What is ONDC and Why Mutual Fund Distributors Should Care

The​‍​‌‍​‍‌ financial ecosystem in India is rapidly transforming, and mutual fund distribution is a vital aspect of this change. Distributors are increasingly moving away from legacy methods such as paperwork, spreadsheets, and manual follow-ups toward digital KYC, online transactions, mobile apps, and real-time portfolio tracking. Speed, transparency, and a seamless digital experience have become the top priorities for clients today; thus, technology is a must-have, not a choice, for mutual fund distributors.

One way the Open Network for Digital Commerce (ONDC) is impacting the scene is by becoming a major player. ONDC is primarily discussed in e-commerce contexts, but its impact runs deep, particularly in enabling and interoperating digital systems. For mutual fund distributors, ONDC is a move toward more options, reduced dependence on closed platforms, and greater flexibility in how payments and other services are managed. As digital adoption continues to rise across the industry, it is a smart move for distributors to learn about ONDC now to stay ahead and prepare for the future of mutual fund distribution in India.

India’s Open Network for Digital Commerce (ONDC) is a government-backed initiative aimed at creating an open, inclusive digital commerce ecosystem. In simple terms, ONDC enables different platforms, applications, and service providers to interconnect through a shared network instead of operating as closed, isolated systems.

Much like how UPI transformed digital payments by making them interoperable across banks and apps, ONDC seeks to bring the same level of interoperability to digital commerce and services. It allows buyers and sellers to discover, manage, and complete transactions across multiple platforms without being locked into a single marketplace or provider.

How ONDC Works in India

ONDC operates as a network of interconnected participants rather than a single application or marketplace. These participants include buyer-side apps, seller-side apps, service providers, and payment gateways. All participants are connected through standardized protocols defined by the network.

This structure allows a buyer to initiate a transaction on one platform and complete it using services offered by another platform, as long as both are part of the ONDC network. The model encourages interoperability, transparency, and choice for both consumers and businesses.

In India, ONDC is currently being rolled out in phases across multiple sectors. The focus is on increasing transparency, fostering competition, and improving access to digital infrastructure, while maintaining strong standards for data security and regulatory compliance.

ONDC and Financial Services

The introduction of ONDC opens up new possibilities for service integration and digital transactions beyond traditional commerce. For financial services such as mutual fund distribution, this reduces dependence on closed ecosystems and allows greater flexibility in choosing technology platforms, payment providers, and service partners.

Over time, ONDC has the potential to simplify digital transactions, improve cross-platform interoperability, and deliver a more consistent digital experience. This can enable mutual fund distributors to build scalable, future-ready businesses while continuing to meet regulatory and compliance requirements.

The distribution of mutual funds in India has expanded significantly over the years, yet many distributors continue to struggle with day-to-day operational challenges. Despite increased adoption of digital tools, a large number of MFDs still operate using fragmented systems and platform-dependent processes.

Present Problems That Mutual Fund Distributors Face

Many distributors today deal with dependence on closed platforms, limited flexibility in payment and transaction workflows, and continued reliance on manual processes that reduce efficiency. Platform-controlled onboarding, transactions, and reporting restrict choice and limit scalability. Managing multiple systems for client data, payments, and compliance further increases operational complexity and workload.

The Impact of ONDC on the Traditional Distribution Model

ONDC introduces an open, network-based approach to digital commerce and services. Instead of being locked into a single platform and its proprietary ecosystem, distributors can operate on a shared network where multiple technology providers, service partners, and payment systems coexist.

This model gives MFDs the freedom to choose and combine tools without disrupting the investor experience. By reducing platform dependence and encouraging interoperability, ONDC creates room for innovation, better service integration, and improved transparency across the distribution process.

ONDC vs Closed Mutual Fund Platforms

By following an open-network approach, ONDC enables distributors to work with multiple service providers without being constrained by a single platform. This openness supports long-term scalability, smoother technology upgrades, and greater operational control, making ONDC a promising shift for the future of mutual fund distribution in India.

As mutual fund distribution becomes increasingly digitized, distributors need systems that provide not only flexibility and efficiency but also long-term stability. ONDC addresses many of the limitations of traditional, closed platforms and offers tangible advantages to mutual fund distributors operating in a rapidly evolving digital environment.

Benefits of ONDC for Mutual Fund Distributors

ONDC allows distributors to move away from closed ecosystems and adopt an open digital framework. This openness enables easier selection of technology partners, smoother integration of multiple services, and the ability to evolve operations as market conditions change. As a result, distributors gain greater operational control and position their businesses to be more future-ready.

Platform Independence and Flexibility

One of the most significant benefits of ONDC is platform independence. Distributors are no longer locked into a single system for onboarding, transactions, or payments. ONDC enables multiple tools and services to operate together on a shared network, allowing MFDs to design workflows that align with their business size, strategy, and growth objectives, whether they operate as individual advisors or large distribution firms.

