IndiaStack

Gateway to
Opportunities
in India
 INDIA STACK REPORT
CONTENTS

3
FOUNDATION
OF INDIA
STACK

7
ROAD TO ACHIEVING
DIGITAL INTER-
DEPENDENCE

9
TOWARDS A PAPERLESS,
PRESENCELESS,CASHLESS,
AND CONSENT SERVICE DELIVERY

25
THE
INDIASTACK
ECOSYSTEM

44
A FUTURE PERSPECTIVE INTO
THE NEW-AGE FINANCIAL
ECOSYSTEM IN INDIA

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1. Foundation
of
IndiaStack

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 INDIA STACK REPORT
Foundation of IndiaStack

IndiaStack – a term used to refer to the universal biometric identity

program, Aadhaar, along with a suite of open APIs linked to it across
four distinct layers – has played a catalytic role in India’s digital
foundation and evolution.

It is founded on the core principles that services can be:

1. Presence-less
or capable of being authenticated from anywhere;
2. Paperless
or reliant on digital records;
3. Cashless
or truly universalizing the access and usage of digital payments; and
4. Consent-based
or allowing secure movement of data authenticated by its owners.

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India’s Digital Growth Story in
Financial Services

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In 2018, almost 90% of India’s total population – over 1.2 billion
people – had an Aadhaar biometric ID, making it the largest digital
identity program in the world.

As of 2019, IndiaStack enables providing identity, completing KYC,

making digital payments, signing documents digitally, and sharing of
data. While the list of APIs is growing, the APIs listed in Table 1 are now
mature and are already enable efficient delivery of services in India.

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2. Road to
Achieving
Digital Inter-
dependence

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India’s API Architecture
[Key Milestones]

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3. Towards a
Paperless,
Presenceless,
Cashless, and
Consent
Service
Delivery

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FourLayers of
IndiaStack
Each of the four layers of the
IndiaStack has specific goals
and objectives that they can
meet using the strong underlying
technology solutions. We’ll dive
deeper into each of these layers
below.

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 INDIA STACK REPORT
1. Presenceless Layer
Aadhaar: Using identity as a utility; an enabler.

• Goal: Establish the identity of a person anywhere across all

domains, at any time, to anyone, with consent.
• Owner: UIDAI (Unique Identification Authority of India)
• Product: Aadhaar is a unique, permanent digital ID. It is a unique
12-digit number attached to individual biometric information.

This unique ID offers people a digital identity and enables them to

provide their identity proof anytime, anywhere, without having to carry
any physical documentation. Using Aadhaar, an individual would only
need to remember the 12-digit unique number and identify his or her
authenticity with a simple finger scan (iris scan is also available as a
mode). Aadhaar has been created to be robust enough to eliminate
duplicate and fake identities.

Seven data points are captured in a physical Aadhaar card: DOB,

name, address, gender, phone number, photo, fingerprint, and iris
scan.

This layer is the foundation layer, the bedrock for all other layers to rest
on.

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Key Statistics

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2. Paperless Layer
Aadhaar eKYC, eSign, and Digital Locker: Store
& Retrieve Data digitally

• Goal: Power solutions that can easily store and retrieve information
and documentation digitally.
• Owner: Ministry of Electronics & Information Technology (MeitY)
• Product: Constitutes three solutions: Aadhaar eKYC,
(indiastack.org/ekyc) eSign https://indiastack.org/esign, and Digital
Locker (DigiLocker.gov.in).

Together, the three solutions power a paperless ecosystem that verifies,

authenticates, and stores information and documentation digitally,
anytime, anywhere across any device.

2.1 AADHAAR EKYC:

A paperless Know-Your-Customer (KYC) process, which provides easy
access to information (name, DOB, address, and gender) through the
Aadhaar identification system for verification processes at any time and
place and on any device.

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Key Statistics
A recent World Bank report cites an estimate that moving to eKYC
reduces the average cost of verifying customers from $23 to $0.50.
Similarly, most estimates suggest that customer verification can be
done in seconds using eKYC compared to five to seven days when done
manually.

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2. Paperless Layer

2.2 ESIGN:
eSign: A process that allows individuals, enterprises, and government
bodies to easily and securely sign documents digitally. An electronic
signature is created using the authentication of the individual through
Aadhaar eKYC service. It is an integrated service that facilitates issuing
a digital signature certificate and allows users to sign by authenticating
the Aadhaar holder. A digital signature makes a transaction immutable
and legally valid as per IT Act 2000/2008.

• Service Providers: eMudhra Ltd., C-DAC, (n)Code Solutions, NSDL

e-Governance Infrastructure Ltd, Capricorn Identity Services Pvt.
Ltd., and Verasys.

