Hello everyone,

Welcome to the 123rd edition of The Pattern, a weekly newsletter looking into the latest in finance, economy and technology. Let’s dive in. The last few weeks have been frantic. In the ever-bustling India’s financial sector, new announcements took center stage that might put rocket boosters to certain companies while rock the boat for some others. Let’s look at each of these one by one.

AA waves in choppy waters It’s customary to start with the good news first. The cutting-edge financial data sharing protocol called Account Aggregator crossed 100 million successful consents milestone earlier this week. This is a massive step forward for the country as it seeks to set up standardised protocols for data aggregation and analytics. AA is a godsend for lenders and underwriters who require access to reliable, error-free financial information without having to jump through hoops.

The industry body DigiSahamati Foundation revealed that almost 80-90 million people in India are already using AA, underscoring the rapid rise in digital adoption of even nascent frameworks such as the AA.

At FinBox, we were among the first to launch AA-driven underwriting for our partners back in the day. And recently, we released a multi-AA based bank statement analysis product. This combines the power of multiple AA providers to ensure reliability, coverage and maximum ease for the end borrowers. At the same time, it comes pre-integrated with PDF uploads to process statements even in cases where AA network is down or a certain bank isn’t yet covered in the ecosystem.

However, not all is well yet. A recent report by The Ken highlighted how certain lenders are seeking to use AA consents to pull user data as many as 30 times a month allegedly for “loan monitoring” purposes. This is not only considered excessive in the industry but also borderline unethical.

The banks don’t like this much because – A. They have to part with prized customer data only for them to be served by someone else and B. They must incur huge infrastructure and network costs for these high-frequency data requests. The industry alliance DigiSahamati Foundation hopes to find an amicable solution to this issue even as it insists in its guidelines that account information should be pulled no more than 5 times a month. Interesting times ahead. Credit to ONDC

Dubbed the poster child of the new wave of open protocol innovation, India’s Open Network for Digital Commerce has now formally developed credit products on its platform. This, the platform claims, will enable customers to avail fully digital and paperless loans in less than 6 minutes.

The current ecosystem consists of 9 Loan Services Providers, 3 lenders and another three lenders to join in the near-future, according to Hrushikesh Mehta, SVP, Financial Services at ONDC. The network has its eyes set on capturing a share of the ever-growing pie of the Indian financial services ecosystem where digital and paperless experiences have become table stakes as the competition heats up.

The platform aims to launch GST based invoice financing loans next with more products such as purchase financing loans and working capital lines for individuals and corporates in the pipeline.FinBox has been bullish on ONDC since day one and our ONDC stack is helping large enterprises launch seamless credit experiences without the heavylifting. We wrote about the importance of the network and a playbook for lenders here . UPI credit breaks down the door

Even as ONDC takes its first steps in the journey to become a financial services major, UPI is taking even larger strides to capture all possible forms of transactions.This time, it’s with the credit line. Even as credit lines on UPI were announced months ago, the first products have started to appear and it seems that the fintech community is eagerly looking to piggyback on the UPI gravy train before it becomes too late/crowded.

Walmart-owned PhonePe announced the launch of credit lines on UPI this week and the feature will help customers availing such lines from their banks to link it to PhonePe and make merchant payments seamlessly. At the same time, it will enable merchants using PhonePe payment gateway to add another mode of payment at the checkout – namely credit line on UPI. And hence, enable customers to pay in seconds through their pre-approved credit lines.

The only catch is that these credit lines need to be pre-approved and availed from the banks. And hence, adoption might be slow in the beginning but it’s likely that a quick onboarding for UPI-based credit lines will make its way to the market soon.

PS: I am sure you’re excited about the upcoming Global FinTech Festival in Mumbai. We are too. FinBox is bringing some of its latest launches to the event including a modern business rules engine and a bunch of stacks to take advantage of the FinTech wave with a plug-and-play integration. Be sure to visit us at booth F21.

That’s all for this week. As always, leaving some reading recommendations below.

Reading List

1. SBI report dismisses bank deposit concerns as a 'Statistical Myth'

2. HDFC Bank beats peer banks in garnering deposits with a wide margin

3. Insurance and mutual funds to be soon available on ONDC

4. Bank borrowings cross Rs 9 lakh crore mark; lenders face pressure to raise funds

5. After unsecured retail loans, why is microfinance the latest focus of RBI?

Thank you for reading. If you liked this edition, forward it to your friends, peers, and colleagues. You can also connect with me on Twitter here and follow FinBox on LinkedIn to always get all updates.

Cheers, Mayank

All opinions expressed are my own and do not necessarily reflect the views of FinBox or its promoters.