Nikhil Kamath x Nandan Nilekani | People by WTF | Ep #3

In a conversation with Nandan Nilekani, the discussion centers on the transformative impact of the India Stack on entrepreneurship and digital infrastructure in India. Nilekani, a co-founder of Infosys and a key figure in the development of Aadhaar, highlights the evolution of digital public infrastructure, including UPI and DigiLocker, which have revolutionized financial transactions and identity verification. He emphasizes the importance of building systems at a population scale to ensure inclusivity and economic growth. The dialogue also touches on the potential of AI, the role of protocols like Beckn in disrupting monopolies, and the future of digital currencies and financial networks.

• The India Stack is a comprehensive digital infrastructure initiative aimed at fostering entrepreneurship in India.
• The discussion centers on how young entrepreneurs can leverage the India Stack to create opportunities and generate revenue.
• The conversation is led by Nandan Nilekani, highlighting his dual roles in public digital infrastructure and private sector investments.

"There is so much information around the India stack that is so relevant to a young person who wants to be an entrepreneur in India."

• The India Stack offers significant potential for young entrepreneurs to innovate and build new solutions.

• Nandan Nilekani co-founded Infosys in 1981, contributing to India's IT boom and establishing Bangalore as a tech hub.
• Infosys played a crucial role in shaping the landscape for technology companies in India and inspiring future entrepreneurs.
• Nilekani transitioned from Infosys to lead the Aadhaar project, marking a shift from enterprise to population-scale initiatives.

"Infosys was founded in 1981 under the leadership of Mr. Narayana Murthy, and I was one of the co-founders."

• Infosys was pivotal in establishing India as a major player in the global IT industry, influencing the tech ecosystem in Bangalore.

• Infosys is recognized as a pioneering startup that set high standards for corporate governance and long-term vision.
• The company fostered a culture of innovation and entrepreneurship, spawning numerous successful ventures.
• Infosys distinguished itself from traditional family-run businesses by focusing on synergy among its founders and a commitment to global respect.

"The group of founders were very synergistic; we all had different strengths. We had a vision of creating a globally respected company."

• Infosys' founders shared a unified vision and values, setting a benchmark for corporate governance and innovation.

• In 2009, Nilekani took on the role of leading India's digital ID program, Aadhaar, focusing on creating a digital-first identity system.
• Aadhaar aimed to address issues of efficient benefit transfer and inclusion of people into the formal system through a unique ID.
• The project emphasized digital infrastructure to enable private sector innovation on public rails.

"The government asked me to build a unique ID. I made it digital because I said in 2009, if you're going to build an ID, it has to be a digital ID."

• The Aadhaar initiative was transformative, shifting the focus to digital identity verification and enabling real-time online authentication.

• Aadhaar was designed to provide a unique digital identity to individuals, facilitating efficient government benefit transfers.
• The project required collaboration with various regulators to ensure acceptance of Aadhaar as a valid KYC method.
• By the time Nilekani stepped down, Aadhaar had reached 600 million people, and it continues to expand.

"When I stepped down, 600 million people had an ID, and now 1.3 billion people have the ID."

• Aadhaar's success in scaling digital identity verification has been a cornerstone of India's digital transformation.

• Aadhaar laid the foundation for subsequent digital initiatives like eKYC and eSign, enhancing the ecosystem for digital transactions.
• The concept of digital public infrastructure involves creating open platforms that enable innovation and private sector participation.
• The infrastructure is designed to be scalable and adaptable, supporting a wide range of applications and services.

"The philosophy of the design of Aadhaar and subsequently UPI as API-led architecture which everybody could use."

• The design philosophy behind Aadhaar and UPI emphasizes open access and interoperability, encouraging widespread innovation.

• The Jan Dhan Yojana program aimed to provide bank accounts to everyone in India, significantly accelerating banking penetration through digital technology.
• eKYC (electronic Know Your Customer) played a crucial role in reducing the time and cost of opening bank accounts and was instrumental in the rapid expansion of banking services.
• The introduction of Aadhaar-based eKYC also revolutionized the mobile industry, with companies like Reliance Jio leveraging it to enroll millions of customers quickly.
• The launch of eSign and DigiLocker in 2015 further enhanced digital capabilities, allowing for secure document storage and digital signatures.

"On the normal GDP, if you had looked at it, it would have taken 46 years to get to the level of banking penetration that we did in 9 years because you accelerated with digital technology."

• Emphasizes the dramatic reduction in time required for banking penetration due to digital technology.

"Reliance Jio used Aadhaar eKYC to enroll a million customers a day because they wanted to get to 100 million customers in 6 months."

• Highlights how Aadhaar eKYC facilitated rapid customer acquisition for Reliance Jio.

