Is Digital India a Failure? Are there Gaps in UPI, ONDC and OCEN? Detailed Analysis — Transcript

Full transcript

1. 0:00Hi everybody. For the longest time, the
2. 0:02Modi government has flaunted the success
3. 0:03of UPI and the digital India
4. 0:10initiative
5. 0:1340% digital
6. 0:23payments. India has one of the fastest
7. 0:25growth rates of digital payments of any
8. 0:27nation in the world.
9. 0:29131 billion transactions by
10. 0:35volume. But there is one big big
11. 0:38problem. Today QR codes are everywhere.
12. 0:40Chaiwalas accept digital payments and as
13. 0:43of 2025 more than half a billion people
14. 0:46in India have a bank account with UPI
15. 0:48transactions alone crossing 23 trillion
16. 0:50rupees. But it pains me to say that
17. 0:53after the phenomenal success of UPI,
18. 0:56there are still gaps, failures, and
19. 0:58glorified announcements that the media
20. 1:00forgot to follow up on. And two of these
21. 1:02glorified initiatives are the DC and the
22. 1:05Okin initiative. Open credit enablement
23. 1:08network, which is a digital
24. 1:10infrastructure being created by the
25. 1:12government to democratize the small
26. 1:14ticket credit market in India. Open
27. 1:17network for digital commerce or the ODC.
28. 1:20ONDC is aimed at helping small retailers
29. 1:22go online to reduce the dominance of the
30. 1:24likes of Amazon and Flipkart. These two
31. 1:26initiatives have failed so badly that
32. 1:29ODC's app is worse than a college
33. 1:31student's first year project and Okin
34. 1:34has been ignored by the biggest banking
35. 1:36players of the country. And the reason
36. 1:38why we're making this video is because 2
37. 1:40years ago we ourselves made a video on
38. 1:42how revolutionary these initiatives
39. 1:44were. And one wise comment said that I
40. 1:46wish all the initiatives mentioned in
41. 1:48this channel actually get executed but
42. 1:50sadly they are just announcements with
43. 1:51no action. And this really hit me. So we
44. 1:54decided that we will not just make a
45. 1:56video when there is a sensational
46. 1:58announcement but we will also follow up
47. 2:00on the action so that we can help you
48. 2:02differentiate between marketing and
49. 2:04action. So in this episode today let's
50. 2:06try to understand what are the biggest
51. 2:08gaps in UPI. Why arec and Okin not the
52. 2:11phenomenal success that UPI was? And
53. 2:14what are the lessons that we need to
54. 2:15learn from the slowdown of DC and
55. 2:22Okin before we move on, let me thank
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96. 3:41introduction call for the session
97. 3:42happens on Friday at 7 p.m. So please
98. 3:45don't miss it. And now on with the
99. 3:50episode. All right, before we talk about
100. 3:52ONDC and Okin flopping, let's understand
101. 3:54the foundation that they were built on
102. 3:56something called the India stack. India
103. 3:59stack is a moniker for formidable
104. 4:01digital infrastructure which includes
105. 4:03identity, payments and data management.
106. 4:06Governments, startups and developers
107. 4:08used this infra to accelerate India's
108. 4:10shift to not only a digital economy but
109. 4:13also an inclusive one. India stack
110. 4:16actually consists of many applications.
111. 4:19You have Aadhaar, you have UPI,
112. 4:22Digilocker, Cove in number of them. It
113. 4:24has been extremely successful in India.
114. 4:26India stack is like a four layer mega
115. 4:28tech sandwich. Each layer was designed
116. 4:31to completely transform how Indians
117. 4:33interact with the digital world. Layer
118. 4:35one is the presenceless layer. This is
119. 4:37where the famous Aadhaar system comes
120. 4:39in. So your fingerprint, iris scan,
121. 4:42Aadhaar number, all of it helps you
122. 4:44verify your identity without you even
123. 4:46being present. Then comes layer two
124. 4:49which is the paperless layer. Here with
125. 4:51the help of the dig locker system
126. 4:53instead of carrying your PAN card,
127. 4:54driver's license or certificates, India
128. 4:56stack said what if all your documents
129. 4:58could live in the cloud. This is how the
130. 5:01digital locker was born. So now you can
131. 5:04send your documents anywhere anytime
132. 5:06without printing a single page. And then
133. 5:09came layer three, the cashless layer.
