Open Credit Enablement Network (OCEN)

OCEN is an initiative to unbundle lending and enable the creation of specialized entities, each specialized at one part of the job. Therefore, we envision the future of lending to be a partnership between multiple firms individually focused on sourcing/distribution, identity verification, underwriting, capital arrangement, recollections, etc. The entities like marketplaces who have high business-connect with their customers (businesses or individuals), can embed credit offerings in their applications now. These entities are referred to as Loan Agents’ (LAs) and were previously referred to as ‘Loan Service Providers’ (LSPs).

OCEN (Open Credit Enablement Network) aims at democratising the lending ecosystem. The core philosophy is using open networks to reach out to maximum borrowers and lenders, with reduced risk, more transparency, strict control on funds (both end use & collections) and thus building a robust lending ecosystem. At the borrower level, using consent driven architecture and personal data as information collateral, any type of borrower (even new to credit or people with poor credit scores), can access financing. The end-to-end digital processes not only reduces the total cost of operations, but also has the advantage of reaching out to anyone and everywhere, without the lender having a physical presence. For example, sitting out of Jaipur, a NBFC has disbursed OCEN loan on GeM Sahay to borrowers operating from Andaman Nicobar Islands, Manipur, Baramullah etc and the smallest loan transaction has been of Rs.160 for business purposes.

OCEN is the right protocol, to bring credit/finance to the bottom of the pyramid and at the same time lenders also make money with this same section of people at the bottom of the pyramid. OCEN not only levels the playing field between incumbents and challengers, but also reduces the concentration risk which comes with size at bigger players. Most MSMEs are working capital intensive businesses that need quick money and do not have collateral securities to put up to banks for conventional Cash Credit limits like financing. For such businesses, this is a tool to grow their businesses, and improve their credit scores.

Lenders see opportunities in not only sourcing new business, but also reduced risk due to high quality data and use of DPI (Digital Pubic Infrastructure), like GSTN, Account Aggregator, Digilocker and its associated APIs, like mobility, Health, Fastag etc.

Why OCEN

Low Cost of Acquisition >> The Borrower Agent brings his borrowers on the network, reducing the cost of acquisition through various channels. OCEN framework benefits the Lenders to gain easy access to borrowers. Not just borrowers of one network, but easy access to multiple sets of borrowers of multiple networks. 

Lower Cost of Underwriting >> The Borrower Agent also acts as a Provider of Derived Data along with other Underwriting data from various sources like GSTN and Account Aggregator which helps in lowering the Cost of Underwriting

Digitisation >> OCEN Digitises the whole process which involves various activities like Bureau pull, KYC validation, Account Aggregator data, E-Sign on documentation, e-NACH for repayment etc and reduces the time and effort of processing at reduced costs.

Reduced Cost of Collections >> OCEN provides a large opportunity to Lenders and Borrowers to participate in T4 (Type 4) loan products which have End Use Control and Collections control for ensuring higher portfolio quality and cash flow control as well as reduced Cost of collections

OCEN solves for MSME’s Credit requirements: Small Ticket Short Tenure Loan

Small businesses need loans of smaller amounts and for shorter tenures (15/30/90 days) for their businesses compared to larger businesses to help them navigate through the requirement of day-to-day Working Capital needs.

It also helps Lenders to create Loan books for smaller loans which are granular loan exposure on a rotational basis, compared to large bulky loans. Hence reducing concentration risk.

As these Loans are for short tenure, there is higher predictability and lower risk compared to long tenure loans in which recovery of loans may sometimes be a challenge. 

Loan Agent model

The Loan Agent (LA) model is a departure from the Direct Sourcing Agent (DSA) model and is an ‘agent of the borrower’. The LA explains to borrowers their ‘bill of rights’ ensuring transparency and safeguarding of borrower interests. They educate the borrowers about the various credit product offerings, pricing and more details. They help the borrowers get access to formal, affordable credit at low interest rates and collaborates with lenders to create more tailored offerings for borrowers.

In their simplest form, LAs are a loan marketplace that enables borrowers to compare loan offers from multiple lenders and choose the best one. In a more advanced version, the LAs are akin to a borrower’s financial advisor, looking after their interests, fetching the best offers and advising the customer to make good decisions.

In the longer run, it is envisioned that many more LAs (with apps) will be created. Each of them would focus on distinct borrower pools and build the specialized experiences suited to their customers. This would allow lenders to focus purely on their underwriting and collections logic and cater to diverse collaborations with the LAs.

