Home / Industry / Banking /  Aadhaar and India Stack are revolutionary ideas: Capital First’s V. Vaidyanathan

Mumbai: V . Vaidyanathan, founder and executive chairman of Capital First Ltd, a financial institution specializing in providing debt financing to small- and medium-sized firms and consumers, says going digital is a sure path to success for companies. He buttressed the point by highlighting the explosive growth in the number of connected devices.

“The number of connected devices grew from 0.5 billion in 2005 to 8 billion in 2015. This number is set to grow to 50 billion in 2020 and a trillion in 2030," Vaidyanathan said in his special address on the theme Digitally Disrupting the Financial World, at the Mint Fintech Summit in Mumbai on 23 June.

Vaidyanathan compared the largest companies by market cap in 2006 with those in 2017. In 2006, he noted, these firms included Exxon Mobil Corp., General Electric Co., Microsoft Corp., Citigroup Inc., BP Plc and Royal Dutch Shell Plc. In 2017, however, the companies by market value are Apple Inc., Google Inc., Microsoft, Inc. and Facebook Inc.

“There are two noticeable differences: the market cap of Apple is almost twice that of Exxon Mobil and all the firms in 2017 are from the technology sector. This trend is definitely indicative of a major disruption in our world," he added.

Likening digital growth to Moore’s Law, Vaidyanathan said digital had increased consumer welfare in the form of reduced prices and has made possible the advent of faster and smarter computers, aided by artificial intelligence.

“Let us think about the work fintech companies and start-ups have accomplished by banking the micro-markets that no traditional bank would finance. The current scenario, as I see it, is one of collaboration instead of competition, between banks and fintech companies," he said.

But all progress is not directed at the digital space, cautioned Vaidyanathan. “Companies are increasingly going ‘phygital’ (a combination of the terms physical and digital) because the lines between e-commerce and bricks-and-mortar stores are blurring, as we have recently seen in Wal-Mart’s acquisition of and Amazon’s purchase of Whole Foods."

But the matters of most importance in the Indian context, according to Vaidyanathan, relate to Aadhaar—the initiative of giving a unique identity number to every Indian—and the India Stack, a set of application programming interfaces to enable e-governance services. “These two ideas are revolutionary and will be indispensable in curbing tax evasion due to the recent linkage mandate of the PAN, Aadhaar and the taxpayer’s mobile number. Out of 25 crore PAN holders, only 4 crore are taxpayers. Therefore, the linkage mandate will immensely help in a situation where there are multiple PANs and bank accounts for a given individual," he said.

Vaidyanathan added that he is “confident" of the ability of fintech companies to address the recent security and privacy concerns over the Aadhaar data leakage.

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