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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

Open Innovation, entrepreneurship, and our digital future

Open Innovation has lead to the creation of priceless resources like Wikipedia, and Free and Open Source Software (FOSS) that form the foundations of our digital society. The freedoms enjoyed by hundreds of thousands of young people around the world, hacking on laptops, hacking on servers, hacking on general purpose hardware is the primary source of the innovation which drove much of the world’s great economic expansion in the past ten years. This freedom to hack has enabled innovation and entrepreneurship, and made it possible for innovation to occur where it can occur without friction, which is at the bottom of the pyramid of capital.

As India witnesses one of the greatest entrepreneurial spurts in its history, much of it based on technologies built through collaboration and openness, it is important to understand the forces that drive the Open Innovation ecosystem. In this session, some of the brightest minds in the Open Innovation ecosystem, and the world of FOSS, will discuss:

  • 1) Why Open Innovation is important for India’s digital future
  • 2) Why Open Innovation and entrepreneurship are deeply interconnected
  • 3) How India can become one the leaders of this entrepreneurship
  • 4) What India needs to do to protect and nurture Open Innovation

Click here to register for the event.

The speakers are:

Prof. Eben Moglen: Prof. Eben Moglen is Professor of Law and Legal History at Columbia University Law School. Professor Moglen is the founder of the Software Freedom Law Center, which has represented many of the world’s leading free software developers. Professor Moglen earned his PhD in History and law degree at Yale University. He has taught at Columbia Law School since 1987 and has held visiting appointments at Harvard University, Tel Aviv University and the University of Virginia. In 2003 he was given the Electronic Frontier Foundation’s Pioneer Award for efforts on behalf of freedom in the electronic society.

Keith Bergelt: Keith Bergelt is the chief executive officer of Open Invention Network (OIN), a collaborative enterprise that enables innovation in open source and an increasingly vibrant ecosystem around Linux. In this capacity he is directly responsible for enabling, influencing and defending the integrity of the Linux ecosystem. Central to the achievement of his goals is the acquisition and transfer of patent rights designed to permit members of the Linux ecosystem to operate free of the threat of assertion and litigation from those whose business models are antithetical to innovation and global economic growth in information technology and computing.

Mishi Choudhary: Mishi Choudhary is a technology lawyer and an online civil liberties activist. She is the Legal Director of Software Freedom Law Center, New York and the founding Executive Director of SFLC.in, a pro-bono legal services organization based in New Delhi, India. At SFLC, New York she represents the world’s leading free and open-source software projects and advises technology companies. SFLC counsels clients on the big picture, beyond today’s specific problems, helping projects reach their long-term goals safely and efficiently. SFLC.in is widely regarded as the leading organization for extensive work on free speech and expression, privacy, software patents, corporate surveillance, network neutrality, internet governance, free and open-source software, and access to knowledge. For her work on these issues, she has been chosen to be amongst Asia Society’s 21 Young Leaders Initiative that identifies dynamic young leaders under the age of forty, bringing them together and supporting them as they build the critical mass to impact global affairs for decades to come.

Venkatesh Hariharan: Venkatesh Hariharan is Director of Alchemy Business Solutions LLP, and Outreach Lead (India) for the Open Invention Network (OIN). Alchemy is an organization that focuses on leveraging technology for development, while OIN is a defensive patent pool and community of patent non-aggression which enables freedom of action in Linux. He is also a member of the Governing Board of the Software Freedom Law Center.

Hariharan has served as Head of Public Policy and Government Affairs with Google, and as Corporate Affairs Director for Red Hat in the Asia-Pacific region. He has worked on key policy issues like Internet regulations, open standards, software patents, open source in government, and Indian language computing.

Posted on

Open Innovation, entrepreneurship, and our digital future

Open Innovation has lead to the creation of priceless resources like Wikipedia, and Free and Open Source Software (FOSS) that form the foundations of our digital society. The freedoms enjoyed by hundreds of thousands of young people around the world, hacking on laptops, hacking on servers, hacking on general purpose hardware is the primary source of the innovation which drove much of the world’s great economic expansion in the past ten years. This freedom to hack has enabled innovation and entrepreneurship, and made it possible for innovation to occur where it can occur without friction, which is at the bottom of the pyramid of capital.

As India witnesses one of the greatest entrepreneurial spurts in its history, much of it based on technologies built through collaboration and openness, it is important to understand the forces that drive the Open Innovation ecosystem. In this session, some of the brightest minds in the Open Innovation ecosystem, and the world of FOSS, will discuss:

  • 1) Why Open Innovation is important for India’s digital future
  • 2) Why Open Innovation and entrepreneurship are deeply interconnected
  • 3) How India can become one the leaders of this entrepreneurship
  • 4) What India needs to do to protect and nurture Open Innovation

The speakers are:

Prof. Eben Moglen: Prof. Eben Moglen is Professor of Law and Legal History at Columbia University Law School. Professor Moglen is the founder of the Software Freedom Law Center, which has represented many of the world’s leading free software developers. Professor Moglen earned his PhD in History and law degree at Yale University. He has taught at Columbia Law School since 1987 and has held visiting appointments at Harvard University, Tel Aviv University and the University of Virginia. In 2003 he was given the Electronic Frontier Foundation’s Pioneer Award for efforts on behalf of freedom in the electronic society.

Keith Bergelt: Keith Bergelt is the chief executive officer of Open Invention Network (OIN), a collaborative enterprise that enables innovation in open source and an increasingly vibrant ecosystem around Linux. In this capacity he is directly responsible for enabling, influencing and defending the integrity of the Linux ecosystem. Central to the achievement of his goals is the acquisition and transfer of patent rights designed to permit members of the Linux ecosystem to operate free of the threat of assertion and litigation from those whose business models are antithetical to innovation and global economic growth in information technology and computing.