Partnership with ONDC: Pioneering Embedded Banking for the Future

The world is rapidly moving towards embedded banking, and banks must be at the forefront of this revolution. Over the next decade, more platforms will embed financial services—payments, loans, insurance, or investments—directly within their user experiences. Imagine renewing your car insurance right from your car's dashboard or getting a loan based on projected income data from your HRMS system. Embedded Banking isn't just a vision of the future—it's a reality coming soon.

To accelerate this future, we are building infrastructures that can speed up the rollout of embedded banking solutions. One such infrastructure is the ONDC Financial Services network, backed by the open-source Beckn protocol.

Why should the Bank partner with ONDC?

1.????? Low Cost of Experimentation: Banks have invested heavily in their technology infrastructure, particularly API banking. Thanks to a scalable yet agile technology stack, banks can experiment rapidly and cost-effectively. This agility allows Banks to stay at the forefront of innovation.

2.????? Serving Everyone Equally: Irrespective ?of the size of the application platform, customers are welcome to connect with the Bank through standardized API interfaces provided by ONDC.

3.????? Omnipresence for Customers: With ONDC's expanding network, customers—both current and future—can seamlessly access respective bank’s products, just as they would at the branches.

4.????? Championing Open-Source Finance: The ONDC model champions open source in its true sense—making services available in an open-source format for all to consume from the comfort of their favorite app.

5.????? One integration: Through one single integration, Banks can plug their services into hundreds of application platforms and start servicing them, saving big on technology efforts.

What's in it for the end customers?

1.????? Increased Productivity: Customers no longer need to switch between their banking apps or visit a branch to complete financial transactions. ONDC embedded finance within application platforms allows for a seamless experience, reducing friction and saving time. It eliminates the need to switch contexts, enabling more streamlined financial management.

2.????? Better Reconciliation: By integrating financial services into specific application platforms, customers can enjoy better reconciliation of their transactions. For instance, in the case of auto loans, money movement details between the bank and the dealer are automatically synced, which saves hours of manual follow-up for the customer.

3.????? Robust Service Levels: API-driven services ensure a higher service standard than traditional human-led processes. These digital services are inherently more reliable and measurable, providing customers with a more consistent and higher-quality experience.

4.????? Enhanced Privacy and Security: Since embedded banking is entirely digital, it reduces human touchpoints, ensuring higher levels of privacy and security. Transactions are encrypted and handled by APIs, minimizing the risk of exposure to human error or data breaches.

What's in it for the bank?

1.????? Better Fraud Prevention: Application platforms hosting embedded banking services (typically) have pre-verified customer data and a deep understanding of customer behavior. Leveraging the platform's customer insights makes detecting and preventing fraudulent activities more effortless for the bank.

2.????? Reduced Delivery Costs: With ONDC embedded finance, many operational costs, such as customer onboarding and partner integration, are reduced. Additionally, distribution can reach the last mile without physical branches, making financial services more accessible across India.

3.????? Customized Experiences for Diverse Segments: India is home to a vast and diverse population, each with unique needs. It's challenging for a bank to cater to every customer segment with personalized experiences through traditional channels. However, embedded finance allows third-party platforms to tailor specific solutions for different customer segments, while banks focus on providing secure, reliable financial services through APIs. ONDC integration thus enables banks to deliver personalized experiences at scale without adding operational complexity.

India's financial services industry is proliferating and will continue to grow in the coming decades. For this expansion to be sustainable and inclusive, we need more collaboration among large banks, ensuring financial services reach the last mile in the most convenient and efficient ways possible.

Mr. Abhijit Singh

Group Head – Banking as a Service, Digital Ecosystem Banking and International Banking

HDFC Bank