OCEN 4.0

The OCEN model has been built incrementally in phases, with reinforced learnings from each of the previous pilots. The goal for OCEN 4.0 is to build an ecosystem of participants that creates a Cambrian explosion of cash-flow based loan products across different MSME sectors and different types of borrowers. 

Participant Roles

OCEN 4.0 supports specialized roles for the participants. The purpose of introducing new roles is that it promotes specialization and enhances system efficiency. For example, by establishing a local network of participants, the burden on lenders is reduced, resulting in increased credit accessibility in underprivileged areas.

Role Description
Lender Lenders are the regulated entity that create and own the credit products. They work with other participants as part of a Product Network to serve the Borrower. The Loan-agent understands the borrowers’ credit requirements and works with the lenders to create the product.
Loan-Agent (LA) Agent of the borrower who will help the Borrower to pick up the best loan offer. The Borrowers agent will charge the Borrower a fee for helping them select the best loan. Loan agent is a more inclusive term that encompasses both Borrower Agent (BA) and Lender Service Provider (LSP), spanning across the existing DLG model referred to as LSP and the emerging model in which BA operates as the borrower agent.
Derived Data Partner (DDP) A derived data provider is a collaborating partner within the network that furnishes supplementary data to the Lender, aiding in enhancing their underwriting engine with additional information.
Collections Partner (CP) A Collections Partner is a network-affiliated collaborator designated by the Loan Agent (LA) to aid in the collection process. The lender retains the option to either opt for the Collections Partner or continue using their existing collection procedures.
Disbursement Partner (DP) A Disbursement Partner (DP) is responsible for supporting Purpose Controlled products. This partner will establish integration with suppliers, retrieve their catalog, and facilitate seamless direct payments to suppliers within the OCEN journey.
KYC Partner A KYC partner is a collaborator selected by the Loan Agent (LA). This partner can be engaged for Assisted KYC or any technology-related specialization available on the network. The lender retains the choice to employ the KYC partner within the network or continue with their existing procedures.

In addition to the participant roles above, OCEN framework also relies on Account Aggregator and Credit Guarantees (CGTMSE) as part of the loan journey.

Participant Onboarding

All participants are onboarded to OCEN 4.0 via the participant registry. A standard onboarding process is followed for all participants, and their verification is guaranteed by SROs to ensure that new members receive an equivalent level of trust within the network.

Product and Product Network onboarding

Lender will create & manage the Product and the Loan Agent will create & manage the Product Network to serve that product. All participants in OCEN 4.0 can browse the Products and Product Networks on the Product Registry and subscribe to serve a Product via the Product Networks.

Product Networks

OCEN 4.0 enables a network of product networks that participants can discover, collaborate and serve products to borrowers. See sample example below:

  1. Network begins with Product Network 1
    • Created by Loan Agent 1 who onboards as network participants – 3 lenders, disbursement partner, collections partner and a derived data partner
    • Loan agent 1 can serve their borrowers other products as well.
  2. Network expands with Product Network 2
    • Created by Loan Agent 1 who onboards as network participants – 2 new lenders, the same disbursement partner, and a new derived data partner
    • Loan agent 1 can continue to serve their borrowers other products as well.
  3. Network expands with Product Network 3
    • Created by Loan Agent 1 who onboards existing participants and a new lender (Lender 6) to serve the product
    • Participants can discover products and join the product network
  4. Network expands with Product Network 4
    • Created by a new LA, Loan Agent 2, who onboards existing and new participants to serve the product to their borrowers

OCEN Examples:

GeM SAHAY

GeM is a short form of one stop, ‘Government e-Marketplace’ where common user goods and services can be procured by various Ministries and agencies of the Government. Government e Marketplace (GeM) offers both products and services as part of its offerings to its registered buyers. GeM facilitates the procurement of a spectrum of Product and Service categories in a way to facilitate Buyer in ease of selection and procurement. GeM SAHAY is an online platform built on the OCEN protocol that provides loans against Purchase Orders to the sellers. 

GeM SAHAY is the pilot project on OCEN to validate the idea of cash-flow based lending for MSMEs. In this pilot, GeM (Government e-Marketplace) is the Loan Agent. The Lenders onboarded onto the pilot offer loans to MSMEs on the GeM portal against government purchase orders. The pilot validates that short-tenure, small-ticket size loans enabled via the OCEN network works for all participating parties.

GeM as a Loan Agent allows the Goods and Service Providers on GeM to apply for Loans against Purchase orders received through various Government buyers on the GeM portal.

