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Asia-PacificMarch 1 2021

Deploying digital solutions at scale

Infosys chairman Nandan Nilekani talks about Aadhaar, India’s biometric identity scheme; the India Stack; and employing optionality to adapt post-pandemic.
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Deploying digital solutions at scale

Q: Given your background, especially with your work with Aadhaar, India’s biometric identity (ID) scheme, what is required to employ digital at scale?

A: I learned about developing digital at scale when I joined the Indian government as a cabinet minister leading the Aadhaar project, which today has issued 1.27 billion digital IDs for Indian residents. Scale in the back end means ensuring that the platform can deal with billions of transactions. But equally important is scale in the front end to onboard a billion-plus users.

For example, we had to build a highly scalable enrolment engine, which was processing 1.5 million IDs a day through 30,000 enrolment stations. This was possible because we designed a modular system which allowed each enrolment station to join independently. In the back end, we deployed technology for biometric reduplication. To illustrate the scale of the challenge: if there are 500 million people in the database and one million new people enrolled that day, the system would have to perform 500 trillion matches to identify duplicates.

One of the big lessons I learned is that scale cannot be post facto — you must design a system for scale from day one.

Q: Can you share some examples of how Aadhaar has improved the lives of people and businesses?

A: Aadhaar has played a huge role in financial inclusion and acceleration of financial services adoption using digital technology. A Bank for International Settlements’ report comparing the number of bank accounts to gross domestic product estimates that India did in eight years what would have normally taken 46 years.

That acceleration happened because Aadhaar was very simple. Once in possession of an Aadhaar number, a customer could do an electronic ‘know your customer’ check and open a bank account in one minute. Consequently, over a billion bank accounts have been opened in India in the past six years.

The India Stack has transformed the way financial services can be delivered to millions of people.

Nandan Nilekani, Infosys

We created the Aadhaar number as a financial address. This is the basis for the world’s largest direct benefit transfer (DBT) system – the Indian government can transfer money into people’s accounts in real time. Such a system was very useful during the pandemic, as India was able to use the DBT platform built on Aadhaar to deliver money immediately into over a billion bank accounts. This was a transcendental moment in the use of digital financial services for society.

Q: What advice could you give governments that are embarking on a mass digital ID project?

A: Unbundling the ID to create a foundational ID, on which many functions can be built, is my recommendation to other governments.

Often when governments launch ID projects, they combine the function with the foundation. For example, a passport is both a travel document and an ID. We separated the ID from the function, so that whether someone is eligible to travel will be decided by the passport system.

Q: What do you means when you say that the India Stack is the single most important innovation to formalise the domestic economy through digital services?

A: The India Stack has three parts. The first is ID and the second part is payments. The National Payments Corporation of India has built a state-of-the-art payment system, the Unified Payments Interface (UPI). It is an any account to any account, any mobile to any mobile, real-time payment system. Again, consent for the payment is unbundled from the bank account. The UPI creates high-volume, low-cost payments at scale.

The third part is data empowerment, which allows people to use their data to access financial services. For example, a small business can use its tax payments and invoice details to get credit from a bank. Putting the data in the hands of consumers — empowering them — is at the heart of the data environment architecture in India.

The India Stack has transformed the way financial services can be delivered to millions of people.

Q: What advice can you give senior leaders on how to successfully navigate their business through the pandemic?

A: What the pandemic has taught us above all is that digital is an imperative in every industry, and having digital capabilities is essential for survival. It’s also important that we use digital to create optionality. In other words, strategy is not about saying we will do A or B, but saying what we do is based on the circumstances.

For example, many US retailers went bankrupt because they could not cope when customers stopped coming to the mall. But the ones that thrived had shifted to e-commerce and created different ways for customers to access their goods, such as home delivery or store collection. So digital acceleration is one part, but also creating optionality so that you are able to continue to do business no matter what happens.

This is an edited version of a Finacle Conclave 2021 session, Navigating to the Next Normal — Leading with Digital, which aired on January 27, 2021.

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Read more about:  Digital journeys , Fintech , Asia-Pacific , India
Joy Macknight is the editor of The Banker. She joined the publication in 2015 as transaction banking and technology editor. Previously, she was features editor at Profit & Loss, editorial director at Treasury Today and editor at gtnews. She also worked as a staff writer on Banking Technology and IBM Computer Today, as well as a freelancer on Computer Weekly. She has a BSc from the University of Victoria, Canada.
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