134. 5:11Now this is where UPI changed the game
135. 5:13forever. Whether it's a 5 rupee cutting
136. 5:15chai or a 50,000 rupee iPhone, UPI made
137. 5:18your money move at the speed of light.
138. 5:20And then came layer 4 which is the
139. 5:22consent layer. This is by far the most
140. 5:25underrated layer of all. And here we
141. 5:27have something called account aggregator
142. 5:29system. This layer helps you share your
143. 5:31bank history, insurance, credit score
144. 5:33and all other information with the
145. 5:35lenders or service providers with no
146. 5:37photocopies and no middleman. And when
147. 5:39all these four layers of India stack
148. 5:41which are identity, documents, payments
149. 5:44and consent come together, they were
150. 5:46supposed to create a digital superpower.
151. 5:48But here's something that nobody tells
152. 5:50you. Even UPI has gaps and they are
153. 5:52massive gaps. And guess what? Those gaps
154. 5:55are nothing but multi-million dollar
155. 5:58startup opportunities. For example, meet
156. 6:00Arjun. Arjun is a guy who runs a
157. 6:02restaurant chain in Mumbai. His staff
158. 6:04used to pay vendors with cash, file
159. 6:06receipts and then pray for the
160. 6:07reimbursements. So it was complete
161. 6:09chaos. But then came a company called
162. 6:11cashbook which is a UPI based business
163. 6:13wallet. So now Arjun's team uses UPI
164. 6:16wallets with 10,000 rupees monthly
165. 6:18limits which is directly controlled by
166. 6:20Arjun's company dashboard. So every
167. 6:23payment is locked. categorized and
168. 6:25approved in real time. This way, Arjun
169. 6:27slashed his reconciliation time from 22
170. 6:30hours to just two hours and saved 1.2
171. 6:33lakhs per year in just leakage expenses.
172. 6:36So, the moral of the story over here is
173. 6:37that you don't need to reinvent UPI. You
174. 6:39just need to fix the gaps and there are
175. 6:41some beautiful business opportunities
176. 6:42waiting for you. Similarly, there's a
177. 6:44huge need for UPI for salaries and
178. 6:46contract payments because businesses
179. 6:48even today struggle with payroll
180. 6:50processing and freelancer payments and
181. 6:52current options like bank transfers take
182. 6:54a lot of time and they need approvals.
183. 6:56Cash payments are absolutely messy and
184. 6:58untraceable and payment gateways charge
185. 7:01very high fees for processing. This is
186. 7:02the first gap and the second gap that we
187. 7:04could obviously identify was the gap for
188. 7:07high value B2B transactions with UPI.
189. 7:09But you see guys, these are just gaps in
190. 7:11UPI which can still be addressed and at
191. 7:14least UPI worked. But the next part of
192. 7:16India stack, it's not just broken. It's
193. 7:19a full-blown disaster. So let's start
194. 7:21with ONDC. Let me introduce you to ODC,
195. 7:23the open network for digital commerce.
