#8 India’s Digital Imprint on the Globe Part 1 | Digital Rails for the next Billion
Make for India, Make for the world
India’s Unified Payment Interface (UPI) recently received praise from the coveted chambers of Google — a pioneering tech firm of our times and one that has had a successful launch and adoption of its UPI-based Google Pay app in the Indian market.
UPI Goes Global
Google recently wrote recommending the UPI model to the US Federal Reserve Board, which is looking to build “FedNow” — a new interbank Real-Time Gross Settlement service (RTGS) for faster digital payments in the US. The firm mentioned how its partnership with the National Payments Commission of India (NPCI), Reserve Bank of India’s payment regulator, helped it reap rich dividends. The letter goes on to say that critical aspects of UPI’s design have been thoughtfully planned resulting in a real-time and open interbank transfer system that allows users to directly perform bank account transfers from their mobile devices. The scale and robustness of such a system — an essentiality in India’s context — has resulted in the total volume of UPI transactions in Q3 2019 in India touching an incredible 2.7 billion, a 183% increase from the same quarter a year ago.
These numbers along with Google’s good word do not fully capture how UPI has brought about a lifestyle change in major urban pockets of India. Payments for taxi, food and shopping now happen via UPI based mobile apps and transactions are authorized through QR code scans or a PIN — concepts that are alien even to many advanced economies. UPI’s journey keeps growing from strength to strength, with the recent launch of the BHIM UPI app in Singapore kickstarting plans to expand to other currencies.
UPI’s success might have attracted eyeballs, but as an integral component of the larger India Stack, it is just the first of many potential success stories furthering the vision of: “Make for India, Make for the world”. India Stack, established in, as early as 2009, is a set of software modules that allows governments, businesses, startups and developers to build digital solutions to solve issues plaguing India. Its conceptualization as a presenceless, paperless and cashless suite of digital solutions, with an added focus on user consent, has seen it quickly become a successful model of ‘Government as a Service’.
Enable, Engage, Empower
Pramod Varma, Chief Architect of Aadhaar and India Stack, in a recent talk at YourStory’s Future of Work 2020 conference explained the 3-step approach to India’s Public Digital Infrastructure: Enable, Engage, Empower.
Enable relates to establishing a digital ID and eKYC infrastructure through Aadhaar and PAN (Personal Account Number). Aadhaar — a robust and scalable system designed to achieve the goal of inclusion, has helped disrupt financial innovation through eKYC, particularly in the mutual fund and neo-banking arena. Identity verification processes, that previously required a subscriber to endure a litany of processes — from submitting paper documents attested by an authorized signatory to mobile verification, email verification and video verification, now required just the Aadhaar ID and a confirmation via a secure One-Time-Password (OTP) received on the subscriber’s mobile.
Engage relates to establishing a digital transaction infrastructure through solutions like eSign, AEPS (Aadhar Enabled Payment Services), UPI and GST (Goods and Services Tax). Here again AEPS has made it easy for a new financial services provider to plug-in and launch their services, thereby creating a widespread network of representatives associated with different banks. This automatically expands the choice set for the customer, increases competition and improves customer service.
Empower, India Stack’s ultimate goal, relates to establishing a data and credentialing infrastructure. This would include services for maintaining machine verifiable e-Documents (such as School certificates, Driver Licenses, accredited Vocational Training certificates), Digital Lockers etc.
Privacy Through Distributed Data Sharing
Acknowledging the importance of ensuring individual privacy, Mr. Varma expounded on the Data Empowerment and Protection Architecture (DEPA) as an open protocol for distributed data sharing. It would be implemented across domains through inter-operable protocols, digital infrastructure and more importantly data access fiduciaries.
As an example of a truly empowering application that DEPA can support, Mr. Varma delineated the case of an Account Aggregator network — a system that would facilitate consented sharing of financial information in real time.
Account Aggregators (AA) introduce the concept of an “Electronic Consent Artefact” that enables the user to request and then provide selective consent to access their data from various repositories and share this info in a highly granular fashion with service providers. Service providers include Banks, NBFCs, brokerages, and wealth management companies. This consent is for a predefined period and can also be revoked by the individual. Ultimately AAs are intended to make credit accessible to people who are currently not part of the credit ecosystem and help them become part of the formal financial system. With 400+ FinTech startups having access to this infra, AAs are a fertile ground for innovation in providing truly inclusive financial solutions.
Digital Public Goods for the Next Billion
India Stack’s open digital infrastructure is designed to be a public good, so as to create open access and a level playing field for innovators to cater to the needs of a diverse society. It promises to provide the required scale, resilience and ease to build solutions for providing services such as Direct Benefit Transfers, Health Insurance, Faster and Secure Payments, Education & Skilling and Digital Lending for the next billion.
With India providing competent IT systems, a testing ground of hundreds of millions of people equipped with internet-connected mobile phones as well as opportunities for interoperability between multiple languages, these solutions have the required impetus to scale and become truly global.
In Part-2, we look at how technology can be used to empower communities at large through the use of AI and Machine Learning, and understand India’s vision in pioneering this.
Vignesh Venkatachalam is a Tech Policy enthusiast, interested in using Data Science for Policy Making. He is intrigued by developments in the areas of Internet Governance, AI Ethics and System/Organisational Design and their applications in Public Policy.
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