India stack - A detailed presentation

1. 1 Towards presence-less, paperless, and cashless service delivery

4. Layered Innovation 4 Mass Flourishing!

5. 5 TCP / IP, Internet, SMTP (Email), GPS Fundamental Technology Innovations, Govt. Funded, Publicly Available Payments Visa/Master, ApplePay Evolution of Payment Systems, Security Frameworks, ... Open APIs, Platforms Google Maps Large Scale Infrastructure, Private Companies, Smart Phones Android, IOS Telecommunications & Computing Technologies - Hardware Innovations TECHSTACK Layering of Innovation Govt. Technology eCommerce (Amazon) Taxi (Uber) Hotel (Airbnb) ------

6. 6 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 SIM Finance Apps UPI Digital Locker APB AEPS DBT eSign Aadhaar Applications / Systems Devices ● Minimal ● Standardized ● Simple design ● Easy to execute ● Easy to write a law

7. J A M - The Foundation of the India Stack 7

8. Pradhan Mantri Jan Dhan Yojana BANKING FOR ALL 8Source: As on 20 Dec 2016, http://pmjdy.gov.in Nandan Nilekani, 2016

9. 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 Tap Banking Licenses +10 +2 +2 Accelerated by regulatory innovation 2nd Aug 2016 Nandan Nilekani, 2016

10. 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!

11. The rise of smartphones Current sales about 25M smartphones per quarter Source: Ericsson Mobility Report 11

12. The Evolution of the India Stack - Built on JAM 12 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

13. Name DoB/Age Gender Address Mobile/Email 1234 5678 9012 Unique Lifetime 13

14. Aadhaar Authentication NO MORE PHYSICAL PRESENCE Are you who you claim to be? Only a yes/no answer Anytime anywhere 14

15. Aadhaar e-KYC NO MORE PHOTOCOPIES! Access ONLY via authentication No more fake identities No more paper 15

16. 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 dongles eSign allows all Aadhaar holders to digitally sign anytime anywhere Open API based, allowing applications to easily integrate Residents needing to sign a document

17. 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

18. 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 posting Funds 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!! 18

19. ● 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

20. 20 ● 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 Flow Secure data sharing based on consent

21. 21 PRESENCE-LESS LAYER Aadhaar Authentication Unique digital biometric identity with open access of nearly a Billion users CONSENT LAYER Open Personal Data Store Provides a modern privacy data sharing framework PAPERLESS LAYER Aadhaar e-KYC, E-sign, Digital Locker Rapidly growing base of paperless systems with billions of artifacts CASHLESS LAYER IMPS, AEPS, APB, and UPI Game changing electronic payment systems and transition to cashless economy COMMERCE (GSTn) CREDIT (RBI) INVESTMENTS (SEBI) OTHERS INDIASTACK SKILLS JAM Jan Dhan, Aadhaar, Mobile

22. Source: UIDAI, NPCI, TRAI Website, Conversations with NPCI, eMudhra, Deity officials 600 Mn Authentications/month 500M unique ids 1.103 Bn Enrolments In 6 years since launch 340 Mn eKYC in 3 years 75 Mn unique ids 367 Mn APB Accounts Linked 1.2 B Transactions worth 4.5 B USD in 3 years >2.5 Mn e-Sign in 15 months >0.8 Mn unique ids 2.9 Mn Digilocker users & 15 months 4.8 Mn Uploaded Docs 10M+ UPI VPA in < 6 Months 259 Mn Jan Dhan bank accounts 350 Mn Smartphones 1060 Mn Phone numbers Jan Dhan Aadhaar Mobile 22

23. Source: UIDAI Website, Conversations with NPCI, eMudhra, Deity officials India Stack Ecosystem 25 ASA 293 AUA Aadhaar Authentication 23 KSA 216 KUA Aadhaar eKYC 4 eSign ESPs 1Digital Locker Provider 830Banks (APB) 127Banks (AEPS) 32Banks (UPI) 23

24. GSTN Platform Goods & Services Tax Network (GSTN) API based platform GSPs can provide basic and value-added services to taxpayers 24 GSTN will process 5 Billioninvoices a month across 70+ Lakhsbusinesses! Source: GSTN website

25. 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 Billion Bills per month ~250 Billion INR monthly payments 25Source: Public data and NPCI website

26. 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

27. 27 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!

