Cloud communications company Route Mobile Ltd is in talks with major e-commerce and payment platforms to enable a solution that will authenticate financial transactions without the need for a one-time password (OTP), a chief executive said. At the same time, he said it would be safe since the solution would arm telcos with a mechanism to identify the nature of a transaction, and act as an additional layer of security to filter genuine transactions from transactions that could be fraudulent. Of course, if the talks are successful, such a solution would have to jump through several regulatory hoops before launching.
“This is a digital identity solution that we will be able to launch soon. Some companies are looking to bring this in for all their financial transactions, and some microfinance and fintech companies are looking to use it to reduce their (lending) risk,” said Tushar Agnihotri, head of operations at India and the Asia region Route Mobile, in an interview.
The solution comes from Telesign, owned by Belgium-based Proximus Group, a provider of digital services, communication and technology solutions. In July, Proximus signed a definitive agreement to acquire 57.5% in Route Mobile for ₹5,922 crore. The combined entity of Route Mobile and Telesign is expected to have an annual revenue of €900 million. The agreement is still complete.
The technology has huge potential and is being tested in two countries, Agnihotri said, adding that he has had a great response.
“We now need to bring it to India and make sure it fits within the framework of India’s data privacy laws, because telcos are reselling or monetizing the data they have. We need to understand the legal framework very well regarding this product, but at the same time we believe that this could significantly reduce NPAs, which is a major concern for any financing firm, and lower cost borrowers for microfinance businesses,” he said.
Implementing the solution will require a partnership with telecom operators since OTPs are sent over text messages. The telco will also be leveraged to create the customer’s risk profile; for example, a record of payments, which microfinance and fintech companies can then use to determine how much credit can be given. It’s like having a credit rating, but with telcos.
Two-factor authentication, where the second step involves entering an OTP, is considered a much safer method for online financial transactions, user verification and various types of authentication required by banks and private and government services.
In the case of financial transactions, approval from the banking regulator Reserve Bank of India would be required to implement such a solution.
On the telecom side, the solution will require clearance from the Telecom Regulatory Authority of India, which regulates telecom operators.
“We are also talking to some telcos, since it has to go through the legal and regulatory frameworks on both sides. The companies that want to implement this solution would have to get the regulatory approvals since we are not in the solution provider category,” said Agnihotri.
He said Route Mobile will conduct proofs of concept in a closed environment until the Digital Personal Data Protection Act rules and regulations are issued, which will determine how companies can use existing and future customer data.
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