GeM as a Loan agent helps onboard borrowers for lenders reducing the acquisition cost for the lenders

GeM being a loan agent also acts as a Derived Data Provider as it carries rich data of the participating MSME borrowers in terms of past number of orders, value of orders executed, quality incidences, completion timelines, etc and these data points help the participating Lenders to underwrite the MSME loan application.

GeM facilitates digital loan process for MSMEs on its GeM SAHAY portal by ensuring integration with multiple lending institutions and helps the Borrower MSMEs to receive multiple offers for its loan applications. Allowing the MSME to choose the best suitable loan offer creates a market shift from Lender’s market to Borrower’s market.

GeM also acts as a Collection partner for the Lending institutions as it helps the lender with repayment of the loan for the purchase order though the Escrow account where the payment for the orders executed is credited by the purchasing entities.

GST SAHAY

A second pilot that expanded on the above is the GST SAHAY pilot project. This pilot uses GST data to enable working capital loans where SIDBI is acting as the Loan Agent. An additional parameter for validation on this pilot was the inclusion of the Account Aggregator data for loan underwriting.

In GST SAHAY, borrowers can seek loans against unpaid B2B Invoices for supply of Goods and Services to other businesses. Any business registered with GSTN and filing the statutory returns on GSTN can seek financing against Invoices where goods or services are supplied on credit period.

Borrower can register on GST SAHAY application and upload Invoices against which it seeks to avail financing. 

The GST SAHAY application, after seeking the consent of borrower will pull details available from the GST network for its past invoice transactions filed with GSTN, periodic return filings and share the same with Lenders for evaluation and underwriting and credit decisioning.

Similarly, GST SAHAY application after seeking the consent of the borrower will pull details of the Bank statements available from Account Aggregator framework for its past banking data and share the same with Lenders for evaluation and underwriting and credit decisioning.

Lenders will parallelly also check the Credit Bureau of the borrower to assess credit worthiness and past performance on existing credit facilities from other lenders, if available. 

Lending institutions will digitally consume all these data points, along with details available on the Invoice to be financed and by using its proprietary rule engine for underwriting and scoring model, will provide an offer to the borrower for the respective Invoice to be financed.

Borrowers may receive multiple offers (higher loan amount, lesser interest rate, longer tenure) from different Lenders based on their evaluation criteria and will have a choice to select the best suitable offer for seeking the disbursement in a digital way by e-signing the loan agreements, e-Nach / Standing instructions, wherein the amount will be credited to the borrower’s account within few minutes.

There are other OCEN innovative product networks which are at various stages of development and are expected to go live to provide seamless credit to the credit starved MSMEs using OCEN API specifications for communication between the parties (Borrowers, Lenders, Loan Agents and other participants)

For more information, please visit: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteer, Rahul Bhaik

Unlocking Growth: The Power of Cash Flow Lending for MSMEs | Expert Insights with Dr. Ravi Modani

In this recent OpenHouse, Sagar Parikh discusses with Dr Ravi Modani how democratizing credit through short-tenor and small-ticket loans can help finance Indian MSMEs, 99% of which are micro-enterprises. Dr Modani shares his insights and invaluable guidance to navigate the complex world of B2B financing for MSMEs.

He also delves deep into the challenges faced by them in accessing financing, particularly in the realm of B2B transactions. Drawing from his extensive experience and research, he offers a fresh perspective on the traditional lending landscape and presents innovative solutions to empower MSMEs.

Key Insights from the Video:

  1. The MSME Financing Dilemma: Dr. Modani highlights the significant hurdles that MSMEs encounter when seeking short-tenor and small-ticket loans. He emphasizes the need for a paradigm shift in lending practices to better serve the unique needs of these businesses.
  2. A New Way Of Financing for MSMEs: Dr. Modani advocates for a pioneering financing approach for MSMEs, highlighting the effectiveness of short-tenor and small-ticket loans. These loans, being revolving in nature throughout the year, allow lenders to disburse a higher volume of loans. Consequently, lenders can potentially amplify their AUM by up to 8 times, surpassing the typical 5-6 times AUM ratio associated with traditional lending practices.
  3. Comparing Financial Platforms: Dr. Modani provides a comprehensive comparison between TReDs and OCEN, offering insights into the advantages of leveraging public networks like OCEN for enhanced interoperability and accessibility.
  4. The Power of Public Networks: Leveraging platforms like OCEN and GeM can significantly reduce operational costs for lenders, ultimately leading to lower lending costs and improved efficiency. Dr. Modani illustrates how these public networks can drive down the cost of lending, benefiting both lenders and borrowers alike.
  5. The Time Sensitivity of MSME Financing: Dr. Modani underscores the time-critical nature of MSME lending and stresses the importance of streamlining the loan journey to ensure timely access to funds for businesses.

