Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
The Trifecta of India’s Digital Transformation is Turning Heads Globally
Digital Transformation | Aug 27, 2023
Image: Unsplash/Akhil Chandran
India's digital horizon is not just broadening—it's setting a global precedent.
- Powered by innovations like Aadhaar, UPI, and the e-Rupee, the nation is experiencing a tech-driven metamorphosis. As these technological marvels intertwine with daily life, their profound impact is not only revolutionizing the subcontinent but also offering a blueprint for the world. Three pivotal digital infrastructure programs have emerged: Aadhaar, UPI, and the e-Rupee.
See: Payments Canada Delays Launch of Real-Time Rails Again (without a timeline)
- Together, they form a formidable trifecta that's redefining identity verification, financial transactions, and governmental digital currencies. Each, in its own right, is a testament to innovation, but collectively, they paint a vision of a digitally empowered India, setting the stage for a future that many nations might soon aspire to emulate.
Aadhaar - More than Just an ID
- Aadhaar, initiated in 2009, has been nothing short of monumental. As of 2021, over 1.3 billion Aadhaar numbers have been issued, covering more than 99% of the adult population. This biometric system has streamlined countless services.
- A World Bank report suggested that Aadhaar could potentially save the government approximately $11 billion annually by reducing corruption and leakage for its welfare programs.
- In the financial sector, Aadhaar's impact is undeniable. The World Bank's Global Findex Database revealed that bank account ownership in India surged from 53% in 2014 to 80% in 2017, attributing a significant part of this jump to the Aadhaar program.
UPI - Catalyzing Cashless Commerce
- UPI's rise has been meteoric. From its inception in 2016, UPI transactions skyrocketed to over 4.2 billion transactions in August 2021 alone, amounting to nearly INR 7.7 trillion. The platform has democratized digital payments across the socio-economic spectrum.
- According to a report by Credit Suisse, UPI's annual transaction value could reach $1 trillion by 2025.
- For businesses, UPI has been a boon, reducing friction in customer transactions and paving the way for novel business models. Its interoperability has also attracted global giants like Google and Walmart to develop UPI-based solutions for the Indian market.
The e-Rupee's Potential
- The e-Rupee, while in its embryonic stage, has generated significant global interest. As nations worldwide evaluate the feasibility of CBDCs, the e-Rupee serves as a potential blueprint. While exact figures on its adoption and impact are yet to emerge, experts believe its integration with existing digital infrastructures could bolster India's position as a digital economy powerhouse.
See: Bank of Canada Publishes Staff Paper on ‘Unmet Payment Needs and CBDCs
- Why is India pushing for the e-Rupee (CBDC project) when it has UPI? It's anticipated that up to a certain value of rupee, transactions via e-Rupee will remain anonymous like hard cash.
Global Stage is Watching
- India's digital strides haven't gone unnoticed. Countries in Africa, Asia, and even South America are closely monitoring the Aadhaar and UPI models. Nigeria, for instance, initiated a biometric-based identification system in 2019, drawing inspiration from Aadhaar.
- The World Economic Forum hailed UPI as a global model for digital payments, underscoring its adaptability and efficiency.
- The numbers speak for themselves. India's digital transformation, anchored by Aadhaar, UPI, and the e-Rupee, is not just reshaping its socio-economic landscape but also offering valuable lessons to the world.
- As the statistics continue to roll in, they paint a picture of a nation that's leveraging technology not just for advancement but for holistic, inclusive progress.
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