After 6-minute loans, ONDC to offer sachetised insurance, micro-investments services

The Open Network for Digital Commerce (ONDC), an interoperable network initially launched by the government to increase e-commerce penetration in the country, will soon also offer sachetised insurance and investment products to users.

This comes after the company, on 22 August, debuted into the financial services sector offering digital and paperless loans in just six minutes to both salaried and self-employed individuals, through its network of nine service providers and three lenders.

Thampy Koshy, the managing director of ONDC, during the launch of its lending foray, told Mint that the network will start offering other financial services like insurance and micro-investments, on its network soon. “Within (general) insurance, we have already done trial transactions. We will do a few more and then we will make it public,” he added. 

Koshy also said that the network will follow that with offering micro-investments products like mutual funds within the next quarter. 

ONDC has begun transactions in health and marine insurance already, according to a person in the know. In addition, it has started developing a protocol for life insurance products and expects to initiate transactions by December.

In September, news platform Inc42 first reported on ONDC’s plans to venture into financial services saying that the company will start offering auto, health and marine insurance, and mutual fund products. 

ONDC is now planning to launch the services within this year. 

The company is also expected to make its first mutual fund transaction by September, the source said. ONDC will most likely launch these services officially once they cross 100 transactions each, they added.

“We started with one segment (unsecured loans) and only a few stock keeping units (SKUs) within that. Even when we started food, it didn't have variants, now you can have all kinds of variety, that is how we expand. Eventually every product or service which is cataloguable will be there,” Koshy told Mint, during the interview, earlier today.

Deeper into lending

Meanwhile, within lending, ONDC Network plans to introduce goods and services tax (GST) invoice financing loans by September 2024, it announced on August 2022. The network will also include purchase financing for individuals and sole proprietors, and working capital lines for partnerships and private limited companies, within its lending services soon.

Through this foray, buyer applications on the ONDC Protocol will have access to multiple lenders with a single integration. So far, ONDC has buyer applications like Paisabazaar, Tata Digital, Easypay, and Invoicepe, among others, and lenders like Aditya Birla Finance, DMI Finance and Karnataka Bank, integrated to its network.

ONDC said that it also has a strong pipeline of buyer applications with interest in expanding this digital credit model, such as Mobikwik, Rupeeboss and Samridh.ai. Similarly, HDFC Bank, IDFC First Bank, and Central Bank of India, are among lenders in the queue to join the ONDC network.

“For bigger players, there is no urgent need initially because they are established. But when they find that the network has become relevant for their use case, more such firms will follow,” said Koshy.

ONDC's expansion into financial services coincides with a broader trend of e-commerce companies exploring various avenues to enter the financial services sector. On 21 August, Zomato bought Paytm’s entertainment and ticketing business for $244 million.

On the same day, Flipkart rolled out a new payments app, super.money, to enable users to make payments via Unified Payments Interface (UPI) and earn cashback, rekindling its ambition to gain a stronghold in the fintech space. “While those are one-to-one deals, with ONDC - options increase both for the supplier as well as the consumer,” said Koshy.