Tag: economy

API Based Economy in India: A New Paradigm for Growth

Prasad AjinkyaLeave a comment
Digital India

APIs, or Application Programming Interfaces, are the building blocks of the digital economy, enabling software applications and systems to communicate and exchange data with each other. APIs are essential for creating seamless and integrated digital experiences, as well as enabling innovation and collaboration across various sectors and domains.

India and the APIs

India, as one of the fastest-growing and most diverse economies in the world, has a huge potential to leverage APIs to transform its businesses, industries, and society. According to a report by NASSCOM, the Indian API market is expected to grow at a CAGR of 17.2% from 2019 to 2024, reaching $5.1 billion by 2024.

The report also identifies six key drivers for the growth of the API economy in India, namely:

  • Digital transformation: As more businesses and organizations adopt digital technologies and platforms to enhance their efficiency, productivity, and customer satisfaction, APIs play a vital role in enabling interoperability, scalability, and agility.
  • Government initiatives: The government of India has launched several initiatives and policies to promote the adoption and development of APIs, such as the India Stack, a set of open APIs that provide access to various digital infrastructure and services, such as Aadhaar, UPI, eKYC, and eSign. The government has also mandated the use of APIs for various public services and schemes, such as GST, FASTag, and Ayushman Bharat.
  • Startup ecosystem: India has a vibrant and dynamic startup ecosystem, with over 50,000 startups operating in various domains, such as fintech, e-commerce, healthtech, edtech, and agritech. These startups rely on APIs to access and offer various solutions and services, such as payments, logistics, analytics, and cloud computing.
  • Consumer demand: The Indian consumer market is one of the largest and most diverse in the world, with over 1.3 billion people and a growing middle class. The Indian consumers are increasingly demanding and expecting personalized, convenient, and seamless digital experiences, which can be delivered by APIs.
  • Data explosion: India is witnessing a massive surge in data generation and consumption, driven by the proliferation of smartphones, internet penetration, social media, and online platforms. According to a report by Cisco, India’s IP traffic is expected to grow at a CAGR of 26% from 2018 to 2023, reaching 21.5 exabytes per month by 2023. APIs enable the efficient and effective management, analysis, and utilization of this data, creating value and insights for businesses and consumers.
  • Innovation and collaboration: APIs foster a culture of innovation and collaboration, as they allow businesses and organizations to create and offer new and improved products, services, and solutions, by leveraging the capabilities and resources of other entities. APIs also enable the creation of new and niche markets and segments, such as peer-to-peer lending, microfinance, and social impact.

Key benefits of using APIs

The API economy in India is creating new opportunities and challenges for businesses, industries, and society. Some of the benefits of the API economy include:

  • Enhanced customer experience: APIs enable businesses to offer personalized, convenient, and seamless digital experiences to their customers, by integrating various solutions and services, such as payments, delivery, loyalty, and feedback. APIs also enable businesses to reach and engage new and untapped customer segments, such as rural and unbanked populations, by leveraging the digital infrastructure and platforms provided by the government and other entities.
  • Increased efficiency and productivity: APIs enable businesses to optimize and automate their processes and operations, by connecting and synchronizing various systems and applications, such as ERP, CRM, and inventory management. APIs also enable businesses to reduce their operational costs and risks, by outsourcing and accessing various solutions and services, such as cloud computing, analytics, and security, from third-party providers.
  • Improved innovation and competitiveness: APIs enable businesses to innovate and differentiate themselves from their competitors, by creating and offering new and improved products, services, and solutions, by leveraging the capabilities and resources of other entities. APIs also enable businesses to collaborate and partner with other entities, such as startups, government, and academia, to co-create and co-deliver value and impact.

