BIIA Biennial Conference Bangkok, Thailand October 2017
Building an Infrastructure for a Truly Digital Economy and Financial Inclusion
India
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Law DepartmentTransUnion555 West AdamsChicago, Illinois 60661
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The Numbers
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260M+Credit Active Consumers
India in Numbers
900M+15+ Years of Age; median age is 27
1BMobile Phone Connections
1.3BPopulation of India, 18% of the total world population;
33% is urban
1 of 2Countries with Advanced
Online Biometric DatabaseFinancial institutions
240+ banks, 100 FinTechs;500M+ bank accounts
10,000
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The market share for non-bank finance companies has increased to 48%
-
200
400
600
800
1,000
1,200
1,400
Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416
NBFC & HFC OTHERSNBFC Market Share
43%
NBFC Market Share48%
Banking Environment
Source: TransUnion CIBIL Consumer Credit Database
Live
out
stan
ding
bal
ance
In b
illio
ns U
SD
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6079
94 97 109
139 152
177207
247
310
In m
illion
s
Jan 2007.
Aug 2017.
Consumer Credit Growth Trajectory
Number of Consumers Present on the Credit Bureau Database
Source: TransUnion CIBIL Consumer Credit Database
Slow pick up post credit squeeze in 2008
Robust growth led by focus on secured loans
Steady state growth with all product types displaying stable growth
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q106 Q406 Q307 Q208 Q109 Q409 Q310 Q211 Q112 Q412 Q313 Q214 Q115 Q415 Q316 Q217
AUTO LOAN MTG LOAN PERSONAL LOAN CONSUMER LOAN GOLD LOAN CREDIT CARD TWO‐WHEELER LOAN
45%
Source: TransUnion CIBIL Consumer Credit DatabaseLoan types not included in the graph above account for ~ 30% of all loans disbursed in a quarter.
UPDATE AS OF 31 JUNE 2017
Composition of New Accounts Opened
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q106 Q406 Q307 Q208 Q109 Q409 Q310 Q211 Q112 Q412 Q313 Q214 Q115 Q415 Q316 Q217
AUTO LOAN MTG LOAN PERSONAL LOAN CONSUMER LOAN CREDIT CARD TWO‐WHEELER LOAN
Source: TransUnion CIBIL Consumer Credit DatabaseLoan types not included in the graph above account for ~ 60%+ of all loans disbursed in a quarter.
UPDATE AS OF 31 JUNE 2017 – excludes GOLD LOANS
Composition of New Accounts Opened
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5 3 5
9
15
22
27 31
-
5
10
15
20
25
30
Q20
7Q
307
Q40
7Q
108
Q20
8Q
308
Q40
8Q
109
Q20
9Q
309
Q40
9Q
110
Q21
0Q
310
Q41
0Q
111
Q21
1Q
311
Q41
1Q
112
Q21
2Q
312
Q41
2Q
113
Q21
3Q
313
Q41
3Q
114
Q21
4Q
314
Q41
4Q
115
Q21
5Q
315
Q41
5Q
116
Q21
6Q
316
Q41
6Q
117
Q21
7Q
317
DEFINED BY TRAJECTORY OF DEMAND FOR RETAIL LOANS
Consumer Credit Growth TrajectoryIn
milli
ons
Source: TransUnion CIBIL Consumer Credit Database
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7
4
7
13
18
24 26
0
5
10
15
20
25
Q20
7Q
307
Q40
7Q
108
Q20
8Q
308
Q40
8Q
109
Q20
9Q
309
Q40
9Q
110
Q21
0Q
310
Q41
0Q
111
Q21
1Q
311
Q41
1Q
112
Q21
2Q
312
Q41
2Q
113
Q21
3Q
313
Q41
3Q
114
Q21
4Q
314
Q41
4Q
115
Q21
5Q
315
Q41
5Q
116
Q21
6Q
316
Q41
6Q
117
Q21
7
In m
illion
s
DEFINED BY TRAJECTORY OF SUPPLY FOR RETAIL LOANS
Consumer Credit Growth Trajectory
Source: TransUnion CIBIL Consumer Credit Database
Demonitization
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0.0%
0.5%
1.0%1.5%
2.0%
2.5%
3.0%3.5%
4.0%
4.5%
5.0%
Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117
90+%
(a)
AUTO LOANS HOUSING LOANS PERSONAL LOANS CONSUMER LOANS CREDIT CARDS TWO‐WHEELER LOANS
Source: TransUnion CIBIL Consumer Credit DatabaseNOTE: NPA Rate measured by Outstanding Balance in 90+% (90 to 179) as ofSnapshot Date for all loan types excluding Mortgage. 90+% for Housing Loans & Property Loans calculated at 90 to 900 DPD
NPA continues to be low with quality of new vintage of origination typically better or at par with previous originations
Portfolio NPA
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60M+ 30M+ 1.5M
Individuals seeking credit every year
Number of individuals unable to get credit
Number of individuals who had behavior similar to low risk
Trended credit information and more robust analytics can increase access to credit for this population
Increasing Supply
$10B+ in additional lending
But what about mass India?