His illustrations and learnings help in navigating the complex world of MSME financing by embracing innovative approaches. He believes that leveraging public networks like OCEN will only help lenders unlock new growth and success in today’s lending landscape by opening multifold opportunities to them.

For more information, please visit: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Sagar Parikh and Muskaan Sharma

Unlocking MSME Growth: Interoperable Networks & FinTech Insights with Bhavik Vasa

In our most recent OpenHouse, we embark on an insightful exploration of the transformative landscape in MSME lending, featuring Bhavik Vasa, the Founder of GetVantage, and Sagar Parikh. The conversation delves into the potential of creating groundbreaking impact through interoperable networks, particularly focusing on OCEN. The discussion navigates the dynamic intersection of finance and technology, highlighting how inventive solutions are reshaping the lending panorama. Emphasizing the crucial role of interoperability, the dialogue underscores its significance in bridging the credit gap, propelling the MSME sector into a new era of unprecedented growth.

https://youtu.be/tKXE4RDL5nc?si=ziHF811uwGNm9X18

Key Takeaways:

Network Effects Unleashed: OCEN catalyzes network effects, narrowing the credit gap and expanding the market, fostering inclusivity and vibrancy.

Efficiency through Interoperability: Standardized protocols cut costs and efforts, providing high-quality data for lenders while empowering MSMEs with smoother access to loans.

Addressing Unmet Needs: Explore how interoperable networks bridge gaps in unsecured lending, catering to shorter tenures and smaller loan sizes.

Tech-Enabled Business Growth: Witness the role of unsecured lending in a tech-driven landscape, fostering a circular consumption economy for economic growth.

Personalized FinTech Solutions: Bhavik advocates for a borrower-centric approach, urging lenders to view lending through a tech and data-driven lens, benefiting both parties.

Collaboration Dynamics: Conclude with insights on how NBFCs and banks can coexist and collaborate, playing to their strengths for a more robust lending environment.

Ready to unlock the future of MSME lending? Join the conversation now!

For more information, please visit: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Sagar Parikh and Muskaan Sharma

Role of Intermediaries & FinTech in MSME lending ecosystem: A conversation with Lizzie Chapman

Intermediaries and Fintechs have played an important role in the lending ecosystem, but the impact is mostly seen in consumer lending and not so much in MSME lending, especially for unsecured, small ticket and short duration loans. What are the missing pieces in the lending process for which advanced tech and a mindset shift can utilise a digital infrastructure like OCEN (Open Credit Enablement Network) and unlock this credit supply for MSMEs?

Recently, we hosted Lizzie Chapman in an insightful conversation with Sagar Parikh. She shared her views on where the intermediaries and FinTechs can further become a value add in a profitable manner by pushing the boundaries of technology.

Points discussed:

  • Digital infrastructure & its impact on the costs, penetration & process for lending eco-system
  • Unsecured MSME loans not as solved as unsecured consumer loans. Cashflow lending addresses the concerns around unsecured lending to MSMEs.
  • DPI such as OCEN facilitating the availability, quality, aggregation of data for credit underwriting along with loan disbursement for MSMEs
  • Need for Intermediaries & Fintechs to harness technology to conceptualise innovative lending products, advanced ways of pricing and matching risks & address the opex challenges in collections & repayments
  • Investors tend to prefer businesses that touch the customer end to end. They should see that being part of the value chain can be as profitable as owning the value chain.
  • OCEN is creating dispute resolution mechanisms but intermediaries should also innovate for transparency and building trust with the customers so as to enable a safe, stable, secure growth in short term cashflow lending for MSME credit.

For more information, please visit: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Sagar Parikh and Muskaan Sharma

Unveiling the Future of Lending: A Conversation with Shachindra Nath from UGro Capital

In an era of evolving financial landscapes, the realm of lending is witnessing a significant shift—from the traditional collateral-based approach to the more contemporary cash flow lending model facilitated by OCEN (Open Credit Enablement Network). Recently, we hosted UGro Capital in an insightful conversation with Shachindra Nath, shedding light on this transformative paradigm in lending and delving into its profound implications.

Points discussed:

  • Transitioning from Collateral to Cash Flow Lending
  • Exploring Market Potential
  • Challenges in Seamless Digital Lending

For more information, please visit: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteer, Sagar Parikh 

Beyond the clutter: How OCEN is unlocking MSME credit market in India

Introduction

OCEN plays a pivotal role in revolutionising MSME lending in India. This innovative open network is specifically designed to serve those new to credit, employing an omni-channel approach that democratises and simplifies access to lending.

