All platforms are cheap, scalable while ensuring privacy
In this note we take a deeper look at govt initiatives like India Stack, UPI, AA, ONDC, Health stack etc and implications of that. These have helped/will likely help India leapfrog other countries towards creating a robust digital public infrastructure (DPI) allowing Indians to have access to multiple services in a cheap, digital & frictionless manner. The common aspect for these platforms is that they are inexpensive, widely available, interoperable, scalable & based on open architecture. Besides, they follow principle of democratization of access & ensure user/merchant privacy i.e. consented usage of data. Private sector can also leverage these platforms by building applications on top of this. Open architecture platforms don’t lead to “winner takes it all” but help innovative models win.
Network effects of ecosystem to be seen in coming years
At heart of the push for DPI was India’s growing middle class who can access affordable goods & services. The c. 800 mn+ broadband users consuming cheap data has helped generate a digital footprint, at par with a western user. The govt is using these rich & diverse datasets to empower users by giving them access to services like cheaper credit, affordable healthcare access etc. The full effects of DPI will be visible in coming years as these platforms interface with each other to create an ecosystem that facilitates seamless offerings. For instance, AA & ONDC would help merchants access credit and expand addressable market. The second order impact from these would likely be seen on supply chains getting disintermediated or loosened up. This would allow both traditional & new age businesses to innovate & build “India-specific” unique models.
Room for further improvement; Sustainable biz model key
1) Models should find balance between delivering low-cost offerings at scale & being profitable. This is because, the flipside of democratization is the lack of differentiation that may lead to competition, & inability to make profits even at scale. E.g., on UPI most of the apps give similar offerings to users limiting the ability to monetize; 2) The success of UPI till date has not been replicated across other platforms. While platforms like AA, ONDC are relatively new and evolving, we note that cooperation of the multiple parties is key to succeed; 3) Continued tech investment is key for on-going adoption.
Who benefits: Listed players & Innovative model startups
DPI is likely to lead to a multiplier effect on social and economic growth. In the listed space, Paytm benefits from UPI due to faster customer acquisition. Banks benefit from AA as its SMEs/users reach will increase. Banks with better tech will likely gain share. RIL could be a beneficiary from ONDC given its strong offline network & logistics fleet. Delhivery as a logistics company should benefit. Health stack would benefit hospitals/diagnostics cos as it would lead to faster turnaround & lower insurance fraud. Bima Sugam/ONDC’s success increases competition for PolicyBazaar/IndiaMart respectively.