196. 7:26It's a governmentbacked online retail
197. 7:28network. You can find all kinds of
198. 7:29sellers on it. Restaurants, grocery
199. 7:31stores, gadget hubs, even fashion. OMDC
200. 7:34is a network of network. It's a platform
201. 7:37of platform. So today let's say Flipkart
202. 7:39can also be part of ODC. Somebody who's
203. 7:42new who doesn't have a platform but
204. 7:44wants to have an innovative test an
205. 7:46innovative idea they can also be a part
206. 7:48of this. You see ODC is not an app or
207. 7:50platform like Amazon or Flipkart. ONDC
208. 7:52is a protocol. So just like UPI is for
209. 7:55payments is a digital infrastructure
210. 7:57that allows different buyer apps, seller
211. 8:00apps and logistics providers to interact
212. 8:02on a common network. This means any
213. 8:04seller on the network can sell to any
214. 8:06buyer through any participating app
215. 8:09which eventually creates an open and
216. 8:11interoperable e-commerce system. Now
217. 8:13imagine this in the digital world
218. 8:15sellers are on different apps like PTM,
219. 8:17Magic Pin and Misho. Buyers are using
220. 8:20different apps like somebody might order
221. 8:21from Phone Pay, someone might order from
222. 8:23PTM and logistics partners like Dunzo,
223. 8:26Load Share, all of them exist as
224. 8:28independent entities in the same
225. 8:29network. So now make sure that a buyer
226. 8:33on Phone Pay can buy a shirt from a
227. 8:35seller listed on Magic Pin and then this
228. 8:37shirt can then be delivered by Dunzo all
229. 8:39in one smooth order. So no one needs to
230. 8:42be on the same app. They just need to be
231. 8:43on the same network. Now if you look at
232. 8:45its success, it's not bad at all. ODC
233. 8:48has actually made significant strides
234. 8:50since its inception. By March 2025, it
235. 8:53has facilitated over 200 million
236. 8:55transactions, onboarded over five lakh
237. 8:57sellers with 70% of them being MSMES.
238. 9:00So, it's a great thing and the platform
239. 9:02is also gaining traction in multiple
240. 9:04sectors like food delivery, grocery, and
241. 9:07even mobility. So, yes, is still
242. 9:10growing. But in spite of its impressive
243. 9:12growth, ONDC faces some serious
244. 9:14challenges which need urgent attention.
245. 9:17Firstly, the user experience is one of
246. 9:19the most talked about complaints. For
247. 9:21those who don't know, just like Beam UPI
248. 9:23is the app for UPI. Even has its own
249. 9:26app. But if you look at the app
250. 9:28experience, the app experience is a
251. 9:31nightmare. You select groceries and you
252. 9:33get shown marketplaces of kortis. You
253. 9:35search for foreign whey protein brands
254. 9:37and you get moringa powder from Indian
255. 9:39sellers. And the UX is so bad that it
256. 9:41feels like using a college student's
257. 9:43first year project. And the delivery is
258. 9:45so bad that prime it takes 5 to 7
259. 9:48days for the products to be delivered.
260. 9:49This is because unlike Amazon they do
261. 9:52not have a seamlessly integrated
262. 9:53logistics network. So there is no
263. 9:55centralized fulfillment and no
264. 9:57consistency. And while Amazon and
265. 9:58Flipkart throw billions on marketing and
266. 10:00discounts, ODC has no such firepower.
267. 10:03They have no flash sales and they have
268. 10:05no flash discounts. So users tend to
269. 10:08stick around with Amazon and Flipkart
270. 10:10more than they stick around with the ODC
271. 10:12apps. And then comes the last part which
272. 10:13is awareness. You see, OMDC's success
273. 10:16relies on getting trust and awareness to
274. 10:18match its growth. Currently, many users
275. 10:20still don't know about the platform at
276. 10:22all. And even when they do, they're
277. 10:24often turned off by the experience as
278. 10:26seen in numerous social media
279. 10:27complaints. So, the question is, how can
280. 10:29a platform built to take on Amazon and
281. 10:30Flipkart survive if customers aren't
282. 10:33coming back? Now, don't get me wrong