Currently, the market lacks a scalable and profitable model for short-term, low-value MSME loans – a significant gap that OCEN has adeptly filled with its GeM-SAHAY pilots.

Amidst the confusion and excitement surrounding OCEN versus ONDC, and the broader impact of open networks in the lending sphere, this blog aims to provide clarity and insight. Let’s dive in and explore these transformative developments.

🔀 OCEN or ONDC: Which is better for short tenure MSME lending?

There’s much debate about which lending framework potential partners should explore. Rahul Mathur (Associate Director, InsuranceDekho) captures this perfectly in his tweet, presented as a checklist below:

🗣️ “Turns out, the focus in lending for ONDC v/s OCEN is very different (see the image below)
(1) 💰Type of loan: Type 1 personal loan v/s Type 4 MSME loan
(2) 🔎GTM: Online v/s Omni-channel (assisted)
(3) 🙇Persona: Eligible for credit v/s New to credit
(4) 🌟Objective: Bring credit to point of commerce v/s Democratize credit access

To summarize, there are some good reasons why ONDC has launched loans independently of the OCEN network.
Over time, OCEN will expand to include further lending use-cases & products. And, at that point, ONDC <> OCEN interoperability would make sense.”

You can find the original post here

Clearly, OCEN is the undisputed option for short tenure, low ticket size lending for new to credit MSMEs. Over time the lending use cases will be expanded to service the traditional form of loans.

OCEN and ONDC, while both operating in the lending space, are tailored for very different use cases and audiences. While they may overlap in some cases, the larger ecosystem benefits from introduction of newer networks. In the end, it’s all about solving the most challenging problems 🙂

Let’s further understand how OCEN addresses the MSME lending problem in India.


📈 OCEN makes small ticket size lending a reality

OCEN’s primary goal is to make short-term lending profitable. Something which we’ve achieved in our pilots with the Government e-Marketplace, through the GeM-SAHAY app.

One of our volunteers explains the economics in this blog post: Evaluating the short term lending opportunity, where he shows how lenders can earn 2.2x higher revenue with the same capital through the adoption of the OCEN framework.

The significant 2.2x increase in revenue is attributed to the introduction of a crucial role known as the borrower’s agent. These agents not only reduce the cost of servicing a loan but also heighten accountability within the system.

Borrower’s Agents (BAs) assume a variety of roles traditionally outsourced by lenders, BAs function as data providers, collections agents, escrow account managers, and product providers.

By integrating these services and cohesively binding the network, BAs enable lenders to efficiently service low-cost loans even in remote areas. In performing these four key roles, the borrower’s agent emerges as the cornerstone of the open network, vital for its effective operation.

The role of borrower’s agent has been discussed in depth in one of our open house sessions:

OCEN is changing the game by making even the tiniest loans worthwhile for both the lender and the borrower.


🌐 Efficacy of Open networks and streamlining the lending process

Some people we’ve spoken to, worry that open networks will lead to the commodification of lending, which, in turn, is bad for the overall market. However, this couldn’t be farther from the truth 🙂.

OCEN streamlines the lending process by introducing roles such as the borrower’s agent, KYC agents, and collection partners. These roles combine to create a bundle that lenders can easily integrate into their processes to start lending.

Newer and smaller lenders will benefit from the transparency and scale offered by open networks.

Closed network auctions, which are common today, see lenders bidding down for loans. However, their lack of transparency and scale often results in low profitability.

Open networks, on the other hand, provide scale and transparency that leads to low cost of servicing, more borrowers to choose from, and reliability in the system through a borrower’s agent.

Larger lenders benefit from the low cost of servicing a loan that comes with open networks

Larger lenders will benefit from open networks as it provides the technical chops of a borrower’s agent. BAs can help with KYC, collections and other parts of servicing a loan while absorbing some of the costs.

We’ve seen such effects before, with the introduction of Aadhaar and UPI, where KYC and collections became far cheaper enabling large lenders to facilitate smaller ticket size loans.

In conclusion

Through OCEN, the potential to unlock a ~$300 billion credit market in India becomes a tangible reality. This is demonstrated by the increased revenue potential and the introduction of the borrower’s agent role, enhancing loan servicing efficiency and accountability.

Moreover, OCEN’s streamlined lending process benefits the entire market, by offering scalability and cost-effectiveness to both emerging and established lenders.

