Keeping the development of the fintech sector in mind, Niti Aayog has proposed opening up user data which is currently locked up in the digital vaults of big companies. Subject to conditions, Niti Aayog wants the end of data monopoly which is currently prevalent in India with data being exclusive to a few tech giants, people aware of the matter told The Economic Times.
Under existing operating conditions, companies are independently liable to store and process user data for their fintech and online payments products. Under the proposed changes, the data from these various companies would be collected and processed centrally, with safeguards in place to protect user privacy and improve data storage security. The proposal includes all data related to all online transactions.
In order to protect the privacy of consumers and users, the data would be anonymised before being made available for use so that it does not have personally identifiable information about individual users. Niti Aayog has further proposed to set up an independent regulatory body to oversee that no entity is monopolising the data of consumers and that the data being used is anonymised.
The consumer and user data for sectors such as banking, ecommerce, health and education will be made available for all agencies and businesses if the plan gets the green light from the government. Available on-demand for anyone, the data would be collected from every digital transaction. Starting with data collection from large companies on a real-time basis, the data would then be anonymised and converted into trends to help fintech companies improve their products and find areas of innovation.
Niti Aayog is said to have created groups to study the constraints in the fintech sector that restricted growth. The inability to access data stood out as a primary roadblock. According to the Niti Aayog, transactions in the fintech sector would be worth $73 Bn by 2020 with an annual growth rate of 22%.
Rise Of Open Banking
Availability of data in an open manner will especially benefit the banking sector, according to the government planning body. Niti Aayog has also proposed adding a clause mandating the consent of the consumer about data sharing.
Commonly known as open banking, the open data approach is gaining ground globally led by the UK market. But there are other examples such as Australia, which is on track to become an open banking country by July this year. Similarly, New Zealand and Canada are also taking strides in this direction.
Data Monopoly in Ecommerce
Questions around data monopoly were raised in India’s draft ecommerce policy as well. There was a proposition around collection and processing of data in the draft ecommerce policy which was released by the Department for Promotion of Industry and Internal Trade in February this year.
“A handful of companies today dominate the digital economy. They are successfully exploiting the significant first mover’s advantage in the data-driven ecosystem,” the draft policy had noted.
However, convincing users to part with the transaction and financial data will be a big challenge under the open banking system. Despite the measures the Niti Aayog is proposing to put in place, it would be hard to spread awareness of the benefits for users, especially in the light of data breaches.