Open Payments to Open Data: Is There a Playbook?

Background

Digital public goods (DPG) have been a defining characteristic of the last Indian decade. Significant strides have been made in providing population-scale digital solutions for identity, payments, documents, e-commerce and data. These DPGs have shaped the service delivery landscape in India, both on the public and the private side of things. The techno-legal approach to craft these DPGs holds immense transformational potential across sectors, especially financial services.

It is essential to understand that a techno-legal approach to institutionalising citizen-scale initiatives in India is an uphill task, given its vast diversity, limited digital & financial literacy, and resource crunch. Despite systemic issues, India has successfully implemented such technological systems in identity and payments on a population scale. These tales of rigour & commitment present an imperative lesson for similar endeavours in e-commerce and data.

Ms Praveena Rai, COO of NPCI, has unbundled the success of open networks to its founding principles. This talk was a part of the ‘SamvAAd 2023 – Let’s Open Finance’ event hosted by Sahamati. It was the first annual event of the Account Aggregator (AA) community that brought together more than 300 financial institutions across sectors such as banking, investment, pension and insurance, and fintech TSPs (technology service providers).

She distilled vital insights that have emerged from the iterative process of trial-and-error undertaken during the implementation of UPI into six fundamental principles. She emphasises that replicating these principles holds enormous value for creating open network ecosystems, and the actual execution could look quite different. Here are the foundational principles as elaborated by her:

1. Consent
   Consent is at the core of Account Aggregator (AA) architecture, forming an essential pillar of this data-sharing infrastructure. This principle holds for every data transaction, whether B2B or customer-facing. Consent is not merely a checkbox but a comprehensive and dynamic principle; it ensures that individuals have greater control, fosters trust, and enables responsible and secure transactions.It becomes essential to recognise that consent is not a static but rather a dynamic concept which incorporates elements such as the ability to revoke consent, pause data sharing temporarily, and set time-validity for consent. This ensures that individuals have control over their data and can make informed decisions about its usage.

   To uphold the transparency and agency of the consumer, the consent mechanism within AA is designed to be both transparent and user-friendly. The consent process aims to be straightforward, avoiding complexity and confusion. The users can exercise their rights effectively by clearly understanding what data is being shared, who has access to it, and for what specific purposes.

2. Access
   The second foundational principle advocates promoting the access of AAs to all participants, including providers, users, institutions (large or small), and not-for-profit entities, ensuring that innovators and end-users have an equal opportunity to leverage its benefits. A logical corollary of the principle is to bridge gaps in awareness and educate about the advantages of data-sharing.Responsibility is crucial at every level within the ecosystem. All participants must follow the established rules and guidelines for the system to function optimally. Responsibility includes adherence to transaction protocol, data flow, and consent management. When all participants fulfil their duties in a high-performing manner, it leads to an enhanced customer experience.

   On the other hand, failure at any point of shared responsibility will result in a suboptimal user experience. The integrated experiencewithin the AA ecosystem depends on every component’s success. Any technical or user-driven failure can impact the overall functionality and experience. Therefore, the success rate of AA should be examined from various angles, such as technical, user-driven, etc.

3. Experience
   The third foundational principle of experience focuses on creating an easy, instant, simple, and secure data-sharing experience for users.It is crucial to eliminate friction and make the process easy for users to enhance their experience. Customer experience involves a minimal & intuitive design, simple procedures, and a user-friendly interface. It is essential to complete the transaction lifecycle in real time.Users should be able to instantly access and share their data without delays or cumbersome waiting periods.

   Furthermore, a simple and intuitive design and clear communication are vital for a positive user experience. Helping users easily navigate the system builds trust in the data-sharing process. Users need to have confidence that the technology employed by the ecosystem handles security concerns effectively and safeguards their data throughout the sharing process.

4. Service
   The fourth foundational principle of service focuses on a comprehensive service-oriented customer-centric experience for business-to-consumer (B2C) and business-to-business (B2B) interactions.In the B2C space, a full-lifecycle experience is crucial. Merely facilitating core transactions is insufficient; users also require support in case of errors or when the expected experience is not delivered. Users should have access to efficient grievance redressal mechanisms, enabling them to seek resolution and assistance when needed. In the B2B domain, the principle of service translates into an ecosystem-driven, collaborative approach. The participants can co-create and contribute towards ideation, design, and problem-solving within the ecosystem.

   The collaborative mindset fosters innovation, efficiency, and continuous improvement. Education and enablement play a crucial role in this process, ensuring that every participant has the necessary knowledge and tools to engage and contribute to the ecosystem actively.

5. Customer Needs
   The fifth foundational principle of customer needs revolves around understanding and addressing customers’ unique challenges, going beyond low-hanging fruits.AA can potentially play a crucial role in supporting government welfare schemes. By increasing awareness and facilitating efficient delivery, AA can ensure that eligible individuals are informed about and can access the benefits they are entitled to. Addressing customer needs includes streamlining processes, reducing paperwork, and leveraging data-sharing to enhance the reach and effectiveness of welfare schemes.

   Underwriting every Indian is another aspect of addressing customer needs. AA has the potential to provide a holistic view of an individual’s financial and transactional data, which can help in assessing creditworthiness and enabling access to financial products and services. By leveraging this comprehensive data, AA can contribute to expanding financial inclusion and making credit more accessible to all segments of society.

   Additionally, AA has encouraged reimagining the concept of a traditional “passbook.”

   The humble p(AA)ssbook: Re-imagining trust, courtesy the Business Correspondents

6. Scale
   The sixth foundational principle of scale is centred around the innovation opportunities enabled by scaling the system. This principle emphasises two key aspects: time to market and exponential growth. By prioritising scale, the ecosystem enables a fertile ground for innovation to flourish. The reduced time to market ensures that innovators can quickly access and utilise the AA infrastructure, driving the development of groundbreaking solutions. The ability to handle exponential growth allows for creation of scalable and impactful innovations. Through its commitment to scale, the ecosystem facilitates core transactions and fuels innovation.
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