Thus, embracing OCEN is not just a choice but a strategic direction for expanding market possibilities and empowering both lenders and borrowers in the dynamic credit landscape of India.

OCEN 4.0 : Intro to Lenders Openhouse #11

📢Calling all lenders to understand how a short tenor loan can become both an effective and profitable business opportunity under OCEN 4.0. 🔑📈

If you are a lender looking for the next big opportunity in lending to the thousands of MSMEs currently unable to access loans, then don’t miss this introduction to OCEN 4.0. 💡

Here we deep-dive into how a new underwriting model enabled by OCEN 4.0 makes it viable and profitable to provide loans to MSMEs traditionally considered unfavourable candidates for loans given the associated high delinquency rates.
Our OCEN pilots show, in some cases, it is even possible to create short tenor loans that are twice as profitable as long tenor loans. 🌟🚀🚀

OCEN Documentation: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Sagar Parikh and Rahul Bhaik

OCEN 4.0: Intro to Borrowers Agent Openhouse 10

📢Calling all loan agents keen to understand the OCEN 4.0 business opportunity. 🔑📈

OCEN 4.0  introduces a new and powerful role – the Borrowers Agent(BA). If you are looking to play a pivotal role in the MSME lending ecosystem without lending from your own balance sheet, this new role of a BA may be what you want to understand really well. 💡

The BA role is critical to the OCEN story. In this session, we deep-dive on what this role entails, why it is the linchpin of the OCEN 4.0 model, how BAs enable lenders to go remote, and how this role wields a lot of power. We also talk through how to get started, possible business models for BAs and what to focus on to be a successful Borrowers Agent. 🌟🚀🚀

OCEN Documentation: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Wribhu Tyagi and Aravind R.

OCEN 4.0 : Tech deep-dive Openhouse #9

📢👷🧑‍💻Calling all TSPs and participants eager to dive into OCEN 4.0 APIs. 

If you are wanting to understand the tech, the APIs and get started on building for OCEN 4.0, our second open house on OCEN 4.0 is here for you !! 💡

In this session, we do a deep-dive on the architecture, the loan journey on OCEN 4.0 components, the APIs in the OCEN spec and share how you can build for a participant by mocking the APIs of the other. 📝🔑🧑‍💻

OCEN Documentation: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Aravind R and Sagar Parikh.

Introducing OCEN 4.0: Transforming MSME Lending 🚀🚀

We’re thrilled to unveil OCEN 4.0, the latest advancement in our Open Credit Enablement Network protocol, revolutionizing cash flow-based MSME lending. 🌟

OCEN 4.0 represents a significant leap forward from our ongoing GeM SAHAY and GST SAHAY pilots. In this iteration, along with updated API specifications, we have also added the OCEN Registry, Product Network and rules, specialized participant roles and much more. All these features help us unlock cash-flow-based lending to match the scale, complexity and needs of Bharat. 🔑📈

Check out our introductory open house session on OCEN 4.0

🔍 More details? The API and documentation of OCEN 4.0 are publicly available at http://ocen.dev and will be updated with FAQs from the open house sessions.

🔮 What’s next? Yes, a lot is happening. We have more open house sessions coming out in the following weeks. We are also actively onboarding Wave 1 partners for OCEN 4.0.

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Aravind R and Sagar Parikh.

iSPIRT First Open House on OCEN: Summary and Next Steps

“The ‘Landline to Mobile’ leapfrog for MSME credit is here.”

On Friday evening we hosted the first open house discussion on the new Open Credit Enablement Network (OCEN). It is the next chapter of the ‘India Stack’ story, one that has provided the building blocks for public digital infrastructure in our country.

The past decade has seen us widen the net for financial inclusion in India on the back of open infrastructure for digital identity (Aadhaar, eKYC, eSign) and payments (UPI, AEPS). This year will also see the launch of the Account Aggregator framework, ushering in a new era for data governance in India. Similarly, OCEN is a new paradigm for credit that seeks to provide a common language for lenders and marketplaces to build innovative, financial credit products at scale.

The first session on OCEN covered the following topics broadly

  • By Sharad Sharma
    • An introduction to iSPIRT and our values
    • An overview of India Stack and where OCEN fits in
  • By Siddharth Shetty
    • A product demo of Sahay, the reference app for OCEN
  • By Ankit Singh
    • The reason for the credit gap in India
    • The challenges for lenders and prospective credit marketplaces
    • A reimagined credit ecosystem with OCEN and Loan Service Providers (LSPs)
    • The roles of LSPs
    • A new cash flow-based lending paradigm
    • The opportunity for market participants with OCEN
    • Release of OCEN APIs, Check them on Github: https://github.com/iSPIRT/lsp-lender-protocol-specification
  • Brief Q/A – Nipun Kohli

Why do we need this?