283. 10:35over here, guys. ONDC has the potential
284. 10:37to disrupt the e-commerce space. But the
285. 10:40government needs to address three key
286. 10:41issues. Logistics, marketing and
287. 10:44financial viability. They need to
288. 10:46introduce more fees but also balance the
289. 10:48fees in such a way that they themselves
290. 10:50don't become the problem that they want
291. 10:52to solve. These are the challenges that
292. 10:54the government needs to solve when it
293. 10:55comes to ONDC. If this is very very
294. 10:57clear to you, let's look at Okin or open
295. 11:00credit enablement network. And guys, I
296. 11:02must admit that I was very happy for
297. 11:05this initiative and I thought that this
298. 11:06is going to change the landscape of
299. 11:08Indian MSMES forever. But the only thing
300. 11:11that has changed is my opinion on
301. 11:13government execution. So let's
302. 11:15understand this better. Okin is a
303. 11:17government-led initiative aimed at
304. 11:19democratizing the access to credit in
305. 11:21India particularly for small businesses
306. 11:23and the individuals who have been
307. 11:25excluded from traditional banking
308. 11:27systems. So if a small business in Bihar
309. 11:29applies for a loan of 10,000 rupees
310. 11:31using Aadhaar the business owner's
311. 11:33identity is verified then the business
312. 11:36shares its GST records and transaction
313. 11:38history via the account aggregator which
314. 11:40allows the lenders to then access the
315. 11:42business's creditworthiness. Then a
316. 11:45lender like HDFC quickly approves the
317. 11:47loan using real-time data and the
318. 11:49business receives its funds instantly
319. 11:51via UPM. And then the business will use
320. 11:53digilocker to store and access important
321. 11:56documents digitally reducing paperwork
322. 11:58and ensuring security. So this paperless
323. 12:01cashless and digital-driven ecosystem
324. 12:03was expected to cut transaction costs,
325. 12:06reduce fraud and provide instant access
326. 12:08to financial services. So the question
327. 12:10is where did we all go wrong? Because
328. 12:13this seems like a very straightforward
329. 12:14procedure, right? Well, the biggest
330. 12:15challenge for Okin has been the
331. 12:17reluctance of major banks to fully
332. 12:19participate. While initial reports in
333. 12:212022 and 23 suggested that lenders like
334. 12:23ICI Bank, Kotak Mahindra, Aditaba
335. 12:26Finance have signed up, their level of
336. 12:28engagement still remains low. In fact,
337. 12:30the total loan dispersal through Okin as
338. 12:33of 2024 was just 23 cr rupees and that
339. 12:37too to just 14,000 sellers. Now compare
340. 12:40this with UPI's transaction volume which
341. 12:42hit 200 lakh crores in 2024 you will
342. 12:45know how Okin's impact was negligible in
343. 12:48contrast to the other digital public
344. 12:50goods. In fact from what we read by 2024
345. 12:54only five lenders were actively
346. 12:55dispersing loans through OKEN which
347. 12:57indicates a failure to reach mainstream
348. 12:59adoption. Now why is this happening?
349. 13:02Well, from the brief data that was
350. 13:04available on the internet, what we found
351. 13:05is that number one, the banks fear
352. 13:07losing direct control over customer
353. 13:09relationship. Number two, unlike UPI
354. 13:11which banks were forced to adopt, Okin
355. 13:13is a protocol and thus banks can choose
356. 13:16to adopt or ignore it. So, banks could
357. 13:18ignore it without any consequence. In
358. 13:20fact, if you look at account
359. 13:21aggregators, which was supposed to be
360. 13:22the fourth layer of India stack that
361. 13:24could let users share bank and insurance
362. 13:26data, as of 2024, from the data that we
363. 13:29could find on the internet, only 8% of
364. 13:32bank accounts are linked. In fact, Phone
365. 13:34Pay stopped being an account aggregator
366. 13:36recently citing competing priorities.
367. 13:38Now, I don't understand what this means.
