As part of Accion Global Advisory Solutions, Mona Kapoor is the Senior Director of Digital Strategy and Transformation responsible for supporting Accion partners in the planning and implementation of their digital initiatives. She brings more than 17 years of experience working with a range of businesses in the banking, payments, and hospitality industries.
Prior to joining Accion, Mona worked with the National Payments Corporation of India as the product manager for RuPay, an innovative card payment program, where she was instrumental in launching and managing the project. Previously Mona managed the debit and prepaid cards business for Kotak Mahindra Bank and worked in various roles across business development, product management, and marketing for Visa. Earlier in her career, she was instrumental in leveraging the card payments ecosystem to streamline processes in the agriculture industry.
Mona holds bachelor&#8217;s in physics from the University of Pune and a postgradutate diploma in business management from the Narsee Monjee Institute of Management Studies in Mumbai.

Senior Director, Digital Strategy and Transformation

Mona Kapoor

Digital platforms advance financial inclusion in India by closing the financial service gap for rural populations

Article

Chandra Kanthayadav was first inspired to open her business during the Festival of Rakhi one year in her hometown of Raipur, India. The popular Hindu festival is a celebration of the love between siblings and close friends, symbolized by people tying special woven bracelets called rakhis on their loved ones’ wrists. She saw how other shops in her community had great success during the festival, so she decided to open her own stall to sell rakhis and other items. Chandra quickly sold out of her inventory during that first festival and in the next festival after that.

Recognizing an opportunity to build a permanent business, Chandra opened a storefront adjacent to her family home and began searching for a way to stock her store with everyday household goods and seasonal items. At first, she borrowed from her family, friends, and other informal sources to pay for her inventory, but the higher interest rates and inconsistent availability of these informal loans prevented her from reaching her goals. Chandra found a better solution when she learned she could get funding through a more formal channel.
<h2>The power of financial services for women in India</h2>
Microcredit, small loans for low-income entrepreneurs, gives women in rural India access to the financing needed to strengthen their businesses and earn their own income. Chandra first took a group loan from Sub-K with women in her community that she’s known for over 17 years. Sub-K, a partner of Accion, is a financial provider focused on reaching underserved populations in India, especially focusing on women entrepreneurs in rural areas. Chandra has continued to work with Sub-K to purchase her inventory, eventually quadrupling her store inventory (stock) value from 5,000 rupees to 20,000 rupees. Next, she plans to expand her store to make room for increased inventory.

Sub-K celebrated their 10th anniversary in August this year. Over the past decade, they’ve helped millions of women like Chandra realize their entrepreneurial dreams, in turn instilling confidence, expanding financial literacy and stability, and improving household conditions for women and their families. As Chandra’s business continues to grow, she feels more respected in her community, and her success helps her provide for her children’s education. To reach more underserved micro, small, and medium enterprises (MSMEs) and individuals, Sub-K has launched a new digital financial tool called SARTHI.
<h2>Advancing financial inclusion through technology</h2>
[caption id="attachment_22266" align="alignright" width="146"]<img class="size-medium wp-image-22266" src="https://content.accion.org/wp-content/uploads/2020/09/Sub-K-SARTHI-platform-146x300.png" alt="" width="146" height="300" /> Sub-K’s fintech platform called SARTHI, which stands for Seamless Advanced Resourceful Tech-driven Hybrid Interface.[/caption]

Sub-K uses an extensive agent network to <a href="/finding-a-new-way-to-reach-the-last-mile-in-india" target="_blank" rel="noopener noreferrer">reach micro, small, and medium entrepreneurs in rural areas</a> who lack access to traditional banks. The company recently launched their new SARTHI fintech platform to complement this model and provide entrepreneurs with the tools they need to manage and grow their businesses. SARTHI will offer products like MSME credit, digital microloans, and health insurance that customers can access on their own mobile devices or with assistance from Sub-K’s staff and agents. SARTHI is integrated with multiple banks and third-party partners to provide customers with a wide variety of products and payment choices and quick application processing.

“This platform marks a major milestone in our digital transformation journey. We genuinely believe that the future is digital, and we are committed to bring a large segment of the excluded population into the mainstream by effectively leveraging the power of fintech,” says Sasidhar N. Thumuluri, Sub-K managing director and CEO. SARTHI was developed with advisory services provided by Accion through a <a href="/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">global partnership between Accion and Mastercard</a>.

