The Minister of Commerce and Industry, Piyush Goyal, recently highlighted that India is poised to become one of the largest digital markets in the world on the back of an unprecedented 87 per cent fintech adoption rate as against the global average of 64 per cent. He added that the JAM (Jan Dhan-Aadhaar-Mobile) trinity, besides Direct Benefit Transfers (DBT), have brought timely delivery of financial benefits and services, especially in the post-pandemic era.

While there are many reasons for this optimism, two stand out. First, the ever-improving India Stack — the world’s only public digital platform, that enables digital services and commerce puts us in front of the race. Second, the absence of legacy systems — options that require behaviour change amongst both vendors and customers who resist change — has allowed India to leapfrog to mobile payment systems in banking.

The elements of the country’s public digital platform that form the India Stack are unique. Consisting of Aadhaar biometrics, United Payment Interface (UPI), e-Sign and e-KYC, and Aadhaar Enabled Payment Systems (AEPS) it is the only public platform that we know of in the world that combines all these elements. The US has Mastercard, VISA, Amazon Pay and PayPal — all private companies. China has WeChat and Alipay, again, from the private sector. Interestingly, new payment applications such as WhatsApp Pay are easier to implement in India and Brazil.

Expanding footprint

Small steps to expand India Stack’s footprint are already in evidence. Open source version of Aadhaar, MOSIP, in alliance with ID4D of the World Bank managed out of IIIT-Bangalore is one such project. NPCI Global is taking UPI and Rupay to other parts of the world.

Clearly, the stage is now set to take India Stack to the next level: export it farther to other parts of the world and carve a larger impact domestically. How can this be done?

One, through reverse innovation, take the India Stack experience not only to developing countries but even to the highly developed markets of the US and Europe. US banks have much to learn from SBI’s digital platform YONO (You Need Only One). In fact, many MNCs have set up Global Capability Centres (GCCs) to manage and develop applications for their home markets. The US can learn from eGov Foundation about the digital Covid vaccination certificate that India has developed through open source.

Two, in theory, mid-size and start-up companies in India can scale up through India’s public digital platforms and compete with the ‘Reliance’s’ of the world. In a short lifespan, BYJU’S with a market cap of over $18 billion today has become the largest and most valuable Edu-tech company in the world overtaking long established firms in the field like Coursera.

Three, when we look at Aadhaar and the India Stack, they provide a backbone for digital innovation and doing things more effectively. For example, it can be used in combining healthcare needs with insurance dissemination in a seamless way — ambulance services with insights from e-KYC can take patients to the right hospital emergency room and admissions can be manage in minutes.

Four, on top of this digital infrastructure, a lot of value has been created. In 2021 itself, at last count, India had created 33 unicorn companies.

This is similar to when the Internet emerged which was developed by US taxpayers’ money and over that infrastructure was created the Googles, Facebooks and Amazons of the world. We are seeing something similar in India today.

The writer is Novartis Professor of Marketing Strategy, ISB