How India’s Digital Public Infrastructure Is Shaping Future Of Fintech

India is climbing the ranks on the global digital stage, and it's not just the tech-savvy nature of the country pushing this rise; it's also a commitment to crafting a financial ecosystem that’s inclusive. At the core of this transformation lies the Digital Public Infrastructure (DPI), a robust network of systems and services that are revolutionising the fintech sector.

India’s DPI includes a whole suite of services, like the Unified Payments Interface (UPI), the Goods and Services Tax Network (GSTN), and the Aadhaar authentication system. These technologies come together to support everything from everyday banking and payments to more intricate operations like lending and insurance.

While DPI shares some common ground with components of the India Stack, it is crucial to view it through a wider lens. DPI is all about enabling technologies and frameworks that help deliver public goods digitally. Its open APIs are a playground for the private sector and startups, letting them innovate and build new services that enhance competition and efficiency in financial services.

One of the most significant achievements of DPI is its impact on financial inclusion. By leveraging DPI, financial services have reached the remotest corners of India, bringing banking services, insurance, and credit to populations that were previously underserved or completely unbanked.

Take the Jandhan-Aadhaar-Mobile (JAM) trinity, for example. This setup has made it extremely easy for individuals to open bank accounts that are linked to their mobile numbers and Aadhaar identities. This integration is also crucial for Direct Benefit Transfers (DBT), cutting out the middlemen and slashing corruption, ensuring subsidies get directly to those who need them without any detours.

UPI deserves a special mention for changing the game in how we think about payments. UPI has democratised the process, allowing people to transact simply using a virtual payment address linked to their bank accounts, no matter what bank they use.

But DPI doesn’t just stop at payments. It has overhauled the personal and small business lending landscape too. The days of stacks of paperwork and snail-paced verification processes are long gone. Now, lenders can quickly check out your creditworthiness thanks to DPI’s treasure trove of data, including digital KYC, credit histories from Credit Information Companies (CICs), and transaction histories through UPI. This easy access to financial data has not only cut down the risks linked with lending but has also encouraged more tailored and flexible loan products.

DPI isn’t just about making things easier; it’s also about making them safer. DPI ensures that everyone’s data stays secure, with encryption and continuous monitoring, thus building trust and maintaining privacy in our digital age.

The success of India’s DPI speaks for itself, as more than 1.3 billion people have enrolled in Aadhaar, paving the way for secure transactions and streamlined identity verification. As of August 2024, UPI is buzzing too, handling over 14 billion transactions each month. That's a lot of digital cash moving around! DBTs also reached ₹3.2 trillion in just the first half of 2024. Platforms like DigiLocker serve over 300 million users with access to digital documents, enhancing service delivery across public and private sectors.

Several countries are looking towards India's DPI as a blueprint for developing their digital infrastructures. For example, Bhutan has adopted India’s Unified Payments Interface (UPI) to enhance its digital payments landscape, becoming one of the first countries outside India to integrate this system. Singapore is the first country with which a cross-border person-to-person (P2P) payment process has been launched with PayNow-UPI linkage.

India’s Digital Public Infrastructure has reshaped the fintech landscape by creating an ecosystem that promotes inclusivity, innovation, and efficiency. As we look to the future, India's blueprint stands as a testament to how thoughtful technology deployment can transform financial services globally, ensuring that digital empowerment reaches every corner of society.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the publication.