28. Nandan Nilekani, 2015 28 The phone will replace the card as the ‘What you Have’ authentication factor WHAT YOU KNOW WHAT YOU HAVE WHO YOU ARE PIN / Password Card Proof of Identity

29. Nandan Nilekani, 2015 29 Combining Security with Convenience Biometric smart phones enable 1-click 2-factor authentication WHAT YOU KNOW WHAT YOU HAVE WHO YOU ARE Smart Phone Aadhaar

30. The future is here! Smartphones with integrated Aadhaar compliant Iris recognition available for commercial use! Source:http://news.samsung.com 30

31. 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? 31

32. 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 32

33. 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 required 33

34. 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 min Capacity Freed up for lead generation Reimagining Channel Management - Digital Transformation with Aadhaar eKYC 34

35. 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 months Customer Experience "Walk Out Working" Customer Onboarding - Digital Transformation with Aadhaar eKYC 35

36. © Nandan Nilekani, 2016 India Stack - Taking Off 36 All layers of the stack have shown tremendous growth! Source: UIDAI 5K 13.5M 36

37. © Nandan Nilekani, 2016 India Stack - Taking Off 37 eKYC has seen tremendous growth in recent months! Source: UIDAI 200K 4M 37

38. Providing credit without friction 38

39. 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

40. Need a loan Sees loan offers Accepts best offer Receives loan Sells Goods Repays loan Agrees to share data 40 7 Key Steps For Rajni to get a small intra-day loan

41. Consent Architecture Credit marketplace app Credit marketplace 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 41 Each step requires a solution

42. Need a loan Sees loan offers Accepts best offer Receives loan Sells Goods Repays loan Agrees to share data Consent Architecture Credit marketplace app Credit marketplace paperless contract Transaction a/c & app Payment app Payment app Aadhaar/ eKYC digi locker API for loan offers eSign Digilocker UPI auth orization api UPI UPI 42 Each solution is enabled by the India Stack

43. 43 Cashless & Paperless Digital Footprints Business Micro-Credit Business Growth Feeling of Wellbeing Virtuous Cycle of Credit to the first mile

44. 0 5 : 0 0 mins Completely digital 5 minute lending process 44

45. 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 45

46. Alt Lender Traditional lender Origination & Underwriting Expected additional savings of 60% Risk costs Limited savings as original savings from data analytics Loan Servicing 15% of overall costs Expected savings of 50% Collection Over 10% of overall costs Expected savings of 30% Impact of India Stack on new credit system Costs New Entrant on India Stack 46

47. 47 Millions of Borrowers Data Driven Algorithm Driven Consented Data Sharing Enabled by Mobile Electronic Contracts Digital Payments Credit Marketplaces Thousands of Lenders Digital Footprints Credit at scale

48. Making investments accessible 48

49. Investment at scale 49Source: NCAER-CMCR survey, www.openthemagazine.com, discussions with ScripBox Low Cost, High Volume, Low Ticket Size

50. Sachet Sized Transactions! With reduced costs, minimum ticket sizes will come down, volumes will go up! 50 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

51. To Increase Market Size 10x or 50x Cost of Doing Business Must Come Down! 51

52. Enabling The Skills Marketplace 52

53. 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 53

54. 54 Training, Apprenticeship & Certification Trusted Credentials Employment Credible History Differentiated Earnings Virtuous Cycle for Skills Guru-Shishya Parampara Ecosystem of institutes/agencies Aadhaar, Digital Locker for portability and trust Market places like LinkedIn, Babajobs, etc.

55. Skilling at scale 55 COMMERCE TRANSPORT TOURISM CONSENT ARCHITECTURE DIGITAL LOCKER COMMON IDENTITY SKILLS EXPERIENCE Networks and aggregators driving mass skilling in several domains India Stack allows skill and experience to be portable

56. 56 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

57. 57 Thank You