Published on June 27, 2016
1. Nandan Nilekani, 2016 An Alternate View Of The Future INDIA IN THE AGE OF TECHNOLOGICAL DISRUPTION
2. Nandan Nilekani, 2016 Conventional Wisdom - Prescription for India? Exports Led Growth Manufacturing Led Growth Large Employers Led Job Growth Nandan Nilekani, 2016 2
3. Nandan Nilekani, 2016 Domestic Consumption Led Growth Services Led Growth Small Businesses Led Jobs Growth Our Vision of The Future not Exports led not Manufacturing led not Large employers led 3
4. Nandan Nilekani, 2016 The Digitization Of The Economy 4
5. 5 Mobile Phones are the first 'Universal' product 5.2 Billion people have a mobile phone Source: ben-evans.com
6. The rise of smartphones Current sales about 25M smartphones per quarter Source: Ericsson Mobility Report 6
7. Internet penetration is increasing! 7 With 331Minternet users, India is now the second largest internet market, ahead of the USA! Source: World Bank World Development Indicators, data.worldbank.org Source: www.trai.gov.in Internetusers(per100people)
8. Uses Google Maps to head to a crime scene. Bought a TV on OLX. “I might not be educated, but I know how to respond to queries I receive on our website” “I had no idea I could sell my art directly to my customers” “3G nahi to hotspot sahi” “The internet has helped us cut the middleman and changed our lives forever” “I don’t need a passbook any more because of the SBI netbanking app” 8
9. 1 Billion in 5½ Years Source: Data from http://www.uidai.gov.in 9 950 M 600 M 300 M 100 M 50 M 1019 M A Ubiquitous Digital Identity Infrastructure for a digital desh. The Aadhaar system can authenticate 100 M transactions per day, in real time!
10. The future is here! Smartphones with integrated Aadhaar compliant Iris recognition available for commercial use! Source:http://news.samsung.com 10
11. Pradhan Mantri Jan Dhan Yojana BANKING FOR ALL 11Source: As on 30 May 2016, http://pmjdy.gov.in
12. 2 31 54 6 Micro ATMs, AEPS, APB mPOS Prepaid Instruments Wallets Payment Banks IMPS Unified Payment Interface Digital Payments are coming in a big way! 7 BBPS 12
13. New national platforms to unlock more data streams Goods & Services Tax Network (GSTN) Bharat Bill Pay System (BBPS) Electronic Toll Collection System (ETC) 13 GSTN will process 5 Billioninvoices every month across 70+ Lakhsbusinesses! 1 Billionutility bills amounting to $60+ Billionper month BBPS source: http://indiatoday.intoday.in/story/bill-payment-industry-all-set-to-rock-in-services-sector/1/180344.html
14. ● Digitize their supply chains ● Increase consumption of digital infrastructure - payments, logistics, etc. ● Leave digital footprints for service providers, and customers alike. ● Digitize their customers ● The best aggregators use these digital footprints to enhance their services! New Age Platforms are digitizing their ecosystems Customers Platforms Service Providers 14 Product Providers Vendors Partners
15. Transport Hotels eCommerce Health & Care Household Services Food Delivery Classifieds New Age Platforms are leading to digitization in multiple sectors! 15
16. 16 India will go from data poor to data rich nation in 5 Years ... Digital Identity Paperless Process Commerce Payment Social Machine Learning & Algorithms … allowing data driven decision making for scale and inclusion!
