india stack - a detailed presentation

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Towards presence-less, paperless, and cashless service

delivery

Layered Innovation

4

Mass Flourishing!

5

TCP / IP, Internet, SMTP (Email), GPS

Fundamental Technology Innovations, Govt. Funded, Publicly

Available

Payments Visa/Master, ApplePayEvolution of Payment Systems,

Security Frameworks, ...

Open APIs, Platforms Google MapsLarge Scale Infrastructure, Private

Companies,

Smart Phones Android, IOSTelecommunications & Computing

Technologies - Hardware Innovations

T E

C H

S

T A

C K

Layering of Innovation

Govt. Technology

eCommerce(Amazon)

Taxi(Uber)

Hotel(Airbnb)

------

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Aadhaar Hourglass Architecture

� Identity as a utility, an enabler

� Allows innovation on all sides� Amplifies ecosystem players

Biometric Sensors

Phones Tablets

Attendance Device

Micro ATM

Healthcare Apps

SIMFinance

Apps

UPIDigital Locker

APB AEPSDBT

eSign

Aadhaar

Applications / Systems

Devices

● Minimal● Standardized● Simple design● Easy to execute● Easy to write a law

J A M - The Foundation of the India Stack

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Pradhan Mantri Jan Dhan YojanaBANKING FOR ALL

8Source: As on 20 Dec 2016, http://pmjdy.gov.in Nandan Nilekani, 2016

1969 1980 1993 2001 2014 2015 2016

Ushering in a new ERA of DIFFERENTIATED

BANKING

+2149 Years, 14 New Banks

BANK NATIONALIZATION

New Banks

On TapBanking Licenses

+10

+2 +2

Accelerated by regulatory innovation

2nd Aug 2016

Nandan Nilekani, 2016

1 Billion in 5½ Years

Source: Data from http://www.uidai.gov.in 10

950 M

600 M

300 M

100 M

50 M

1093 M

A Ubiquitous Digital Identity Infrastructure for a digital desh.

The Aadhaar system can

authenticate 100 M transactions per day, in real time!

The rise of smartphones

Current sales

about 25M smartphones per quarter

Source: Ericsson Mobility Report 11

The Evolution of the India Stack - Built on JAM

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2010 2011 2012 2013 2014 2015 2016

950 M

1005 M

190 M

Aadhaar

Mobile

JDY

2009

944 M

600 M

100 M

Source: Ericsson Mobility Report, PMJDY, Aadhaar Web Sites

AEPS

APB

Aadhaar Authentication

Aadhaar eKyc

eSign

UPI

Consent Architecture

Digilocker

1+ B

1+ B

250+ M

Name DoB/Age Gender Address Mobile/Email

1234 5678 9012

UniqueLifetime

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AadhaarAuthentication

NO MORE PHYSICAL PRESENCE

Are you who you claim to be?Only a yes/no answer

Anytime anywhere14

Aadhaare-KYC

NO MORE PHOTOCOPIES!

Access ONLY via authenticationNo more fake identities

No more paper

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eSign - eliminating wet signature

Application Service Provider (ASP)

1.Online request for Digital Signature

2. Request for PoA/PoI Data

4. Online Instant Digital Signature

Issued

3. PoA/PoI Through eKYC

eSign Service Providers (ESP)

UIDAI (for Aadhaar

eKYC)

Existing DSC non-scalable due to physical verification, paper process, and use of dongleseSign allows all Aadhaar holders to digitally sign anytime anywhere

Open API based, allowing applications to easily integrate

Residents needing to sign a

document

Digital Locker - eliminating fake papers

Open API based

Ecosystem driven

Digitally protected

Source: https://digilocker.gov.in 17

Multi-provider Digital Locker

EcosystemIssuer Requestor

Users

Issues Documents Digitally

Accesses Documents Online

Approves Access

No Physical Papers No Fake Documents

Validation & Assurance

Virtual Payment Address

Minimal Issuer/Acquirer Cost

Ubiquitous - Bank accounts

Easy Immediate Payments

Timely Notification

Unified Payment Interface

Push & Pull Payments

@Every one with a bank account can send money to any bank account in India!