$400B+
© 2016 TransUnion LLC All Rights Reserved | 16Enabling 1B+ People
While virtually no one was looking, India created the
largest open API in the world
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Building “Digital India”
Source: www.Forbes.comIndia's Tech Revolution Has Already Left The West Behind -- It's The Best Investment Opportunity Now by John Mauldin, April 2017
pre-2009Nearly ½ the population of India is undocumented
2012Phase 2Mobile Infrastructure, eKYC
2016Phase 4A New Payments System
2016Phase 6Demonitization
2014Phase 3Banking Adoption
2016Phase 5India Stack
2010Phase 1The Aadhaar Act
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Building “Digital India”
Source: www.Forbes.comIndia's Tech Revolution Has Already Left The West Behind -- It's The Best Investment Opportunity Now by John Mauldin, April 2017
pre-2009Nearly ½ the population of India is undocumented
2012Phase 2Mobile Infrastructure, eKYC
2016Phase 4A New Payments System
2016Phase 6Demonitization
2014Phase 3Banking Adoption
2016Phase 5India Stack
2010Phase 1The Aadhaar Act
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Aadhaar Numbers Issued
Adoption of Aadhaar
Source: IDinsight State of Aadhaar Report 2016-2017; May 2017
100210
510
720
930
1,100
0
200
400
600
800
1000
1200
2011 2012 2013 2014 2015 2016
62% CAGR
In th
ousa
nds
130
179177
217 236
290
391383
508
565
451
506
0
100
200
300
400
500
600
Apr'16
May'16
June'16
July'16
Aug'16
Sept'16
Oct'16
Nov'16
Dec'16
Jan'17
Feb'17
Mar'17
Authentications per Month
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Building “Digital India”
Source: adapted from www.Forbes.comIndia's Tech Revolution Has Already Left The West Behind -- It's The Best Investment Opportunity Now by John Mauldin, April 2017
pre-2009Nearly ½ the population of India is undocumented
2012Phase 2Mobile Infrastructure, eKYC
2016Phase 4A New Payments System
2016Phase 6Demonitization
2014Phase 3Banking Adoption
2016Phase 5India Stack
2010Phase 1The Aadhaar Act
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Jan Dhan Yojanalaunched in August 2014
for comprehensive financial inclusion
Aadhar launched in 2010. Issued 1.1B+ Aadhaar in
just seven years
Pradhan Mantri MUDRA Yojana (PMMY) was
launched in 2015, 39M+accounts opened and $27B+ USD amount
sanctioned
Pradhan Mantri Jeevan Jyoti Bima Yojana was launched in
2015. Over 10M people enrolled in 1st month of
launch
Banking Adoption
Since Inception
300M Bank Accounts
opened
670BCash
Deposits
3.2B Overdraft
Guinness World Record
1.8M accounts opened in one week
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The principle of JanDhan Aadhaar Mobile Trinity is that an individual’s Aadhaarnumber is linked to an active bank account for implementing cash transfers
The Power of JAM
Developing mobile based solutions to reach wider audience
Scores helping the emerging consumer have access to credit
Leveraging Aadhaarbiometric data to facilitate consumers having faster access to credit Name, Address, DOB, Gender,
mobile/email All 10 fingerprints Iris scan Photograph
Mobile Subscribers
1B+
Mobile Subscribers
1B+
Jandhanbank a/c300M+
Jandhanbank a/c300M+
AadhaarCard1.1B+
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Building “Digital India”
Source: www.Forbes.comIndia's Tech Revolution Has Already Left The West Behind -- It's The Best Investment Opportunity Now by John Mauldin, April 2017
pre-2009Nearly ½ the population of India is undocumented
2012Phase 2Mobile Infrastructure, eKYC
2016Phase 4A New Payments System
2016Phase 6Demonitization
2014Phase 3Banking Adoption
2016Phase 5India Stack
