The Account Aggregator (AA) construct defined in this RBI circular, this technical specification, and this article is imminently coming to life. Individuals and businesses in India will be able to link their bank and financial accounts with an AA application and begin leveraging their own data in order to avail of cheaper, faster, and more customized products and services. This document lays out some of the use cases and opportunities open to entrepreneurs and companies to build on top of this infrastructure.

iSPIRT will be hosting a meetup in Bangalore to dive deeper into these opportunities for any companies or entrepreneurs interested in learning more. Details about the meetup will be shared after the following description of the various opportunity areas borne of the AA ecosystem.

Basic potential use cases leveraging AA applications:

• A user can link his HDFC Securities, SBI, and ICICI accounts and use an AA app to share his last 12 months bank statements and demat statement in programmatic form with a fintech. The user is able to see his latest account balances across all his banks and asset managers in one place. The fintech is able to visualize all user transactions according to category, spend amount, date, and payment instrument across all the user’s bank accounts. This use case could happen on a fintech’s mobile app, a bank’s netbanking portal, or any other interface.
• A group of users can share their anonymized stock portfolios with a company which is able to give them investment advice or connect them with a group of like-minded investors for further discussions.
• A user can share her bank statement with a fintech which can analyze her financial behaviour and recommend products to help the user save money eg. “Your bank history shows that you often go into overdraft. You would save 20,000 rupees per year if you switched to XYZ bank which has a more lenient overdraft charge”

Dates for AA framework to go live to all citizens: May 20th, 2020

Current status: Several of the largest financial institutions are in production testing of their AA APIs. Note that the first wave of companies that can consume AA data is limited to companies regulated by RBI, SEBI, PFRDA, and IRDA. 

Opportunities in the AA ecosystem: There are 200 banks, 10,000 NBFCs, and thousands of other companies which will need technology to help them adapt to the AA paradigm, There are opportunities to help these companies with:

1. Middleware to help them consume and share data in the specified format
2. Middleware to help them manage customer consent and customer data (data governance and data security products)
3. Middleware to help companies provide good AA UX flows on their apps
4. End-user applications such as the personal finance applications mentioned above

In addition to these opportunities around Account Aggregators themselves, there are also several opportunities to build software products and offer services around the fields of Cash Flow Lending, Loan Service Providers, and UPI applications.

Cash Flow Lending (CFL) background:

• Most lenders use traditional credit scores from credit bureaus to understand borrower credit worthiness
• Many individuals and companies in India do not have credit scores (New To Credit – NTC)
• Many individuals and companies in India do not have good credit scores (subprime)
• Getting access to credit for subprime and NTC borrowers is very difficult
• If any bank or lender gives a loan to subprime or NTC lenders, it usually at a high interest rate 
• In many other cases, banks only give such subprime loans if the borrower can give some hard tangible assets (such as property) as collateral
• Many borrowers, especially small businesses, cannot give this collateral and therefore cannot get access to credit products that can greatly improve their business health
• The reasons mentioned above are partly responsible for India’s low credit penetration
• There is a new underwriting and lending model emerging called Cash Flow Lending
• In this new model, a business shares its historical business performance with a lender
• This includes historical invoices raised on GSTN, and bank statement records that capture all of a business’ cash inflows and outflows
• Using this data, a lender can understand the likely future performance and creditworthiness of a borrower
• Moreover, the lender can plot the historical cash flow curve of a particular borrower to understand how to best structure and customize a financial product
• This form of lending happens sparingly today because it is expensive for a lender to gain access to a borrower’s verified GST invoices and verified cash flows from a bank in order to reliably plot the cash flow curves of the borrower
• Due to upgraded APIs in the GST system and access to bank statement data from the AA framework, it is now simple and cheap for lenders to understand the verified business performance and cash flows of a borrower
• Due to upgrades in the UPI system, it is also possible for a lender to lock down any future incoming cash flows of a borrower (instead of taking current assets as collateral, a lender can now take future assets – namely cash flows – as collateral)

Current status on Cash Flow Lending: Lenders are free to use whichever underwriting model they see fit. Lenders wishing to begin consuming machine-readable GST invoice data and bank statement data will be able to do so once the AA framework goes live on May 20th.

Opportunities in Cash Flow Lending:

1. Underwriting engines to help lenders and insurers analyze data and take decisions based on customer financials and business relationships
2. UPI interfaces to help borrowers and lenders exchange e-mandates (the instrument used to lock down future cash flows of a borrower)
3. Lending businesses, particularly those serving NTC or subprime borrowers

In order to deepen the penetration of financial services to underserved individuals and borrowers, a new type of financial company has been proposed. This company is known as a Loan Service Provider (LSP). 

