Banking on DPI: How India’s Digital Public Infrastructure Powers Open Finance
India’s digital financial revolution is no longer a vision of the future — it is a lived reality powered by the Digital Public Infrastructure (DPI). From Aadhaar to UPI to Account Aggregator (AA), India has built one of the most inclusive, interoperable, and secure digital ecosystems in the world. This framework is not only redefining financial access but also reshaping how banks, fintechs, and regulators collaborate to deliver innovation and inclusion at scale.
From Access to Empowerment: The India Stack Story
The India Stack represents a series of interoperable digital layers that together have democratized financial access for hundreds of millions of citizens.
Aadhaar (Identity Layer): Over 1.3 billion Indians now possess a unique digital identity. Aadhaar has accelerated the onboarding of individuals into formal financial systems, making KYC processes faster and more reliable.
UPI (Payments Layer): UPI has turned India into a global leader in real-time payments, processing over 13 billion transactions monthly as of 2025. It has made digital payments accessible, instant, and nearly cost-free for individuals and small businesses alike.
Account Aggregator (Data Layer): The newest and most transformative layer, the AA framework enables individuals and MSMEs to securely share their financial data with lenders or service providers, entirely on their own terms.
This evolution marks India’s shift from inclusion by access to inclusion by design. Financial participation is no longer just about opening an account — it is about using trusted, consent-driven systems to unlock new opportunities.
Account Aggregator: The Backbone of Open Finance
The Account Aggregator ecosystem is at the heart of India’s Open Finance movement. It allows users to share their financial data securely across banks, NBFCs, insurers, and wealth managers through regulated, consent-based channels. Instead of data being locked within institutions, individuals now decide what to share, for how long, and with whom.
The AA framework has over 2 billion linked accounts, with participation from major public and private banks, NBFCs, and fintechs. Institutions like Axis Bank, HDFC Bank, and Federal Bank are already using AA-enabled data to streamline underwriting and offer personalized products to customers.
This new data-sharing model is transforming lending and wealth management. By enabling real-time visibility into cash flows, it allows financial institutions to make faster, more accurate, and risk-adjusted credit decisions. MSMEs that were previously invisible to the formal credit system can now access loans based on actual transaction data, not just collateral.
Building a Consent-Driven, Privacy-First Financial System
As India implements its Digital Personal Data Protection Act (DPDP Act), the Account Aggregator system stands as a model of compliance and privacy-first design. It has embedded principles such as purpose limitation, data minimization, and revocation of consent long before they became legal mandates.
Every transaction in the AA network is consent-based, digitally signed, and fully auditable. This means users retain complete control over their personal and financial data. It also ensures that institutions operate within a transparent and trust-based data-sharing ecosystem.
Bridging the MSME Credit Gap
India’s 64 million MSMEs form the backbone of its economy but continue to face a credit gap estimated at over $300 billion, according to SIDBI and IFC. Traditional underwriting models, heavily dependent on collateral and manual documentation, have excluded a large segment of viable businesses.
The Account Aggregator network is helping close this gap. Through cash flow-based lending, lenders can now assess real-time financial health using transaction data from GST, bank statements, and other digital records. This has led to a rise in faster, more inclusive credit products for small businesses. Early results from participating lenders show a sharp improvement in turnaround times and a significant reduction in non-performing assets.
DPI's Expanding Universe
While the current wave of DPI adoption is anchored in financial data, India’s digital ecosystem continues to evolve. Upcoming integrations under the India Stack include:
- Tax and income data from the Central Board of Direct Taxes (CBDT)
- Provident Fund and pension datasets
- Telecom, property, and health records via DigiLocker
These integrations will enable truly holistic financial services — where a user’s creditworthiness, income stability, and asset ownership can all be verified digitally, seamlessly, and securely.
Fintechs as Enablers of Scale
Fintech companies and technology service providers are key enablers in this transformation. They build the interfaces, APIs, and integrations that make the AA and UPI frameworks scalable and usable for both financial institutions and end users. Collaborations between fintechs and banks are creating a dynamic model where innovation meets regulatory confidence.
Regulators such as the Reserve Bank of India (RBI), NPCI, and ReBIT continue to play a central role by ensuring security, interoperability, and standardization. This triad of regulation, innovation, and inclusion is what makes India’s DPI model a global reference point.
The Road Ahead: A Global Template for Open Finance
India’s DPI success story is now inspiring similar efforts in other countries, including Brazil and Indonesia. As these systems mature, India is proving that public digital infrastructure can drive both innovation and inclusion without compromising privacy.
The coming years will see the convergence of DPI layers into a seamless ecosystem that connects identity, payments, credit, and data under one interoperable umbrella. For financial institutions, this means rethinking business models around open data and shared infrastructure. For customers, it means a future where financial empowerment is not a privilege but a default.
India’s financial system is evolving from just being transaction-led to being trust-led as well. With DPI as its foundation, Open Finance as its framework, and inclusion as its goal, the country is setting new benchmarks in how technology can humanize finance.
The next chapter of financial innovation will not be about who owns the data, but who uses it most responsibly to build trust, empower customers, and drive equitable growth
