An Alternate View of The Future - July 2016

An Alternate View Of
The Future
INDIA IN THE AGE OF TECHNOLOGICAL DISRUPTION
Nandan Nilekani, 2016
Conventional Wisdom - Prescription for India?
Exports
Manufacturing
Large Employers
Led Growth
Led Growth
Led Job Growth
Our Vision of The Future
Domestic Consumption
Services
Small Businesses
Led Growth
Led Growth
Led Jobs Growth
not Exports led
not Manufacturing led
not Large employers led
The Digitization Of The Economy
Mobile Phones are the first 'Universal' product
5.2 Billion people have a mobile phone
Source: ben-evans.com
The rise of smartphones
Current sales
25M
about
smartphones
per quarter
Source: Ericsson Mobility Report
Internet penetration is increasing!
Internet users (per 100 people)
331M
Source: World Bank World Development Indicators, data.worldbank.org, www.trai.gov.in
With
internet
users, India is now the
second largest internet
market, ahead of the
USA!
Uses Google Maps

to head to a crime
scene. Bought a TV
on OLX.
I had no idea
I could sell my
art directly to
my customers
3G nahi to
hotspot sahi
I might not be
educated, but I know
how to respond to
queries I receive on
our website
The internet has helped
us cut the middleman
and changed our lives
forever
I dont need a
passbook any more
because of the SBI
Nandan
Nilekani, 2016
netbanking
app
1 Billion in 5 Years
A Ubiquitous Digital
Identity Infrastructure
for a digital desh.
50 M
100 M
The Aadhaar system can
300 M
100 M
600 M
950 M
1036 M
Source: Data from http://www.uidai.gov.in
authenticate
transactions per day, in
real time!
The future is here!
Smartphones with integrated

Aadhaar compliant Iris
recognition available for
commercial use!
Source:http://news.samsung.com
10
Pradhan Mantri Jan Dhan Yojana

BANKING FOR ALL
Source: As on 28 July 2016, http://pmjdy.gov.in
11
Digital Payments are coming in a big way!
Micro ATMs,
AEPS, APB
mPOS
Prepaid
Instruments
Wallets
IMPS
Payment
Banks
Unified Payment
Interface
BBPS
12
New national platforms to unlock more data streams
Goods & Services Tax

Network (GSTN)
Bharat Bill Pay System (BBPS)
Electronic Toll Collection
System (ETC)
GSTN will process
5 Billion invoices every month

across 70+ Lakhs businesses!
1 Billion utility bills amounting to
$60+ Billion per month
BBPS source: http://indiatoday.intoday.in/story/bill-payment-industry-all-set-to-rock-in-services-sector/1/180344.html
13
New Age Platforms are leading to digitization in

multiple sectors!
Household
Services
eCommerce
Hotels
Health &
Care
Classifieds
Food
Delivery
Transport
14
New Age Platforms are digitizing their ecosystems

Service Providers
Product Providers
Vendors
Partners
Platforms
Increase consumption of digital infrastructure

- payments, logistics, etc.
Digitize their supply chains
Digitize their customers
Leave digital footprints for service providers,

and customers alike.
The best aggregators use these digital

footprints to enhance their services!
Customers
15
India will go from data poor to data rich nation in 5 Years ...
Social
Commerce
Payment
Machine Learning
& Algorithms
Paperless
Process
Digital
Identity
allowing data driven decision making for scale and

inclusion!
16
Domestic Consumption Led, Not Exports!
17
"Globalization is being
attacked as never
before"
Protectionism
is growing
around the
world
Trade deals
are
slowing down
- Jeffrey Immelt, CEO General

Electric
Source: Fortune.com
18
Source: Daily Mirror, Bloomberg, Twitter
19
Global Trade Is Slowing Down
Source: economist.com
20
Outlook for Trade is Bleak
Freight Prices Are Down
Source: economist.com
21
Exports are trending down
Source: www.business-standard.com
22
Domestic consumption is continuing to grow
Domestic consumption
continues to grow
Even as exports slow!
Source: data.gov.in (MOSPI)
23
Services Led, Not Manufacturing!
24
Services will Grow!
A young
country in an
aging world
- jobs in
outsourcing
2X GDP growth in
Housing,
Health,
Education
Services are
labour
intensive.
Growth will
drive jobs
Services like
tourism job creators /
forex earners
Growth of the formal economy will

