Inspirations from India's Digital Transformation

On a recent trip to Namma Bengaluru (our town Bengaluru), it was hard to miss the energy, vibrance, and optimism in the air. I heard many references to Nandan Nilekani , the non-executive chairman of Infosys, and his vision for a reimagined India that has sparked a robust industry-government alliance in many sectors. It is hard to miss the impact of Nandan's thought leadership, and this is a tribute to his contributions. In attempting to understand the big picture of societal transformations, it is evident that developing deeper understanding of localized individual problems helps solve macro challenges. The opportunity to manage change in a big democratic country needs a bias for action and dogged determination to hold the course. The vision, will, and resolution of people, a supporting government, and meaningful collaboration with the industry cement the selfless contributions of many dreamers who aspire for a better country. The idea of a "less" cash society is here, with a dramatic increase in digital transactions. The digitization wave is enveloping all walks of life, helping meaningfully improve the quality of life, of all.?

I experienced getting a new mobile phone after getting my Aadhar identification verified near-real-time (by fingerprints and a photo), linking my bank account to my phone and activating UPI on my phone, and seamlessly transacting almost instantaneously. Although there were some "hiccups" during set up, it has been a fantastic experience. While I was impressed by how UPI has transformed the society, it was easy to notice that the UPI is a sliver of a more complex transformation that is currently underway.

At the heart of the revolution, it is hard to miss two core building blocks that are responsible for these large-scale transformations. The organic development of the "India Stack," supported by non-profit technology think tank iSPIRIT, helped cement the outcomes.??

The development of "India Stack" is mainly responsible for the exponential growth and adoption of Digital India. India Stack is "a set of open APIs and digital public goods that aim to unlock the economic primitives of identity, data, and payments at population scale."?

India Stack has three core pillars - Identity (Aadhar), Payments (UPI), and Data Aggregation capabilities. Ability to uniquely authenticate and authorize people, facilitate a seamless transfer of value through a robust payment network, and provide a reliable framework to aggregate data through regulated aggregators that do not sell or abuse data.

Identity: India set out and has been successful in the ambitious goal of issuing unique and verifiable identification to every Indian citizen. India established "The Unique Identification Authority of India" under the leadership of Nandan Nilekani to roll out and administer the program. Over a billion people now have a verifiable identification. The adoption of Aadhar has made many people eligible to open bank accounts.?

Cellular Phone Infrastructure: With the expansion of telecommunications infrastructure, given the scale and competition with the various providers, India has the world's lowest call tariffs. Given the inexpensive cellular phone services, it has been common to see people with multiple purpose-specific phones.?

Payments: In 2007, India began a vision to modernize the payments and settlements infrastructure. A non-profit organization, The National Payments Corporation of India, was established with ten core promoter banks. This body has created RuPay (an indigenously developed payment system to compete with Visa and Mastercard Network), IMPS (Immediate Payment Service to enable near real-time payments), and many other innovations, including the UPI - the Unified Payments Interface.

The combination of qualified people to open bank accounts, mobile phone access, and a simple payment architecture has fueled a massive expansion in the payment infrastructure- p2p, p2b, b2b, and g(government)2p. COVID has accelerated the adoption. These are the three J-A-M (Jan Dhan(Financial Inclusion), Aadhar (Identify), and Mobile) pillars that support present-day socioeconomic and technology policy strategies.

iSPIRIT is the custodian of India Stack. iSPIRIT is a non-profit technology think tank that aims to tackle India's most significant problems like financial inclusion and quality healthcare delivery. The mission of iSPIRIT is to enable a "Product Nation" - with the objective to transform India into a hub for new generation software products, by addressing crucial government policy, creating market catalysts and grow the maturity of product entrepreneurs.?It is a volunteer group of technologists?that contributes to shaping a modern platform that will transform how technology can meaningfully change the lives of citizens. The iSPIRIT Product Nation Volunteer handbook is an impressive artifact in its own right. India Stack and iSPIRIT are helping bring digital reality to life.??

Given my interest in payment technologies, as I look to deconstruct how the UPI framework functions - it was easy to find copious literature on the topic. The three-part blog by Setu does a fine job summarizing the process:?

Part 1 - The basics

Part 2 - Transaction Lifecycle

Part 3 - The Settlement

It is noteworthy that UPI is going beyond Indian borders.?

Lyra Network, a French company, recently announced that it would deploy UPI. It marks UPI's entrance into the European Union (EU) as an alternative payment system designed to be reliable, secure, and interoperable among other digital payment firms. Notably, the global presence of UPI is apparent as countries like Bhutan and Nepal are already accepting UPI, and it is likely to go live in Singapore later this year. Further, merchants in Singapore, Cambodia, Malaysia, Thailand, Philippines, Vietnam, and Bhutan, accept UPI payments through QR-code payment systems standard in the Asia continent. Notably, the National Payments Corporation of India (NPCI) is in talks with Australia to integrate UPI with Australia's own nascent fast payment rail, called New Payments Platform.?

The J-A-M and India stack summary by RS Sharma, Chairman of the Telecom Regulatory Authority of India (TRAI), presented at the World Bank - is informative.

It is not by chance that India is finding a new rhythm on the global stage. While Nandan Nilekani is the catalyst and an ambassador to the transformation, the change is organic and there are many people contributing to fuel this growth. Visionary leaders, increasing industry-government collaboration, inspired people willing to volunteer time and talent selflessly, and opportunistic times all contribute to the rising tide. One can only wonder what the future holds for the people of an inspired and engaging nation.