• Use Cases: eSign online electronic signature service can be

effectively used in scenarios where signed documents are required
to be submitted to service providers, government, or public/private
sector. The agencies that stand to benefit from offering eSign online
electronic signatures are those that accept a large number of
documents from users. Here are some notable use cases for eSign:

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Key Statistics
A total of five eSign providers have been onboarded, and more than
58.9 million eSigns have been issued. Income tax filing (e-Returns) has
been the most frequent use case for eSign. States that are leading the
charts in terms of submitting e-Returns (using eSign) are Karnataka,
Maharashtra, Delhi, and Gujarat. (Source: CCA)

2.3 DIGILOCKER:
A solution that allows secure digital storage of documents for people to
store, retrieve, and share digital documents. It is a cloud-based storage
solution that offers 1 GB per user to store digital copies of key
documents. Self-uploaded documents can be digitally signed using the
eSign facility (which is similar to the process of self-attestation).

• Use Cases: The table below shows a list of the top 10 issuers and the
corresponding documents issued by each. It also shows a list of top
10 requesters of documents and the corresponding use cases for
each.

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Issuers (Top 10) Requesters (With Key Use Cases)

Aadhaar, Unique Identification Authority Zerodha: Users can complete their KYC online
of India (1.2 billion issued) using DigiLocker, open a demat account, and
smoothly invest in equities and debt market.

Ministry of Road Transport & NSDL e-Governance Infrastructure Limited:

Highways Citizens applying online for a PAN card can fetch
Documents Issued: Registration of documents from their DigiLocker accounts.
vehicles, driving license, fitness
certificate, vehicle tax receipt (vehicle tax
receipt)

New India Assurance Co. Ltd. School of Open Learning: Students applying
Documents Issued: Insurance policy online for various courses can upload documents
certificate from their DigiLocker accounts.

Income Tax Department Union Public Service Commission: Citizens

Documents Issued: PAN verification applying through UPSC's Online Recruitment
record Application (ORA) can upload documents through
DigiLocker as well.

Maharashtra State Board of VERVE Financial Services Private Limited:

Secondary & Higher Secondary Entrepreneurs starting a business, applying for
Education business registrations, or filing an income tax
Documents Issued: Class X & XII mark return can fetch documents from their DigiLocker
sheets and passing certificates accounts to seamlessly complete the process.

Ministry of Petroleum & Natural Gas Whatsloan.com: Documents required for

(IOCL) applying online loan services for individual and
Documents Issued: LPG subscription loan distributors provided by WhatsLoan can be
voucher fetched from DigiLocker accounts.

eDistrict Uttar Pradesh BankBazaar: Citizens applying for financial

Documents Issued: Income certificate, products offered on BankBazaar can fetch
birth certificate documents from their DigiLocker accounts.

Central Board of Secondary Digikredit Finance: Citizens applying for

Education, Delhi business loans offered by SMEcorner can share
Documents Issued: Passing certificates, documents from their DigiLocker accounts.
mark sheets

Ministry of Petroleum and Natural Gas VFS Docswallet: VFS Docswallet supports visa
Documents Issued: LPG subscription applications for Indians traveling abroad. Using
voucher the DigiLocker, Indians can submit vital
documents online, such as the Aadhaar card,
driver’s license. VFS Docswallet also supports
applications for vital services such as university
certificates and attestation requirements.

Revenue Department – Karnataka Nopaperforms: A startup providing a digital

Documents Issued: Income Certificate, enrollment management platform to academic
Crop Certificate, Pension Certificate, institutions. Nopaperforms has integrated
Residence Certificate, etc. DigiLocker to enable students to allow universities
to view their transcripts as a part of their
applications.

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Key Statistics
With more than 31.28 million registered users, 141 issuers, and 41
requesters, DigiLocker provides access to over 3.53 billion certificates
in digital format on a single platform with more than 22.5 million
uploaded documents since its launch in 2016.

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3. Cashless Layer
UPI, AEPS & APS: Increasing transparency and
ease.

• Goal: To move things into the digital age, payments, and financial
transactions need to go cashless, enabling transparency and ease of
use.
• Owner: National Payments Corporation of India (NPCI).
• Product: UPI (Unified Payments Interface) in addition to AEPS &
APB.

3.1 UPI
UPI is an extremely powerful solution in the IndiaStack that allows
people to transfer money from any bank account to any other bank
account (individuals or merchants) digitally, securely, and instantly by
simply creating a VPA (Virtual Payment Address) without going through
circuitous steps online or offline. It also caters to the “peer-to-peer”
collect request, which can be scheduled and paid as per the
requirement and convenience. UPI has unbundled the "address" of
payments. Instead of requiring users to remember an arbitrary
combination of account numbers and routing numbers, UPI
standardized the payment address. In UPI, every payment address is of
the following form: "name@entity." This address is then resolved
internally by NPCI to the correct account. Every account may have
multiple payment addresses linked to it so that the user may give john-
banker@citi to his colleagues and john-gamer@sbi to his friends and
both route money to the same underlying account from ICICI Bank.

