India Stack!!!
Contents:
1. Have you heard about India Stack?
2. What is an API (Application Programming Interface)?
3. How India Stack uses APIs?
4. How has India Stack helped Indian economy?
5. Innovations fueled by India Stack.
5a. Account Aggregation in India
5b. Open Credit Enablement Network
5c. National Health Digital Mission
6. Future of India Stack
Have you heard of India Stack?
Many of us haven’t. But have you heard of UPI… The answer is probably yes.
UPI is integrated with some of the core technologies of India Stack, which enables it to provide a more robust and secure payment system for users in India. UPI uses the Aadhaar Enabled Payment System (AEPS), which is one of the core components of India Stack, to allow users to link their bank accounts to their Aadhaar number and perform transactions using their biometric data. UPI leverages the digital identity infrastructure of India Stack, which includes Aadhaar authentication, to enable users to verify their identity and complete transactions securely. UPI also uses the eSign service of India Stack to enable users to sign documents digitally using their Aadhaar-based digital signatures.
Overall, UPI is one part of India Stack infrastructure that is revolutionizing banking, financial services, insurance, health and other services in India. You have heard of UPI because it is customer facing and we probably use it more than 100 times in a month. However, all of this is building on what India Stack has provided as a foundation. There are other services based on India Stack that you might not have heard of, but these services are also building the foundation for a Digital India.
Let us learn more about India Stack
Before we move on to understand what India Stack is, we need to be aware about another technical term: API.
What is an API (Application Programming Interface)?
An API is a collection of established guidelines that describe how programmes or computers communicate with one another. APIs serve as a middle layer that handles data flow between systems, sitting between an application and the web server. API enables organizations to make the data and functionality of their programmes available to external third-party developers, commercial partners, and internal divisions inside their own organisations. It enables services and products to interact with one another and use one other’s data and capability. Developers just utilise the interface to interact with other goods and services; they are not required to understand how an API is developed. This makes the use of an API very easy which is why APIs are very popular and omnipresent. During the past ten years, the use of APIs has increased to the point that many of the online services today would not be viable without them.
Here’s how an API works:
1. A client application makes a request, often known as an API call, to get information.
2. When the API receives a request, it calls the web server or external application.
3. The server replies to the API with the data that was requested.
4. The API sends the data to the application that requested it.
While the queries and responses in this procedure are all done through an API, the data transmission will vary based on the web service being utilised.
But What is India Stack and how does India Stack use APIs?
India Stack is a collection of APIs that empowers programmers to build digital solutions for a range of services, including identity, authentication, eKYC (electronic Know Your Customer), digital signatures, payments, and more. In essence, it is a platform that gives the Indian economy access to digital infrastructure. India Stack’s mission is to use digital technology to improve the effectiveness and accessibility of various services, notably in the financial, medical, and educational sectors.
India Stack was introduced by the Government of India in 2016 and is built on four layers:
· Presence-less Layer: The largest biometric identity system in the world, Aadhaar, is at the centre of India Stack. Each Indian citizen and resident receives a unique 12-digit identity number from Aadhaar based on their biometric and demographic information. This layer makes it possible for people to prove their identification online without the need of paper.
· Paperless Layer: India Stack’s paperless layer makes digital documentation and verification possible. For instance, people can use eKYC to authenticate their identification by online entering their Aadhaar data rather than physically presenting physical papers. This layer also permits digital signatures, which may be used to electronically sign papers and contracts.
· Cashless Layer: The universal payments interface (UPI) offered by the cashless layer enables quick, risk-free, and easy money transfers across bank accounts. Without utilising cash or physical cards, UPI enables people to pay for products and services using their mobile phones.
· Consent Layer: The permission layer gives users choice over how third-party providers share and utilise their personal data. For instance, people may share their Aadhaar information with a bank to create an account or with a telecom company to activate a SIM card by utilising the permission layer.
Because India Stack is open and interoperable, developers use it to build digital solutions for a variety of services. Moreover, it is safe, guarding user data and transactions using robust encryption and multi-factor authentication.
India Stack seeks to offer a safe, effective, and practical platform for online services and transactions. By facilitating increased financial inclusion and service access for all individuals, particularly those in rural and remote areas, it has the potential to fundamentally transform India’s economy.
How has India Stack helped Indian economy?
India Stack has significantly improved financial inclusion, efficiency, and innovation, all of which have a positive effect on the Indian economy. Following are a few significant ways that India Stack has benefited the Indian economy:
· Financial inclusion: India Stack has significantly contributed to the promotion of financial inclusion by providing electronic Verification, paperless paperwork, and digital payments. This has made it possible for millions of Indians who lack access to banking services to have access to the official financial system and a greater choice of financial services and products. Using India Stack, India has achieved financial inclusion for 80 per cent of the population in 6 years as compared to the projected figure of 46 years.
· Increased efficiency: Opening bank accounts, requesting loans, and filing taxes are just a few of the procedures that India Stack has optimised by making them quicker, safer, and more effective. Due to the decrease in time and money needed to execute these chores, organisations and people may now concentrate on more productive endeavours.
· Innovation: India by giving companies and developers a platform to build new digital goods and services, India Stack has promoted innovation. This led to the development of various new fintech alternatives, including loan platforms, investing applications, and digital wallets, which have challenged traditional financial services and opened up novel growth prospects.
· Reduced corruption: By facilitating electronic transactions and paperless paperwork, India Stack has contributed to the decrease of corruption and fraud. This has boosted financial transaction transparency and decreased the opportunity for corruption.