Small businesses like Chandra’s are the backbone of the Indian economy, and they need financial services to weather challenging times and succeed in the future. We are proud to support Sub-K in their efforts as they move to the next chapter of advancing financial inclusion. Victoria White, the managing director of Accion’s Global Advisory Solutions, says, “Sub-K’s proven commitment to reaching last-mile customers, their expansive reach through their agent network and bank partnerships, and their demonstrated embrace of digital technologies made them an ideal partner for our efforts with Mastercard to help microbusinesses benefit in a digital economy. The launch of this platform is an important milestone in that effort.” By investing in digital tools that help microentrepreneurs build better businesses and better lives, we can bridge the financial services gap in rural India and bring financial inclusion to more people.

Banking goes digital to reach rural entrepreneurs

Sub-K is bringing banking to entrepreneurs in rural India, supplementing its extensive agent network with digital platforms during the pandemic

Each morning, Laal Kumari Singh rises early to feed her herd of cows, milk them, and leads them to a pasture to graze. As the sun begins to set, she leads them back home for another feeding and milks them once more. When her regular customers arrive to purchase fresh milk – an important source of protein and nutrients — throughout the day, Laal carefully measures the milk that her cows produce, saves exactly what she needs for her family, and sells the surplus both to people in her community in Raipur, India and to larger suppliers.

There are millions of small business owners like Laal in India, each working hard to support their families and fulfill a need in their communities. When these enterprises thrive, so do the families and communities that depend on them. That’s why our partner <a href="https://www.subk.co.in/index.php" target="_blank" rel="noopener noreferrer">Sub-K</a> set out to bring financial tools to underserved businesses in India, particularly the last mile where no financial services have reached before. Sub-K uses <a href="/instead-sending-people-bank-sub-k-brings-banking-people">its large network of agents</a> to reach people in rural communities in India and connect them to banks. “It’s really critical for us to have the touchpoints on the ground to interact with these communities that probably have never had a banking relationship. So to that extent, our agents play a very important role in introducing these communities to the banking system,” explains Sub-K’s CEO Sasidhar Thumuluri.

By working with Sub-K to purchase additional cows for her herd, Laal has expanded her business dramatically. When she first started her milk business, she only owned five cows. Now, her herd of cows, calves, and buffaloes has grown to nearly 40, producing 30 to 40 liters of milk for her to sell each day. Because of Laal’s success, she’s been able to support her three kids: two sons and one daughter. She uses her increased income from the expansion of her milk business to help pay for her children’s education. She’s thinking of the future, too — she’s already invested in buying a shop in nearby Sarura to further build her family’s financial security.
<h2>Continuing to serve small businesses during the pandemic</h2>
As the coronavirus pandemic leaves its impact on communities, the entrepreneurial dream that led Laal to build a better life for her family is in danger. To help small business owners in India overcome this devastating financial shock, Sub-K is introducing emergency loans and accelerating digital solutions. Even before the crisis hit, Sub-K recognized this opportunity for driving financial inclusion. “Digital is the way to go to reach the large-scale masses and the last mile,” says Sasidhar.

Despite the clear advantage in connecting small business owners like Laal to digital services, Sasidhar also knows the great challenges this presents. Many of Sub-K's clients have never had a formal bank account before, much less access to any digital banking services. So Sub-K is used to giving clients extra support to learn about products and become comfortable with new platforms. Their agents have typically done this work hands on in local communities, but as face-to-face interactions are halted, Sub-K is offering digital payment options on their mobile phones. Only 20 – 30 percent of Sub-K's clients in rural areas currently have smartphones, but even those without online access can utilize digital services through Sub-K's call center or by reaching out to local agents. As Sub-K works to quickly expand their digital platform to address new challenges from the pandemic, they are taking a multichannel approach that will continue to meet these clients where they are. If clients are given what they need to use digital financial services, this shift could make it possible to reach even more financially excluded people in the longer term.

Sasidhar stresses the importance of rebuilding from COVID-19 in a way that brings the most vulnerable microbusinesses into the digital economy: “Let’s not go back to our old normal, and let’s not wait for the situation to get normalized and then get back to the old way of doing business. Here is an opportunity that we need to grab. Let’s develop tools. Let’s educate them. Let’s make sure we build a new normal, which to me is a [digital] ecosystem play. It is possible. Let’s get together, collaborate, and make this happen.” With the right tools and support, entrepreneurs like Laal can grow their businesses and build stability for themselves and their families. The future of these small businesses — under threat from the pandemic — depends on their ability to access the financing they need digitally. Learn more from Sasidhar by watching our recent webinar, <a href="/going-digital-an-essential-move-for-msmes-in-a-post-covid-19-world">Going digital: An essential move for MSMEs in a post COVID-19 world</a>.