368. 13:40So, if you do, please let me know in the
369. 13:41comments. And you know what's even more
370. 13:43disappointing, guys? The latest status
371. 13:45of OK is not available on the open
372. 13:47source. So if at all it is successful I
373. 13:50would request a government official to
374. 13:52please email the report to write to
375. 13:54things.com and we will make a video on
376. 13:56it. And the last reason why OK is a
377. 13:58failure is because of the regulatory and
378. 14:00operational failures in early pilots. In
379. 14:03this pilot lenders struggled with
380. 14:05repayment collection leading to a higher
381. 14:07thanex expected defaults. In fact the
382. 14:09government's marketplace called GM Sahai
383. 14:121.0 to it was quietly discontinued in
384. 14:15late 2024 with a new version of Okin 4.0
385. 14:18under development. So while Okin has not
386. 14:21been officially discontinued, its
387. 14:23primary pilot program was shut down due
388. 14:25to performance issues. And again, there
389. 14:27is no clear update on whether its
390. 14:28replacement is more successful or it is
391. 14:30less successful. And according to us, a
392. 14:32major red flags that there have been
393. 14:34virtually no official updates on Okin's
394. 14:36progress since early 2024. Unlike UPI
395. 14:39which has monthly transaction reports
396. 14:40and the progress that features on
397. 14:42Instagram page itself, Okin's adoption
398. 14:44figures have not been published
399. 14:47frequently enough which has then led to
400. 14:49speculation that maybe the rollout has
401. 14:52been stalled. This is what we could find
402. 14:54about the gaps in UPI the startups to be
403. 14:56built and the gaps in ONDC and OKAN. So
404. 14:59if any government official is watching
405. 15:00this episode, please help us gain
406. 15:02clarity on this so that we can educate
407. 15:04the people about the pitfalls and
408. 15:05opportunities and we do want to
409. 15:08celebrate the success of the government
410. 15:09but if you don't find any we can't do
411. 15:11it. So please let me know in the
412. 15:13comments or you can email it to write
413. 15:16tothinkchoolgmail.com. But this is what
414. 15:17brings us to the last part of the
415. 15:18episode and that are the lessons that we
416. 15:20need to learn from this story. Lesson
417. 15:22number one, vision without execution is
418. 15:24just PR. We all see grand government
419. 15:26tech initiatives often being launched
420. 15:27with big speeches and bigger promises.
421. 15:29But we also need to remember that unless
422. 15:31there are follow-ups, incentives and
423. 15:33user feedback loops which keep on
424. 15:34improving the product, these ideas will
425. 15:37remain as PowerPoint dreams and not
426. 15:39public goods. Lesson number two, without
427. 15:41skin in the game, private players will
428. 15:43walk away and the government needs to
429. 15:45understand this as soon as possible. You
430. 15:47see okin and account aggregators fail to
431. 15:49attract banks because there was no
432. 15:51incentive or regulation forcing the
433. 15:53participation of these giant players.
434. 15:54And if private players do not see any
435. 15:56value, they will stick to what already
436. 15:57works. So whenever you build a system or
437. 15:59a platform, always ask yourself one
438. 16:01question. What is the incentive for any
439. 16:04person or any entity to sign up on your
440. 16:06platform? And only when you get the
441. 16:08answer, you should begin developing the
442. 16:10platform or the system. Lesson number
443. 16:12three, India stack needs startups and
444. 16:14not just state support. You see UPI
445. 16:17exploded because startups like Phone
446. 16:19Pay, Google Pay and PTM built amazing
447. 16:21layers on top of the public rails. But
448. 16:24ODC and Okin tried to scale without
449. 16:26startup innovation and we believe that
450. 16:28is why they are not picking up. And
451. 16:30lastly, if a government official is
452. 16:32watching this, please understand that to
453. 16:34us the common people of India,
454. 16:36transparency builds trust and silence
455. 16:38often signals failure. While real-time
456. 16:40data of UPI is published everywhere, OK
457. 16:43and account aggregators data is not
458. 16:44published that often and in fact when we
459. 16:47searched for it, we almost found
460. 16:48nothing. So if the public doesn't know
461. 16:50what's working and what's not, they
462. 16:52would assume that it's not working. So
463. 16:54please update us and keep us posted on
464. 16:56both your progress and failures. And we
465. 16:58understand that some initiatives may not
466. 17:00work. But not informing the public at
467. 17:02all doesn't seem like the best thing to
468. 17:04do, especially after you've created this
469. 17:06massive hype about something really
470. 17:08really revolutionary which got the
471. 17:09public very very excited. So please
472. 17:11update us and let us know and we would
473. 17:14be more than happy to celebrate your
474. 17:15success because we believe that your
475. 17:17success is our success. That's all from
476. 17:19my side for today guys. If you learned
477. 17:21something valuable, please make sure to
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480. 17:25insightful business and polial case
481. 17:26studies, please subscribe to our
482. 17:27channel. Thank you so much for watching.
483. 17:29I will see you in the next one. Bye-bye.
484. 17:37[Music]