Unlock Savings, Credit and Investments, leading to growth in associated servicesNandan Nilekani, 2016
25
Rise in Small Businesses
Small Services
businesses are
growing faster
than
Manufacturing
businesses.
Source: livemint.com
26
Services Like Tourism Have Significant Potential

With 8M
International
Arrivals, India earned
$ 20B in 2014.
However, there is
significant potential
as can be seen from
other similar
destinations!
Source: World Development Indicators.
27
The Changing Face of Manufacturing

Manufacturing outsourcing trend is
starting to reverse
Foxconn is considering manufacturing in
the US
Technology is a huge driver of

change in manufacturing
Robotics, IoT, 3D printing are
changing manufacturing
Automation will hit manufacturing
before we catch up
Manufacturing is becoming a high

end, capital intensive activity
Will not lead to jobs growth
Why India Cannot Copy China
When China, Korea, Japan

started
They had universal
literacy
China has over 10x India's

Capacity for Steel production!
They had no established

competition
2014
China - 822 Million Tonnes
Source:www.worldsteel.org
India - 86 Million Tonnes
29
Growth in Services
Service Taxes are

growing faster than
Excise collections!
Source: indiabudget.gov.in
30
Small Businesses Led, Not Large Employers!
31
A New Structure Is Emerging ...

Service Providers
Product Providers
Large employers will transition to

Networks of small businesses,
Vendors
Partners
Platforms
micro entrepreneurs, built

around New Age Platforms
(aggregators / marketplaces)
leading to broad based jobs
growth
Customers
32
New Age Platforms

Provide Common Services
Service Providers
Product Providers
Customer Acquisition,
Discovery, Payments, Logistics
Use data to grow and

optimize
Vendors
Partners
Platforms
Few in numbers
Generate economies of scale
Few Employees
Grow the market
33
Service Providers
Service Providers
Product Providers
Provide a specific service

Taxi Drivers, Pathology Labs,
Retail stores, Hospitality
Use platforms for the rest

Vendors
Partners
Platforms
Accounts, Inventory
management, Supply chain,
Logistics, etc.
Many in Number
Have few Employees
34
With 6500 employees, Uber supports 1.5M cars &

drivers!
1.5 Million
Cars & Drivers
Service Providers
Large number of service providers
Each service provider creates multiple jobs
New Age Platforms

Only 6500
Create a few, high value, jobs

that can be leveraged to enable service
providers.
Employees
35
es
at
l
On
im
et
k
r
t
Es
10,000 Hospitals
200,000 Doctors
Labs, etc
5000
Employees
1.5M Cars
6,500
Employees
0.25M Cars
100,000+
Merchants
8,000
Employees
4,500
Employees
100,000+
Merchants
Logistics,
Support
23,000
Employees
a
ob
Gl
36
High Quality Jobs - At the Edge
These platforms bring in new efficiencies. As a result, the same jobs pay more
than before.
With better demand matching, cab drivers drive more with Ola / Uber than before
- hence earn more, and have more control on their life.
Flipkart merchants sell more, and have lower costs of sale - hence make more
money than before!
37
Skilling the workforce
Requires a growth in
training,
certification and
related services
Networks and
aggregators require a
skilled workforce
for uniform service
delivery
Portability of skill
related certification and
experience is
essential
38
The New Social Safety Net: Direct to Employees

Savings &
Investment
Schemes
Pensions
Health &
Insurance
Education
Skills Training &

Certification
Replaces the safety

net previously
provided by large
employers and is
portable Empowering the
Workforce.
Why New Age Platforms are important
Solve local
problems
Remove
inefficiencies
Create
Significant
Value
Enable service
providers
across the
country
to grow, and
to create jobs
40
Why India Is Different From The Rest of

The World!
41
Goods
Agriculture
Services
Labour
USA
Single Market,
No manufacturing
tax, states have sales
tax
Single market
Fragmented, due to
several regulators,
approval for
insurance products
by state, ...
Free movement
European Union
Single Market (GST)
Fragmented, due to
local regulators in
each country for
banking, telecom,
insurance, ...
Free movement
China
Single Market
Single Market
Single Market
No free movement
India
Fragmented (pre
GST) due to excise,
state / city entry
taxes, etc.
Highly fragmented,
local. Due to lack of
infrastructure - cold
chains, storage,
processing, as well as
regulation - APMC,
Single market for

banking, telecom,
insurance, capital
markets, etc.
Free movement
42
India Stack
Open APIs as Public Infrastructure
Will result in massive innovation!
43
Name
DoB/Age
Gender
Address
Mobile/Email
1234 5678 9012

