Embedded Finance
Open Credit Enablement Network

What is Open Credit Enablement Network & what it means for Digital Lending

Devashish Mulye   /    Product Manager    /    2021-01-27


The launch of OCEN was the definitive step for India to move towards democratization of credit and financial inclusion. But OCEN isn’t a product or a service. It is a set of standards. It needs an effective implementation to show results. Technology companies are building according to the standard and are adding the necessary functionality required to actualize OCEN’s vision. That’s where Embedded Finance comes in. Embedded Finance is an implementation of OCEN in the real world. 

What is OCEN? 


Nandan Nilekani, Global FinTech Festival, 2020

Open Credit Enablement Network (OCEN, pronounced O-ken) is a set of open standards to facilitate the various aspects of the lending value chain. It creates a common language for the collaboration and partnerships between lenders and digital platforms called lending service providers (LSP’s) in OCEN parlance.


But what is OCEN really? A common language. A credit protocol infrastructure. What does this mean for our ecosystem?


OCEN contains an API for each step of the lending lifecycle. Digital Platforms, which until now had a very high barrier to entry for offering financial services, can now seamlessly integrate these APIs as defined in the spec and integrate with multiple lenders, digitise the entire lending life cycle and offer credit on their platform. Similarly, lenders can now open their financial infrastructure to multiple digital platforms to source new pools of borrowers.

OCEN defines three parties - 

  1. Loan Service Provider (LSP)

  2. Technology Service Provider (TSP)

  3. Lender

Loan Service Provider (LSP) - Any customer-facing digital platform that can source borrowers. A digital platform could be a webapp or an android app that already has a core offering and a customer base. They can augment their product offering by originating and enabling credit on their platform itself. 


Lender - Banks/NBFC/Small Finance Banks provide capital and access to core banking networks to the Embedded Finance Infrastructure company to build on.

Embedded Finance is the missing link between OCEN and financial inclusion 


- Nandan Nilekani, Global FinTech Festival, 2020


Technology Service Providers fulfill that role. TSPs help both these parties adopt OCEN. Here is what adoption entails



  • Building fintech partnerships with multiple lenders, platforms, credit enablement ecosystem (eNACH, pan verification etc)

  • Writing cash flow based and alternative data based underwriting models

  • Developing a credit product configuration layer based on the digital platform and customer demographics

  • Developing analytics and business rules layer in collaboration with both parties 


  • Developing a payment reconciliation layer

Essentially, the TSPs combine their financial know-how that helps digital platforms leverage their unique position, with their tech solutions that help lenders digitise the various processes of the lending life cycle. They make the entire lending lifecycle easily embeddable for the lending service provider (aka digital platform).

Platforms that can bundle the above things and make it such that they can be seamlessly embedded by any digital platform, will gain prominence and become the torchbearers of OCEN’s vision. They will be able to empower platforms to embed financial services and actually let OCEN’s real power be unleashed.

The Impact



Nandan Nilekani, Global FinTech Festival, 2020


Financial Inclusion - According to the International Finance Corporation, the credit gap in India’s MSME market is estimated to be an astounding USD 400  billion. Credit flow to MSMEs in India has always been broken. 

The lack of formal data to underwrite MSMEs makes it expensive for financial institutions to identify creditworthy borrowers.  In addition, MSMEs have very specific credit needs. They need smaller loan amounts, shorter repayment timelines, and quick access to funds, on a repetitive basis. 

Since underwriting MSMEs is complex and expensive, banks can’t afford to do small ticket sized loans, and usually take a long time to process their applications. 




Recommended Reading

  1. OCEN & Account Aggregators will change digital lending in India

  2. Open House 1 – The ‘Landline to Mobile’ leapfrog for MSME credit

  3. Open House 2 – Loan Service Provider (LSP) products and business cases

  4. Open House 3 – OCEN API Specifications

  5. Open House 4: OCEN Market Opportunitie

  6. Technical Service Providers in the AA Ecosystem

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