Article 2: Aadhaar System : Digital Transformation and e- Government of India

Introduction

This case study is a very interesting one to be illustrated where you will wonder how infrastructure can be played in a significant role in country's digital transformation journey that will lead to enhance the wellbeing of people. How I got to know about Aadhaar, I participated for a training program recently conducted by Asian Fintech Academy together with University of Hongkong and we discussed about Aadhaar case study too. I was curious about to do some research and write about something on Aadhaar (Digital Identification process developed by India) basically to highlight how the same concept can be implemented in other countries too.

If you recapped about India two years back, as a country they have gone through a very challenging time because of COVID 19 pandemic. All the people in the country were affected drastically and it directly impacted their economy in a significant manner. But as we all know, India is a country where people are so committed and resilience as a nation, always pushing their boundaries to country to move forward. Specially, in 2021 January, they were able to dispense more than 900 million vaccines through digital platform called “Covin”. At the same time, there were time periods to provide some aid and other necessities for their poor- underprivilege people including farmers, small businesses, SMEs, and other vulnerable groups with an aid of 450 USD billion.

According to their facts and figures, they claimed that they were able to transfer those funds to their bank accounts directly closer to 421 million account holders in India. They still believe that the project was successful based on the reliable data management about their intended parties through a digital platform which is called “Aadhar”. As a digital authentication system, it allows (Aadhar) to connect with many parties such as governments, businesses, banks, and others entities and ensure that, the person who is dealing with those respective institutions and companies are true and person who can trust with. This platform is basically to collect information about a person and routing to different source systems or channels for authentication purposes by using biometrics and demographic data. This platform was built in 2009 in India with the objective to assign a unique ID number to all residents of India. When it comes to reasons behind the “Aadhar” came to the picture was basically to address to their birth register system failure and increase its efficiency and effectiveness. Since the unique ID system is a problem to initiate from an original document such as a birth certificate. As a result of that, they decided to move along with biometrics to assess the identification of the person. According to them, it’s done by taking the scans of the 10 fingerprints, as well as IRIS scan and comparing with their existing databases to make sure that, those data will not be overlapping one another.

Aadhar at a glance

As mentioned earlier, this came to a picture in India due to proper identification was not there in place. It was estimated that 400 million (out of roughly 1.2 billion population) didn’t have an individual identity or a document. At the same time, 17% of people had bank accounts during that time with their respective financial institutions and banks. Those two were the main reason why the country required a digitalized platform in order to track the data and other important information about their people. As a result of that, they have designed a platform called “Aadhar”. At the time of conceptualization of “Aadhar” as a digital platform, they wanted to have a secure, stable, and reliable way of identifying their people. Back in those days, Indians didn’t have any single document to proof who they were.

They have identified two important factors when it comes to operationalizing “Aadhar” as a national project. Firstly, they have earmarked funds for the first phase of a project (USD 13 million) and a person who oversees the project and drives it amidst different challenges and obstacles etc. This entity was identified as Unique Identification Database Authority of India simply (UIDAI). According to many scholars, many people who have had expertise, knowledge, know-how, capabilities of operations and data privacy etc. were invited to apply. This exercise has been going on for the past 14 years contiously amidst a lot of challenges and issues globally as well as locally. As of now, “Aadhar” was capable enough to capture 94.2 % of population in India successfully as per their initial mandate of providing secure, stable digital identity that cannot be easily faked or erased. Most of the people in India now using this digital identity as their first proof of identity.

During the period of 2012, “Aadhar” has been added some of the features such as verification and it allowed governments to provide necessities, rationales social pensions, subsidies and many more. In addition to that, it allowed banks and financial institutions to verify the customer before making them onboard. In 2013, it developed to where the system will be capable of verify through eKYC process where customer must be provided their proof of identity and some other key information to their officials at Banks in order to on board them in such simple manner. Furthermore, in terms of application to its finance, 400 million people now have linked their account and bank details to “Aadhar”. When it comes to Paytm, one of the largest mobile payments companies in India, almost 300-350 million of customers were easily onboarded because of “Aadhar” and eKYC process.

Unlike other case studies or user cases, “Aadhar” brings many advantages and benefits to India on a great scale. However, these kinds of national initiatives are critically important for the development of a country as well as increasing financial inclusion where most of the people are coming to the banking system. Furthermore, country like India, they are experiencing higher number of poverties among their population, through these kinds of platforms will be helpful for banks to approach to the bottom of the pyramid, identify their challenges, empower them through different set of activities and initiatives to uplift them from their poverty levels. The same set of concepts can be implemented in many parts of the world specially under banked or no banked especially Sub-Saharan African countries due to their economic conditions, poverty, low infrastructure facilities, low technological advances and many more.

Finally, India has identified that, in order to leverage the existing infrastructure may be required a smooth set of eco system including successful field enrolments, agencies and their continues trainings, certifications of their carder enrollment, provide more accurate and advanced technological devices, keep them together powered by technology. In addition to that, many applications were developed on top of “Aadhar”. Specially, it allows transfer money to another “Aadhar” account virtually by using the payment bridge without involvement of various middlemen. Finally, this system is capable enough to make some basic financial transactions on portable devices carried out by bank representatives to customers’ doorstep. They will require to provide an “Aadhar” number and the fingerprints as their identification proof.

Next phase of “Aadhar”

As per the many scholars and other sources are confirming that “Aadhar” will continue their foundation or core business process as it is and moreover, they will add some values in the process of upgrading their platform as a road map. Apart from that, they will particularly consider the wellbeing of their population by providing accessibility of their financials, mobility, and connection with many parties in the eco system locally.

About the writer

Name – Mr. Dinuka Mandula Peiris

MBA (PIM), CIM (UK), PgDipM (SLIM), CPM (ASIA), MSLIM, ACIM.

Currently working as a sales Manager – (Local and International) at EPIC Lanka (Pvt) Ltd

Currently he serves as a lecturer at Sri Lanka Institute of Marketing (SLIM).?