• 2016 was a landmark year for digital transformation in India, with significant events including the launch of UPI, Reliance Jio, and the demonetization initiative.
• The Unified Payments Interface (UPI) transformed the payment ecosystem by enabling real-time, easy-to-use transactions between different bank accounts and apps.
• Reliance Jio's entry into the market drastically reduced data costs and made voice services free, driving smartphone adoption and data usage.
• The BHIM app, launched by the National Payments Corporation of India (NPCI), popularized mobile payments and paved the way for other payment apps.

"In one year, everything changed... Reliance Jio launched, demonetization happened, and the Prime Minister launched the BHIM application."

• Summarizes the pivotal events of 2016 that accelerated digital adoption in India.

"UPI protocol is a protocol that describes how payment values move in a payment network, enabling dissimilar organizations to talk to each other."

• Explains the foundational role of UPI in facilitating transactions across different banking and app platforms.

• The concept of "population scale" is central to digital initiatives in India, aiming to include everyone in the digital ecosystem.
• Aadhaar, bank accounts, and mobile connections were all designed to reach every individual, emphasizing inclusivity and digital empowerment.
• Digital technology is viewed as a powerful tool for societal transformation, driving economic growth and formalizing the economy.

"If you want inclusion to happen, you have to think at population scale."

• Underlines the importance of designing digital solutions that cater to the entire population.

"I genuinely believed that digital technology used properly can make a big difference to lives of people."

• Reflects the belief in digital technology as a transformative force for societal benefit.

• Account aggregation emerged as a concept in 2016, focusing on the secure exchange and aggregation of financial and other data.
• The Reserve Bank of India supported the idea to facilitate data aggregation across different financial institutions.
• Account aggregation aims to empower consumers by providing a comprehensive view of their financial data and enabling informed decision-making.

"Account aggregation is I, as a consumer, let's say I'm a financial consumer... it can be used for anything."

• Describes the consumer-centric approach of account aggregation and its potential applications beyond finance.

• Account aggregation facilitates the construction of a personal balance sheet by collecting financial data from various sources, such as banks, mutual funds, and insurance policies, in real-time.
• The system is not a data repository but an exchange that enables real-time data requests and transfers without storing the data itself.
• Financial Information Providers (FIPs) supply the data, whereas Financial Information Users (FIUs) use the data for purposes such as loan eligibility assessment.
• The account aggregation framework reduces friction in financial transactions and supports various applications beyond lending, such as personal finance management and capital market apps.

"Account aggregation is not a repository; it's just an exchange. The data decides where it is; it's a real-time system."

• This quote highlights the nature of account aggregation as a real-time data exchange system rather than a data storage solution.

"The account aggregator is not holding on to the data; they only act as a conduit."

• This explains the role of account aggregators as intermediaries that facilitate data transfer without storing or accessing the data themselves.

• The India Stack initiative has led to the development of various digital systems, including FastTag for vehicles and UPI for financial transactions.
• FastTag assigns unique IDs to vehicles, allowing for digital payments on highways and reducing wait times significantly.
• The integration of digital platforms has facilitated innovations like online IPO applications, real-time tax refunds, and seamless bank account transfers.
• The India Stack journey continues with opportunities for entrepreneurs to build innovative solutions on top of existing digital infrastructures.

"FastTag was a platform where a vehicle could make a digital payment on the fly."

• This demonstrates how FastTag has transformed vehicle payments by enabling quick and efficient digital transactions.

"Indian everything goes to real-time... real-time bank account transfers, real-time tax refunds."

• This underscores the shift towards real-time digital transactions in India, enhancing efficiency and convenience.

• Entrepreneurs can leverage the India Stack to create solutions that address specific needs, such as apps for street vendors to streamline supply procurement.
• Innovations like daily savings apps and digital payment systems have emerged, providing convenience and financial inclusion.
• Entrepreneurs are encouraged to identify low-hanging fruit opportunities and build on existing digital platforms to create impactful solutions.

"Now these guys built an app for them to order and it's delivered to the cart, and they pay with UPI."

• This highlights an entrepreneurial solution that simplifies supply procurement for street vendors, saving time and increasing productivity.

"In India, you can now build a system where I can set up an autopay and deduct 5 rupees a day from my account."

• This quote illustrates the potential for creating digital financial solutions that promote savings and financial management.

• The Beckn protocol enables the unbundling of transactions, allowing different parties to interact in a decentralized manner.
• By separating e-commerce transactions into distinct components, Beckn facilitates new business models and disrupts traditional aggregator-based systems.
• Beckn's open-source nature allows for diverse applications across industries, including mobility, commerce, and energy.

"Beckn is a protocol which is a general-purpose protocol... it's a way to do transactions to buy things."

• This defines Beckn as a versatile transaction protocol applicable to various industries and use cases.