Finding a new way to reach the last mile in India

Prateek Shrivastava

How does India’s agenda towards transparency and digitization evolve after the Supreme Court ruling?

Since 2012, the government of India has been driving forward the idea of a “Digital India” with a vision to transform the country into a digitally empowered society. A unique digital identity for every person — universally acceptable and accessible — was core to this vision. This twelve-digit identity number, based on biometric data, is called “Aadhaar,” and it has been issued to over 1 billion residents of India by the Unique Identification Authority of India (UIDAI). This number has been leveraged by financial service providers, utility companies, and mobile operators to make it simple for customers to register for services. It reduces the cost of identification for individuals and has enabled many millions of underserved people and businesses to access financial and other services more efficiently.

In August of this year, <a href="https://www.thehindu.com/news/national/privacy-is-a-fundamental-right-under-article-21-rules-supreme-court/article19551224.ece">the Supreme Court of India upheld</a> that the government can mandate the need for an Aadhaar number to distribute subsidies and benefits and require that it be linked to the individual’s tax ID number. However, they also ruled that an Aadhaar number cannot be required by private entities to provide services. Therefore, Aadhaar can no longer be mandatory for opening bank accounts or mobile phone sim cards.

At Accion, we have developed a significant body of work on <a href="https://www.accion.org/webinar-indiastack-the-change-catalyst">IndiaStack</a>, <a href="https://www.accion.org/aadhaar-demonetization-financial-inclusion-in-india">Aadhaar</a>, and <a href="https://www.accion.org/digital-identity-for-financial-inclusion-webinar">digital identity</a> more broadly. We believe that IndiaStack, as was initially intended, would bring <a href="https://www.accion.org/the-game-changing-innovation-that-could-bring-financial-services-to-millions-in-india">millions of Indians</a> into the formal economy by breaking down the barriers that kept them out.

While the Supreme Court aimed to safeguard data and protect customer interests, it may unintentionally tarnish the goal of a “Digital India” and curtail the promise of IndiaStack for financial inclusion. Initial reactions from the financial services industry agree that this ruling may move India back to an era of manual entries and paper-based systems. Many inclusive fintech companies and financial institutions have developed products and services that use the Aadhaar identification service to reduce the cost of onboarding customers, targeted at more marginalized communities. However, now, these organizations will need to adopt in-person verification systems in addition to their digital identification processes, for clients that do not want to share their Aadhaar number. This will drive up costs, potentially making these new business models unfeasible.

While the full results of this ruling are still unraveling, the increased cost of operations will likely dissuade service providers from targeting the underserved with newer technology-driven models, making it difficult for these individuals and small businesses to access financial services. The ruling states that customers may offer their Aadhaar number voluntarily when registering for a service, but it remains to be seen whether they will be willing to provide the information. Despite new challenges, we hope that the providers who have made remarkable progress in driving financial inclusion can continue to find innovative ways to bring underserved Indians the financial tools they need. While this ruling may make it harder to sustain <a href="https://www.accion.org/accion-in-india-advancing-financial-inclusion-in-one-of-the-worlds-fastest-developing-economies">the pace of progress in India</a>, it’s crucial that policymakers, financial institutions, and entrepreneurs don’t give up on achieving a “Digital India.”

Is a ‘Digital India’ still possible?

