Open Network for Digital Commerce (ONDC) holds the promise of a more equitable world, setting a global benchmark for digital public goods. Its intricate tapestry of open data and open protocols has paved the way for bigger, broader, and above all, inclusive commerce. It is all set to bring the next 500 million consumers and 100 million sellers to trade online, marking the beginning of a Cambrian explosion in digital commerce. 

ONDC is best explained as the UPI of commerce. As a buyer, no matter which app you use, you will be able to access all available products and services listed by various sellers on different platforms, via a common network. 

Things aren’t very different when it comes to financial services; you can use any app to access loan & insurance products of various lenders or insurance providers on different platforms, via the ONDC network. A buyer app could be a proprietary app, say IIFL’s MyMoney App, or an aggregator, say Paisabazaar, or a superapp, say Paytm, while lenders and insurance companies comprise the seller side.

Let’s say you apply for a business loan on Paisabazaar (buyer app), it authenticates your GST details and broadcasts your loan application via a gateway, allowing you to select any lender of your choice on the ONDC network. This eliminates the scope for exclusive lender-platform partnerships, levelling the playing field for all loan providers. This translates to three broad outcomes; one, more choice for borrowers including new-to credit customers, two, equal access to a significantly larger user base for all financial service providers, three, additional revenue stream for buyer apps for their role as a loan originator. Besides these benefits, the framework also ushers in a hyper-competitive marketplace, where only product innovation and customer-first solutions can flourish. 

The expectation is that ONDC will help lenders reach 400-440 million eligible retail borrowers by 2030 . Currently only 120 million are covered by formal lenders. Although this presents a vast opportunity to tap into a large borrower base, for it to realise revenue, lenders will have to be ready for an FMCG-like rush in a competitive framework such as ONDC. 

This is because the scope for nurturing exclusive business partnerships is limited within a framework such as ONDC, leaving no room for lenders to influence how their loan products are featured. 

Given that lenders will have no control over where or how they will be featured within ONDC, the only thing they can do to survive the competition is to create a host of loan products that are competitively priced and match the unique needs of the borrower base. 

In essence, lenders must be equipped to:

• Adapt quickly to market changes

• Offer competitive loan products at speed

• Efficiently serve borrowers by constantly matching changing consumer preferences

• Make quick policy iterations based on real-time analytics, whether it is to offer better interest rates, reduce document requests, or change threshold values

This is where lenders will need a smarter, faster business rules engine. 

• Launch loan products at speed

Risk teams at lending organisations can create policies on Sentinel without having to write a single line of code. They can create various credit decisioning modules by writing business rules in natural language, either in the form of expressions or matrices; and simply sequence them together to form a workflow. They can make iterations at speed based on changing ONDC dynamics. The fact that a leading NBFC could expand the number of policies by over 176% from 64 to 177 in a few months of adopting Sentinel stands testimony to its prowess at launching new loan products at speed. 

• Live test lending strategies

Sentinel allows Canary testing — a method by which risk teams can test new waters in digital lending, without getting their feet wet. Risk teams can test up to five new lending strategies in live production environment without disrupting their day-to-day operations. While the primary policy is responsible for making credit decisions, the canary policy(s) operates discreetly in the background, logging its decisions for later analysis. They can even A/B test up to five lending strategies by enabling the Champion/Challenger mode on Sentinel. This approach ensures that lenders don't venture blindly into new risk/borrower segments on ONDC. 

• Generate real-time risk analytics & embed feedback data

Optimising your loan products without relevant analytics is akin to shooting blindfolded. Sentinel enables data-driven decision-making by giving lenders access to rule-level, policy-level, and portfolio-level analytics . Risk teams can even access funnel-level analytics, and easily figure out why a user was flagged or approved. 

That’s not all. The true measure of a credit decisioning strategy lies in collections outcomes. Therefore, to be able to meaningfully optimise credit decisioning models one must be able to embed feedback loops (delinquency data). This is catered to by Sentinel’s Risk Connector feature. This way, lenders can quickly understand what works and what doesn’t and take informed, calculated decisions while setting risk limits for ONDC. 

• Access more data, drive better decisions

Should you notice considerable traffic from specific loan agents (buyer apps) on ONDC, you can integrate their respective platform data into the decisioning process via APIs for more accurate credit underwriting. The process is as simple as pasting a curl command. Besides, Sentinel comes with ready integrations for a range of data sources including alternate data.

• Orchestrate end-user journey 

Curate customised experiences for your loan applicants using Sentinel’s workflows. For instance, premium customers shouldn’t be put through multiple checkpoints, for they deserve short and quick checkout experiences. Once a loan application is broadcasted by the loan agent (buyer app), and the customer chooses you as their preferred lender, you can help them skip screens involving multiple document requests if they qualify your risk assessment criteria. To know how easily this can be done via Sentinel, see the above illustration.

To know more about how the ONDC framework works or to build the rails for lending on ONDC, schedule a call with our experts . Should you wish to see Sentinel in action, drop us a message here , and we will get back to you as soon as possible.