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Posted on Monday June 4th, 2018

India is poised for a paperless finance revolution.

We are at an inflection point in the Indian e-commerce industry in India. Thanks to “Regulatory Encouragements to Paperless Finance” and with the availability of technology that allows for a seamless mobile experience, buying financial productions online, be it fixed deposits, credit cards, insurance products, loans or mutual funds, will be as easy as buying a mobile phone online.


Social and financial inclusion


The keys to buying paperless products are e-KYC, which instantly authenticates a customer’s credentials via the Aadhar servers, and the e-signing of application documents, which allows customers to digitally sign documents without having an offline interaction with a branch. These two keys enable instant, frictionless processing and delivery of financial products.


Speaking of how the UIDAI-led Aadhar project paved the way for India’s paperless finance ecosystem, Nilekani said that the coming together of e-KYC, e-sign, and digital locker would create the seamless and instant processing and delivery of financial products.


“Ultimately, Aadhar-led authentication would lead to the financial and social inclusion of people who had been outside the ambit of the formal financial system.


200 million Indians shopping online by 2020


Recently Amazon’s Agarwal agreed that online transaction needs to be frictionless, adding that customers must be allowed to access a product of their choosing instantly through instant payment and instant authentication through e-KYC.


Talking of the growth of e-commerce in India, Agarwal said that Amazon has made 90% of India’s pincodes serviceable. “E-commerce will eventually touch every person in India”, Agarwal said, adding that e-KYC would help enable frictionless online transacting that would encourage more people to shop online.


Paperless products can also reach consumers where brick and mortar BFSI establishments may not. There currently are approximately 50 million online shoppers in India in 2016. This number is expected to hit 200 million in 2020.


This rapid spurt in online customers certainly would also impact the online marketplace for financial products, with more people going online to search, compare and buy these product.


So what needs to change for fast-tracking paperless product and transforming BFSI?


The use of e-sign (an Aadhar-enabled digital signature to replace wet signatures) and e-KYC via OTP (instead of physically documenting KYC or collecting biometric KYC), and the automation of payments instead of paper ECS or NACH mandates.


What are the advantages of paperless finance products?


Paperless finance products can be processed instantly in minutes, as opposed to days in the offline world. Consumers on mobile devices are connected to online financial platforms that can simultaneously process potentially millions of applications at once, this saving massive overheads in paperwork and manpower. The reduction of costs can be as much as 2-3% for banking products and 20-30% for insurance products. Consumers ultimately stand to gain with such reduction in costs.


Online selling of paperless product also helps weed out frauds, fudged data, and faking of signatures, thanks to e-signing and e-KYC. Lastly, selling paperless financial products online can help end the scourge of mis-selling of financial product. Since consumers can control the levers of their product search, they can compare, short-list and buy products that properly match their requirements.