Overall, India Stack has contributed to the development of a more innovative, efficient, and inclusive digital economy in India, and its influence is only expected to increase going forward.
Several digital services that you currently use like UPI and Aadhaar are already based on India Stack. Many other are leveraging the India Stack API infrastructure to offer new innovation spurred services. Let us have a look at them:
Innovations fueled by India Stack
1. Account Aggregation in India: A new category of financial intermediaries known as account aggregators (AAs) enables both private people and public companies to safely exchange their financial data with other financial institutions and service providers. The India Stack programme, which enables developers to create digital services that can be utilised by the general public, companies, and governments in India, now includes AAs.
An individual’s financial information from multiple financial institutions and service providers, including banks, mutual funds, insurance companies, and tax authorities, is gathered by AAs onto a single, secure digital platform as their primary function. The person may then provide permission for additional financial institutions and services to access this data via the AA platform for reasons including credit scoring, financial planning, and investment management.
The key benefits of Account Aggregators are:
· Convenience: By removing the need for manual data collection and submission to several service providers, AAs reduce paperwork and save time.
· Control: People have complete control over their financial data and may decide with which service providers, for how long, and for what purposes they wish to disclose it.
· Security: AAs offer a safe and secure environment for exchanging financial data, lowering the chance of identity theft and data breaches.
· Accuracy: Financial institutions and service providers may make better judgements on creditworthiness, financial planning, and investment management thanks to AAs’ real-time and reliable financial data.
Account Aggregators are already in the game. Around a billion accounts are activated on the AA network. The volume of transactions is anticipated to skyrocket. They will be a crucial part of India’s digital financial infrastructure, facilitating increased financial inclusion and corporate and consumer access to credit and financial services.
Account Aggregators (AAs) are built on India Stack, AAs use the following APIs provided by India Stack to build their platform:
· Consent API: To get permission from the person to access their financial data held by multiple financial institutions and service providers, the Consent API is employed. Via a one-time password (OTP), biometric authentication, or another method, the person can give their approval.
· Data Standards API: For the interchange of financial data across various financial institutions and service providers, the Data Standards API offers a common format. Using a uniform format makes the data consistent and simple to analyse.
· Financial Information User (FIU) API: The AA accesses the person’s financial information from various financial institutions and service providers through the FIU API. The API accesses the data by using the consent received through the Consent API.
· Financial Information Provider (FIP) API: Financial institutions and service providers exchange the person’s financial information with the AA through the FIP API. To guarantee that the data is consistent and straightforward to analyse, the API makes advantage of the data standards offered by the Data Standards API.
· Account Aggregator API: The Account Aggregator (AA) makes use of the Account Aggregator API to give users access to a solitary, secure platform where they can examine and share their financial data with other financial institutions and service providers.
2. Open Credit Enablement Network (OCEN): The Reserve Bank of India (RBI) created OCEN as a digital infrastructure effort to provide an open, inclusive, and interoperable digital environment for loan delivery. In order to facilitate efficient and safe data interchange between different players in the credit ecosystem, such as lenders, borrowers, credit bureaus, and other service providers, OCEN will use the India Stack platform. OCEN will use Digital KYC API to digitally confirm the borrower’s identity. OCEN will use eSign API to enable borrowers to sign loan documents digitally. OCEN will use Account aggregator API to access real-time financial data of borrowers from various financial institutions and service providers to assess the creditworthiness of borrowers accurately and efficiently, enabling better lending decisions. OCEN uses Data Standards API to ensure that the financial data received from different sources is consistent and can be easily analysed. Finally, OCEN will use the UPI API to facilitate the transfer of funds between lenders and borrowers.
3. National Health Digital Mission (NHDM): The Indian government created the NHDM as a project to use digital technology to enhance the quality, accessibility, and cost of healthcare services in India. The NHDM aims to create a digital health ecosystem that links different parties involved in the healthcare system, such as patients, medical professionals, and public health organisations. It seeks to achieve this by creating a range of digital health infrastructure and services, such as a national health stack, a health ID for every Indian citizen, telemedicine services, electronic health records (EHRs), and health analytics.
India Stack is expected to play a critical role in enabling the National Health Digital Mission (NHDM) by providing a digital infrastructure that can support the creation and sharing of health-related data across the country. India Stack’s digital identity system, Aadhaar, can serve as a foundation for the creation of health IDs for every Indian citizen. e-KYC (Know Your Customer) system can be used to authenticate patients and healthcare providers to eliminate fraud and reduce errors in the healthcare system. Digital locker can be used to store and share health-related documents, such as medical records, prescriptions, and diagnostic reports, securely and electronically. E-signature system can be used to sign and authenticate digital health documents, such as consent forms and medical reports. UPI can be used to facilitate the payment of healthcare services, such as telemedicine consultations. All based on the India Stack APIs.
Future of India Stack
“Our mission as a nation is to offer India Stack or the part of the stack to those enterprises and countries across the world who want to innovate and further integrate, execute, and implement digital transformation,” said Rajeev Chandrasekhar, the Minister of State of Electronics and IT.
As more businesses and nations around the world innovate and execute, and implement digital transformation, India Stack will become more nuanced, intelligent, and complex in its next iteration.
The next objective would be to make India Stack intelligent using technologies like AI that can derive insights out of the huge amount of data generated. Also, India Stack can be made available to countries that are keen to adopt and integrate it as per their requirements. It would be beneficial to both the countries, India as well as the partnering country. This way we can create a robust ecosystem of startups, developers and system integrators working around it on next-generation innovation.
