IndiaStack
Here's an ambitious project to create a unified software platform to usher India's banking and payment system into the digital age. Read on.
Suppose you want to take a personal loan.
You go to your bank and the customer representative explains to you the interest rates and installments for the loan.
You agree to the terms and conditions and he asks you to write a loan application form, mentioning your personal details, employment details, liabilities, guarantor details … the list goes on and on.
He then asks you to submit passport size photos, identity proof, salary slips, and what-not for the verification.
You leave the bank happily thinking that your loan will be approved. And then, you wait ...
After 7-10 days, when you have forgotten all about that application, you get an email from the bank stating that your loan is approved.
Now the wait starts for the bank to credit the loan amount to your bank account.
For us millennials, this is like, so slow! We are a generation that loves instant gratification.
Click, click, click. Clap, clap, clap.
Let's break down this process, and look at the problems:
1. Lots of wasted energy in filling out lengthy (and boring) loan application forms (manual work)
2. Submit a lot of verification documents, get those weird pictures clicked (paper-intensive)
3. Queuing up in bank branches for futile visits, and when our turn finally comes, only to be told that it’s the “lunch-hour” (time-consuming)
Thankfully, where there is a problem, there is an entrepreneur looking for a solution.
But hey, wait-a-second! It’s some crazy masterminds that were trying to solve this one.
It all started in 2014 when Sharad Sharma, the co-founder of iSpirt (Indian Software Product Industry Roundtable), a software product industry think tank, along with some volunteers, gave a presentation before the Minister of Information Technology, Mr. Ravi Shankar Prasad.
And the rest, as they say, is history. The folks at iSpirit wanted to create a stack, a foundation, on which Indian banking and payment system could stand strong.
And so, they came up with ...
IndiaStack.
India Stack is an ambitious project to create a unified software platform to usher India's banking and payment system into the digital age.
It is a set of open programmable APIs (Application Programme Interface) that have the potential to provide an efficient, direct, and digital service delivery through presence-less, paperless, cashless and digital consent service.
“Buddy, we lost you at API. What’s that?”
Okay. Calm down. Think of an API in terms of lego-blocks, or building blocks. You can play around with the legos, and integrate them with other structures.
Similarly, open API is a base to which you can plug-in your own software.
For example, when you open your PayTM Bank account and they “verify” your PAN number instantly, that’s because PayTM’s software application is plugged-in with the Government of India’s website. It fetches your PAN data and instantly matches it with the details you provided. Smooth!
Coming back to the point.
These four layers (paper-less, presence-less, cash-less and consent) make the system faster, more efficient, and reduces costs too. It eliminates the use of paper and the need for physical existence during a transaction. It eradicates the use of cash through digital payments, saving time, and reducing cash-thefts. It also reduces "leakages" through the verification of identity and elimination of duplicates.
The four layers:
Economic unity has always been a question in our country. The formal financial system could not cater to the financial needs of the poorest strata as the cost to serve was very high.
The sad truth is, customers with the lowest default rates (who always repay their loans) have to pay the highest interest rates. What IndiaStack (and technology in general) has done is democratise this process.
With one platform integrating everything one needs for a hassle-free experience, it has made financial inclusion for all at least cost a reality.
This four-layered approach is uniquely Indian, and the world is taking notes. India is already ahead in the race to innovate the banking system. Hopefully, we will be able to maintain this lead.
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