P2P PAYMENT FLOW USING UPI

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3.2 Aadhaar Payments Bridge (APB):
NPCI (working with UIDAI), created the Aadhaar Payments Bridge (APB)
to channel government-to-person (G2P) payments directly into
beneficiaries’ bank accounts using the Aadhaar number as the payment
address.

3.3 Aadhaar Enabled Payment System (AePS)

allows customers to use their biometric information to authenticate and
perform cash-in and cash-out transactions at any bank agent who has a
biometrically-enabled POS device.

Charts below illustrate the growth of UPI and how it fares against
the adoption of debit cards, credit cards and other peers
globally.

CHART 1:
UPI growth rate since inception.

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 INDIA STACK REPORT
CHART 2:
In India, UPI has surpassed
debit and credit card
transaction values.

Chart 3:
Among global peers, UPI is
growing at the highest CQGR.

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4. Consent Layer
Data Empowerment and Protection
Architecture: Enabling easy data flow
• Goal: To enable people to securely provide consent for the
interoperable data exchange between data providers and data
consumers.
• Owner: The Reserve Bank of India and MeITY
• Product: Data Empowerment & Protection Architecture/Account
Aggregation

The electronic consent architecture enables user-controlled data sharing,

data flow, and data retention. This layer allows data to move freely and
securely to democratize the market for data. Officially known as Data
Empowerment & Protection Architecture (DEPA), the consent architecture is
the fourth and final piece in the IndiaStack and is still in the works.
• Technology: DEPA leverages a machine readable standard for electronic
consent (owned by MeITY), and APIs for data sharing (published by RBI's
IT arm).

• Users: Data providers such as banks, insurance providers, and fund

houses (to be later extended to non-FS areas such as telecom and
healthcare) to data requestors like FinTechs, banks, credit card
providers, or any similar approved entities.

• Key Use Cases: Credit (new types of flow based lending products for
individuals and small businesses, and ease of credit scoring); improved
personal financial management and decision support.

• Under the draft Data Protection Law, The Indian government has mandated
organizations to seek the consent of the user to use and share their data,
seeding the idea of “data access fiduciaries”: organizations envisioned to
enable personal management of consent. Sahamati Foundation is
Collective of Account Aggregator firms (referred to NBFC-AAs) that has
been classified as a new kind of NBFC by the RBI in 2016.

The AA model aims to reduce friction in accessing data and financial

services across platforms and organizations. In its most nascent form, it
actually implements in the Indian ecosystem the concept of true open
banking that has already achieved significant popularity and regulatory
backing in Europe and the US under the PSD2 and GDPR guidelines.
These countries have yet to design the exact technology framework
however (shared APIs etc) and buy-in to implement from market players -
which India has now taken leadership on.

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Data Flow in the Account
Aggregation Model

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The first manifestation of data access fiduciaries is for financial data
through the NBFC-Account Aggregator ecosystem, as depicted below:

AAs will use consent-based data capture and sharing framework in

which AAs will first ask for consent from Financial Data Owners
(individuals or small businesses) and then fetch the financial data from
the Financial Information Provider (FIP), for example, a bank. The same
data can then be shared with a partner firm, or FinTech requests the
same from a user.

Some interesting use cases emerge with the AA model. For example,
users will be able to view a consolidated bank statement across
different banks in which one maintains his/her accounts. A recurring
credit line or buy-now-and pay-later model can also be achieved via the
AA model, with the help of real-time data visibility, which increases
transparency and prevents fraud.

Currently, five major banks have agreed to share data with seven
Account Aggregators.

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4. The
IndiaStack
Ecosystem

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IndiaStack, as explained by its architects, is a public good offering a set
of APIs that allows a layer of authentication for paperless, presenceless,
and cashless transactions, each built and owned by a different team.
Each layer perfectly fits on top of the other, to create an open-source,
cost-effective platform that can be leveraged by innovators, creators,
and developers to build a symbiotic ecosystem, fostering the vision for
a “Digital India.”

Put together, the layers, power the IndiaStack and a robust digital
ecosystem across applications, and devices as represented below to
solve unique use cases across each of the industries:

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IndiaStack and Key Stakeholders
in Financial Services

The IndiaStack, with its set of open APIs built around the biometric-
enabled Aadhaar identification system offers a presenceless (eAuth),
paperless (eKYC, eSign), and cashless (Unified Payments Interface or
UPI) APIs to reduce the cost of serving a customer, enabling cost-
effective financial innovation at a staggering growth rate in the country.

In this segment, we will dive deeper into some successful use

cases adopted by the three main stakeholders in the financial
services ecosystem.

BANKS FINTECH STARTUPS GOVT AGENCIES

INDIASTACK + BANKS

Banks, financial companies, and microfinance institutions are

increasingly integrating their digital presence into the authentication,
payments, and information exchange layers of the IndiaStack. In the last
three years, digital banking penetration has doubled, and the
frequency of digital channel usage has increased fourfold.

