What is an Account Aggregator?
An Account Aggregator is a RBI-regulated entity that helps an individual securely access and share information from one financial institution they have an account with to any other regulated financial institution in the network.
The business of an account aggregator is supposed to be in the business of providing, under a contract, the service of retrieving or collecting information of its customers regards to financial assets, as specified by the bank from time to time, and consolidating and presenting those information to the customer as per the instructions of the customer.
AA Framework to Protect Customer Benefits
Getting a loan could get simple with the Reserve Bank of India’s Account Aggregator (AA) framework implemented in the system.
Instead of submitting a long list of documents to the bank, loan applicants can now just give their consent to share bank statements digitally with the lender – a process that could take days of time can be done in just a few seconds.
Experts say that the Account Aggregator framework can help consumers in many ways in different areas such as getting a consolidated view of their financial assets for better financial management and getting multiple options to plan investments and insurance better.
Account Aggregator Framework and Digital Lenders Network
The AA ecosystem can help in providing accurate, comprehensive and recent data to the lender that would give insights about the potential of a borrower. It reduces time and effort to be spent on fraud detection as the data is completely machine readable and directly from the source. Data from bank statements, loan papers, insurance policies and various investments can be verified in this format.
Financial data of a customer is spread across multiple banks, insurers, mutual funds, GST and there is no cumulative view to access this information. AA creates this organized consolidated view, adding that it is a secure way of sharing information, which has customer consent and data privacy as its core designed principles.
Account Aggregator ecosystem shifting the Fintech landscape
At present the data including bank accounts, mutual funds, insurance policies and pension funds can be accessed through an AA framework. Eight major banks including State Bank of India, ICICI Bank, Axis Bank, IDFC First Bank, Kotak Mahindra Bank, HDFC Bank, IndusInd Bank and Federal Bank have already joined the AA ecosystem.
The major use cases of this ecosystem have been getting auto loans, small business loans, personal loans and other personal finance management services. Different banks are using AA for different use cases.
AA framework assists lenders in filtering the customer onboarding process to make it seamless. The lenders might be focusing on various use cases targeting different customer segments.
Financial Inclusion
Many experts have likened AA to what UPI did for payments and said that it can lead to democratisation of credit.
If a business has a digital footprint, that information can be used by a lender to make a decision whether to give that SME a working capital loan or not. The AA ecosystem can help in financial inclusion, as many people who are new to credit or do not have a credit score but still hold proof of regular income might qualify for a loan.
There could be many more use cases for account aggregators over time, experts hint that there is also a need to build awareness among consumers regarding the same. The AA network will become stronger with more banks and financial entities enrolling in. This will lead to democratisation of the entire system and keep the faith of customers.
Where To Find A Certified TSP Solution
If you are seeking a technology service provider solution for your account aggregator ecosystem, opt for the one that implements the modules as per the standards laid down by RBI.
If you represent as a regulated account aggregator, you certainly will benefit from our product. At Digitap, we make sure that we provide the Financial information provider and financial information user modules only as per the RBI accepted standards. We can make the entire process seamless and automated.
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Learn more about Digitap to Get Started. You can also reach out to our team at sales@digitap.ai.