Unique
Lifetime
44
Aadhaar
Authentication
NO MORE PHYSICAL
PRESENCE
Are you who you claim to be?
Only a yes/no answer
Anytime anywhere
45
Aadhaar
e-KYC
NO MORE PHOTOCOPIES!
Access ONLY via authentication
No more fake identities
No more paper
46
eSign - eliminating wet signature
Existing DSC non-scalable due to physical verification, paper process, and use of dongles
eSign allows all Aadhaar holders to digitally sign anytime anywhere
Open API based, allowing applications to easily integrate
Source: http://www.cca.gov.in/cca/?q=eSign.html
47
Digital Locker - eliminating fake papers
Issues Documents
Digitally
Issuer
Accesses Documents
Online
DigiLocker
Approves
Access
Requestor
Open API based

Ecosystem driven
Digitally protected
Users
Source: https://digilocker.gov.in
48
UPI Features
Push & Pull Payments
Payments can be initiated by payer or payee.
Ubiquitous - Bank accounts

Every one with a bank account can send
money to any bank account in India!
Easy Immediate Payments

Real-time posting
Funds are not locked!
Virtual Payment Address

No need to disclose account information.
Allows account portability, enhances privacy.
Validation & Assurance

Real-time validation of the
account and balance
Timely Notification
Minimal Issuer/Acquirer Cost
Immediate notifications of
the payment made
Smartphone replaces card and

PoS machine!!
Electronic consent architecture
Structured consent artifact and log system

User controlled data sharing, data flow, and
data retention
Consent Flow
(facilitated by
consent manager)
Separation of data and consent flows

Consistent with current legal frameworks
CONSENT
MANAGER
Data
Providers
Data
Consumers
(Banks,Telco,
Hospitals,etc)
(Banks,Credits
Providers etc)
Data Flow
50
Benefits of proposed consent architecture

Allows more data sources to be used
for lending decisions
Stronger underwriting, less

likelihood for loan defaults
Data flows tracked digitally, providing

traceability
Quickly identify fraud, take early

action. Reduced data leakage,
improved security and privacy
Consent tokens are shared, not credentials
Reduced potential for misuse, leading

to improved security and privacy
Real Identity is verified in the process
Reduces potential fraud, and

improves the effectiveness of
credit bureaus.
Purely digital process
Instant monitoring, and reporting,

improved transparency. Regulator can
monitor defaults, risks, fraud
51
INVESTMENTS
(SEBI)
SKILLS
OTHERS
CONSENT LAYER
Provides a modern privacy data

sharing framework
Open Personal Data Store
STACK
CREDIT
(RBI)
CASHLESS LAYER
Game changing electronic payment

systems and transition to cashless
economy
IMPS, AEPS, APB, and UPI
INDIA
COMMERCE
(GSTn)
PAPERLESS LAYER
Rapidly growing base of paperless

systems with billions of artifacts
Aadhaar e-KYC,
E-sign, Digital Locker
PRESENCE-LESS LAYER
Unique digital biometric identity

with open access of nearly a Billion
users
Aadhaar Authentication
JAM
Jan Dhan, Aadhaar, Mobile
52
The Evolution of the India Stack - Built on JAM

Digilocker
AEPS
Aadhaar
eKyc
Consent
Architecture
Aadhaar
Authentication
UPI
APB
eSign
2009
2010
2011
2014
2015
2016
100 M
190 M
250+ M
Aadhaar
600 M
950 M
1.2+ B
Mobile
944 M
1005 M
1+ B
2012
2013
JDY
Source: Ericsson Mobility Report, PMJDY, Aadhaar Web Sites
53
Why Is The India Stack Disruptive?

Allows Innovation
Broad based, ubiquitous, inclusive

platform
No physical presence required

(reduces more costs)
Cuts Onboarding Costs
Aligns market goals with

social goals
Cuts Transaction Costs
Increases trust - allows a new

business architecture to emerge
Banking at scale
Mobile Becomes The Bank!
Presence-less
Paperless
Data driven
Algorithms driven
Network model
Transaction Infra
55
Investment at scale
Low Cost, High Volume, Low Ticket Size
To increase market size 10x or 50x and bring in mass inclusion,

cost of doing business must be brought down!
Source: NCAER-CMCR survey, www.openthemagazine.com, discussions with ScripBox
56
Credit at scale
Millions of Borrowers
Thousands of Lenders
Credit
Marketplaces
Digital Footprints
Data Driven
Algorithm Driven
Consented Data Sharing