Enhanced Payment and Transaction Flow

ONDC supports more seamless and interoperable payment mechanisms. Instead of being restricted to limited, platform-controlled payment options, distributors can enable faster, smoother, and more transparent digital transactions. This not only improves operational efficiency but also enhances the investor experience by making investing simpler, quicker, and more convenient.

ONDC stands for the Open Network for Digital Commerce. It is an open digital network designed to connect multiple participants instead of relying on a single, closed platform. This structure allows mutual fund advisors to operate within a flexible ecosystem where technology providers, payment systems, and service tools can work together seamlessly.

Overview of the ONDC Ecosystem

The ONDC ecosystem is built around a network of participants that include advisor-facing platforms, service providers, payment partners, and network facilitators. Each participant plays a distinct role but follows common standards that allow seamless communication across the network. This open architecture prevents advisors from being locked into one system and enables them to continue using tools and services that best suit their business requirements.

Roles of Technology Providers and Payment Partners

Technology providers build advisor platforms that integrate with the ONDC network. These platforms manage key functions such as client onboarding, transaction processing, reporting, and compliance workflows. Payment partners, on the other hand, enable secure and interoperable digital payments within the ONDC framework. Together, they ensure that advisors can deliver smooth, compliant, and reliable services without juggling multiple disconnected systems.

Transaction and Payment Flow

When a mutual fund advisor initiates a transaction, such as a SIP or a lump-sum investment, the request is processed through an ONDC-connected platform. Transaction details are securely shared across the network, and payments are executed through an ONDC-aligned payment partner.

Once the payment is completed, the transaction is confirmed and recorded, providing greater transparency and faster execution for both advisors and investors. This streamlined flow reduces duplication, minimizes rework, and simplifies daily operations, making mutual fund distribution more efficient and scalable.

ONDC’s goal is to open up, improve efficiency, and make the payment layer more interoperable. With ONDC-enabled payments, mutual fund distributors can simplify transaction workflows, thereby improving the overall investment experience for their clients.

The Significance of ONDC Payments

ONDC payments reduce dependence on a few platform-specific or limited payment options. Through interoperable payment systems, ONDC enables seamless transactions across connected platforms. This leads to faster execution, greater transparency, and fewer transaction-related issues, ultimately improving distributor efficiency and client satisfaction.

The Route for Distributors to Activate ONDC Payments

Mutual fund distributors are not required to build or manage ONDC payment infrastructure on their own. They can enable ONDC payments by partnering with an ONDC-aligned technology platform, without facing technical complexity. Such platforms integrate with approved payment partners, allowing distributors to accept digital payments smoothly while staying focused on advisory services and client engagement.

Compliance and Security Aspects

ONDC payments are designed to align with India’s regulatory framework. Transactions are processed through secure, compliant payment partners, ensuring adherence to data privacy, security, and regulatory standards. This provides distributors with confidence that payments remain auditable, secure, and compliant with SEBI and other applicable regulations.

Due to the rising attention around ONDC, several misunderstandings especially among mutual fund distributors have emerged. Clearing these myths is essential to correctly understand the role ONDC plays in strengthening, not disrupting, the advisory ecosystem.

“ONDC Is Merely an E-commerce Platform”

This is one of the most common misconceptions. While ONDC began with a focus on digital commerce, its scope now extends across services and digital transactions, including financial use cases. For mutual fund distributors, ONDC enables open payment systems and interoperable digital infrastructure, rather than functioning as a traditional marketplace.

“ONDC Is Too Complex for Mutual Fund Distributors”

ONDC is often perceived as highly technical, but distributors do not need to deal with its technical layers directly. ONDC-compliant platforms handle integrations in the background. As a result, distributors can continue focusing on advisory, client relationships, and business growth while benefiting from ONDC-enabled capabilities without operational complexity.

“ONDC Will Eliminate the Role of Distributors”

This assumption is incorrect. ONDC is designed to reduce dependency on closed platforms, not to remove advisors from the value chain. In fact, it empowers distributors by giving them greater control over workflows, technology choices, and client experiences, while preserving and strengthening their advisory role.

Compliance remains a significant concern for mutual fund distributors. This remains true even with new digital frameworks like ONDC. It is important to realise that ONDC does not cancel or replace existing regulations; it works alongside them. For distributors, following ONDC still means adhering to all mutual fund regulations, including client onboarding, KYC, disclosures, and transaction reporting. ONDC-aligned platforms are designed to support these requirements by offering structured workflows that reduce manual errors and improve overall process consistency.

ONDC operates in harmony with SEBI regulations. Mutual fund distribution rules related to investor protection, suitability, and compliance checks remain unchanged. What ONDC introduces is a more open and standardised digital framework that allows these processes to function smoothly across multiple platforms without creating silos.

Data privacy and security are central to the ONDC framework. Secure protocols and encryption mechanisms are used to protect information flowing across the network, ensuring that investor data remains confidential and safeguarded at all times. For mutual fund distributors, this means that adopting ONDC-enabled systems does not compromise regulatory responsibilities or data security obligations, while still enabling greater efficiency and interoperability.

