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Benefits of DigiLocker Services to the Fintech Sector

by Amar Deo Singh (Head Advisory, Angel One Ltd)
Feb 12, 2023
Benefits of DigiLocker Services to the Fintech Sector, Market, KonexioNetwork.com

India’s fintech space is divided into five segments – payments that include QR payment, bill payment and other aggregator services; lending includes buy now, pay later and lending platforms, thirdly there are digital banking platforms, insurance platforms and wealth management platforms enabling investments and AI-based advisory services. To gain access to any of these financial services, people need to submit identity proofs, and it is a must for these platforms to verify the identity details submitted during the onboarding process. Over the years, Fintech platforms have simplified the KYC process to enhance customer experience. However, Finance Minister Nirmala Sitharaman’s announcement during the Union Budget 2023-24 to provide Fintech platforms access to documents in DigiLocker to authenticate users is a game-changer.

Aligned with its Digital India mission, the Indian government has facilitated the growth of Fintech in the country by providing access to other digital public infrastructure like Aadhaar, PM Jan Dhan Yojana, Video KYC, UPI, etc. As a result, the Indian fintech industry is predicted to grow to $1.3 trillion by 2025.

About DigiLocker

At present, DigiLocker is used to store digital copies of documents issued by the central and state governments, banking and insurance services, health certificates and transport documents like a driving licence. With the latest announcement, the government would be increasing the scope of adding other documents to the DigiLocker as well. 

Available on a web browser and mobile apps, DigiLocker has been used so far for identity verification on the DigiYatra app for contactless and effortless entry, check-in and security at domestic airports. The use cases of DigiLocker-based KYC will be expanded now.

Dynamic KYC

The government’s decision to simplify KYC with more utility of DigiLocker is aimed towards making the KYC process dynamic. Instead of a one-size fits all approach, it’s moving towards ‘risk-based’. It means risk assessment will be done using the Aadhaar and Pan card data as it has all the financial history from credit bureaus. Such simplification of KYC with a risk-based approach will ensure faster onboarding of users and make the Digital India initiative more accessible in the country. It will also ease access to credit.


The Budget is a significant step in supporting the long-term growth of India’s fintech industry, especially amidst the global headwinds. The Union Budget has largely emphasised the importance of tech and knowledge-driven growth. It has also focused on building a ‘one-stop solution’ for citizen data maintained by different government agencies and regulators. The DigiLocker and Aadhaar are going to be the foundation for the same.

Other significant measures that will benefit the fintech industry include the announcement of a National Digital Library, which will enable the economic growth of the country. Similarly, the RBI’s decision to link credit cards with UPI to make payments is a welcoming decision. A lot is happening in the Fintech industry, and it is encouraging that the government is enabling a friendly ecosystem for growth.