Most of the large banks have their own digital banking app that enables
them to onboard new customers, offer products, fulfill transactions, and
provide support digitally, lowering their operations costs tremendously.
The larger and smaller private and public banks both have either
developed their own mobile apps or white labels the BHIM app to offer
customers simple payment services that use UPI. Today, over 1,400
banks are members of the NPCI. Around 160 of these are on UPI.
Although this is a small percentage, these banks serve 95% of the
country’s banking customers.

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However, the digitalization comes at a huge upfront cost on systems
and technology architecture of these legacy banks. They are navigating
the era by increasingly collaborating with innovative solutions
offered by new-age FinTech startups that leverage the IndiaStack
APIs to offer quick, cost-efficient solutions. However, the Supreme
Court in 2017 banned Aadhaar-based authentication but recently lifted
the ban to now allow banks to allow bank account opening via Aadhaar-
based eKYC if the customer allows it voluntarily.

In the most recent announcements by the iSpirit team, Nandan

Nilekani, the chief evangelist of the IndiaStack, shared a new vision and
framework for data consent and sharing – the Account Aggregation
Model/DEPA. Five banks – IDFC First, SBI, Axis, Kotak, and IndusInd
Bank – are leading the way in terms of getting their API endpoints ready
for DEPA.

Notable Banks (Mobile) in the Ecosystem: Yono by SBI, Open

powered by ICICI Bank, Kotak 811, digibank by DBS, YES Bank, RBL
Bank, HDFC Bank, and ICICI Bank.

SUCCESSFUL CASE STUDIES:

GooglePay, PhonePe, and Whatsapp Payments: All of
these apps leverage UPI to partner with sponsor banks to
conduct financial transactions. The apps are merely
collectors of permission from the user for a financial
transaction, while banks such as Axis, YesBank, SBI, and
others process and secure the transactions.
(This is discussed more in the next section as well).

Axis Bank offers e-signature services through which

individuals with registered Aadhaar numbers will be able to
digitally sign documents for online submission to the bank.

ICICI Bank offers Aadhaar Pay, which is a payment system

that allows merchants to collect payments from a
customer using his Aadhaar number and biometric
authentication. The Aadhaar seeded account of the
customer gets debited, and the merchant account gets
credited.

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YES Bank offers BHIM Yes Pay, which is fully integrated
with all the IndiaStack APIs and NPCI Products. YES Bank
has over 5.5 lakh registered users on BHIM Yes Pay, and
more than 2 lakh users have already availed either UPI or
Virtual Card Services to carry out P2P payments and online
shopping. Since its launch, the bank has witnessed over 2
million transactions valued close to INR 700 million.

BHIM
YES PAY
APP

India Post Payments Bank has rolled out Aadhaar

Enabled Payment Services for unbanked and underbanked
customers. Through this service, users are offered basic
banking services such as cash withdrawals and balance
inquiries irrespective of the bank they hold their account
with. It helps India Post Payments Bank by enhancing the
last-mile interoperable banking infrastructure by 2.5 times.
The network brings doorstep banking access to millions of
underbanked customers.

BHIM Aadhaar Vijaya Pay is a digital payment

acceptance solution from Vijaya Bank, which enables
merchants to accept payments for goods/services using
their Android smartphones and fingerprint readers from
customers with Aadhaar-seeded bank accounts by
authenticating the customer's biometrics. The transaction
will be interoperable in nature, allowing any other
participating bank customers to transact on the
application.

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Nearby Technologies has partnered with YES Bank &
NPCI to launch a cardless and PIN-less Aadhaar ATM
service. Using the PayNEARBY mobile application on a
smartphone, a retailer can become an Aadhaar ATM/bank
branch for cash withdrawals and deposits by a customer.

YES Bank and NiYO have launched “YES Bank NiYO

Benefits Card” that makes it easy for organizations to
deliver employee benefits, and for employees to claim the
benefits. The solution will leverage the latest in mobile
technologies and build on the IndiaStack initiatives,
including eKYC by UIDAI and Unified Payments Interface
(UPI) launched by NPCI. Through this solution, NiYO and
YES Bank will aim to digitize the entire employee benefits
process right from instant onboarding via e-KYC, offering
digital credits on all categories of benefits, the capability to
attach bill proof through mobile, and also allow digital
storage of bills and receipts on the cloud. The
accompanying mobile app allows employees to review all
card transactions as well as check balances in real time.
On the back-end, the NiYO app seamlessly integrates with
existing HR management systems of companies, helping
them track all benefits and claim reimbursements in a
paperless manner.

Edelweiss Asset Management has partnered with

Signzy for digital customer onboarding and a faster
verification process on its investment platform. Edelweiss
deployed Signzy’s AI-led e-KYC solution that allows new
customers to conduct seamless digital KYC, biometric-
enabled (Aadhaar) digital contracts, and due diligence
through algorithmic risk intelligence for their mutual fund
investments. It helps to reduce customer onboarding costs
and provide a seamless verification process.

