By Rajashekara V. Maiya, VP & Global Head of Business Consulting, Infosys Finacle
In today’s world, where uncertainty is driven by climate change, geopolitical tension, and economic challenges, being prepared for what’s next is crucial. This is particularly true for financial services, and technology. Let’s explore how technology has transformed from feature-specific solutions to software products, then making the transition to global platforms. We believe the next frontier in this journey is protocols that enable wider access and innovation across industries.
From feature to platform
Just twenty or thirty years ago, technology offerings were largely feature-centric, rendered as applications with unique features to meet very specific needs of providers and consumers. For example, Cheque Processing Systems were focused solely on clearing and processing checks. From there, they progressed to applications whose features could be used across industries and regions. Features were built once and used multiple times after customising them to meet local market expectations, regulations, language requirements, etc. This transformed the application into a product, which was created once and then licensed or sold to several institutions. Core banking systems are a prime example, offering a suite of integrated functionalities such as account management, loans, deposits, and transaction processing, all wrapped into a single software solution. The reach of products was expanded by making them accessible, affordable, intuitive, navigable, “mass market”, and finally, open for other industries or regions to use, heralding the birth of the platform.
The platform, whose earliest exponents were App Store, iTunes and Google Play, democratised access both to consumers and innovators; soon, almost every business under the sun, from ecommerce and ride sharing to food delivery, travel & hospitality, and banking was exploring this model. But things came to a head during the pandemic, when the lockdown forced every aspect of life – education, work, medical consultation – to be “platformised” at scale, overnight. This had the unexpected effect of democratising access to certain facilities to populations that had never been targeted, the best example being access to digital financial services for the unbanked and underbanked.
What’s next for platforms?
While platforms today drive democratisation, their impact is expanding to broader, cross-industry applications. India Stack is a compelling example. Initially focused on providing digital identity through Aadhaar, it evolved into a powerful payment system via the Unified Payments Interface (UPI). As of June 2023, UPI accounted for 40% of the global real time payments. For the 460 million Jan Dhan bank accounts created over eight years, the India Stack and UPI platforms are enabling seamless access to numerous government benefits at the click of a button. In the wake of COVID-19, 160 million beneficiaries received critical financial support and relief when the Government of India was able to transfer about USD five billion (INR 37 thousand crore) directly to their bank accounts. The platform also powered the biggest vaccination program in the world. The same stack is now being offered to several countries to use, free of cost.
This marks the evolution of the platform into a protocol – a platform that subject to its governing rules and processes, can be adapted and extended to be used by anyone, anywhere, for any purpose. For example, the India Stack is also being leveraged to open digital commerce and credit through the ONDC and OCEN protocols respectively. As these protocols enable global access, they are also dismantling the stranglehold of platform monopolies and gatekeepers that is increasingly on the radar of regulators: the European Union enforced the Digital Markets Act (DMA) to identify gatekeepers – large digital platforms, such as online search engines, app stores, and messenger services – and ensure that they behave in a fair manner by allowing third-parties to interoperate with their own services, enabling business users to access the data they create by using their platform, and not ranking their own products and services more favourably than similar third-party offerings that are offered on the platform.
Another goal for the protocol is to share best practices with the rest of the world; for instance, one of the lessons from the India Stack experience is that the best way to scale benefits is by providing public infrastructure for private innovation.
Next on the protocol’s globalisation agenda, especially in the banking context, is operational resilience. eKYC, customer onboarding, account opening, and transactions of every kind must happen with unfailing consistency, reliability, and in conformance with applicable laws. The European Union’s Digital Operational Resilience Act (DORA), coming into effect in January 2025, seeks to harmonise rules for operational resilience in the financial sector. Similarly, India’s Digital Personal Data Protection (DPDP) Act, 2023 enforces responsible data management and protection, both domestically and internationally.