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Late last year, ONDC rolled out financial services on its platform and may have unlocked an opportunity for lenders to accelerate their growth. This possibility, however, hinges on how well lending institutions are equipped to leverage the platform.  

But before we delve into the nitty-gritty of how lenders can be ONDC-ready, let’s take a closer look at the factors that enable growth for lenders on the platform: 

Easy-to-onboard, standardised technology

The open network comprises standardised APIs that help onboard all participants, including financial services, with ease. Once a lender onboards a buyer app, they can easily get onboard other buyer apps with minimal effort, solving two major aspects of growth strategy: partnership lending and customer acquisition.  

A wide range of potential borrowers

ONDC welcomes all types of players in the commerce ecosystem—sellers, end-consumers, technology service providers, and other allied businesses that add value to the ecommerce supply chain (e.g. logistics). It gives lenders a diverse potential borrower pool to tap into. 

Tons of data

A large user/participant volume pool transacting in an intricate network means tons of data and insights. Lenders can access a lot more (consent-driven) data compared to other channels, which can be leveraged across functions across the loan cycle, including segmentation, credit assessment, and strategy. 

Keeping the aforementioned factors in mind, there’s no doubt that ONDC has much to offer to lenders. If the network does indeed deliver on its promise of having millions of participants onboard, lenders must brace for impact. The first order of business? Getting their technology stacks in place.  

Here are some technical facets that lenders must consider when they plan their ONDC foray: 

Optimal use of data

Despite data analytics having a strong footing in businesses for over a decade, a vast majority of enterprise data is still in silos. A Wakefield survey in 2022 found that while 96% of respondents managed to create new revenue streams with data available to them, only 20% were using all their data.

ONDC has the potential to provide data that can be leveraged across use cases, including up-sell, cross-sell, policy decisioning, and underwriting. To combat data silos, lenders need to ensure their system architecture allows the free flow of data across the organisation, while also providing mechanisms for optimal data usage.  

Highly configurable modules

The fast-paced nature of ecommerce and the sheer volume of users make ONDC an ever-evolving environment. It requires lenders to continually adapt their strategy by micro-segmenting borrowers based on real-time criteria.

To this end, lenders need to move away from a traditionally monolithic system to a modular approach. The modules—which comprise specific functionalities like KYC, policy building, loan journeys, and more—must also be agile enough to adapt to a live and dynamic ecommerce environment.  

Rich analytics

ONDC is a rich ecosystem that will see lenders partner with various platforms to cater to diverse cohorts, giving lenders insights into borrowers. Utilising this actionable information calls for efficient funnel analytic tools that can help lenders strategise and tailor their offerings to borrowers.  

Fraud mitigation

With large-scale expansion of lending comes a greater risk of fraud. Often, in the case of banks, there is a lag between its occurrence and detection. Last year, an RBI report noted that 94.5% of the frauds reported in 2022-23 by banks had occurred in previous financial years.

It is, therefore, imperative that lenders have a robust fraud detection mechanism in place, one that detects malicious activities and nips them in the bud. Alternative data-powered fraud detection tools can help mitigate this risk.  

Scaling the lending business is like running a marathon. It takes months of preparation and a whole lot of stamina-building to finish the race.

A lender’s imperative to getting on board and scaling their growth on the ONDC game begins with having a robust and agile originations system. The above four pillars are a great place to start! 

Rajat Deshpande is the Co-founder and CEO of FinBox.