IDFC Bank has launched a biometric-based payment

system Aadhaar Pay through its network. IDFC Aadhaar
Pay will enable millions of merchants across the country to
facilitate cashless purchases for customers in a cost-
effective and scalable way, supporting the government’s
initiatives towards boosting cashless transactions.

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IndiaStack and Key Stakeholders
in Financial Services

INDIASTACK + FINTECH STARTUPS

IndiaStack has enabled FinTech startups across payments (P2P, P2M &
B2B), lending (consumer & MSME), and Wealth Management (personal
finance management, robo-advisory, marketplaces, investment
brokerage) to leverage its platform and build various innovative
solutions.

More than 50% of all FinTech companies are currently leveraging

India’s API infrastructure to provide faster, cost-efficient services to
people across India. An illustrative sector-wise snapshot of the FinTech
startups across the three verticals are shown in the images below.

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The chart below illustrates a sector-wise breakdown of the utilization of
IndiaStack

Below is a deep-dive into the three verticals showcased above. We will

look at the different use cases and success stories across each of the
verticals accessing the IndiaStack API infrastructure.

1. Payments
Google Pay, Paytm, PhonePe, BHIM, Razorpay, PayU, Amazon Pay,
Mobikwik, Ezetap, Itzcash, Instamojo, WhatsApp Pay (still in Beta) &
375 other payments-focused startups in India leverage on the open
APIs in the UPI framework to offer seamless retail and corporate
payments. The RBI’s KYC requirement is fulfilled by Aadhaar, which
enables most of the payment apps/wallets in the P2P payments space
to use eKYC to easily onboard customers. P2M apps, by leveraging the
growing penetration of mobile phones as a mode of interface/merchant
POS and by using virtual addresses instead of physical cards to reduce
both cost of acquisition and issuing infrastructure, have been able to
substantially reduces costs using UPI, making it one of the most
inexpensive payments systems in the world.

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As shown in the chart above, Google Pay leads the charts in terms of
contribution to the UPI transaction volumes, followed by large FinTech
companies such as PhonePe, Paytm, and BHIM. Legacy banks
combined contribute less than 2% of the total UPI transaction volumes.
It’s also interesting to note that Tier 1 cities – Bengaluru, Mumbai,
Delhi, Hyderabad – contribute 66% to the UPI numbers.

SUCCESSFUL CASE STUDIES:

The BHIM app has become one of the main digital payment
instruments for sending and collecting the money as well as
paying for various utility bills. In September 2018, more than
163 lakh (16.3 million) transactions valued at Rs. 7,065 crores
(Rs. 70.6 billion) were made using the BHIM app. BHIM has
been downloaded more than 33.2 million times since its
launch in December 2016, signalling the large number of
Indians who are inching toward a less-cash economy.

Google Pay: After its introduction in September 2017, UPI

transactions doubled to 30 million, and crossed 100 million in
November 2017, hitting a 500-million mark a year later.
Google Pay uses ‘scratch cards’ for sending or receiving
money, and can follow the instructions on the card for a
chance to win a cash reward, as a way to acquire customers.
It is interesting to note that Google Pay in India is different
from other countries, as the product has been built
specifically for the so-called “next billion users” in India.

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Paytm: Paytm has implemented IndiaStack
components like eSign and eKYC to ensure great
scalability for its mobile payments and commerce
solutions. Today, 87% of Paytm’s KYCs are Aadhaar-
based, with over 250 million KYC verified wallets.

WhatsApp Pay: India is WhatsApp’s biggest market

with 400 million users. In 2018, WhatsApp rolled out a
beta test for a payments feature, WhatsApp Pay, which
used UPI infrastructure to deliver a seamless user
experience. The beta test enrolled more than 1 million
users and received a phenomenal response. The
company is currently working out the issue of data
storage with the central bank and the government
before it can roll the feature out fully. Using this model,
WhatsApp and Facebook are working on launching a
similar payment feature in other markets as well.

SCREENSHOTS OF WHATSAPP PAY (CURRENTLY IN

BETA) USER EXPERIENCE USING UPI INFRASTRUCTURE

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Novo Pay uses the Aadhaar platform to verify citizens
to enable them to open bank accounts or transfer
money to any bank across the country, or make
payments for bills or buy products through the kirana
network.

Ezetap has launched the EzeSmart POS terminal,

which provides the Aadhaar Pay option and eKYC (Know
Your Customer) authentication solution. EzeSmart also
supports other payment modes such as UPI and Bharat
QR, besides mobile wallets, and credit/debit cards.

PhonePe announced a new service that enables users

to participate in initial public offerings (IPO) using their
BHIM UPI ID created on the PhonePe app.