Risks and challenges ahead

However, the API economy in India also poses some challenges and risks, such as:

  • Data privacy and security: APIs involve the exchange and sharing of sensitive and personal data, such as identity, financial, and health information, which can be vulnerable to breaches, leaks, and misuse. Therefore, businesses and organizations need to ensure that they comply with the relevant laws and regulations, such as the Personal Data Protection Bill, 2019, and the Information Technology Act, 2000, as well as adopt best practices and standards, such as encryption, authentication, and authorization, to protect the data and the rights of the data subjects.
  • Quality and reliability: APIs need to ensure that they provide consistent, accurate, and reliable data and services, as they can affect the performance and functionality of the applications and systems that depend on them. Therefore, businesses and organizations need to ensure that they test, monitor, and maintain their APIs, as well as adopt quality and reliability metrics and measures, such as SLAs, uptime, latency, and error rates, to ensure the satisfaction and trust of their customers and partners.
  • Regulation and governance: APIs need to comply with the relevant laws and regulations, as well as the policies and guidelines of the entities that provide or consume them. Therefore, businesses and organizations need to ensure that they understand and adhere to the legal and contractual obligations and responsibilities, as well as the ethical and social implications, of their APIs. They also need to establish and enforce clear and transparent governance mechanisms and frameworks, such as API documentation, versioning, and lifecycle management, to ensure the accountability and sustainability of their APIs.

The API economy in India is a new paradigm for growth, as it enables businesses, industries, and society to leverage the power and potential of the digital economy, and create value and impact for themselves and others. How we leverage this and grow on to become the largest economy is something that still remains to be seen and this is where the next set of technology companies should be working on.

Generative AI in lending

Prasad AjinkyaLeave a comment
AI content creator generated using DALL-E

The Indian lending market is one of the fastest-growing and most diverse in the world, with a huge potential for financial inclusion and social impact. According to a report by Boston Consulting Group, the Indian lending market is expected to grow from $1.2 trillion in 2019 to $3.5 trillion by 2024, driven by the increasing demand for credit from individuals, small businesses, and rural segments.

Problems in the lending industry

However, the Indian lending market also faces several challenges, such as high operational costs, low credit penetration, complex regulatory environment, and high credit risk. Traditional lending models rely on manual processes, limited data sources, and rigid criteria, which result in inefficiencies, delays, and exclusions. Moreover, the COVID-19 pandemic has exacerbated the situation, as lenders face increased defaults, liquidity crunch, and changing customer behavior.

To overcome these challenges and tap into the opportunities, lenders need to adopt innovative and agile solutions that can enhance their efficiency, scalability, and profitability. This is where generative AI, a branch of artificial intelligence that can create novel and realistic content, such as text, images, audio, and video, comes into play.

What can generative AI do?

Generative AI can transform the Indian lending landscape by enabling lenders to:

  • Automate and optimize the lending process: Generative AI can automate and optimize various steps of the lending process, such as customer acquisition, verification, underwriting, disbursal, and recovery. For example, generative AI can create personalized and engaging marketing campaigns, analyze alternative and unconventional data sources, such as social media, e-commerce, and geolocation, to assess creditworthiness and risk, generate customized loan offers and contracts, and create interactive and empathetic chatbots and voice assistants to facilitate communication and collection.
  • Enhance fraud detection and prevention: Generative AI can enhance fraud detection and prevention by identifying and flagging suspicious patterns and anomalies in the data and transactions. For example, generative AI can detect fake or tampered identity proofs and documents, such as Aadhaar cards, PAN cards, and bank statements, by comparing them with the original or authentic versions. Generative AI can also detect fraudulent or malicious behavior, such as identity theft, money laundering, and cyberattacks, by analyzing the behavioral and transactional data of the customers and the lenders.
  • Innovate and diversify the lending products and services: Generative AI can innovate and diversify the lending products and services by creating new and tailored solutions that cater to the specific needs and preferences of the customers. For example, generative AI can create dynamic and flexible loan products that adjust to the changing circumstances and requirements of the customers, such as income fluctuations, emergencies, and life events. Generative AI can also create new and niche lending segments and markets, such as peer-to-peer lending, microfinance, and social impact lending, by leveraging the power of the crowd and the network.

Challenges in using generative AI

Generative AI is a new frontier for the Indian lending industry, as it offers immense possibilities and benefits for both the lenders and the customers. However, generative AI also poses some challenges and risks, such as ethical, legal, and social implications, data quality and security issues, and human-machine interaction and collaboration challenges. Therefore, generative AI needs to be adopted and implemented with caution and responsibility, ensuring that it is aligned with the values and goals of the stakeholders and the society.

