A file image of a sale in Sao Paolo, Brazil. Digital public infrastructure serves as the foundation upon which user-friendly digital products and services can be built to benefit large populations.
In an era dominated by digital transformation, governments worldwide are grappling with the challenge of leveraging digital tools, technologies, and platforms for the betterment of society. However, a significant portion of the global population lacks access to digital resources, hindering efforts to address critical issues such as healthcare, education, sanitation, and improved livelihoods. This digital divide is especially pronounced in emerging economies in the Global South. Still, it also affects marginalised communities in developed countries, including poverty-stricken urban neighbourhoods and remote indigenous populations. Although governments have initiated digital solutions, they scale slowly, and their impact remains limited.
To bridge this gap and cater to underserved populations, governments are exploring the concept of Public Interest Technology. This emerging field focuses on designing technology solutions prioritising historically marginalised communities as primary users, ensuring responsible and equitable solutions. These technologies are then scaled and adapted for broader use. However, designing such solutions is complex, as they involve multiple stakeholders, intricate governance mechanisms, and end-user populations unfamiliar with these technologies. Adding to the complexity are user-friendly private digital platforms like Uber and Airbnb, which set high expectations for public sector services in inclusivity and pervasiveness. Nevertheless, concerns remain regarding exploiting workers and customers on privately owned platforms driven solely by profit motives, especially among vulnerable populations lacking resources and digital literacy.
Creating public interest digital platforms is a formidable challenge. It requires robust digital public infrastructure and effective policy initiatives to harness emerging technologies to develop open, inclusive, and empowering platforms. While the world has few such initiatives deployed at a massive scale, there are instances of digital public infrastructure with positive outcomes.
Solving Identification, Digital Payments, and Open Data Issues
Digital public infrastructure serves as the foundation upon which user-friendly digital products and services can be built to benefit large populations. Most digital public infrastructure projects worldwide centre on identity platforms, digital payments, and real-time data management capabilities. Among these, fintech examples stand out due to their impact on providing faster, cheaper, and better access to financial services for global populations. According to a World Bank report, India's digital public infrastructure has propelled the financial inclusion rate from 25 percent to over 80 percent in the past six years.Also read: How India is taking UPI global
Examples of such platforms include Swish in Sweden, Zelle in the US, UPI in India, and PIX in Brazil. What sets these payment platforms apart from private platforms like WeChat and Alipay is that they are built within the public sector, often through partnerships and government initiatives. Consequently, these platforms are more open to plug-and-play opportunities, fostering scalability, adoption, and the development of additional services. The Digital Public Goods Alliance, a multi-stakeholder initiative, and global bodies like the G20's Digital Economy Working Group and the United Nations Development Program recognise the significance of digital public infrastructure and actively promote its development.
Identification plays a crucial role in digital public infrastructure. Indian government launched Aadhaar, the world's largest biometric digital identity program, in 2016. Aadhaar enabled third-party providers to build services on top of its modules, creating an ecosystem of vendors while preserving privacy and data security. This revolutionised access to banking and financial services, particularly for populations previously excluded from the formal banking system. It has also transformed the disbursement of social security payments and subsidies, reducing inefficiencies and corruption. As of January 2023, there are 1.359 billion Aadhaar card holders in India.
Digital payments: India has witnessed a digital payments revolution, with the Unified Payments Interface (UPI)
driving digital payments and real-time transactions. In June 2023, UPI processed approximately 10 billion transactions worth nearly $300 billion, benefiting 350 million people and 50-60 million merchants. UPI's success lies in its inclusive approach, fostering interoperability and enabling lower-income and marginalised populations to participate in the digital economy. Policy initiatives like Jan Dhan Yojana have facilitated financial inclusion by allowing the unbanked and underbanked to open accounts with zero deposit balances and no fees.
Open Data-Driven Commerce: The success of UPI paved the way for the Account Aggregator framework, the missing piece of India's digital public infrastructure puzzle. This framework enables secure and standardised data sharing between individuals and institutions, addressing data gaps hindering financial inclusion efforts. It has also led to the creation of the Open Network for Digital Commerce (ONDC)
. This inclusive platform empowers small and medium-sized enterprises and small traders in India's digital ecosystem. ONDC's interoperability and co-listing capabilities provide equitable access to the national ecommerce ecosystem, challenging the dominance of giants like Flipkart and Amazon.
Shaping the Digital Public Infrastructure future with caution!
The global recognition of India's digital public infrastructure success has led several nations to adopt elements of the "India Stack"—a set of open APIs and digital public goods that aim to unlock economic opportunities at scale using the power of mobile and cloud technologies. These efforts aim to address grand challenges in healthcare, poverty, education, and finance using open, affordable, and inclusive digital tools. Digital public infrastructure platforms can create network effects and scalability but are not without challenges.
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Criticisms include their social and environmental impacts, exclusionary practices, digital colonialism, and surveillance capabilities. To be effective, digital public infrastructure platforms must be accompanied by the right policy initiatives that promote adoption and provide onboarding rails for public and private stakeholders. For example, the digital payments revolution would not have been possible without access to affordable mobile phones and the lowest mobile data prices globally.
Digital public infrastructure-driven platforms hold great promise for achieving social impact at scale in the digital age. We can build a more equitable and impactful future by learning from successful examples like India's, which has harnessed these platforms to foster financial inclusion, promote economic activity, and empower marginalised populations. These platforms offer the potential to balance the rapid growth of privately owned digital platforms with public good mechanisms that are open, inclusive, and empowering. To realise this potential, policymakers must ensure that investments are made in the necessary digital and physical infrastructure and that the right policy interventions are in place. Digital public infrastructure provides hope and promise as a mechanism to address global grand challenges.Suchit Ahuja is an Assistant Professor at John Molson School of Business, Concordia University; Yolande E. Chan is Dean of Desautels Faculty of Management, McGill University; Umesh Rathod is a Policy Analyst at Indian School of Business.
[This article has been reproduced with permission from the Indian School of Business, India]