, this is a particularly relevant lesson. Interoperable and low-cost payment infrastructure can accelerate both inclusion and innovation when treated as national infrastructure, rather than as a set of purely commercial products. The work EthSwitch is doing in this regard is promising. The next challenge is to scale these systems, strengthen interoperability and address the remaining barriers that prevent instant payment services from becoming truly ubiquitous.

The Last Mile: Where Trust Becomes Usage

As our visits and discussions continued, it became clear that infrastructure alone does not guarantee usage. Digital rails are only as effective as the channels that connect them to people. This is where the visit to PayNearby and discussions about agent networks added an important dimension to the story.

PayNearby operates an assisted digital finance network that connects banks to customers through local agents. Its experience highlights a reality often overlooked in conversations about digital finance: many people still need support to access digital services. Technology may power the system, but human touchpoints build trust.

The scale of these agent networks is remarkable. Their presence across most postal codes, and their ability to serve a large customer base over time, demonstrate how simple services can drive adoption at scale. Their early service offering was intentionally basic: cash deposits and withdrawals, transfers, balance enquiries and statements. Even with this limited set of services, they reached millions of customers every month.

This reinforces an important lesson: financial inclusion does not begin with sophisticated products. It begins with reliable, high-frequency transactions that people can depend on.

India’s regulatory approach also played a role in enabling scale. The introduction of tiered agent models allowed different levels of participation depending on capacity and risk. Some agents offer full services under stricter requirements, while others provide basic services under simplified rules. This proportional approach helped balance expansion with risk management and allowed the network to grow rapidly.

Trust in the system is reinforced through digital audit trails rather than paper processes. Transaction confirmations through SMS, one-time authentication and regular bank audits create accountability while reducing administrative burden. One principle repeated during the visit was particularly striking: paper can increase fraud risk, while digital trails can reduce it.

India also leveraged existing community networks. Women’s self-help groups, postal workers and local service providers became part of the financial access ecosystem. By embedding financial services into trusted community roles, the system gained both legitimacy and reach.

For Ethiopia, the parallels are clear. The country already has strong foundations in microfinance, cooperatives and community-based networks. With the right regulatory support, digital infrastructure and market incentives, these networks could evolve into a powerful last-mile financial access layer.

What This Means for Ethiopia’s Market Systems Approach

Reflecting on the visit, the most compelling takeaway is how India’s digital financial ecosystem functions as a flywheel. Digital identity simplifies onboarding. Interoperable payment rails make transactions instant and affordable. Agent networks ensure services reach people where they live. Each component strengthens the others.

This is the core market systems lesson. Inclusion is not created by one actor, one technology or one policy instrument. It emerges when the right rules, infrastructure, incentives and delivery channels come together in ways that allow markets to serve people sustainably.

India’s experience does not offer a blueprint for Ethiopia to copy. The countries differ in scale, institutional capacity, fiscal space and market structure. But India does offer a system to learn from.

For Ethiopia, the opportunity lies in adapting this systems thinking: building shared infrastructure, embedding digital identity into everyday services, strengthening interoperable payments, enabling market actors to innovate and investing in the last mile where trust is built and inclusion becomes real.