Fireside Chat on ONDC

In the ever-evolving landscape of digital innovation, India is setting a global precedent with platforms like ONDC (Open Network for Digital Commerce) and Account Aggregators (AA). A recent fireside chat between Hrushikesh Mehta, Senior VP of Financial Services at ONDC, and T. Koshy, Managing Director and CEO of ONDC, shed light on how these platforms are transforming the way businesses and consumers interact in the digital ecosystem. The session explored the synergies between ONDC and AA, the groundbreaking opportunities they present, and the challenges that still need to be addressed.

Here are the key takeaways from their thought-provoking discussion:

The Vision Behind ONDC and Account Aggregators

1. Koshy opened the session by contextualizing the broader vision of ONDC: to democratize digital commerce and empower businesses of all sizes. Traditionally, digital commerce has been dominated by platform-centric models, where e-commerce giants hold the keys to market access. This creates a dependency on these platforms for visibility and sales. ONDC, on the other hand, is an open, unbundled, and interoperable network that aims to eliminate this gatekeeping by enabling seamless collaboration between buyers and sellers across diverse platforms.

Similarly, Account Aggregators are transforming the financial services landscape by simplifying how individuals and businesses share their financial data with service providers. This allows for more accurate risk assessments and tailored services, especially for underrepresented segments like small businesses and rural consumers.

How ONDC Empowers MSMEs and Startups

Koshy provided a compelling example to illustrate ONDC’s potential: two young graduates from a textile family in Tamil Nadu who want to expand their business. Today, their options are limited to integrating with large e-commerce platforms like Amazon or Flipkart, where market access comes with significant constraints and costs. However, in the ONDC ecosystem, these entrepreneurs can integrate once and gain visibility across a vast network of buyers, including those brought in by fintech companies, media platforms, and even ride-hailing services.

This “common pool of consumers,” as Koshy described it, is the core of ONDC’s value proposition. Unlike traditional platforms, where consumer bases are considered proprietary assets, ONDC allows merchants to access a shared market of over a billion potential customers, leveling the playing field for small and medium-sized enterprises (SMEs).

Account Aggregators: Building Trust and Inclusion in Financial Services

Hrushikesh Mehta delved into the transformative role of Account Aggregators in addressing India’s financial inclusion challenges. Historically, financial services have catered to the top tier of the market—those with established credit histories or formal income records. Account Aggregators disrupt this dynamic by digitizing and centralizing financial data, making it easier for lenders to assess creditworthiness even for individuals and businesses with no prior track record.

“Digitization reduces the cost of delivery,” Mehta explained. This reduction in cost allows financial institutions to offer smaller, more inclusive financial products, from microloans to sachet-sized insurance policies. For example, rural farmers who previously had to walk miles to submit physical bank statements can now share their financial data digitally, opening up access to credit and other financial products.

The Cascading Benefits of Interoperability

Both speakers emphasized the cascading effects of interoperability. ONDC unbundles and integrates various components of digital commerce—catalogs, logistics, credit, and more—while AA does the same for financial data. This interoperability creates opportunities for new use cases, such as:

• Credit and Insurance Integration: Sellers on ONDC can seamlessly access invoice financing or insure shipments through interoperable protocols.
• Alternative Data for Underwriting: Platforms like Shiprocket and Ola are exploring ways to use transaction and behavioral data to provide credit to merchants and drivers, respectively.
• Democratizing Wealth Creation: ONDC and AA also aim to simplify investment access, helping underserved populations build wealth through mutual funds and other financial instruments.

Real-World Impact: A User’s Perspective

A highlight of the session was a question from the audience, where a user shared their personal experience with ONDC. Despite early challenges like transaction failures and delayed refunds, they remained optimistic about the platform’s potential to disrupt traditional e-commerce. The user also praised initiatives like Namma Yatri, a mobility solution built on ONDC principles, while urging the platform to expand its reach to other cities and services.

This interaction underscored the transformative power of ONDC, not just in commerce but across sectors like mobility, where democratization is equally crucial.

Challenges on the Path to Adoption

While the potential is immense, the panelists acknowledged key challenges that need to be addressed:

1. Awareness and Trust: Mehta highlighted the need for ecosystem-wide education to build trust in platforms like AA. Many consumers remain wary of sharing sensitive financial data, especially in light of rising OTP and phishing scams.
2. Interoperability: While ONDC and AA are built on the premise of interoperability, gaps still exist. Koshy and Mehta stressed the importance of collaboration across stakeholders to ensure seamless integration and avoid silos that could hinder growth.

Looking Ahead: The Future of Digital Transactions

Both Koshy and Mehta were optimistic about the long-term prospects of ONDC and AA. As these platforms scale, they envision a future where:

• Every product and service, from groceries to insurance, is available on an open network.
• Financial transactions, whether for credit, insurance, or investments, are underpinned by AA infrastructure.
• New use cases, such as visa applications or cross-border trade, leverage the power of standardized, interoperable data sharing.

“We believe that 10 years from now, Account Aggregators will be at the center of almost every financial transaction in the country,” Mehta predicted.

Conclusion: A Collaborative Revolution

The fireside chat offered a glimpse into how platforms like ONDC and AA are not just technological innovations but catalysts for systemic change. By unbundling and democratizing access, they hold the promise of empowering millions of businesses and individuals, driving economic growth, and making digital ecosystems more inclusive.

The journey is just beginning, but with collaborative efforts and a shared vision, ONDC and AA could very well define the future of digital commerce and financial services in India—and beyond.

Catch up to the complete conversation with the session recording available on YouTube.