Iain Brougham

How to move forward after a data breach affects India’s biometric ID system

Reports of data security breaches have become increasingly prevalent in recent years. As various countries across the globe establish national identity databases and centralized credit bureaus, such as DNI in Peru, NADRA in Pakistan, Aadhaar in India, and CNIC in Thailand, media coverage of incidents is amplified. In 2016, <a class="markup--anchor markup--p-anchor" href="https://www.riskbasedsecurity.com/2017/01/2016-reported-data-breaches-expose-over-4-billion-records/">over 4.2 billion data records</a> were exposed globally. These attacks are not limited to emerging markets, as proven by the recent breach of US-based credit bureau service Equifax, which exposed several hundred million <a class="markup--anchor markup--p-anchor" href="https://www.consumer.ftc.gov/blog/2017/09/equifax-data-breach-what-do">consumers’ information </a>— including names, Social Security numbers, birth dates, and addresses. Late last year, researchers discovered <a class="markup--anchor markup--p-anchor" href="https://www.wired.com/story/macos-high-sierra-hack-root/">a flaw in Apple’s macOS</a> that enabled super-user access to any Apple device, enabling malicious software to be installed easily and remotely. Now, India’s Aadhaar database has joined the long list of data breaches, as <a class="markup--anchor markup--p-anchor" href="https://www.cnbc.com/2018/01/04/aadhaar-database-breach-investigation-opened-in-india-on-tribune-report.html">recent reports</a> indicate that access was purchased through a WhatsApp group to the Aadhaar portal and the private data of over 1.2 billion Indians, all for a paltry sum of 500 rupees — about US$ 8.00.
When you see news of a crack in data security, you may picture savvy hackers exposing cryptographic vulnerabilities to access your banking information, but this isn’t always the case. Human error, process failures, and policy violations are overwhelmingly the most significant causes of such breaches and leaks of sensitive personal information.
In addition, while it is true that the majority of data attacks are executed outside the targeted organization, more often than not, the exposed weakness that enabled them was initiated — unwittingly — by internal staff. According to a <a class="markup--anchor markup--p-anchor" href="https://www.recode.net/2016/5/24/11756584/cyber-attack-data-breach-insider-threat-steve-durbin">survey from the Information Security Forum</a>, in most cases, employees were doing ordinary tasks, like taking files home to work in the evening, with no malicious intention of harming employers or their customers.
In other words, the human-driven processes that compliment secure technologies are equally as important as the technologies themselves. These processes can be easily overlooked or become out-of-date, leaving even the most robust of digital security systems useless for preventing criminal access.
The Aadhaar security breach is a prime example of this type of internal process failure. <a class="markup--anchor markup--p-anchor" href="http://indianexpress.com/article/opinion/columns/all-is-not-well-with-aadhaar-leak-aadhaar-details-5013305/">Analysis indicates</a> that this is a case of mismanagement and poor administration within the government bureau that manages Aadhaar, <a class="markup--anchor markup--p-anchor" href="https://uidai.gov.in/">UIDAI</a>, where UIDAI’s operations team failed to block (or delete) defunct legitimately issued access rights.
To meet the government’s ambition of registering hundreds of millions of Indians with Aadhaar identity cards, approximately 300,000 Village Level Enterprises (VLEs) were initially employed under the government’s Common Services Centres Scheme (CSCS). Once the targets were met (or the initiative had reached a logical conclusion), these jobs went away. But the access rights were not disabled by UIDAI staff, enabling malicious individuals to abuse the privilege.
From a financial inclusion point of view, robust identification is a fundamental requirement for micro-entrepreneurs to access the financial tools that provide growth and stability. Centralized identity databases enable customers to access their accounts remotely, and they limit leakages by preventing multiple enrollments by the same individual. Without a clear identity that can be proven, it is nearly impossible for any individual or business to obtain the necessary financing to grow. As Makhtar Diop, the World Bank Vice President for Africa, stated in the Identification for Development annual report, “Identification provides a foundation for other rights and gives a voice to the voiceless.”
However, any system is only useful if people trust it. Trust is instilled if the system is easy to use and understand, if issues are resolved immediately, and if people believe their transactions are safe.
In India, trust in the central identity database has been shaken. This trust needs to be re-instated and amply demonstrated through better policies, governance, controls, and operational processes. These improvements should be backed by unscheduled internal and external audits to test the core system, internal operations, and the extended distributed network, which is more susceptible to such breaches. Interestingly, the Aadhaar team has now come with Virtual ID to replace the Aadhaar number for third-party verification purposes. Let’s hope this is not a knee-jerk reaction but a well-considered solution that can earn the trust of the more than 1.2 billion people of India who look to Aadhaar for their unique IDs.

Is India better off without Aadhaar?

IndiaStack enables cashless, on-demand financial services for all Indians

<figure class="graf graf--figure"></figure>
The traditional financial system hasn’t worked for millions of Indians. The slow pace, the excessive documentation, the need to travel — all of these barriers locked people out of the formal economy and kept them from accessing the financial tools they need to improve their lives.
IndiaStack is changing the game. Using a digital infrastructure, IndiaStack brings paperless, cashless services to anyone with access to a smartphone, tablet, or computer. It will bring millions of Indians into the formal economy by breaking down the barriers that kept them out. Nandan Nilekani, the founder of Infosys, stated that IndiaStack is “India’s single most important innovation to formalize India’s domestic economy through digital services.”
Not only does IndiaStack ease access to financial services, it will also use the same digital system to help deliver government services in a transparent, accountable, and secure way. And since it’s digital infrastructure is accessible to businesses, start-ups, and developers, IndiaStack is already fostering innovation. Apps are being built to deliver financial, health, and educational services at scale.