Real-time postingFunds are not locked!

Immediate notifications of the payment made

Payments can be initiated by payer or payee.

Real-time validation of the account and balance

No need to disclose account information.Allows account portability, enhances privacy.

Smartphone replaces card and PoS machine!!

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● Open interoperable API ● 1-click 2-FA experience● 4-party model allowing unbundling of application from bank● Virtual Payment Addresses hide bank details and allows features like one time

VPA, amount limited VPA, revocation, etc.● Merchant can use smartphone/featurephone to eliminate PoS● e-Mandate, e-Cheque and biometric authentication are coming on UPI 2.0● Markup allowing pluggability for addresses, credentials, and channels

State of the Art architecture

19Source: http://www.npci.org.in

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● Structured consent artifact and log system

● User controlled data sharing, data flow, and data retention

● Separation of data and consent flows

● Consistent with current legal frameworks

Electronic consent architecture

Data Consumers (Banks,Credits Providers etc)

CONSENT Collector

Data Providers(Banks,Telco,Hospitals,etc)

Consent Flow Digitally signed consent artifact

Data FlowSecure data sharing

based on consent

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PRESENCE-LESS LAYER Aadhaar AuthenticationUnique digital biometric identity

with open access of nearly a Billion users

CONSENT LAYER Open Personal Data StoreProvides a modern privacy data

sharing framework

PAPERLESS LAYERAadhaar e-KYC,

E-sign, Digital LockerRapidly growing base of paperless systems with billions of artifacts

CASHLESS LAYER IMPS, AEPS, APB, and UPIGame changing electronic payment systems and transition to cashless

economy

COMMERCE(GSTn)

CREDIT(RBI)

INVESTMENTS(SEBI)

OTHERS

I N D

I A

S

T A

C K

SKILLS

JAM Jan Dhan, Aadhaar, Mobile

Source: UIDAI, NPCI, TRAI Website, Conversations with NPCI, eMudhra, Deity officials

600 MnAuthentications/month 500M unique ids

1.103 BnEnrolments In 6 years since launch

340 MneKYC in 3 years75 Mn unique ids

367 MnAPB Accounts Linked1.2 B Transactions worth 4.5 B USD in 3 years

>2.5 Mne-Sign in 15 months>0.8 Mn unique ids

2.9 MnDigilocker users & 15 months

4.8 MnUploaded Docs

10M+UPI VPA in < 6 Months

259 MnJan Dhan bank accounts

350 MnSmartphones

1060 MnPhone numbers

Jan Dhan Aadhaar Mobile

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Source: UIDAI Website, Conversations with NPCI, eMudhra, Deity officials

India Stack Ecosystem

25 ASA 293 AUAAadhaar Authentication

23 KSA 216 KUAAadhaar eKYC

4 eSign ESPs

1 Digital Locker Provider

830 Banks (APB)

127 Banks (AEPS)

32 Banks (UPI)

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GSTN Platform

Goods & Services Tax Network (GSTN)

API based platform

GSPs can provide basic and value-added services to taxpayers

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GSTN will process

5 Billion invoices a month

across 70+ Lakhs businesses!

Source: GSTN website

Bharat Bill Payment System

API based platform allowing innovation on delivery models

Ecosystem incentives aligned for rapid adoption

Multi-channel (web, mobile, offline, etc) with multi payment methods (card, cash, UPI, etc)

Unbundling bills, access, payments and rebundling for any-to-any

Bills can go into Digital Locker which can then be shared with consent for a use (e.g. loan)

~1 BillionBills per month

~250 Billion INR

monthly payments

25Source: Public data and NPCI website

Electronic Toll Collection

Interoperable RFID tag and API specifications

Works across 350+ toll booths on national highways

All vehicle classes, ~60 Million, supported

4 Large banks ready to be issuers and acquirers

Built as an Open API platform. In future, can be used for dynamic pricing, congestion pricing, parking apps, etc.