Access to credit is a crucial part of any flourishing economy. It is safe to say that India’s economic engine has not yet gotten out of second gear because of our inability to guide formal credit into the hands of the people and businesses that need it most. The unit economics of our current lending set-up are broken, and don’t suit the needs of either borrowers or lenders. The challenges range from high costs of customer discovery to lack of trustworthy data for underwriting, and an overall mismatch in ticket size, tenure and interest rates of loans. This has resulted in a whopping MSME credit gap of over $330 bn.

OCEN is an effort to recognise that the touchpoints for delivering financial products to individuals and MSMEs extends beyond traditional lenders. In order to democratize access to credit in India, OCEN reimagines an ecosystem where every service provider can become a Fintech-enabled credit marketplace. 

This means that whether you’re an aggregator, a payment gateway, a software provider or any other company that interfaces with consumers, you can now fill in a crucial role in India’s lending value chain. OCEN will allow you to effectively ‘plug in’ lending capabilities into your existing product or service offerings, enabling you to play the role of a Loan Service Provider (LSP) in this framework.

At one end this will simplify and reduce the cost of acquiring and analysing new customers. Working in tandem with the Account Aggregator framework it will also allow applicants to leverage different data sources so that lending can become a Cash flow based operation instead of the existing balance sheet focus. Overall these open standards will enable lenders to accelerate the disbursal of formal credit while allowing LSPs to holistically serve their existing customers.

India’s new credit rails are ready to be laid out, and we look forward to working with our spirited fintech ecosystem participants over the coming months.

We will be hosting weekly open house sessions to keep diving deeper into OCEN. The next session will focus on Open Credit Enablement Network (OCEN) APIs at 5 pm IST on 31st July 2020.

Readers who wish to learn more about OCEN are encouraged to share this blog post and sign up again for the session here: https://bit.ly/LSPOpenHouse (same embedded below)

As always, in order to successfully create a new credit ecosystem for Bharat  it will take the collaborative effort of participants from every corner of our fintech ecosystem.

If you’re interested in participating as a:

  • Loan Service Provider
  • Lender
  • Technology Service Provider

please drop us an email at [email protected]

Readers may also submit any questions about OCEN on the google form: https://bit.ly/LSPQA. We shall do our best to answer these questions during next Friday’s open house discussion.

About the Author: The post is authored by our volunteer Rahul Sanghi.

Recommended Reading

Chapter 7 and 8 in RBI UK Sinha MSME committee report: https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=924

Introduction to India Stack’s fourth layer – Data Empowerment & Protection Architecture: https://www.youtube.com/watch?v=mW__azI8_ow

Data Privacy and Empowerment in Healthcare

Technology has been a boon to healthcare. Minimally-invasive procedures have significantly increased safety and recovery time of surgeries. Global collaboration between doctors has improved diagnosis and treatment. Rise in awareness of patients has increased the demand for good quality healthcare services. These improvements, coupled with the growing penetration of IT infrastructure, are generating huge volumes of digital health data in the country.

However, healthcare in India is diverse and fragmented. During an entire life cycle, an individual is served by numerous healthcare providers, of different sizes, geographies, and constitutions. The IT systems of different providers are often developed independently of each other, without adherence to common standards. This fragmentation has the undesirable consequence of the systems communicating poorly, fostering redundant data collection across systems, inadequate patient identification, and, in many cases, privacy violations.

We believe that this can be addressed through two major steps. Firstly, open standards have to be established for health data collection, storage, sharing and aggregation in a safe and standardised manner to keep the privacy of patients intact. Secondly, patients should be given complete control over their data. This places them at the centre of their healthcare and empowers them to use their data for value-based services of their choice. As the next wave of services is built atop digital health data, data protection and empowerment will be key to transforming healthcare.

Numerous primary health care services are already shifting to smartphones and other electronic devices. There are apps and websites for diagnosing various common illnesses. This not only increases coverage but also takes the burden away from existing infrastructures which can then cater to secondary and tertiary services. Data shared from devices that track steps, measure heartbeats, count calories or analyse sleeping patterns can be used to monitor behavioural and lifestyle changes – a key enabler for digital therapeutic services. Moreover, this data can not only be used for monitoring but also for predicting the onset of diseases! For example, an irregular heartbeat pattern can be flagged by such a device, prompting immediate corrective measures. Thus, we see that as more and more people generate digital health data, control it and utilise it for their own care, we will gradually transition to a better, broader and preventive healthcare delivery system.

