America Needs A Digital Infrastructure

(Forbes)

A strong DPI has three foundational systems—identity, payments, and data exchange—that together can make life easier in important ways. It highlights such an infrastructure as a way to reduce poverty in emerging economies, but the truth is that developed economies need a digital public infrastructure too, including the United States. A DPI has the potential to support the transformation of the economy and support inclusive growth.

The International Monetary Fund highlights the particular example of India’s foundational DPI, the so-called "India Stack”, and show how it has been harnessed to foster innovation and competition, boost financial inclusion and improve government revenue collection. India’s DPI contains powerful lessons for other countries embarking on digital transformation, in particular a design approach that focuses on shared building blocks and supporting innovation across the ecosystem through APIs. When it comes to payments, for example, many companies have built highly-competitive businesses around the Unified Payments Interface (UPI).

So where are we in the U.S.A. (or the U.K.) with our digital public infrastructure? We don’t have digital identity, we do have a payments system (and even America has instant payments now) and we don’t yet have a data exchange layer.

DPI will change lives. That sounds like a bold statement, but it is important to understand that DPI is not all about financial services. During a crisis such as COVID, countries with DPI were able to provide timely support to their citizens by delivering emergency payments to those who need them most. For example, within weeks of the initial pandemic lockdown, India digitally transferred emergency payments to 300 million people, including 200 million low-income women.

Compare that to the U.K., where the £21bn identified by the National Audit Office (NAO) to have been lost by the government, more than £7bn was linked to schemes introduced during the pandemic, with little chance of the majority being reclaimed. Similarly, between March 2020 and April 2022, American rapscallions made off with (latest estimate) $46 billion in fraudulent unemployment insurance claims by filing claims in more than one state (in one case, 29 states paid unemployment benefits to the same person), using the Social Security numbers of dead people, claiming on behalf of prison inmates and so on.