It can also be used to auto link transport manifests for ease cross border movements.

26Source: NPCI website and discussions with NPCI

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India will go from data poor to data rich nation in 5 Years ...

Digital Identity

Paperless Process

Commerce

Payment

Social

Machine Learning & Algorithms

… allowing data driven decision making for scale and inclusion!

Nandan Nilekani, 2015 28

The phone will replace the card as the ‘What you Have’ authentication factor

WHAT YOU

KNOW

WHAT YOU

HAVE

WHOYOUARE

PIN / Password Card Proof of Identity

Nandan Nilekani, 2015 29

Combining Security with Convenience

Biometric smart phones enable 1-click 2-factor authentication

WHAT YOU

KNOW

WHAT YOU

HAVE

WHOYOUARE

Smart Phone Aadhaar

The future is here!

Smartphones with integrated Aadhaar compliant Iris recognition available for commercial use!

Source:http://news.samsung.com 30

Aligns market goals with social goals

No physical presence required (reduces more costs)

Increases trust - allows a new business architecture to emerge

Broad based, ubiquitous, inclusive platform

Cuts Onboarding Costs

Cuts Transaction Costs

Allows Innovation

Why is the India Stack disruptive?

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Digital footprints - build value for the consumer & businesses

A Trust networks

A Skills repository

Build credit history

Manage customer workflows with user consent

Other Innovative Businesses

Reimagine Market Services

Innovative Businesses

Aadhaar - officially valid document

KYC for Regulated Markets

MicroATM Distribution

Mobile Payments

Paperless, Presenceless, Cashless -lowered costs, market expansion & financial inclusion.

Regulated Market

Enrolment - Digital id for all

Subsidy reform - deduplication

DBT - Aadhaar as a financial address

Biometric Attendance

Government

India Stack Adoption Sequence

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Impact of the India Stack - Large Bank

Retail Customer Onboarding - Reimagining the User journey with Aadhaar, eKYC, e-Sign and Digital Locker

Source: McKinsey & Company - Financial Services and Digital practices

Turnaround Time down from

6 days to 1 hour

Reduced Drop Offs First Time Right> 99%

Branch Capacity

Freed up by 10%Back Office

No longer required33

Impact of the India Stack - Large Asset Manager

Source: McKinsey & Company - Financial Services and Digital practices

Transaction Time down from

4 hours to 2 mins

Reduced Operational cost Improved customer retention

Statement Processing time down from

1 hour to < 1 minCapacity

Freed up for lead generation

Reimagining Channel Management - Digital Transformation with Aadhaar eKYC

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Impact of the India Stack - New Telecom

Source: Conversations

On boarding time Time down from

1 day to 10 mins

Saved Rs 15 / SIM issued Saved 15,000 Trees

Onboarding Rate

50M in < 2 monthsCustomer Experience

"Walk Out Working"

Customer Onboarding - Digital Transformation with Aadhaar eKYC

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© Nandan Nilekani, 2016

India Stack - Taking Off

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All layers of the stack have shown tremendous growth!

Source: UIDAI

5K

13.5M

36

© Nandan Nilekani, 2016

India Stack - Taking Off

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eKYC has seen tremendous growth in recent months!

Source: UIDAI

200K

4M

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Providing credit without friction

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No Credible Data

Servicing Cost

Sales Cost

In today’s model, Rajni can never get a loan!