I am not even going to talk about the compliance risk and the risk of using a pre-cooked model which may not even be similar to the target audience.

Generative AI is not a magic bullet that can solve all the problems of the Indian lending industry, but it is a powerful and promising tool that can augment and enhance the existing capabilities and solutions. Generative AI can help the Indian lenders to become more efficient, scalable, and profitable, while also serving the customers better and faster.

However, smart and crisp solutions are yet to be seen in the Indian market, and this is an area of work for us at Homeville.

Reduction in Stamp Duty rates

Prasad AjinkyaLeave a comment
Stamp duty in Maharashtra

In a move to bolster real estate sales, the Maharashtra government has announced a reduction in stamp duty rates of up to 2-3%.

As a new home buyer, this is an opinionated piece and somewhat of a warped perspective. However, I will try to be as objective as possible and hope to give enough citations to qualify my stance.

What is stamp duty?

Stamp duty is the additional charge that you will have to pay if you are buying a home anywhere in India. Depending on the state you are in, this stamp duty is payable at different stages in the home buying journey.

In Maharashtra, the stamp duty is to be paid upfront when you are doing the home down payment. In other states, such as Karnataka or Telangana (I am mentioning these because these are the two fastest growing states in terms of real estate) this stamp duty is to be paid on possession.

Why is this so important?

Well, most people end up saving for buying their first homes. Unless if you have access to super awesome payment plans and offers such as the home down payment assistance of HomeCapital, the majority of their savings end up being spent for buying that first home.

A stamp duty is usually levied on top of the agreement value. So in Maharashtra whenever you buy a home, not only will you be paying the usual 5% GST, you will also have to pay a 5% stamp duty as well. This pretty much puts the cost of the home at 110% of the agreement value. This is not even factoring in the cost of the broker, the registration fees, the home loan processing fees. If you add that up, the cost of the home is often 115% of the agreement value.

Stamp duty is 30% of this chunk. This chunk of expense is usually not visible to the average home buyer, until the point of purchase. That means you realize that you have incur additional expenses when you commit to buying a home.

Reducing this stamp duty from it’s 5% to 2-3%, the Maharashtra government has reduced the overheads of home buying.

So … what is the actual impact?

This is the question that a lot of us are asking. The actual impact if you are purchasing a home anywhere in Maharashtra, is a 60% reduction in stamp duty (that’s 2-3% of the agreement value). So, if you were to purchase a home worth 1Cr INR (roughly USD 140,000), then the net benefit you are getting is 2-3 Lakhs INR (roughly USD 3000-4000).

Would this impact real estate sales in the long term? No. In the larger scheme of things, this is but a drop in the ocean that’s not the painful part. In the smaller scheme of things, there might be some speculator transactions hoping to cash in on the “opportunity”.

Having just finished the worst quarter in the last 20 years, the sales are bound to rise. As the industry slowly recovers to its pre-COVID numbers, this small respite is a precisely that. It’s a small reprieve and pretty much nothing else. After 10 years, no one will remember this move, however, if this move were to solidify into the norm … then this would be interesting to see.

Conclusion

I think the government needs to look at the larger issues of access to affordable capital. Granting a small reprieve is not really an incentive to the industry.

The short term transaction upheavals would be an issue, and this hurts the same industry more than actually helping. However, most state governments have historically shown to be myopic and short sighted .. due to the nature of their terms and I cannot really fault them for this. So, like all things in the past 4 years, this shall also pass.

6 months of lockdown

Prasad AjinkyaLeave a comment

As I write this after nearing the 6 months mark of lockdown, I cannot help but think at looking back at how things have changed in the last 6 months or so.