Mutual fund distributors must go beyond basic digitisation to fully benefit from ONDC. They need software that is genuinely advisory-led and workflow-oriented. :contentReference[oaicite:0]{index=0}’s ONDC-aligned platform is designed to support distributors across different stages of their business and prepare them for a rapidly evolving digital environment.

Built-In Features Essential for Distributors

JezzMoney offers a comprehensive suite of digital capabilities, including paperless onboarding, Aadhaar-based eKYC, PAN validation, FATCA compliance, transaction enablement on BSE and NSE, portfolio tracking, reporting, and client management. These features ensure smooth day-to-day operations while reinforcing strong process discipline and regulatory compliance.

ONDC-Aligned Payment Integration

The platform supports seamless integration with ONDC-aligned payment providers, enabling secure and interoperable digital payments. This reduces dependence on limited payment systems and delivers a smoother transaction experience for clients, while staying aligned with India’s open digital commerce framework.

Scalability and Future Readiness

Built on an API-first, cloud-based architecture, JezzMoney is highly scalable and adaptable. Whether operated by a solo distributor or a multi-ARN, multi-team organisation, the platform adjusts effortlessly without operational disruption. Its ONDC-aligned design ensures flexibility, easy integrations, and readiness for future regulatory and technological changes.

The future of mutual fund distribution is moving toward openness, digitisation, and ecosystem interoperability, and JezzMoney is positioned to support this transition. Its ONDC-aligned platform helps distributors streamline daily operations, enable secure digital payments, and prepare for the next phase of India’s financial ecosystem.

From individual advisors to growing distribution businesses, JezzMoney provides the flexibility, scalability, and technology confidence needed to grow without platform constraints. With fully digitised workflows, compliance-ready processes, and ONDC-aligned payment integration, distributors can spend less time managing systems and more time building strong, long-term client relationships.

As ONDC reshapes the digital financial ecosystem in India, mutual fund distributors require technology that is open, flexible, and aligned with real advisory workflows. JezzMoney is collaborating with ONDC to help distributors transition into the ONDC ecosystem seamlessly, without operational or technical friction.

ONDC-Aligned Architecture

JezzMoney is built on an ONDC-aligned, API-first architecture that supports interoperability and long-term flexibility. By adopting an open approach, distributors reduce dependence on closed systems and gain the ability to adapt smoothly to evolving ONDC standards, regulatory requirements, and future integrations.

Payment Enablement Support

JezzMoney simplifies ONDC payment enablement by offering seamless connectivity with ONDC-aligned payment providers. Distributors can activate secure, fully compliant digital payment flows without managing complex technical integrations, making transactions faster and easier for both advisors and investors.

End-to-End Digital Advisory Platform

JezzMoney delivers a complete, ONDC-ready digital advisory platform. It supports the entire advisory lifecycle, including paperless onboarding, compliance workflows, transactions, portfolio tracking, reporting, and client engagement, all within a single secure system. This allows distributors to focus more on advisory growth and client relationships rather than operational overhead.

ONDC is still in its early stages, but its eventual impact on mutual fund distribution in India could be significant. By promoting open networks and interoperability, ONDC has the potential to fundamentally change how distributors operate, scale their businesses, and create long-term value for investors.

Long-Term Impact of ONDC

Over time, ONDC aims to reduce dependence on closed platforms and establish an open digital financial ecosystem. This shift will give mutual fund distributors greater freedom in choosing technology partners, enable smoother payment interoperability, and support cleaner, more efficient digital workflows. As the ecosystem matures, ONDC is expected to encourage standardized, transparent, and scalable distribution models across the industry.

Opportunities for Early Adopters

Distributors who adopt ONDC early are likely to gain a strong competitive advantage. Early adoption allows them to build future-ready infrastructure, streamline operations, and offer a modern digital experience to investors. Being ONDC-ready also ensures flexibility as new services, integrations, and regulatory changes emerge.

What Distributors Should Do Next

This is an ideal time for mutual fund distributors to prepare for the shift. Moving toward digital-first platforms, aligning internal processes, and partnering with ONDC-aligned technology providers will ensure a smoother transition. These steps will not only ease adoption but also position distribution businesses for sustainable growth as ONDC becomes a core part of India’s financial infrastructure.

ONDC is a significant shift in India's digital financial ecosystem, with broad implications for mutual fund distributors. By promoting openness, interoperability, and flexibility, it enables distributors to move away from closed platforms and manual processes and embrace scalable, future-ready digital systems.

ONDC is going beyond e-commerce and gradually expanding into financial services, enabling distributors to gain greater control, more integrated payments, and more efficient digital workflows. Early preparation will help mutual fund distributors maintain their competitive edge as the ecosystem continues to evolve, making technology choice a key factor for long-term scalability and compliance.

The transition to open digital networks is already underway. Those mutual fund distributors who take steps now will be able to grow, adapt, and better serve clients. By auditing current technology, streamlining operations, and partnering with an ONDC-ready platform such as JezzMoney ONDC, distributors can confidently establish a future-ready mutual fund distribution business.