Customers with the lowest

default rates have the

highest interest rates

Need a loan

Sees loan

offers

Accepts best offer

Receives loan

Sells Goods

Repays loan

Agrees to share

data

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7 Key Steps For Rajni to get a small intra-day loan


Credit marketplace

app

Credit market-

place

paperless contract

Transaction a/c & app

Payment app

Payment app

Need a loan

Sees loan

offers

Accepts best offer

Receives loan

Sells Goods

Repays loan

Agrees to share

data

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Each step requires a solution

Need a loan

Sees loan

offers

Accepts best offer

Receives loan

Sells Goods

Repays loan

Agrees to share data


Credit marketplace

app

Credit market-

place

paperless contract

Transaction a/c & app

Payment app

Payment app

Aadhaar/eKYC

digilocker

API for loan

offers

eSign Digilocker

UPI

authorization

api

UPI

UPI

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Each solution is enabled by the India Stack

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Cashless & Paperless

Digital Footprints

BusinessMicro-Credit

Business Growth

Feeling of Wellbeing

Virtuous Cycle of Credit to the first mile

0 5 : 0 0 mins

Photograph is public domain. License info:All photos published on Unsplash are licensed under Creative Commons Zero which means you can copy, modify, distribute and use the photos for free, including commercial purposes, without asking permission from or providing attribution to the photographer or Unsplash.CREATIVE COMMONS ZERO: http://creativecommons.org/publicdomain/zero/1.0/

Completely digital 5 minute lending process

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http://creativecommons.org/publicdomain/zero/1.0/

Pilot overview and key participants

LENDERS MARKET PLACES DATA PROVIDERS

● April to June 2016● Consumer and business loans

● Small ticket size: 10 K to 1 Lakh● Multiple geographies

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Alt Lender

Traditional lender

Origination & UnderwritingExpected additional savings of 60%

Risk costsLimited savings as original savings from data analytics

Loan Servicing15% of overall costsExpected savings of 50% CollectionOver 10% of overall costs

Expected savings of 30%

Impact of India Stack on new credit system

Costs

New Entrant on India

Stack

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Millions of Borrowers

Data DrivenAlgorithm Driven

Consented Data SharingEnabled by Mobile

Electronic ContractsDigital Payments

Credit Marketplaces

Thousands of Lenders

Digital Footprints

Credit at scale

Making investments accessible

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Investment at scale

49Source: NCAER-CMCR survey, www.openthemagazine.com, discussions with ScripBox

Low Cost, High Volume, Low Ticket Size

Sachet Sized Transactions!

With reduced costs, minimum ticket sizes will come down, volumes will go up!

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TXn Cost Comm. Break Even Ticket Size

Rs 50 50 bps Rs 10,000

Rs 5 50 bps Rs 1,000

Rs 2 50 bps Rs 400

To Increase Market Size 10x or 50x

Cost of Doing Business Must Come Down!

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Enabling The Skills Marketplace

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The Skills Problem

Low trust environment

Employers do not trust credentials

Training is not a differentiator

No premium for quality

No accumulation of skill credentials

Lack of mobility

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Training, Apprenticeship &

Certification

TrustedCredentials

Employment

Credible History

Differentiated Earnings

Virtuous Cycle for Skills

Guru-Shishya ParamparaEcosystem of

institutes/agencies

Aadhaar, Digital Locker for portability

and trust

Market places like LinkedIn, Babajobs, etc.

Skilling at scale

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COMMERCE

TRANSPORTTOURISM CONSENT ARCHITECTURE

DIGITAL LOCKERCOMMON IDENTITY

SKILLS

EXPERIENCE

Networks and aggregators driving mass skilling in several domains

India Stack allows skill and experience to be portable

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India Stack as Digital Infrastructure

Regulatory Policy

Market Making Policy via Challenge Grants

100s of Experiments - Low barriers to entry - Level playing field - Aligned to national issues - Rapid success/failure cycle

A robust

foundation to

enable innovative

solutions to

India’s hard

problems

Innovative Solutions to India’s Hard Problems - Commercially Viable - Far reaching consumer impact - Reinforces experimentation

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Thank You