LSP background:

• Marketplaces such as Uber, Swiggy etc. aggregate high numbers of suppliers (drivers, restaurants)
• Many of these suppliers would benefit from access to credit to improve their lives or businesses
• For the suppliers, getting access to credit is not always straightforward, as in the case of an Uber driver with a subprime credit score
• The marketplaces, by virtue of the data they have about the suppliers (eg. number of rides done in a day, customer ratings, peak operating hours), are in a good position to help the suppliers apply for financial products
• Furthermore, building a financial services layer into their supplier offering would help marketplaces deepen the value proposition of their platform
• The problem is that building this financial services layer involves building bilateral custom relationships with lenders or finserv providers
• If the technical integrations and data pipelines between marketplaces and lenders can be standardized and abstracted, it could be much easier for marketplaces to plug new lenders into their finserv layer and much easier for lenders to plug into different marketplaces
• An LSP is the company which provides the software linking the marketplaces with the lenders

LSP timelines and status: A technical blueprint for an LSP is being developed. Industry participants are welcome to participate in this process or develop and implement their own ideas for an LSP (although having many different LSP standards would defeat the purpose of the exercise, and the likely outcome is that lenders converge on a preferred standard).

LSP Opportunities:

• LSPs can build a bridge between marketplaces and lenders, allowing suppliers on the marketplace to share data with the lenders 
• Underwriting engines for different kinds of marketplace suppliers (eg. a Swiggy engine might use the number or orders, seasonality of orders, user ratings, and average delivery time to develop a credit model for restaurants)

Any companies or entrepreneurs wishing to learn more about these opportunities are invited to attend a meetup hosted by iSPIRT on the 13th of March in Bangalore.

You can register on this link to attend the workshop. Please note that the workshop is invite only.

References:

• UK Sinha’s Report of the Expert Committee on MSMEs: Loan Service Providers (LSPs) will be an agent of the borrowers is recommended for consideration by RBI: Announcement, Full Report (Section 8.2.1 on page 108 about LSPs and Section 9.26 on page 126 about Cash Flow-based lending)
• Account Aggregator Resources

Design thinking has well and truly become the buzzword in the Indian Startup ecosystem today. With the rise of this phrase, we have seen an unprecedented rise in the status of formerly undervalued ‘designers’. Do designers possess some superpowered thought process that allows them to ingest any problem and come up with elegant and practical solutions? 

Design thinking, in essence, is a systematic way of tackling problems and creating innovative sustainable solutions. 

Empathize → Define → Ideate → Prototype → Test. 

Seems simple, right? 5 steps to solve any problem. An incredibly attractive and easy-to-employ process.

“The emphasis on “thinking” makes the point that design is more than a pretty face: it has substance and structure. Design methods can be applied to any problem: organizational structure, factory floors, supply-chain management, business models, and customer interaction.” – Don Norman

Design Thinking is a useful myth

If design thinking is so efficient, why is it then that 90% of Indian startups fail within 5 years of inception? Did they try to solve irrelevant problems? Did they not figure out a growth strategy? Do entrepreneurs not find the right designers? Do entrepreneurs really have to employ Design Thinking themselves?

Designers who are not designers

Before the stone-pelting begins, let me clarify. If design thinking is just a way of solving problems, then isn’t everyone a designer? Doesn’t everyone solve problems on a daily basis? The scale of these problems might differ wildly but shouldn’t we all be solving problems in the most elegant manner possible? 

The term Design thinking is essentially a wrapper around the traditional creative thinking process. Musicians, artists, writers have all historically employed creative thinking to innovate and create amazing works. 

The singular identifiable difference between creative thinking and design thinking – while it was seemingly rare for creators (in the outdated and traditional sense) to create iconic work, design thinking democratizes the whole process; instead of an exception, design thinking demands that it be the norm. 

Jared Spool in his Medium post argued that the backend performance engineers at Netflix are designers too. The main objective of these engineers is to ensure that their servers work effectively and data gets delivered in a timely manner to a consumer.

“And yet, at the very moment that a Netflix viewer’s video stream stops and that spinning animation appears, indicating the player is now awaiting more data, these engineers make a dramatic change. They become user experience designers.” – Jared Spool

The Power of Experience Mapping

If backend engineers are also designers, where does this stop? Are people from marketing, sales, technology also designers then? Turns out that yes, they are all designers. As a rule of thumb, design thinking insists that anyone whose work adds to the consumer/customer experience is essentially a designer whether you like it or not. 

ये सब तो ठीक है पर भाई कहना क्या चाहते हो?

