Today, riding on the wave of digitization, we are clearly heading towards the ultramodern future of India. The nation’s burgeoning digital market has already crossed 560 million internet subscribers, and, with its population of over 1.3 billion, it is still quite far from saturation. This is possibly why our core digital sectors are pegged to grow anywhere from $355 to $435 billion by 2025, which itself is roughly about 10 percent of our entire GDP at present.

So, as we continue to embrace our digital future, it is simultaneously enabling the market to become more productive and cost-effective, especially by activating round-the-clock customer touch points for both sales and customer acquisition. The time is ripe to factor in the next logical step, i.e. digital authentication, in the ongoing development. Luckily, it is already being done on a panIndia level.

The Need of the Hour: Why Digital Authentication is imperative to support Digital India?

It will be an understatement to say that we have stepped into a new age of digital technologies, wherein novel digital solutions are becoming an integral part of our day-to-day lifestyles. This is largely because of the constantly improving smartphone penetration and reducing data costs, which have fallen by around 95 percent since 2013. It has paved the way, and still continues to do so, for virtually all socioeconomic classes and enable them to join the digital bandwagon.

“The Digital Authentication market is opening avenues for unparalleled productivity within our nation and, at the same time, also supporting our digital advent through targeted technological stimulus”

The ongoing development has added to the comfort, convenience, and mutual advantage of both customers and businesses. However, customer verification – or Know Your Customer (KYC) – comes across as a sizeable challenge in this context. This is specifically true for solutions offered within Banking, Finance, and other relevant sectors that come under the regulatory provisions mandating the same.

So, despite the digital technology making it easier for businesses to onboard a customer, there are certain bottlenecks that affect the customer acquisition process. Such bottlenecks negatively impact the overall market output due to increased Turnaround Time (TAT), customer attrition, and related costs. Business entities have to shell around 150 to 200 per KYC. This is without counting indirect costs incurred because of the customer attrition (due to delays as well as human errors and omissions). Normally, the physical KYC process also consumes a TAT of about 2 days.

Thankfully, as our growing digital market is creating unique challenges, it is also tabling solutions that ingeniously solve them. The Aadhaar infrastructure is the perfect example. Using the Aadhaar infrastructure and cutting-edge technologies such as Machine Learning (a subset of Artificial Intelligence) and encryption, avant-garde authentication solutions like e-COS (which bundles together Aadhaar eKYC, e-NACH mandate, and digital signature) are coming to fore. They enable any organization (or a third-party digital authentication service provider) having a valid license from UIDAI to conduct their KYC digitally at costs less than 15, or less than one-tenth of the operational expenditure otherwise encountered. Further, they help in bringing the TAT down to 10 to 15 minutes, which is 0.5 percent of the Turnaround Time experienced erstwhile. Hence, these solutions prove to be highly valuable for everyone from government bodies to private business entities.

The states of Telangana and Uttar Pradesh have been at the forefront of the service adoption as they have started leveraging the approach for issuance of services, certificates, and driver’s license while extending the touch-of-a-button experience to the Indian citizens. Leading Indian NBFCs, including Muthoot Fincorp and Manappuram Finance, are also using these advanced technologies to onboard their customers. This is because the approach is not only cost-effective and time-efficient but also conforms to the regulatory provisions. All of this is while also adding another layer of safety and security vis-à-vis sensitive consumer data, the leakage of which can have far-reaching consequences for the enterprise.

For the uninitiated, the Aadhaar infrastructure adds unprecedented value to the broader ecosystem. 123 crore Indians have already enrolled in the Aadhaar program, which makes it easy to authenticate nearly anyone in India. Other in-demand digital authentication services include e-Sign and Aadhaar-based subsidy management solutions. The Digital KYC route is also enabling smaller businesses to expand their business footprint without deploying branch offices or agents on the ground.

In a nutshell, the Digital Authentication market is opening avenues for unparalleled productivity within our nation and, at the same time, also supporting our digital advent through targeted technological stimulus. It is also while limiting the leakages and improving market visibility with a non-intrusive approach (as in the case of Edo, which masks the Aadhaar number of a person before sending them to third-party entities). Ultimately, bringing about a win-win scenario for everyone in the market including businesses, regulatory, and, above all, the modern customers.