2010Phase 1The Aadhaar Act
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India Stack
Reference: Indiastack.org
PaperlessWhere digital records move with an individual's digital identity, eliminating the need for massive amounts of paper collection and storage
PresencelessWhere a universal biometric digital identity allows people to participate in any service from anywhere in the country
CashlessWhere a single interface to all the country's bank accounts and wallets enable the democratization of payments
ConsentWhich allows data to move freely and securely; on demand
PresencelessLayer
PaperlessLayer
CashlessLayer
ConsentLayer
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What is the Impact?
People
Empowers all citizens to be “seen” and participate in the
formal economy
Institutions
Enables faster, more efficient and more accurate
decision making in both public and private sectors
Technology
Provides a robust technology infrastructure
that creates parity, reduces costs and drives innovation
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The Experience
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2+ days to open an account
Physical verification required
The Problem:
CASE STUDY: LEADING INDIAN PRIVATE BANK
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The Solution
MOBILE APPLICATIONTablet-enabled application with pre-fill capabilities to accelerate the process and improve data quality
IDENTITY VERIFICATIONBiometric, one-time-password, geo-tagging and KYC solutions to verify the consumer’s identity quickly and seamlessly
DATA ACCESS & UNDERWRITINGLeveraged credit and non-credit data processed through a real-time decision engine to deliver an instant credit assessment
FINALIZATION & DISBURSEMENTImage upload, e-signature, document generation and integration to fulfillment systems resulting in an end-to-end solution
OFFER OPTIMIZATIONInteractive experience enables on-the-fly offer refinement and adjustments within pre-set thresholds
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The Results:30% fewer manual reviews >80% reduction in processing timeInstant loan approvals in 15 minutes
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The Future
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will “Unlock Fortune” at the Bottom of the
Pyramid, which constitutes more than
900M Indians
Empowerment
digital economy will boost participation in
formal sector and help GDP growth
Universal Participation
standardization and easier execution,
while adhering to all necessary regulations
will promote aggressive Innovation
Continued Innovation
interactions, transactions, and
data exchanged in this ecosystem will
make India “data rich”
Data Poor to Data Rich
opportunity for volume-based and
profitable businesses leveraging digital
technology
Opportunity Creation
What Now?
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Faceless
Data Driven
The Bank; Re-imagined
Advanced Algorithms
Paperless
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The Lessons
“The right to privacy is protected as an intrinsic part of the right to life and personal liberty under Article 21 and as a part of the freedoms guaranteed
by Part III of the Constitution”
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Key Takeaways
03Become Insights Rich
02
Challenge the Status Quo
Focus on the Customer Journey
04
Invest in the Core01
The story of the digitization of India is, if
nothing else, both inspiring and
impressive. It is a testament to what is
possible when a bold, clear vision is
delivered with near-flawless execution.
Find your breakthrough
Do something big
ExecuteGO