Digitization has significantly reshaped our relationship with money. The convergence of technology and finance has led to a transformative shift in how we perceive, access, and interact with money in various aspects of our lives – revolutionizing transactions. In a sense, the ability to shop, pay bills, and transfer funds across borders with unprecedented ease has redefined the entire concept of currency. But is all of it necessarily for the best?

Indeed, the rise of fintech companies and digital banking services has democratized financial services. Digital banking also empowers individuals to have greater control and understanding of their finances. Further, access to banking and financial tools – which was once exclusive to a select few – is now available to a broader population, allowing people to manage businesses from the safety and comfort of their homes. For example, by leveraging platforms like Instagram and Facebook, many women can run small businesses online – giving them an opportunity to be financially independent despite the domestic responsibilities society unfairly burdens them with.

“Online business models are particularly important for women entrepreneurs because they provide flexibility and national market access… not just in metros, but also in tier two and three cities,” notes an article on ToI Business. “These successful women entrepreneurs then go on to become role models in their community, creating a virtuous cycle of even greater participation of women in the workforce, greater economic resilience, and a change in perspectives that inspires a new generation of women entrepreneurs.”

Digitization has thus been able to loosen patriarchy’s shackles… to an extent. But the digital leap of the Indian economy in recent years has not included women from less privileged backgrounds. Due to limited access to digital literacy, the financial autonomy of many women has, in fact, decreased. “Many women from low-income backgrounds are still not permitted to have jobs. Earlier, when cash transactions were the norm, they were able to access the money their husbands made – to budget for household expenses, put towards saving for different domestic affairs, and even set some portion aside for a rainy day,” says Richa Sharma, who specialized in gender studies at Jamia Millia Islamia. “But now, most transactions happen online. So, for women who can’t access cellular devices and bank accounts, access to finances has become even more challenging – increasing their dependence on male members of the household.”

With the digital divide presenting an ongoing challenge, not everyone has been able to benefit from the advancements in digital finance. In fact, the shift towards digitization has inadvertently amplified pre-existing inequalities, – disproportionately impacting women's financial agency and exacerbating social disparities.

Moreover, while digitization of the economy has made transactions quicker, more convenient, and often more secure, it has also impacted our spending habits – arguably, for the worse. “[C]onsumer spending has increased drastically for a number of reasons with digital payments being a major factor… The convenience of being able to pay for goods without physically seeing the cash has a unique psychological effect that could convince a person to spend more,” notes an article, explaining, “There’s something about seeing a physical dollar come out of your wallet that makes you think twice before handing it over. With digital payments, this psychological effect is diminished. By not seeing the dollar leaving it’s easy to imagine that you didn’t really have a transaction, which is something your bank account would disagree with.”

This is reflected in the spending habits of Indians, too. Himani Verma, manager of youth affairs at the National Institute of Urban Affairs in the capital, explains that because digitization has made it simpler to pay, people end up spending more on purchases. Not only that, but, in today’s digitized banking economy, many young adults shift their bank accounts frequently – either due to UPI services by older banks being glitchy, another bank offering greater cashback on online transactions, or simply, because a bank tied up with one’s favorite e-tailer. Basically, according to Verma, who is also an urban researcher, by giving better offers on online transactions and investing in better servers, banks are able to attract the generation of adults who are used to the digital economy.

"Due to such changes, it is difficult for banks, too, to understand consumer behavior and maintain the records that may affect their long-term planning," Verma adds, highlighting how digitization, in a sense, can impact the way entire economic institutions function.

For millennials and older folks, however, the relationships cultivated with their chosen banks, over the years, aren’t often worth sacrificing for a better cashback offer. A large part of this is also because these demographics are more financially settled and equipped to function without the privileges of digitization. These long-standing relationships are reciprocal too – with banks being more willing to provide loans and other kinds of financial assistance to old customers. The new generation of earners may be more savvy with technology but, due to the general lack of financial literacy in India, are precluded from the advantages their seniors had – simply because the pace of digitization has outdone that of economic education.

The digitization of money has thus influenced consumer behavior and spending patterns. With the rise of e-commerce platforms, online marketplaces, and subscription services, consumers now have access to a vast array of goods and services at their fingertips.

It’s no wonder, then, that capitalist structures have been leaning steadily towards digitization of the economy, under the guise of modernization. Going a step further, Yvonne Hofstetter, a jurist and essayist specializing in the domain of information technology, argues: “Digitization is turning our world into a mega-computer. Everything is interconnected. All kinds of things are being measured, saved, analyzed, and predicted, in order to be optimized and controlled... And those ‘things’ have of course not failed to include people. The technology giants refer to this process as ‘global consumer control.’”

To add to that, security and privacy issues emerge as digital transactions become more prevalent.

But as Hofstetter writes, “The question of whether we want digitization or not is thus irrelevant. Digital transformation is going to take place whether we like it or not… The mission now is to create an information economy that is both social and liberal, and that will give young generations both beautiful technologies and good lives.”