ONDC, Account Aggregator Framework Present New Avenues for Indian Startups: Nandan Nilekani

Former UIDAI chairman and Infosys cofounder Nandan Nilekani said that the rollout of the account aggregator network and ONDC would open up new avenues for startups and entrepreneurs. 

Speaking at TieCon Pune, Nilekani said that startups have the opportunity to create products and services by leveraging the account aggregator network for financial data and by building on the foundation of an open ecommerce ecosystem enabled by ONDC.

“What small businesses need is access to capital and access to markets… The account aggregator system allows access to capital for small businesses leveraging their own data, and that is being rolled out and that will lead to the democratisation of credit to small businesses. The second is how do they get access to markets and that’s where ONDC comes in,” Nilekani said.

Nilekani also added that tackling unemployment would require millions of small businesses to do well, which in turn, would create millions of jobs.

Citing the example of Aadhaar and the unified payments interface (UPI), Nilekani said that building the right kind of rails at scale and making them available as APIs (application programming interfaces) had the potential to enable startups to create multi-billion-dollar valuations.

“If the basic rails are provided for by the government or at the public system level, then entrepreneurs can leverage these rails and build phenomenal applications. I see this as very complementary,” noted Nilekani.

Elaborating on this, the ex-UIDAI chairman said that the opportunity for entrepreneurs could lay in a plethora of domains, including creating consumer-facing apps, or working with suppliers, or building new direct-to-consumer (D2C) brands.

Nilekani was the architect of the Unique Identification Authority of India (UIDAI) and has been one of the leading brains behind ONDC. 

The Pillars Of India Stack

Both the account aggregator framework and the ONDC have emerged as ambitious schemes of the Government of India. With the account aggregator framework, authorities aim to ensure the quick sharing of user data with financial entities. 

The idea involves compiling financial data from multiple sources and across multiple parameters This will then be deployed to ensure the seamless sharing of information with financial institutions and service providers. In simple terms, it is a data-sharing protocol between financial institutions, including banks, insurance companies, NBFCs, and others.

Currently, the account aggregator ecosystem has 76 certified entities, including eight account aggregators, 29 NBFCs, 24 banks, 6 registered investment advisors (RIAs), 3 insurance companies, 3 stock brokers, an alternative investment fund (AIF), an insurance broker, and a pension fund.

Envisaged with the idea of financial inclusion, the framework will enable a digital conduit to quickly fetch a user’s financial data and open doors for them to access lending services.

On the other hand, ONDC aims to shake up the Indian ecommerce structure by deploying open protocols to enable any user on any platform to buy from any seller. Modelled on the lines of UPI, ONDC will work towards breaking the silos of multiple ecommerce platforms and will unify them with a single, inclusive, open network. 

Aimed at increasing the penetration of ecommerce in the country, the project is currently underway at full throttle. ONDC has already made its debut in Bengaluru in September and plans to launch in New Delhi later this month. 

ONDC has set its eyes on signing up 900 Mn buyers, 1.2 Mn sellers and achieving a gross merchandise value (GMV) of $48 Bn in the next two years.

WIth the two products, the government aims to bring more merchants to the fold of digital consumer-facing services, and along with them, benefits for a host of tech-savvy users. They also aim to scale the thrust to the two particular sectors and increase lending velocity to create a new generation of small and micro enterprises. 

By enabling this big proportion of small founders, the government aims to unlock a huge local market and create more jobs. While account aggregator framework and ONDC are the government’s bid to replicate the success of UPI, it remains to be seen whether these products actually synergise and revolutionise their respective industries.