Digital commerce has become an inseparable aspect of our living in modern times, and the further development of the same has been aspired with new technologies emerging in the field which can completely revolutionize this industry. One of such modern-day technologies is OCEN or Open Credit Enablement Network, which, using the Account Aggregator (AA) system, will revolutionize digital lending. OCEN, integrated with a wide variety of digital platforms and apps, aims to empower MSMEs by directly delivering financial products to them, and therefore, ending their dependence on traditional lenders.
There a few major differences between the traditional lending system and OCEN-based digital lending, which can lead to the transformation of lending in India. As per 3One4 Capital’s new report, India- A Startups Nation, while traditional lending is based on the ‘lend and forget’ ideology, OCEN-based digital lending is based on ‘lend, monitor, and collect’ ideology. On the one hand, traditional lending is a legacy system with less emphasis on data collection, while digital lending is a contemporary system with more emphasis on the same.
Further, credit assessments in traditional lending are based on balance sheets, but digital lending is based on understanding variable cash flow. And while traditional lending gives importance to high ticket-size loans, OCEN-based digital lending gives importance to all types and sizes of loan requirements. Finally, the traditional lending system involves the consumption of more time with physical document collection and verification process, and digital lending is all about end-to-end digital process with least turnaround time.
The other emerging technology in the field of digital commerce in India is ONDC or Open Network for Digital Commerce. This is a network based on open protocols and enables local commerce across segments, such as mobility and grocery among others, to be discovered and engaged by any network-enabled application. As per 3One4 Capital’s report, the ONDC platform has received investments of INR 157.5 crore for the first stage of the project from 17 banks and financial institutions.