In this context, we welcome the proposed DISHA Act that seeks to Protect and Empower individuals in regards to their electronic health data. We have provided our feedback on the DISHA Act and have also proposed technological approaches in our response. This blog post lays out a broad overview of our response.

As our previous blog post articulates the principles underlying our Data Empowerment and Protection Architecture, we have framed our response keeping these core principles in mind. We believe that individuals should have complete control of their data and should be able to use it for their empowerment. This requires laying out clear definitions for use of data, strict laws to ensure accountability and agile regulators; thus, enabling a framework that addresses privacy, security and confidentiality while simultaneously improving transparency and interoperability.

While the proposed DISHA Act aligns broadly with our core principles, we have offered recommendations to expand certain aspects of the proposal. These include a comprehensive definition of consent (open standards, revocable, granular, auditable, notifiable, secure), distinction between different forms of health data (anonymization, deidentification, pseudonymous), commercial use of data (allowed for benefit but restricted for harm) and types and penalties in cases of breach (evaluation based on extent of compliance).

Additionally, we have outlined the technological aspects for implementation of the Act. We have used learnings from the Digital Locker Framework and Electronic Consent Framework (adopted by RBI’s Account Aggregator), previously published by MeitY. This involves the role of Data Fiduciaries – entities that not only manage consent but also ensure that it aligns with the interests of the user (and not with those of the data consumer or data provider). Data Fiduciaries only act as messengers of encrypted data without having access to the data – thus their prime task remains managing the Electronic Data Consent. Furthermore, we have highlighted the need to use open and set standards for accessing and maintaining health records (open APIs), consented sharing (consent framework) and maintaining accountability and traceability through digitally verified documents. We have also underscored the need for standardisation of data through health data dictionaries, which will open up the data for further use cases. Lastly, we have alluded to the need to create aggregated anonymised datasets to enable advanced analytics which would drive data-driven policy making.

We look forward to the announcement and implementation of the DISHA Act. As we move towards a future with an exponential rise in digital health data, it is critical that we build the right set of protections and empowerments for users, thus enabling them to become engaged participants and better managers of their health care.

We have submitted our response. You can find the detailed document of our response to DISHA Act below

SBI and iSPIRT discuss future of banking in India

iSPIRT and SBI had a 4-hour meeting on the future of banking. 30+ seniormost officers of SBI – including all the MDs, DMDs, CGMs, and GMs – participated. Two SBI Board members were also present. Nandan Nilekani chaired the session from iSPIRT side.
DSC_2148The first session was about understanding the technology trends that are shaping banking. There was special focus on understanding implications of eKYC, Aadhaar, new payment infrastructure and GST Network. There was also a good discussion how point-solutions by startups are changing banking.
The second session showcased 7 Fintech software product companies (NovopayHappay,Vote4CashCapitalFloatCustomerXPSProbeEquity, Enstage) and 2 non-FinTech product companies(InMobi, TeamIndus). The third session session was about SBI strategy. This was a very productive discussion. We can’t share the details as it was confidential.
This meeting brought together two threads within iSPIRT. One thread was related to its Policy work related to Open APIs (that is shaping the technology infrastructure of banking and finance in India) and the push for Cashless India. The other thread was InTech50, which is a market catalyst that helps big companies leverage software products startups to drive innovation throughout their business.
DSC_2150iSPIRT is fostering many such dialogs with not just banking giants like SBI, but with Regulatory institutions like SEBI, RBI and others, to fashion a new India.

Era of Open APIs

APIs are important public goods that must be done right. They must not be held captive to commercial interests. This is why iSPIRT is helping Government in this area. iSPIRT’s work is inspired by Open Source movement and IETF methods. It fits with our charter of creating public goods without public money.
GSTN teamOur Open API effort is based on some core principles:
– Like IETF, iSPIRT is not a member organization. Participation is “People, not companies”.
– “Design is a team sport”. Focus is on building a modern architecture for country-scale technology systems.
– iSPIRT API Teams have people who are “Competent experts that are completely free of conflicts”.
– Technical decisions emerge from intense discussion. They are informed by prototypes, not theory. Motto is: “Code walks, bullshit talks”.
Today Economic Times carries an article about this Open API effort.  The article conveys the progress that we are making. More is on its way.

Source: Economic Times

We will soon be launching a micro-site to build engagement with your community. Watch this space.