Chinese banks lag behind Indian counterparts in digital transformation, says KV Kamath

Kamath’s endorsement of the scale of digital adoption in India has also been one of the showpieces for the Narendra Modi government at the G20 Summit 2023. Between 2011 and 2019, digitalisation in India grew neck to neck with China at 11 percent, according to Ernst and Young.

However, at the beginning of the last decade, India’s efforts in building a digital public infrastructure (which was earlier called the India Stack) made the progress more widely accessible and affordable.

“Actually it starts with the India Stack. The governor yesterday talked about it and everyone here knows what it is. So the India Stack is the centerpiece of this whole alliance for good, the digital good of this country. And we build on that.

It is very interesting because that stack is enabled by a public-private partnership, predominantly public, and the government provides for that partnership. And nowhere else in the world, I know of that it is really a government-driven growth," Kamath said.

By opening up public data to be used in creating new applications, by startups, India was able to digitise everything from identity documents to payments to governance and public services and much more.

China’s economy is five times bigger than India's, but the gap between the two countries' fintech is, on the face of it, a lot narrower. India is currently the world’s third largest fintech ecosystem with 7,460 companies in the domain. The US has the highest with 22,290 fintech companies, followed by China, which has 8,870.

India wants to export its digital public infrastructure, which includes the existing Aadhaar (biometric digital identity system), unified payment interface (UPI), digilocker (a public digital storage system for documents), direct benefit transfer of government sops and subsidies, as well as the recently launched ONDC (Open Network for Digital Commerce). The National Payments Council of India is in talks to extend UPI services in the US, European countries, and West Asia.

The not-for-profit ONDC aims to break the monopoly of e-commerce platforms. On this super aggregator network, when a buyer searches for a product, the results will be from different e-commerce platforms and listings. This will allow the buyer to compare prices, features, and discounts available in a single view.  The platform offers similar options at the time of payment too.

According to Kamath, global investors are taking note of the progress, "I had a guest from abroad the other day - one of the largest global banks. When I mentioned to him, what is possible, the only thing the rest of the conversation was, to make sure that telling his local person, make sure that I have the names of those companies who provide this sort of disruption,” he said, emphasising that Indian startups and fintech companies should look at global opportunities too.