From Connectivity to Capability: Digital Readiness as a Gateway to Financial Inclusion in Nepal

Mobile phone ownership has surged across Nepal, but that growth conceals a deeper problem: many people who own a phone still cannot use it to access financial services, receive remittances, or manage risk. This study examined what separates those who are digitally connected from those who are digitally capable, and what that gap means for financial inclusion. Drawing on Van Dijk's Resource and Appropriation Theory, we used the World Bank's Global Findex 2025 survey for Nepal (N = 1000) to classify respondents aged 15 and older into three groups: Digitally Excluded (17.7%, no phone), Digitally Emerging (27.8%, phone owners who rarely use the internet, read texts, or secure their devices), and Digitally Ready (54.5%). Education and age show the strongest demographic associations with group membership, rather than income alone. The stakes of this divide are concrete: mobile money use is concentrated almost entirely among the Digitally Ready, even after accounting for whether someone already holds a bank account, age, education, income, gender, and urban/rural residence. In post-hoc exploratory analyses, digital readiness was also associated with receiving international remittances and with self-reported financial resilience after accounting for income and demographic factors. These findings tentatively suggest that the digital divide may extend beyond fintech adoption and may also relate to how households manage everyday financial needs and economic security. For policymakers, the implication is direct: infrastructure expansion alone will not close this gap. Roughly one in four Nepali respondents aged 15 and older (approximately one-third of phone owners) are online-adjacent but not digitally functional, and the cross-sectional evidence here suggests skills-based interventions targeting this specific group may do more for financial inclusion than continued connectivity investment, though confirmatory longitudinal or experimental evidence is still needed. Methodologically, we introduced a two-stage design that separates access from usage before clustering, a fix for a conflation problem that arises in skip-logic surveys such as the Global Findex, whose 2025 edition covers 141 economies, when usage questions are gated behind a device-ownership screen, offering a template other researchers can apply to comparable data elsewhere.