17. Nandan Nilekani, 2016 Domestic Consumption Led, Not Exports! 17
18. Protectionism is growing around the world Trade deals are slowing down "Globalization is being attacked as never before" - Jeffrey Immelt, CEO General Electric Nandan Nilekani, 2016 18Source: Fortune.com
19. Nandan Nilekani, 2016 Global Trade Is Slowing Down 19Source: economist.com
20. Nandan Nilekani, 2016 Outlook for Trade is Bleak Freight Prices Are Down Source: economist.com 20
21. Nandan Nilekani, 2016 21Source: www.business-standard.com
22. Nandan Nilekani, 2016 Domestic consumption is continuing to grow Domestic consumption continues to grow Even as exports slow! 22Source: data.gov.in (MOSPI)
23. Nandan Nilekani, 2016 Services Led, Not Manufacturing! 23
24. 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 Services will Grow! Growthof the formal economy will Unlock Savings, Credit and Investments, leading to growth in associated services 24
25. Nandan Nilekani, 2016 Rise in Small Businesses Small Services businesses are growing faster than Manufacturing businesses. 25Source: livemint.com
26. Nandan Nilekani, 2016 Services Like Tourism Have Significant Potential 26 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. Manufacturing outsourcing trend is starting to reverse Foxconn is considering manufacturing in the US Technology is a huge driver of change in manufacturing Manufacturing is becoming a high end, capital intensive activity Will not lead to jobs growth Robotics, IoT, 3D printing are changing manufacturing Automation will hit manufacturing before we catch up The Changing Face of Manufacturing 27
28. Nandan Nilekani, 2016 Why India Cannot Copy China They had universal literacy They had no established competition China has over 10x India's Capacity for Steel production! When China, Korea, Japan started 2014 China - 822 Million Tonnes India - 86 Million Tonnes 28Source:www.worldsteel.org
29. Nandan Nilekani, 2016 Growth in Services Service Taxes are growing faster than Excise collections! 29Source: indiabudget.gov.in
30. Nandan Nilekani, 2016 Small Businesses Led, Not Large Employers! 30
31. A New Structure Is Emerging ... Customers Platforms Service Providers 31 Product Providers Vendors Partners Large employers will transition to Networks of small businesses, micro entrepreneurs, built around New Age Platforms (aggregators / marketplaces) leading to broad based jobs growth
32. Use data to grow and optimize Provide Common Services Customer Acquisition, Discovery, Payments, Logistics New Age Platforms Platforms Service Providers Product Providers Vendors Partners Few in numbers Generate economies of scale Few Employees Grow the market 32
33. Service Providers Provide a specific service Taxi Drivers, Pathology Labs, Retail stores, Hospitality Use platforms for the rest Accounts, Inventory management, Supply chain, Logistics, etc. Many in Number Have few Employees Platforms Service Providers Product Providers Vendors Partners 33
34. Supporting Products Provide a service to the aggregator ecosystem Accounting / Tax software, Data based lending, Payments Enablers - create efficiencies in the system Work with multiple networks / aggregators. Platforms Service Providers Product Providers Vendors Partners 34
35. 35 Only 6500 Employees 1.5 Million Cars & Drivers New Age Platforms Create a few, high value, jobs that can be leveraged to enable service providers. Service Providers Large number of service providers Each service provider creates multiple jobs With 6500 employees, Uber supports 1.5M cars & drivers!
36. 10,000 Hospitals 200,000 Doctors Labs, etc 1.5M Cars 0.25M Cars 100,000+ Merchants 5000 Employees 6,500 Employees 8,000 Employees 4,500 Employees 100,000+ Merchants Logistics, Support 23,000 Employees M arket Estim ates Only 36 Global
37. High Quality Jobs - At the Edge 37 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!
38. Portability of skill related certification and experience is essential Networks and aggregators require a skilled workforce for uniform service delivery Requires a growth in training, certification and related services Skilling the workforce 38
39. The New Social Safety Net: Direct to Employees Health & Insurance J Skills Training & Certification Education Pensions Savings & Investment Schemes Replaces the safety net previously provided by large employers and is portable - Empowering the Workforce. 39