  • Work from home is an accepted norm with remote working at an all time rise. The organizations that could slide into this mode of working have also started realizing the benefits of allowing teams to operate from home. Any teething troubles that were there have been ironed out and I am see teams of all functions coming together on Zoom/Hangouts and making it work.
  • Reverse migration has started. A lot of this working class who can work remotely has opted to move back to their native places. Just to give an example, out of my team of 8 – only one has chosen to stay in the city … the rest are safely back at their native places across the country.
  • Internet penetration and mobile services are at an all time high. The demand for Jio has never been higher with this working class scrabbling to ensure that they have steady connections at home. I see this audience’s demand in Tier-2 and Tier-3 cities ensure that brands and the government focus on building out the infrastructure in remote cities.
  • This would lead to some normalization between demand and supply of all goods across higher and lower tier cities. Take Mumbai for example … in the suburbs or in Mumbai proper, it is hardly a case when you see an electricity outage. As you go outwards, you will start seeing specific load shedding hours and schedules. In the Raigad district, there is atleast one day a week when there is no electricity. As the working class goes back to these cities, either the demand for inverters will go up or the respective local governments would be petitioned to increase the quality of lifestyle.
  • Environment conditions across all cities have drastically improved, the Mumbai air feels cleaner, cooler and taking a walk doesn’t seem oppressive.
  • Organizations whose engagement models involved a lot of physical interaction have started discovering alternative methods and workarounds. Dentists have started using full-body kits, delivery boys have established clear package hand-off protocols, restaurants have started opening up with lower floor space utilization.
  • Cost of basic services and commodities have slowly increased. An annualized inflation of 15-16% looks to be on the cards and the common man is going to bear the brunt of this. Any initiative the government is going to take is only further going to exacerbate this.
  • Industries that have been doing well since lockdown –
    • Food Deliveries
    • E-commerce
    • Agri-tech
    • App enabled services
    • Edtech
    • Fintech
  • Communication apps are at an all time high. Zoom has made it to the top 10 websites in India according to Alexa.com
  • OTT platforms are raking it in with a lot of the younger audiences looking at their smartphones for entertainment. Since there haven’t been any theatre releases, all the movies that were scheduled to be released have started being covered on the OTT platforms. A quick glance at the above list by Alexa informed me that Netflix, PrimeVideo and HotStar were all in the top 20.
  • Big tech firms are going all out to change the way things are. Google pretty much gave all schools free access to Google Classroom. Both my children are using this for their new term this year.

As things start settling down from this massive change in life, I see a resilience being shown by businesses as they start figuring out a way to live and thrive in this economically challenging environment. As a technologist, I see a large need to automate a lot of business processes to keep the wheels of the industry turning.

This is what will keep the world going round.

Work from home the new norm

Prasad AjinkyaLeave a comment

As if taken from a zombiecalypse movie, the coronavirus outbreak (COVID-19) has impacted the entire world in a big way. Without meeting people how does work get done?

How does the economy keep running inspite of the lockdown?

These are the questions plaguing a lot of business owners. Some have continued to brave the outbreak by declaring themselves as essential services. However, take the example of some obviously non-essential services – Real Estate, Information Technology, Financial Services apart from banking. How are these industries to function?

Finding a new mode of working

The obvious answer to this is to find a new operating model. Many organizations were going the digital, or were in the process of doing digital. Now, these organizations are most suited to survive the outbreak.

For pure brick and mortar businesses, transitioning to a new way of working is paramount.

This is where work from home comes into picture. This is not anything new and in the ITES sector, the work from home paradigm has been around for more than a decade now.

However, it was always considered as a secondary mode of working and never the primary.

A new operating model

With most businesses struggling to find a way of working online, more and more tools are being sought for online collaboration.

My wife, Dr. Harshaja who runs 13 Llama Interactive marketing agency created a quick video on some tools that people can use during work from home.

5 Tools for Work from Home by Harshaja Ajinkya

A new day, a new way

The human race is very resilient and always finds a way out. I hope that like all things, this too shall pass.

Until then, lets all herald the new way of working!

A fortress of regulations

Prasad AjinkyaLeave a comment

For the past 6 months or so, I have been involved in building up a fintech based business. You might have seen me post about real estate and how the young Indian workforce needs help to own a house. This organization is HomeCapital which provides home down payment assistance for first time home buyers. In fact, it’s India’s first home down payment program.

The product itself is pretty unique and involves a bit of financial engineering. It’s an unsecured personal loan made available to the home buyer at 0% interest. To know more feel free to drop by our office for a chat and a cuppa!

