Smart India Stack Can Slash Operational Costs Upto 70 pc
Last November, Jio unleashed a telecom tsunami in our country. One of the lasting visual images was the long queue of customers waiting to get a Jio sim card. I had used the round-about way of buying a Jio-Fi device to get a data sim card and test-drive the Jio network (without having to stand in those long queues).
What I also remember is the ease of the onboarding process. I had to show my Aadhaar number, and complete two rounds of biometric authentication to get onboarded. That’s all! It took a less than one minute process, no physical documents, and a cooperative me. Compared to my earlier experiences of taking a connection – a land line, a post-paid mobile, a home-loan, home cable TV, etc. – this one was easier and far more efficient.
Earlier, when one took a loan, even a small ticket loan of Rs. 20,000 or so, the very act of verifying the user’s identity (multiple government IDs), their home address, their work address, etc. is often outsourced to intermediaries that specialize in deploying field personnel who visit your house for verification/ call you to collect additional details.
Alternatively, customers have to provide multiple documents that are scanned and digitized for record-keeping, underwriting and compliance. These activities are often outsourced to service providers. In extreme cases, an institution spends more than Rs. 700-800 to complete these processes. This cost often makes it unviable for larger financial institutions to offer such small ticket loans.
Coming back to the Jio example, by opting for eKYC and biometric authentication, Jio likely cut down its operational costs significantly for the eKYC enabled cases. How much did Jio spend? If I have to guess, I would say less than Rs. 1 for the cases where someone had a Mumbai based Aadhaar. As more and more users are confidently brought under the ambit of such digitally managed processes, the operating costs can be brought down by more than 60-70%. Somewhere, in the stated vision of #DigitalIndia or #CashlessIndia, this journey has started.
What will it take to get there?
- A centralized architecture that collects and organizes not just Aadhaar but also other identities
- A secure and user-controlled environment where only through user-consent is such data available for third-party access. A pre-condition for such access is – a one-time regulator approved “purpose”, such as “loan application”. An over-arching condition has to be “user consent”.
- A series of smart algorithms that are focused on identity standardization and fraud detection
- An agency with the resources and skill-set to keep this data current, relevant, secure, and user-transparent.
This is where, irrespective of the data privacy risks and hazards being hotly debated, a robust India stack might deliver more value to us as we continue to bring down the cost of delivering some basic services to remote areas through effective use of technology. As the business portfolios become digital, and operate at a negligible fraction of the cost of traditional labour intensive channels, businesses will start seeing significant cost savings.
[The author is Founder of Think Analytics and Former PwC Analytics Expert]
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