Niti Aayog bats for ending data monopoly
The government is considering a proposal to make consumer data accessible to all, subject to riders, instead of being the exclusive preserve of a few tech giants, said people with knowledge of the matter.
The Niti Aayog proposal to help boost the fintech sector involves setting up an independent regulator with overarching powers to ensure that no entity has monopoly over data that has been anonymised so that the information can’t be tied to specific individuals and their privacy is protected.
This will be available across sectors, beginning with banking, e-commerce, health and education, if the plan is implemented. Information emerging from any transaction will be available and can be obtained by anyone on request. This will include what is bought and sold, borrowings, loans, health and insurance records, assets and insurance policies.
The process would start with the collection of data from all large companies on a real-time basis in a standard format. This would then be anonymised and converted into indices and trends to reflect consumer preferences.
“Small companies, startups, fintech industry and other sectors as well as government are expected to benefit from opening up access to data as it would help them to understand consumer preferences better,” said Bhagwan Chowdhry, professor at University of California, Los Angeles (UCLA).
Chowdhry was a key member of the group on Emerging Areas of Fintech chaired by Andrew Watkins-Ball, CEO of mobile financial services platform, Jumo, at the recently held conference organised by Niti Aayog. The Aayog had set up five groups that focussed on constraints restricting growth of fintech in India and far-reaching recommendations to help the sector realise its full potential.
Inability to access data was among the factors constraining the fintech sector, a senior government official told ET.
“We are considering the industry recommendations,” he said. “Government will ensure through a regulator that data privacy is not breached and hence the provision of customer consent.”
If the government decides to go ahead, Niti Aayog will frame a comprehensive policy that includes the consent architecture. Consumers will have the option to decide what information can be shared.
The government is of the view that allowing access to data will help innovation, which in turn will offer better choice to customers at competitive prices. This will also require the government to speed up licences for data aggregators and brokers, create a powerful regulator, structure the data and educate customers on the consent process.
The Aayog feels the banking sector would benefit from such a move as it has a great deal of information on customers, according to a recent note. Hence, opening it up for use by others can significantly enhance the consumer experience as well as bring efficiency to the system.
In the so-called open banking system, data is shared through application programming interfaces (APIs) between two or more unaffiliated parties. Open banking is gaining ground overseas. The UK has mandated nine banks to enable open banking since January 2018 while Europe has made it mandatory for all banks.
India has over 1,200 fintech firms including Paytm Payments Bank, ItzCash Card, MobiKwik and PolicyBazaar, among others.
Niti Aayog estimates that the Indian fintech sector’s transaction value will more than double to $73 billion in 2020 from about $33 billion in 2016 at a compounded annual growth rate of 22%.
“Indian fintech industry has the potential to solve not just India’s unique needs of financial inclusion, access to credit, limited insurance reach but can also serve as the solution provider of choice for global financial sector to emerge as one of fintech global hubs of choice,” the Aayog said in statement issued recently.
In the past decade, India’s fintech sector has evolved along global lines, starting with payment and fund transfers, moving to personal finance and gradually leading to activities such as insurance, wealth management and traditional deposit or savings accounts.
Source: ET Tech