Cloud communications company Route Mobile Ltd is in discussions with large e-commerce and payment platforms to enable a solution that will authenticate financial transactions without the need for a one-time password (OTP), a top 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 sift genuine transactions from potentially fraudulent ones. Of course, if the talks work out, such a solution would need to pass through several regulatory hoops before launch.
“This is a digital identity solution which we will be able to launch very soon. Some companies are looking to introduce this for all their financial transactions, while some microfinance and fintech companies want to use it to lower their risk (of lending),” Tushar Agnihotri, Route Mobile’s head of India operations and Asia region, said 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 deal is yet to be completed.
The technology has huge potential and is being tested in two countries, Agnihotri said, adding it has had great response.
“We need now to bring it to India and ensure that it fits in the framework of Indian data privacy laws, because telcos are reselling or monetizing the data that they have. We need to understand the legal framework very well around this product, but we simultaneously believe that this can dramatically reduce NPAs, which is a huge concern for any financing firm, and lower cost of lending for microfinance firms,” he said.
Implementing the solution will require partnering with telecom operators since OTPs are sent over text messages. The telco will also be leveraged to create a risk profile of the customer; for instance, his payments record, which can then be tapped into by microfinance and fintech companies to ascertain how much credit can be given. It’s somewhat like having a credit rating, but with telcos.
Two-factor authentication, where the second step entails entering an OTP, is considered a much safer mode for online financial transactions, user verification and authentication of various kinds required by banks and private and government services.
In case of financial transactions, implementing such a solution would require a go-ahead from banking regulator Reserve Bank of India.
On the telecom side, the solution will need clearance from the Telecom Regulatory Authority of India, which regulates telecom operators.
“We’re talking to some telcos as well, since it has to pass 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 don’t fall in the category as a solution provider,” Agnihotri added.
He said Route Mobile will conduct proofs of concept in a closed environment till the time the rules and regulations of the Digital Personal Data Protection Act are released, which will determine how companies can use existing and future customer data.