40. 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
41. Nandan Nilekani, 2016 Why India Is Different From The Rest of The World! 41
42. 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
43. Nandan Nilekani, 2016 43 India Stack Open APIs as Public Infrastructure Will result in massive innovation!
44. Name DoB/Age Gender Address Mobile/Email 1234 5678 9012 Unique Lifetime 44
45. Aadhaar Authentication NO MORE PHYSICAL PRESENCE Are you who you claim to be? Only a yes/no answer Anytime anywhere 45
46. Aadhaar e-KYC NO MORE PHOTOCOPIES! Access ONLY via authentication No more fake identities No more paper 46
47. 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 eSign - eliminating wet signature 47Source: http://www.cca.gov.in/cca/?q=eSign.html
48. Digital Locker - eliminating fake papers Open API based Ecosystem driven Digitally protected Source: https://digilocker.gov.in 48 DigiLockerIssuer Requestor Users Issues Documents Digitally Accesses Documents Online Approves Access
49. Validation & Assurance Virtual Payment Address Minimal Issuer/Acquirer Cost Ubiquitous - Bank accounts Easy Immediate Payments Timely Notification UPI Features Push & Pull Payments @Every one with a bank account can send money to any bank account in India! Real-time posting Funds are not locked! Immediate notifications of the payment made Payments can be initiated by payer or payee. Real-time validation of the account and balance No need to disclose account information. Allows account portability, enhances privacy. Smartphone replaces card and PoS machine!! 49
50. 50 ● Structured consent artifact and log system ● User controlled data sharing, data flow, and data retention ● Separation of data and consent flows ● Consistent with current legal frameworks Electronic consent architecture Data Consumers (Banks,Credits Providers etc) CONSENT MANAGER Data Providers (Banks,Telco, Hospitals,etc) Consent Flow (facilitated by consent manager) Data Flow
51. Data flows tracked digitally, providing traceability Quickly identify fraud, take early action. Reduced data leakage, improved security and privacy Allows more data sources to be used for lending decisions Stronger underwriting, less likelihood for loan defaults 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 Benefits of proposed consent architecture 51
52. Nandan Nilekani, 2016 PRESENCE-LESS LAYER Aadhaar Authentication Unique digital biometric identity with open access of nearly a Billion users CONSENT LAYER Open Personal Data Store Provides a modern privacy data sharing framework PAPERLESS LAYER Aadhaar e-KYC, E-sign, Digital Locker Rapidly growing base of paperless systems with billions of artifacts CASHLESS LAYER IMPS, AEPS, APB, and UPI Game changing electronic payment systems and transition to cashless economy COMMERCE (GSTn) CREDIT (RBI) INVESTMENTS (SEBI) OTHERS INDIASTACK SKILLS JAM Jan Dhan, Aadhaar, Mobile 52
53. The Evolution of the India Stack - Built on JAM 53 2010 2011 2012 2013 2014 2015 2016 950 M 1005 M 190 M Aadhaar Mobile JDY 2009 944 M 600 M 100 M Source: Ericsson Mobility Report, PMJDY, Aadhaar Web Sites AEPS APB Aadhaar Authentication Aadhaar eKyc eSign UPI Consent Architecture Digilocker 1.2+ B 1+ B 250+ M
54. Aligns market goals with social goals No physical presence required (reduces more costs) Increases trust - allows a new business architecture to emerge Broad based, ubiquitous, inclusive platform Cuts Onboarding Costs Cuts Transaction Costs Allows Innovation Why Is The India Stack Disruptive? 54
55. Nandan Nilekani, 2016 Banking at scale 55 Presence-less Paperless Data driven Algorithms driven Network model Transaction Infra Mobile Becomes The Bank!
56. Nandan Nilekani, 2016 Investment at scale 56 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 Low Cost, High Volume, Low Ticket Size
57. Nandan Nilekani, 2016 57 Millions of Borrowers Data Driven Algorithm Driven Consented Data Sharing Enabled by Mobile Electronic Contracts Digital Payments Credit Marketplaces Thousands of Lenders Digital Footprints Credit at scale
58. Nandan Nilekani, 2016 Skilling at scale 58 COMMERCE TRANSPORT TOURISM CONSENT ARCHITECTURE DIGITAL LOCKER COMMON IDENTITY SKILLS EXPERIENCE Networks and aggregators driving mass skilling in several domains India Stack allows skill and experience to be portable
59. Aadhaar Digital Identity For All Jan Dhan Banking For All Mobile Communications & Ubiquitous Compute Device for All New National Platforms built on India Stack and JAM 59
60. 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 Innovative Businesses Aadhaar - officially valid document KYC for Regulated Markets MicroATM Distribution Mobile Payments Paperless, Presenceless, Cashless - lowered costs, market expansion & financial inclusion. Regulated Market Enrolment - Digital id for all Subsidy reform - deduplication DBT - Aadhaar as a financial address Biometric Attendance Government India Stack Enabled Businesses 60
61. Friction Reduction Reduces cost of doing business, and expands markets - everyone wins More Education More Healthcare More Services Access to Education, Healthcare on mobilewill lead to Inside the System Make it easier to be inside the formal systems vs outside! Access to Formal Credit will lead to Prosperity Compliance People will pay taxes if it is easier to be compliant! Acceleration of formalization 61
62. Nandan Nilekani, 2016 62 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! India Stack Is The Tipping Point
63. Our View Of The Future! COMMERCE HEALTH Small Businesses Led Not Large Employers JAM Universal banking, identity, and mobile SKILLS TRANSPORT National platforms for Savings, Credit, Skill, Taxes, etc. built on India Stack Services Led Not Manufacturing TOURISM Domestic Consumption Led Not Exports 63
64. Nandan Nilekani, 2016 Thank you! 64
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