Beyond apps and portals: How digital public infrastructure is transforming South Asia

A new Asian Development Bank report finds that digital public infrastructure, shared systems for identity, payments, and data exchange is rapidly becoming the backbone of governance and service delivery across South Asia, with digital payments leading progress. However, weak data-sharing frameworks, limited government capacity, and fragile public trust threaten to slow its potential to drive inclusion, efficiency, and regional integration.

Across South Asia, a quiet transformation is underway, one that does not rely on roads, ports, or power plants, but on digital systems that most citizens never see. A major new report by the Asian Development Bank, produced with research support from Dalberg Advisors and contributions from institutions such as the Centre for Digital Public Infrastructure, UNDP, and the World Bank ecosystem, argues that digital public infrastructure, or DPI, is rapidly becoming the backbone of modern governance in the region.

DPI refers to shared digital systems that help governments and businesses identify people, move money, and exchange data securely. These systems sit beneath everyday services, welfare payments, health records, school certificates, and banking apps, making them faster, cheaper, and easier to use. Unlike traditional government IT projects, which are often built as closed, stand-alone platforms, DPI is designed to be open, reusable, and interoperable, allowing many services to run on the same digital foundations.

Why DPI matters more than apps and portals

The report makes a clear distinction between digital services and digital infrastructure. While apps and portals serve specific purposes, DPI acts like a public utility. Just as roads allow different vehicles to travel and businesses to operate, DPI allows different digital services to connect and scale. When built well, it reduces duplication, cuts costs, limits fraud, and expands access, especially for people who are poor, remote, or previously excluded.

The economic case is strong. India’s Aadhaar digital identity system has helped reduce leakage in welfare programs, saving far more money than it cost to build. According to UNDP estimates cited in the report, widespread use of DPI could add up to 1.4 percent to annual GDP growth in low- and middle-income countries by 2030. In South Asia, where governments must serve large populations with limited resources, those gains matter.

Payments lead the way, identity follows, data lags behind

Among the three core elements of DPI, digital identity, digital payments, and data exchange, digital payments are the region’s biggest success story. India’s Unified Payments Interface now handles most retail digital transactions and is expanding beyond national borders into Bhutan, Nepal, and Sri Lanka. Nepal has digitized most government payments, while the Maldives’ Favara platform processed over a billion dollars in transactions within its first year.

Digital identity systems show mixed progress. India has near-universal coverage, while Bhutan and the Maldives have rapidly expanded national digital IDs to around half their populations. Bangladesh and Nepal are still struggling to move from rollout to meaningful use, and Sri Lanka’s digital ID system remains largely in development.

Data exchange, the ability for systems to securely share information, is the weakest link. Outside India, most countries lack fully functioning, trusted platforms for sharing data across agencies and sectors. Without this layer, governments cannot fully automate services or personalize support, limiting DPI’s impact.

Trust, skills, and laws are the real bottlenecks

The report is clear that technology alone is not the main barrier. Instead, weak institutions, outdated procurement rules, and gaps in legal frameworks are holding DPI back. Many governments lack the technical skills to design and manage modular digital systems. Procurement processes often favor large, closed vendors rather than flexible, open solutions.

Public trust is another major challenge. Cybersecurity incidents, unclear grievance mechanisms, weak enforcement of data-protection laws, and fears of exclusion all reduce people’s willingness to use digital systems. Women, rural populations, people with disabilities, and those without formal documents face higher risks of being left behind if DPI is poorly designed.

Country experiences underline these issues. Bangladesh has a world-class payments ecosystem but fragmented data systems. Bhutan has strong political backing for digital reform but faces infrastructure and talent constraints. India leads globally on DPI but still struggles with uneven adoption at the state level. Smaller countries like the Maldives face added risks from limited redundancy and offshore data hosting, while Sri Lanka must rebuild digital institutions after the economic crisis.

A regional opportunity hiding in plain sight

Despite these challenges, the report sees real opportunity ahead. Because DPI is modular, countries can learn from each other, share standards, and build systems that work across borders. Cross-border digital payments are already showing what is possible. Similar cooperation could support trade, tourism, migration, disaster response, and even climate finance across South Asia.

For development partners like ADB, the message is clear: funding platforms are not enough. Long-term success depends on strong laws, capable institutions, skilled public servants, and systems that people trust. Digital public infrastructure, the report concludes, is no longer optional. It is becoming core state infrastructure, and how it is governed today will shape inclusion, growth, and accountability across South Asia for decades to come.