Impact of Digilocker Outage on Customer Onboarding at Stockbrokers
Digilocker, the government-operated digital repository for Indian citizens’ documents, experienced a significant outage starting from January 1, causing severe disruptions in customer verification processes for stockbrokers. This outage affected financial services firms and other organizations relying on Digilocker for identity verification, leading to a challenging situation for many in the industry.
Uncertainty Surrounding the Outage
Sources familiar with the matter revealed that the cause of the Digilocker outage remains unclear, with potential links to service interruptions at the National Informatics Centre (NIC) on December 31. The NIC, responsible for managing all government IT services, faced technical issues that also impacted the IRCTC train booking website accessibility on January 1. The disruption created a ripple effect across various sectors dependent on digital verification processes.
Struggles Faced by Industry Players
A senior executive from a digital broking startup, speaking on condition of anonymity, expressed the challenges faced by their firm during the outage period. They highlighted the reliance on Digilocker for customer verification, emphasizing the struggles encountered in onboarding new clients due to the platform’s non-operational status. Similarly, a wealthtech firm executive reached out to authorities seeking information on the restoration timeline but received no definitive response, further complicating the situation for industry players.
Concerns and Reflections from Industry Leaders
The outage raised concerns about the digital public infrastructure (DPI) and its concentration risk on essential systems. While DPI advancements have enhanced technological capabilities in the nation, the lack of alternative service providers during such disruptions poses a significant challenge for industry players. Founder of a stockbroking platform emphasized the need for diversification and contingency plans to mitigate risks associated with complete dependence on a single platform like Digilocker.
Challenges for Online-Only Operators
The fintech sector, heavily reliant on digital verification methods, found itself at a crossroads during the outage period. With traditional brokers capable of processing physical documents, online-only operators faced significant hurdles due to their exclusive reliance on Digilocker for customer onboarding processes. The outage highlighted the importance of alternative verification methods and the need for robust backup plans to ensure business continuity in such scenarios.
Looking Ahead
As Digilocker continues to play a crucial role in the digital verification landscape, the recent outage serves as a wake-up call for industry players to reassess their reliance on single platforms and explore diversification strategies. The need for alternative service providers and robust contingency plans has become more apparent, urging stakeholders to prioritize resilience in their operations to navigate potential disruptions effectively.