Spice Money’s Aadhaar Pay is a digital payment

solution that enables agents to accept payments for
goods & services using their Android smartphone and
biometric scanner from customers holding an Aadhaar-
seeded bank account. Spice Money is also rolling out
the cash withdrawal facility across its 2,00,000
merchant points through the Aadhaar Enabled Payment
System (Micro-ATMs).

2. Lending
CreditVidya, Capital Float, MoneyTap, EzCred, Neogrowth, Simpl,
ZestMoney, Klarna & 338+ other lending (consumer and SMEs)
startups in India leverage on Aadhaar authentication, eKYC, and UPI
platforms to offer quick background checks, credit scores, and instant
loans to the urban, rural, and underserved populations. The maturing
IndiaStack, along with growing API-based data availability, has
fundamentally transformed every step of the credit value chain. Near
end-to-end digital lending has become a reality, with loan approval
turnaround times as short as one day. The number of FinTechs
innovating on India Stack is expected to increase exponentially with the
introduction of DEPA - as new use cases for credit scoring and different
types of loan products (e.g., products relying on evidence for ability to
repay (business invoices and GST) rather than collateral) emerge based
on the ease of consented access to financial data.

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ISPIRIT’S VISION FOR LENDING
WHICH USES INDIASTACK

SUCCESSFUL CASE STUDIES:

Rang De, a non-profit organization working in the space

of peer-to-peer lending in Bangalore, is utilizing Aadhaar
identification, eKYC, and UPI for accessing loan
requirements and disbursing loans to applicants,
especially in the rural belt.

Capital Float used the stack APIs in a trial run of a credit

application process. The lender received the data which
was used to make decisions; the borrower had a digital
account to receive the funds. The entire process, from
application to disbursement, took eight minutes. The
process utilized Aadhaar for ID authentication and
consented to the access of financial and other digital
data held by third parties such as Paytm and for eSign
authenticated by Aadhaar for loan signature.

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 INDIA STACK REPORT
SUCCESSFUL CASE STUDIES:

Faircent and eMudhra have collaborated and

launched an eSign service that allows a seamless and
paperless process of signing a legally-binding loan
agreement between the borrowers and lenders online.
It will help to improve operational efficiency by
reducing human intervention, resulting in lesser
turnaround time, thereby faster loan disbursal.

LazyPay works with payment gateway service provider

PayU to offer UPI as a payment solution. Almost 30% of
the repayments from users are taking place via UPI.
Simpl, a micro-credit startup (also in the ‘buy-now-
and-pay-later’ space), is also using UPI extensively for
repayment of credit availed by its consumers.

Zest Money is a digital lending startup in India with

options to pay for goods and services in EMIs stated
that 40% of the repayments and collections are
through UPI because of the ease of use and
seamlessness of the technology and user experience of
UPI.

LoanTap uses UPI or IMPS for payment of

installments in case the auto-debit facility does not
work for a specific bank account. It runs the UPI handle
with YES Bank. The UPI payments are growing 10% per
month according to company reports.

Aspire Home Finance, a housing finance subsidiary

of Motilal Oswal group, also sees increased
repayments through UPI, despite loans being of much
larger ticket size. The company noted an increase in
UPI’s share of total repayments from 1.2% in August
2018 to 4% in February 2019.

WhatsLoan uses DigiLocker to fetch documents of

borrowers for the loan application process.

Startups like MicroGraam, FlexLoans, NiraFinance, and Quikkloan

additionally utilize UPI and simplify P2P lending.

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 INDIA STACK REPORT
3. Wealth Management
Zerodha, Groww, Paytm Money, Upwardly, and the other 442+
WealthTech (personal finance management, digital brokerage startups,
robo-advisory) startups use Aadhaar authentication, eKYC, and UPI for
transactions and fees, and eSign for document signatures.

SUCCESSFUL CASE STUDIES:

FundsIndia uses Aadhaar-enabled eKYC for Money

Mitr robo-advisory platform.

Zerodha is an online trading platform that provides

DigiLocker (a registered requestor of documents
issued), which helps users to complete the KYC process
online and open a demat account in the fraction of the
time, enhancing efficiency.

Groww has introduced payments through UPI with

multiple options to pay like Google Pay, BHIM,
PhonePe, PayZapp, and WhatsApp. This helps to make
investing in mutual funds easier, more transparent, and
faster.

Moneybase uses Aadhaar-OTP-based eKYC that

enables resident Indian citizens with a PAN card.
Aadhaar can activate the Moneybase account in less
than five minutes and start investing online.

FundzBazar has launched a paperless eKYC facility

that allows investors to complete their KYC process
from their home or office in just two minutes.

Paytm Money, a subsidiary of Paytm, enables its

investors to make mutual fund investments using UPI-
based payment mode on the app.

Karvy Fintech has introduced a new mode of payment

in its mobile app KTrack through which its clients can
invest in mutual funds through UPI.