मुद्दे की बात ये है की अगर सब डिज़ाइनर है तो बेचारे डिज़ाइनर क्या करे? Turns out the problem doesn’t fully lie with “designers who aren’t designers”. ‘Designers’ are also to blame here.

Consider the following statement – “Designers make things look good”. Does this make you angry? If yes, you’re having the correct emotional reaction and you can stop reading now. 

If not, is the job of a designer to make a product feel good or look good? Even if a product looks and feels good, does it really add to the business goals of the organisation? Does the role of a designer end at the deployment of their ideas?

My friend, Dharmesh, argues that most ‘designers’ nowadays do not even consider implementation and measuring impact of their ideas as a part of their work. The above visual is from his presentation titled “A Designer’s Ambition – What does the peak of your Design career look like”. 

An idea is only as good as its performance in the real world, right? So why does it seem that most designers don’t consider implementation and impact a part of their job? 

Turns out there is a reason why most designers skim over the implementation and impact of their work. According to a McKinsey report (The Business Value of Design) when hiring a designer, just over 50 percent executives of 300 publicly-listed companies globally admitted that they have no objective way to assess or set targets for the output of their design teams. How much of this is true for the Indian ecosystem? 

Could it be? Could it really be that the design industry in India too is operating on the vague notions of what looks/feels good? Can designers evolve to incorporate implementation and impact in their JD?

The same report also outlines how companies that put human-centric design at the centre of their companies, grew revenues by 32 percentage points faster and Total Returns to Shareholders by 56 percentage points as opposed to companies that failed to do so.

Summing up

If you’re looking for some sort of resolution to everything I said above, then I humbly apologise. I don’t have answers. 

What I want to leave with is more questions. Questions such as –

• Can entrepreneurs come up with metrics that accurately depict the contribution of design to their organisational goals?
• How quickly can ‘Designers’ adapt and incorporate implementation and impact into their roles?
• Even if we move on both of the above fronts, will that result in Indian products with true human-centric design? 
• Is Design Thinking the secret ingredient that will help India’s startup ecosystem create big wins like the Googles, Facebooks and WeChats of the world? 

There are lots and lots more questions that need to be raised and answered before we dismiss or accept Design Thinking as a key factor in the success of an organisation. If you want to raise more questions or volunteer with us to help answer some, please write to me on [email protected]

Health Stack

The National Health Stack aims to improve quality, access and affordability of healthcare, facilitate national health programmes, monitor insurance policies and claims, and boost medical research and health analysis. The stack is being designed to support existing and future health initiatives, both public and private.

NHS is a visionary digital framework usable by centre and state across public and private sectors. It represents a set of platforms that supports a multitude of health verticals and their disparate branches, and is capable of integrating future IT solutions for a sector that is poised for rapid, disruptive changes and unforeseen twists.

Various layers of the National Health Stack will seamlessly link to support national health electronic registries, a coverage and claims platform, a federated personal health records framework, a national health analytics platform as well as other horizontal components.

Health Stack @ LetsIgnite

LetsIgnite, an initiative by LetsVenture,  has been India’s premier Investor conference bringing together marquee investors to engage with early-stage Startups in the ecosystem as well as other prominent Investors.

One of the highly anticipated sessions at LetsIgnite will cover the introduction to the National Health Stack, feature a deep discussion among the various NHS stakeholders and address queries about NHS. Additionally, 5 shortlisted health-tech startups will be pitching to a highly curated audience consisting of Angel investors, HNIs and other relevant stakeholders.

Some of the confirmed speakers for the session include Sharad Sharma (iSPIRT), Dr. Santanu Chattopadhyay (Founder, Nationwide Primary Healthcare Services), Dr. Ajay Bakshi and awaiting a few more confirmations.

LetsIgnite events are built as a business conference for Investors to connect with relevant Startups in the form of several knowledge-based sessions, panel discussions, and one-on-one interactions. To know more about Lets Ignite and check out what else is happening, click here.

When

1:15 – 3:15 pm on the 15th of June, 2019

Where

The Leela Palace, Bangalore

Who should come for the session?

Calling out to healthtech entrepreneurs, various stakeholders of the health ecosystem, angel investors and enthusiasts who are looking to understand the impact of the National Health Stack to come attend this session. Please feel free to write to Ravish Ratnam ([email protected]) to participate.

For Healthtech startups looking to apply for the Pitching Session, please register on this link.

The deadline for Pitch session applications is the 25th of May, 2019.

NOTE – Please note that this is a highly curated track at LetsIgnite and they may not be able to accommodate everyone who applies for this session.

For general queries, please feel free to write to Ravish Ratnam ([email protected])