Business traction and growth

The business is doing well and therefore it has quickly attracted a good set of investors. As we are gearing up for a Series A run, one of the question that I am increasingly seeing in conversations is this –

What technology barriers to entry does your business have?

The first time I heard this question, I was stumped. It’s not as if the core product was a technology driven product. Given enough time and money, any competent person should be able to build any of the following systems –

  • Loan origination
  • Application management
  • Loan management
  • Customer Relationship Management

These are business support systems, and they will never be a technology differentiator. The simple reason being that there are too many service providers and SaaS products out there which provide alternatives for them.

Yes, I could always claim a better UX, a robust and secure system. However, these are fast becoming hygiene factors and thanks to cloud based solutions fast becoming a commodity.

How does this impact a relatively new industry?

Read on. It’s a good case of how the mayor of Paris has decided to take matters in her hands in order to stop an overcrowding of a young industry.

There are a dozen electric scooter companies operating in Paris right now. There are so many that the Mayor just announced that she will reduce that number to three with new rules for electric scooters in Paris.

via Low (No) Barriers To Entry — AVC

Artificial barriers are being constructed in order for three of the businesses to be sustainable. The young electric scooter industry is being protected in this case by Paris.

Very similar to this, the FinTech industry in India is relatively young, and the Government of India has taken an active interest in this. One of the instances where the banking and lending industry in India was protected was where RBI drastically changed the P2P startup landscape by limiting individual investors to 10 Lakh INR.

Most developing countries are taking this approach for multiple industries. A wait and watch approach with a beady eye on the innovations and changes ensures that most policies that are being passed are in situ with the economic environment.

Protecting lush markets

What the mayor has beautifully done is protect the largest european market of electric scooters. One reason for more than a dozen startups to spring up in this market was that it was fairly easy for someone to join a business, learn the ropes and then start on their own. However, what will happen if one of these fly by night operations were to suddenly go down under? Suddenly the entire market starts stumbling. Would you as a governing body allow this to happen?

No. I would rather have 3-4 stable operators providing this service as opposed to 12-15 firms. It’s regulation, yes. It’s against the natural laws of economy, yes. However, it is being done to protect the market. Over a period of time this triopoly will try creating a seller’s economy, however the regulation will ensure that no one player can generate super normal profits. This creates a pretty strong barrier. An impregnable fortress of regulations that cannot be overcome.

India and FinTech

If you now look at the FinTech industry in India, then there are many regulations. This is not so much a concern as much as the fact that these regulations keep evolving as the industry evolves.

Take the fact that since September 2018 the Aadhar based KYC norms have come to a standstill. It is only last week that the RBI has allowed for e-KYC to be re-initiated. Now through in a recent trend such as DeepFake in their, and now you have regulators in a dizzy. What the major players in banking and lending are doing is looking up to the regulator to take decisions … these decisons are being taken over a long period of time (approximately 6 months in the case of e-KYC).

That’s two business cycles. Enough time for an upstart to start-up. India is a lare country and we haven’t really started making fintech products for the 66% of the non-english speaking Indians. There is hope of growth there, and hence the regulation barriers will be slowly built in that area.

Is a barrier needed?

A barrier to entry is needed when the market becomes small and the players have to compete for transactions. However, what is unique about billion people economies such as India and China is that the sheer volume of users is so high that there is always room for more.

Even in such a space where every month there is a new lender or two cropping up, the Indian real estate and lending space still remains under utilized. Housing for all still remains a distinct dream, and until then, instead of building barriers, perhaps we might want to think about building bridges.

The tragedy behind Indian IT Services

Prasad Ajinkya

Understanding Indian IT Companies (TCS, Infosys, Wipro, HCL Tech, TechM)

via Understanding Indian IT Companies (TCS, Infosys, Wipro, HCL Tech, TechM) —

An excellent infographic of the top IT/ITES providers in the country.

The bulk of the revenue comes from abroad, and this seems to be a problem. As technology keeps getting more simpler and easier to adopt, the reason to outsource the contract to another country will keep going down.

Combine this with the recent spate of visa issues, and you have one impending slump in the near future.