Aadhaar can transform financial services industry, needs to address security concerns: IAMAI
Aadhaar has the potential to transform the financial services industry including banking, insurance, lending, payments, led by services such as e-know your customer and e-Sign, said the Internet and Mobile Association of India, but added that the scheme needs to address the possible misuse of Aadhaar data.
“Conventional paper-based KYC or authentication is a resource intensive process; in terms of time, manpower and operational expenses. For start-ups looking to provide pan-India services, such a compliance burden can be cumbersome and a bottleneck. Estimates suggest that in a paperless platform, financial institutions can reduce costs by 2-3% in banking products and 20-30 percent in insurance products,” said the industry association in a statement on Monday.
The IAMAI is an industry association that counts companies such as Google, Facebook, Microsoft and a host of other Internet-based Indian and foreign companies.
With Aadhaar-based e-KYC and e-Sign, financial service providers will be able to help millions of Indians instantly open savings accounts and give them access to various other financial services like investment, insurance, formal credit, etc, IAMAI said.
“The association is of the view that the biggest impediment to 10X growth of the industry is paper-based verification and authentication process. The association would like to highlight that even a powerful regulator like RBI has shown its lack of confidence on 100 percent e-KYC by mandating paper-based KYC a year after OTP based e-KYC,” said IAMAI.
However, IAMAI also acknowledged the perceived security threats around Aadhaar and the potential misuse of the Aadhaar data.
“IAMAI urges UIDAI (Unique Identification Authority of India) to initiate multi-stakeholder consultation involving the entire digital ecosystem as soon as possible to discuss the issues pertaining to Aadhaar. The association expresses optimism over a collective approach that can help iron out the creases in the near future,” said IAMAI.
Aadhaar, India’s proof of identity project, has been embroiled in controversies ever since its inception. Over the past few months, reports of misuse and unauthorised use of Aadhaar data have surfaced. These claims have been denied by the UIDAI, the agency that administers Aadhaar.
The Supreme Court is also hearing a batch of petitions, some dating back to 2012, that claim that the Aadhaar project scheme violates an individual’s fundamental right to privacy.