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 INDIA STACK REPORT
IndiaStack and Key Stakeholders
in Financial Services

INDIASTACK + GOVERNMENT

Several products have been developed by the government since the

launch of UPI. Some of these, such as the National Electronic Toll
Collection for open road tolling, use new consumer technologies to
change the way India’s population pays. Others, such as BharatQR, are
making it easier for providers and customers to use existing services.

SUCCESSFUL CASE STUDIES:

Gujarat Public Service Commission (GPSC) offers a

DigiLocker that allows applicants to upload documents for
job applications online.

NSDL e-Governance Infrastructure: offers a DigiLocker

that allows users to fetch documents for their PAN card
application.

Direct Benefit Transfer: The direct benefit transfer

program enabled subsidies to go directly into the
beneficiary bank accounts seeded via Aadhaar, increasing
efficiency and reducing pilferage & fraud. For years, the
Indian government has not been able to transfer 100%
amount of the subsidies to the beneficiaries due to a multi-
layer supply chain. Realistically, it is estimated that
leakages in welfare programs spanned from 10% to 60%,
depending on the program.

The BHIM Aadhaar app is a merchant POS solution for

Aadhaar payments, unlike the biometric-enabled payments
supported by APBS and AePS, which do not include
merchant payments. The BHIM Aadhaar app enables
merchants to accept a payment authenticated by
biometrics. The maximum transaction size is capped to
10,000 rupees.

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 INDIA STACK REPORT
SUCCESSFUL CASE STUDIES:

QR Standards: Under an initiative driven by the RBI in late

2016, NPCI and the international card schemes (Visa,
Mastercard, and American Express) worked together to
create common messaging standards for QR codes in
India. These standards support QR-based transactions
riding over the AePS rails for biometric authentication or
over the UPI rails for non-biometric authentication.
Everything else remains the same. Banks or their
designated third parties are still responsible for merchant
acquiring, and the same rules around merchant discount
rates (MDRs), interchange, and other economic and
governance considerations apply.

Bharat Bill Payment System (BBPS) focuses entirely on

bill payment. Unlike a merchant economic model based on
an MDR, BBPS is based on customer fees for bill payment
transactions. It is a regulatory program, and entities
currently in the business of bill payments which are not
authorized on BBPS cannot offer services in the market
though they can become an agent of a scheme participant.

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 INDIA STACK REPORT
Opportunities for New Players

1. UPI 2.0

NPCI recently launched the second version of UPI (UPI 2.0), aimed to
enhance its features to support more use cases across industry
segments and thereby increase adoption. For example, the steering
committee members of NPCI have also agreed to introduce Aadhaar
OTP-based UPI PIN generation for onboarding of new users to expand
UPI access. At present, PIN generation is dependent on debit cards,
which is an entry barrier for customers not having a debit card issued by
their respective banks. Moreover, future versions of UPI are expected to
roll out UPI mandates (short term credit).

It recently also announced that Indian travelers would soon be able to

pay via UPI all over the world, starting with Singapore and the United
Arab Emirates. This opens up new opportunities, not just for the
domestic players, but for foreign financial services companies too.

Here are a few illustrative use cases:

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 INDIA STACK REPORT
Opportunities for New Players

2. CONSENT-BASED ACCOUNT AGGREGATION

The DEPA consent layer is envisioned to usher a new kind of digital data
model wherein Account Aggregators (a special type of NBFC regulated
by the RBI.) will act as data intermediaries between individual
users/entities who are the primary owners of data, as well as banks, FIs,
and NBFCs that maintain & manage it. In this case, users/entities will
be classified as financial data owners, and banks, MFCs, insurance
service providers, tax/GST platforms will be financial information
providers (FIPs).

On the other hand, the financial information users (FIUs), such as

lenders, wealth managers, brokers, robo-advisors, neobanks, and
wallet companies (or other banks/NBFCs) will join the network to pull
customer data from customers’ primary banks and utilize for
personalized and targeted marketing. Some concrete use cases have
been illustrated below:

• Flow-Based Credit System

The Account Aggregator architecture will help individuals and small
businesses use data that will increase access to credit. FIUs will be
able to leverage this built-in infrastructure at a lower price.

Pull transactions/ Consume data directly from the

Use this data
cash flow data source at a much lower cost that
to underwrite
from banks what is currently out there

• Aggregated Account Statements & Analytics

1 2 3

Fintech FIU receive Users enjoy a consolidated Users may be able to

consent to read and view of their finances across give consent to
access all of the user’s all their accounts broken up companies to anonymise
banking/wealth/tax into different categories (food, and share their data in
accounts. travel, entertainment), time return for offers and
periods, and more. discounts

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 INDIA STACK REPORT
FIUs will thus be able to provide an enhanced user experience for
customers to view and manage their data while monetizing by creating
a marketplace where businesses can compete to target different users.

