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Jo Ann Barefoot explores how to create fair and inclusive consumer financial services through innovative ideas for industry and regulators

Access For All: CIIE’s Sanjay Jain and the India Stack

Barefoot Innovation Podcast

Access For All: CIIE’s Sanjay Jain and the India Stack

Jo Ann Barefoot

Jain 1.png

My guest today is Sanjay Jain, Chief Innovation Officer at the Centre for Innovation Incubation and Entrepreneurship (CIIE). Among many high-impact achievements, Sanjay helped lead creation of one of the most ambitious government infrastructure initiatives ever undertaken -- the so-called India Stack that is connecting everyone in India to the financial system and mainstream commerce, by providing a biometric ID.

I met Sanjay at the Jakarta international regulator meeting I’ve mentioned before sponsored by the Omidyar Network and Gates Foundation and put on by FintechStage. I sat next to him at dinner one night, and was astonished to hear him explain the project and to hear others at the table describe how it’s already changing India. I’d been vaguely aware of it and knew it was huge, but had no idea how fast and transformational it is. At the conference the next day, we ducked into an idle meeting room to have this talk.

We usually think of innovation as driven by the private sector. We think of government’s role as either to protect people from innovation-related harm or as just to avoid blocking good innovation. In reality, though, government has another critical role, which is to provide the infrastructure within which new technology can work..

A core component of infrastructure is a system through which people can be accurately identified. People need to be able to prove who they are, quickly and easily and inexpensively, and in ways that can’t be faked, so that no one else can pretend to be them, and so that they won’t be excluded from opportunities because their identities are in doubt, or are too complicated to be worth the effort to verify.

This identity infrastructure doesn’t necessarily have to be provided by government -- we’ll do a show at some point with my friend Greg Kidd of Global ID, who argues passionately that it’s better to have a decentralized identity authentication system. Traditionally, though, government has played this role by giving people identity documents like birth certificates, driver’s licenses, and passports, and also unique, standardized identity markers, like social security numbers.

With old technology, that approach was the best we could do, and it worked pretty well for people who had the right documents. However, it’s never worked well for people who don’t, including many new immigrants, and certainly refugees, and of course, the very poor. The very poor have, always, been locked out of the mainstream.

All that has changed today thanks to what is arguably the most democratizing technology ever invented -- the mobile phone. As of 2013, more people have access to cellphones than to toilets. As we’ve discussed before on Barefoot Innovation, we are headed toward total financial inclusion through the phone. This means that, technologically, everyone can be connected, easily and completely and inexpensively, to everyone else. In most of the developing world, a top goal is to enable full access to the financial system and commerce, through the phone, as a primary engine for economic growth and prosperity.

However, people can only connect to the financial system if they can be reliably identified. So UIDAI -- the Unique Identification Authority of India -- has undertaken one of the largest government projects ever -- the collection of biometric identity information on every adult and every child in the world’s second most populous country. They have gathered ten fingerprints, two iris scans and facial recognition data for about 1.2 billion people. And they have done it fast!

The “IndiaStack” is being implemented in phases around four “layers”: “presenceless” identity, paperless records, cashless transactions, and consent-based use of data. At its heart is the Aadhaar card, which contains the person’s unique identity number, authenticated through the biometric ID. With this tool everyone can, among other things, open and use a bank account.

Needless to say, all this has raised concerns about privacy and data security. The project has critics, and even its advocates agree that the challenges are daunting. India’s leaders, however, believe the risks can be managed and that they are massively outweighed by the opportunity to open the doors of the economy to everyone.

I’ve spent time in rural India, including with an NGO called Rising Star Outreach that focuses on micro-finance, education and health services for leprosy communities. India is curing leprosy, but leprosy-affected people and their families still face daunting challenges. As I listened to Sanjay, I found myself remembering people I’ve met in remote villages where families live in one room, sometimes in huts with thatched roofs and dirt floors, and I also thought back to being in Chennai, in southern India, with the streets teeming with cars and lorries and motorcycles carrying five people and bicycles carrying three or four and auto-rickshaws and people carrying bundles of goods on their heads. And I thought about all the languages -- India has twenty-two official languages -- thirty that are spoken by more than a million people -- and hundreds of minor languages and dialects.  What it took these IndiaStack teams to find every single person in this huge country, and document them all -- it’s stunning.

And thanks to their effort, all these people can be connected up with everyone else in India, and eventually everyone else in the world, through a cell phone and a reliable identity.

Listeners outside the developing world may be thinking this is interesting but not very relevant to them. However, the challenge of creating reliable and safe digital identity is one of the top issues facing finance. The digital age is not only enabling new forms of identity, it’s also undermining the old forms. The dark web runs a thriving market in selling and buying personally-identifiable information including social security numbers. In the U.S., the 2015 Office of Personnel Management data breach, alone, compromised identity information like social security numbers for over 20 million people. Banks are increasingly caught up in fighting fraud and crime based on fake identities -- security experts tell me that criminals are more likely that real customers to accurately provide identification information, because they don’t make typos. Meanwhile, regulatory “de-risking” standards for Anti-Money Laundering “Know Your Customer” rules have been cutting off whole sectors of people from financial access because they come from places, industries or groups that raise disproportionate risk, and banks find it too difficult and costly to sort out the good people from the bad ones

Financial companies and regulators everywhere will need better ways to identify people, and India is blazing a trail that will yield fascinating lessons.

Sanjay’s Biography

SANJAY JAIN, Chief Innovation Officer, Centre for Innovation Incubation and Entrepreneurship (CIIE) Sanjay Jain leads efforts to help create, promote, and encourage entrepreneurship in areas around digital technology. Sanjay is also a volunteer with iSPIRT, the software product industry think tank. He has been an active member of the India Stack, Open API, and Cashless teams. He has been working with the NPCI to define the next generation payment systems (the Unified Payment Interface), as well as with regulators and other bodies to help entire processes go paperless. He has been one of the key contributors to help create, and evangelize various government open APIs, which are collectively referred to as the India Stack.

Sanjay has been responsible for the development of many large scale, high impact systems. He was the Chief Product Manager at the UIDAI, where he led the product development efforts from its early days till well after launch. The UIDAI has issued over a billion numbers to Indian residents.

Sanjay was also responsible for the creation and launch of Google Map Maker - a crowd-sourced mapping product that is responsible for Google Maps data for 170+ countries (including India). He’s been a part of many entrepreneurial teams through his career, including most recently at EkStep, Khosla Labs, and as a founder of Novopay Solutions. He holds an M.S. in Computer Science, from the University of California, Los Angeles and a B.Tech in Computer Science & Engineering, from the Indian Institute of Technology, Mumbai.

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