India’s financial sector provides widespread access to products, yet a confidence crisis among consumers hampers meaningful engagement with loans, insurance, and investments. Digitization boosts availability, but many customers face challenges in understanding processes and making informed decisions, as highlighted in the Ease of Engagement Score (EAS) 2026 analysis.
Challenges in Health Insurance
Health insurance maintains an 89 percent claim settlement ratio, yet penetration rates have declined from 4.2 percent to 3.7 percent. This leaves more than 430 million Indians without coverage, based on data from the industry regulator.
Nearly 69 percent of policyholders experience claim rejections or partial approvals, according to a LocalCircles survey.
Mutual Funds Face Engagement Hurdles
Mutual funds manage over Rs 75 trillion in assets, but investors often need multiple interactions to handle basic redemption requests, per data from the Association of Mutual Funds in India.
Consumers frequently transact out of necessity rather than confidence, which restricts deeper participation in financial products. Low trust leads individuals to delay insurance purchases despite risks, limit investments amid rising incomes, and avoid credit for productive uses.
Rising Complaints Reflect Trust Issues
Grievances underscore the problem, with loan-related complaints surging 43 percent year-on-year to 85,281 cases. Overall banking complaints climbed 68 percent to exceed 934,000, according to Reserve Bank of India Banking Ombudsman data.
Dissatisfaction often stems from unclear processes and terms, beyond mere delays.
Dark Patterns and Internal Pressures
Design and sales tactics known as “dark patterns” exacerbate mistrust, including hidden fees, complex surrender penalties, jargon-filled documents, bundling requirements like “no policy, no loan,” and exhausting multi-step processes.
Relationship managers report pressures too: 57 percent admit incentives to sell unsuitable products, while 51 percent fear job loss for missing targets.
Economic Consequences
This confidence gap carries broader economic impacts, including slower insurance uptake, reduced investment activity, lower credit use, and diminished entrepreneurial risk-taking. These factors hinder financial inclusion despite robust digital infrastructure.
Path Forward: Prioritize Clarity
The EAS framework assesses engagement across access, ability, and aspiration, revealing that India excels in access but lags in comprehension. Reducing cognitive friction in financial processes could boost customer lifetime value by 25-35 percent.
Future growth hinges on transparency, simplified communication, and real-time process visibility, emphasizing informed choices over mere transaction speed.