Enabled by Mobile
Electronic Contracts
Digital Payments
57
Skilling at scale
SKILLS
COMMERCE
EXPERIENCE
TOURISM
TRANSPORT
Networks and aggregators driving

mass skilling in several domains
CONSENT ARCHITECTURE
DIGITAL LOCKER
COMMON IDENTITY
India Stack allows skill and

experience to be portable
58
New National Platforms

built on India Stack and JAM
Jan Dhan
Banking For All
Mobile
Communications & Ubiquitous
Compute Device for All
Aadhaar
Digital Identity For All
59
India Stack Enabled Businesses

Government
Regulated Market
Enrolment - Digital id for all
Aadhaar - officially valid document
Subsidy reform - deduplication
KYC for Regulated Markets
DBT - Aadhaar as a financial address

Biometric Attendance
MicroATM Distribution
Mobile Payments
Paperless, Presenceless, Cashless lowered costs, market expansion &
financial inclusion.
Innovative Businesses
Digital footprints - build value for the
consumer & businesses
A Trust networks
A Skills repository
Build credit history
Manage customer workflows with
user consent
Other Innovative Businesses
Reimagine Market Services
60
Acceleration of formalization
Access to Formal Credit will lead to Prosperity
Access to Education, Healthcare on mobile will lead to
Friction Reduction
Reduces cost of doing
business, and expands
markets - everyone wins
Inside the System

Make it easier to be inside
the formal systems vs
outside!
Compliance
People will pay taxes if it
is easier to be compliant!
More Education
More Healthcare
More Services
61
India Stack Is The Tipping Point
It drives up productivity by an order of magnitude

It drives a formalization of various businesses
Unlocks savings, credit, investment and skilling at scale
As a result, kick starts a new cycle of growth!

62
Our View Of The Future!
HEALTH
COMMERCE
SKILLS
Domestic Consumption Led

Not Exports
TOURISM
TRANSPORT
Services Led
Not Manufacturing
Small Businesses Led

Not Large Employers
National platforms for Savings, Credit,
Skill, Taxes, etc. built on India Stack

JAM
Universal banking, identity, and mobile
63
Thank you!
64

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An Alternate View Of

Nandan Nilekani, 2016

Conventional Wisdom - Prescription for India?

Led Job Growth

Nandan Nilekani, 2016

Our Vision of The Future

Led Jobs Growth

not Exports led

not Manufacturing led

not Large employers led

Nandan Nilekani, 2016

The Digitization Of The Economy

Nandan Nilekani, 2016

Mobile Phones are the first 'Universal' product

5.2 Billion people have a mobile phone

Nandan Nilekani, 2016

The rise of smartphones

Source: Ericsson Mobility Report

Nandan Nilekani, 2016

Internet penetration is increasing!

Internet users (per 100 people)

Source: World Bank World Development Indicators, data.worldbank.org, www.trai.gov.in

Nandan Nilekani, 2016

Uses Google Maps

The Aadhaar system can

Nandan Nilekani, 2016

The future is here!

Smartphones with integrated

Nandan Nilekani, 2016

Pradhan Mantri Jan Dhan Yojana

Source: As on 28 July 2016, http://pmjdy.gov.in

Nandan Nilekani, 2016

Digital Payments are coming in a big way!

Nandan Nilekani, 2016

New national platforms to unlock more data streams

Goods & Services Tax

GSTN will process

5 Billion invoices every month

BBPS source: http://indiatoday.intoday.in/story/bill-payment-industry-all-set-to-rock-in-services-sector/1/180344.html

Nandan Nilekani, 2016

New Age Platforms are leading to digitization in

New Age Platforms are digitizing their ecosystems

Increase consumption of digital infrastructure

Digitize their supply chains

Digitize their customers

Leave digital footprints for service providers,

The best aggregators use these digital

allowing data driven decision making for scale and

Domestic Consumption Led, Not Exports!

Nandan Nilekani, 2016

- Jeffrey Immelt, CEO General

Nandan Nilekani, 2016

Source: Daily Mirror, Bloomberg, Twitter

Global Trade Is Slowing Down

Nandan Nilekani, 2016

Outlook for Trade is Bleak

Freight Prices Are Down

Nandan Nilekani, 2016

Exports are trending down

Nandan Nilekani, 2016

Domestic consumption is continuing to grow

Source: data.gov.in (MOSPI)

Nandan Nilekani, 2016