[caption id="" align="alignleft" width="377"]<img class="graf-image" src="https://cdn-images-1.medium.com/max/1080/1*YErcHELYFE-Tcu5K4yUHUg.png" alt="IndiaStack is composed of 5 different elements: Aadhaar UID, e-KYC, e-Sign, DigiLocker, and UPI (Unified Payment Interface)" width="377" height="311" /> IndiaStack is composed of 5 different elements: Aadhaar UID, e-KYC, e-Sign, DigiLocker, and UPI (Unified Payment Interface).[/caption]
By making customer onboarding simple, fast, and cost-effective, IndiaStack has already proven its use for microfinance institutions, banks, and financial companies. Once IndiaStack is fully integrated, with easy authentication, payments, and information exchange, anyone will be able to open a bank account — without having to worry about cumbersome documentation or delays — and send and receive money by linking their account information to a virtual payments address.

<figure class="graf graf--figure graf--layoutOutsetLeft"></figure>
IndiaStack is composed of 5 different elements: Aadhaar UID, e-KYC, e-Sign, DigiLocker, and UPI (Unified Payment Interface). Each adds value for financial services providers and customers:

<ol class="postList">
 	<li class="graf graf--li">Aadhaar UID is a biometric-based unique identity platform at the heart of IndiaStack. Based on fingerprint and iris data, a twelve digit unique identification number is assigned to every individual by the Unique Identification Authority of India (UIDAI). For financial services providers, this provides a simple way to identify customers and to retrieve customer information. For customers, the value-add is simplicity — where all of their benefits are now linked to their unique identity number.</li>
 	<li class="graf graf--li">E-KYC is a paperless version of the verification process for new financial customers, called Know Your Customer (KYC). E-KYC empowers people with Aadhaar UIDs to share their information electronically using active biometric consent. Verification of the individual is completed by sending a biometric data pack to UIDAI for validation. UIDAI then sends the personal and demographic information of the individual to the business entity requesting the information, making sure the information is secure at every step. Financial services providers benefit from this process in that they can complete KYC verification procedures efficiently and cost-effectively. The online validation is completed in real-time and does not require the storage of documents. Customers save time, effort, and money that they would have spent compiling physical documents.</li>
 	<li class="graf graf--li">E-Sign, an online electronic signature service, is facilitated via E-KYC to digitally sign a document. This enables contracts and agreements to be executed quickly — while preventing forgery — a plus for both financial services providers and customers.</li>
 	<li class="graf graf--li">Digital Locker lets people digitally store and share important documents. This service first began as a mechanism to issue government documents to Aadhaar-holders in electronic format. Financial services providers are able to use this functionality to issue certificates, contracts, and agreements, and to access customer documents digitally. DigiLocker allows customers to control who has access to which documents, and it takes away the risk of potentially losing documents. Best of all, this service is free.</li>
 	<li class="graf graf--li"><a class="markup--anchor markup--li-anchor" href="http://www.accion.org/upi-changing-financial-inclusion-india/" target="_blank" rel="noopener noreferrer">Unified Payment Interface (UPI)</a> enables universal electronic payments. This cashless process lets financial services providers collect payments, fees, and charges electronically. The speed and efficiency of payments significantly lower the cost of operations. Customers benefit from the ability to make mobile payments instantaneously and at no cost.</li>
</ol>
These five components, when fully integrated, will usher in a paperless and cashless India. For financial services providers, the value of integrating into IndiaStack is boundless — easier, faster, and simpler transactions will dramatically improve the customer experience, while the cost of operations will be significantly reduced.
However, IndiaStack is still nascent, and some critics are concerned about security and privacy. The Aadhaar database, which centralizes identifying biometric data of over 1.1 billion people, is an attractive target for cybercrime — though the Indian government asserts that it’s protected by a state-of-the-art security system. The Aadhaar database can also be accessed by the government for purposes of “national security” — a law that is open to interpretation, posing serious privacy concerns. Financial services providers considering integrating with IndiaStack should consider both the potential benefits and costs.
To learn more about the ways that IndiaStack is transforming financial inclusion in India, <a href="https://www.youtube.com/watch?v=-GExQfQGFU8">watch our webinar</a>. In the webinar, we highlighted the risks and rewards of IndiaStack and the considerations financial services providers should take before integrating with this digital infrastructure.
The event is part of <a class="markup--anchor markup--p-anchor" href="http://financialinclusionweek.org/" target="_blank" rel="noopener noreferrer">Financial Inclusion Week</a> — an initiative of the <a class="markup--anchor markup--p-anchor" href="http://www.centerforfinancialinclusion.org/" target="_blank" rel="noopener noreferrer">Center for Financial Inclusion at Accion</a> that aims to strengthen the diverse community of players involved in building a more inclusive financial ecosystem. Financial Inclusion Week brings stakeholders across the globe together to explore the most important steps to achieving financial inclusion.

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