Currently, there are seven companies that have received an in-principle

AA license to conduct a closed group test for the model: Finvu,
Onemoney, CAMS, NESL, MyUniverse (Aditya Birla Group’s
FinTech company), Reliance Jio, and Yodlee, while more startups are
joining the queue to acquire the AA license.

“It is an exciting time to be a VC investor in India right

now. While the size of the market and scale of
potential investment opportunities have always been
attractive, other recent developments such as the
affordability/growth of mobile data, and – from a
FinTech perspective – initiatives such as the
IndiaStack are significant drivers of innovation.

— VC, Propel Venture

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 INDIA STACK REPORT
5. A Future
Perspective
Into the New-
Age Financial
Ecosystem in
India

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 INDIA STACK REPORT
The impact of IndiaStack through its different layers has been huge
since its inception. It has acted as a disruptive force and reinvented the
wheel to build new processes and provide the low-cost digital push,
India needed to move from a data-poor to a data-rich economy, as
highlighted in the sections above.

There have been significant benefits such as lower cost of transactions,

lower onboarding costs for businesses, providing a broad-based,
ubiquitous platform, personalized offerings at scale – allowing new
businesses, developers, enterprises, and the government to build their
digital footprints in the country. IndiaStack enables businesses to tap
into customer segments that were previously out of reach. In the future,
a range of different digitally verifiable identify systems will continue to
evolve, in line with the Supreme Court of India's ruling with regulatory
policy changes underway and further technology developments that
enable identification through alternative means such as QR codes,
voice-recognition, and beyond.

Based on the success of IndiaStack, it is interesting to note that over 20

countries have shown interest in studying and implementing a digital
identity system inspired by India’s Aadhaar and the software stack built
around it. In 2018, Singapore and India signed a high-level agreement
to “internationalize” the IndiaStack. The agreement has been followed
up with the creation of an India-Singapore Joint Working Group on
FinTech, with a view towards developing API-based platforms for the
ASEAN region. As is now widely known, a number of countries and
international agencies such as the World Bank and the Gates
Foundation have also approached India with requests to help build
digital identity and payments architecture.

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 INDIA STACK REPORT
Data is Power: Future of Banking,
Payments, Credit System &
Investments in India
While India has seen rampant growth across several segments,
economic upliftment, technological advancements, and system-level
inefficiencies have failed to achieve optimized growth, especially in
financial services.

Consumers, as well as financial institutions, are embroiled with

challenges related to technology adoption and rigid compliance. As
such, IndiaStack has been a boon for FinTech startups. FinTech,
leveraging IndiaStack, has enabled a profound transition into a
seamless ability to offer agility, simplicity, and scalability.

While India has seen a meteoric rise in bank account openings from
35% to 80% (percentage of the population), bringing the underbanked
into the financial services realm, UPI, and payments, in particular, has
been the most successful story of IndiaStack, so far.

In the next leg of innovation, the architects of IndiaStack are aiming to

bring consent and data privacy, as also ordained by the Supreme Court
of India, at the center of the technology stack. As such, with keeping
data privacy at the core and empowering individuals to have control
over their own data, the future of Indian banking could look something
like this:

A customer, seeking a loan, would be able to share his/her bank

statements and other required documents with the lenders digitally
through his/her choice of preferred Account Aggregator which can
seamlessly obtain data from multiple service providers and deliver via
consent-based channels to financial information users (FIUs), or in this
case, lenders, eliminating the need to visit multiple branches physically.

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 INDIA STACK REPORT
A few mock-up screens have
been shown below, as presented
by Nandan Nilekani
1. User wants to apply for a loan with Kotak
Bank (FIU).

2. User registers with a preferred Account Aggregator.

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 INDIA STACK REPORT
3. User selects and links Financial Information
Providers (FIPs) to the account.

4. Account aggregator facilitates data sharing

between FIP and FIU; the user’s loan application
is assessed and approved in real-time, enabling a
flow-based credit system

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 INDIA STACK REPORT
This architecture really brings India a step closer to
being a data democracy. With this final chapter of the
IndiaStack, the new wave will not be about banks,
FinTech, or NBFCs, but about using the data
effectively to provide an enriching banking
experience to the customer.

Cost-effective innovation and democratization of data

using IndiaStack, a “public good,” will enable FinTech
startups, such as neobanks, personal finance
management platforms, lending startups and more, to
get access to quality & authentic data without massive
spends on integrations with banks and financial
institutions, while also ensuring data security.

Moreover, India’s unique approach to identity and

providing financial inclusion for the masses need not be
confined to the country itself. Like India, countries that
believe in openness – such as the United States and
European states, and Southeast Asian states – should
participate in creating platforms, ratify standards, and
design fiduciary institutions to ensure that privacy,
competition, and interoperability are baked into
technology instead of being tacked on as an afterthought.

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 ABOUT MEDICI
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AUTHORS
Vaibhav Mishra Namrata Narayanan
Senior Research Manager Design Lead