Digilocker down! Customer verification for stockbrokers has been severely disrupted since January 1, as Digilocker, a crucial platform for identity verification, has been non-operational, according to three sources familiar with the matter on Thursday.
Digilocker, operated by the government, serves as a digital repository where Indian citizens can store their documents. Financial services firms and other organisations can access these documents with user permission whilst conducting know-your-customer (KYC) procedures.
Sources informed ET that whilst the cause of the outage remains unclear, it could be linked to service interruptions experienced at the National Informatics Centre (NIC) on December 31. The issue was resolved by the evening of January 2, according to informed sources.
The NIC, a government organisation, manages all government IT services and provides technological guidance to authorities. The disruption affected the IRCTC train booking website, which became inaccessible on January 1.
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“We are entirely dependent on Digilocker for customer verification and over the last two days we have been struggling big time to onboard customers because of the outage,” said a senior executive from a digital broking startup, speaking anonymously.
A wealthtech firm’s executive has contacted authorities regarding the service disruption but hasn’t received any definitive restoration timeline, the report said.
The fintech sector, which relies heavily on digital verification, uses Digilocker as a primary verification tool. The traditional method of scanning physical documents is considered less secure and isn’t preferred by technology-focused companies. Additionally, their systems aren’t equipped to efficiently process scanned documentation.
“The issue has brought to light the concerns around DPI (digital public infrastructure). While it has definitely helped advance our tech capabilities as a nation, it has also built a concentration risk on our systems,” said the founder of another stockbroking platform. “We do not have alternative service providers who can help us in such scenarios, or through whom we can divert traffic.”
Digilocker offers significant advantages to digitally-oriented users, eliminating the need for manual document scanning. Users simply authorise platforms to access their stored documents directly from their Digilocker accounts.
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According to Securities and Exchange Board of India‘s KYC regulations, digital verification must utilise services like Digilocker, followed by customer video verification. Whilst traditional brokers with physical presence can process paper documents, online-only operators face significant challenges due to their complete dependence on Digilocker.
The Digilocker platform currently serves 434.9 million users and has facilitated 9.4 billion document issuances, as reported on their website. Users commonly store educational certificates, driving licences, and registration documents on the platform.