"You pay directly to the taxi Auto guy... it's a different model than an aggregator."

• This quote explains how Beckn enables direct transactions between consumers and service providers, bypassing traditional aggregators.

• Large language models are becoming commoditized, with the focus shifting towards building wrappers that cater to specific languages and nuances.
• The competitive landscape in AI is driving significant investments in language models, particularly in the Western market.
• There is an opportunity to develop AI solutions that address the unique linguistic and cultural needs of different regions, such as India.

"Large language models in my view will become a commodity; they are already becoming a commodity."

• This emphasizes the commoditization of large language models, suggesting a shift in focus towards specialized applications.

"Building wrappers on top of these models to cater to that... for the Indian language and the nuance of it."

• This quote highlights the potential for developing AI solutions that address specific linguistic and cultural requirements, particularly in diverse regions like India.

• Major tech companies are investing heavily in AI infrastructure to remain competitive.
• Open Source AI, like Meta's Lama 3, is becoming more accessible, reducing costs.
• The focus should be on leveraging AI technology in a cost-effective manner to create value.

"To invest is dangerous for them, so they collectively are investing $200 billion a year buying all you know chips, putting data centers, all that, but they have to do it because if they don't do it, they'll fall behind."

• Companies are compelled to invest in AI to avoid falling behind in technological advancements.

"Open source AI is coming. People like Meta have just launched Lama 3, and they're going to give it away free."

• Open source AI initiatives are making advanced AI technologies more accessible and affordable.

• AI can bridge communication gaps, especially in a multilingual country like India.
• Voice-controlled AI can democratize access to information for non-English speakers.
• AI is seen as a tool to improve lives, not replace human capabilities.

"If you can speak to the computer in your language of choice, your mother tongue, then suddenly you can access the entire knowledge in the system."

• Language AI can significantly increase access to information for non-English speakers.

"AI is useful to bridge this gap of communication. So that's why language AI is important for India."

• AI's role in bridging communication gaps is crucial for India's diverse linguistic landscape.

• Voice-controlled systems have potential but have not gained widespread adoption yet.
• They provide accessibility for those who cannot read or write.

"The guy who can't read or write, the only way is by talking."

• Voice automation offers a unique solution for individuals with limited literacy skills.

• Current AI enhances human capabilities rather than replacing them.
• The investment in AI infrastructure is driven by the necessity to stay competitive.

"I purely believe what you said, which is the stuff is going to make our ability to do things better, certainly not a replacement for what human beings can do."

• AI is seen as a tool to improve efficiency and augment human tasks.

• FinNet aims to integrate traditional financial systems with cryptographic advancements.
• Cryptography offers immutability and transparency, crucial for financial transactions.
• FinNet seeks to utilize cryptographic technology for high-volume, low-cost transactions.

"FinNet brings together the traditional mainstream financial system and marries it to the possibilities that cryptographic techniques have taught us."

• FinNet combines traditional finance with cryptographic innovations to enhance transaction efficiency.

"The ability to take different kinds of assets, convert them to tokens, then use a high-speed engine to transact, and then un-tokenize them at the end is a common thing."

• FinNet's architecture enables seamless asset tokenization and trading, enhancing financial operations.

• CBDCs are expected to streamline cross-border transactions and settlements.
• India's liberalization of capital account convertibility is anticipated to progress gradually.

"CBDC ultimately will be one more category in the FinNet."

• CBDCs are seen as a component within the broader FinNet framework.

"My view is it'll get more and more liberalized because India will get lots and lots of dollars."

• The trend in India is towards gradual liberalization of capital account convertibility.

• The crypto world faces challenges due to its lack of regulation.
• FinNet aims to incorporate crypto technology advantages into mainstream finance.

"Crypto world has a lot of issues, and now we're seeing the cost of that."

• The crypto world is encountering difficulties, highlighting the need for regulated integration.

"FinNet essentially brings all the technology advantages of the crypto world into the mainstream economy."

• FinNet seeks to leverage crypto technology benefits while avoiding its pitfalls.

• There are unprecedented opportunities for young entrepreneurs today.
• The challenge lies in choosing the right path amidst abundant choices.

"The ability for young people today to create successful companies has never been higher."

• Young entrepreneurs have immense potential to create successful ventures in today's market.

"Half of life is deciding what not to do, so you chip away and remove stuff from your thing and focus on a few things."

• The key to success lies in focusing on specific opportunities amidst numerous choices.

• Energy transition is a significant sector involving large-scale investments.
• Opportunities exist in both large energy projects and decentralized energy solutions.

"Energy transition is huge; it's going to involve trillions of dollars."

• The energy transition sector presents vast investment opportunities.

"The opportunity is actually in this little energy where there's lots of players and how do you make that efficient."

• Decentralized energy solutions offer potential for innovation and efficiency improvements.