Eight banks join account aggregator network, a newly launched open digital financial platform
Account aggregator will allow sharing of consumers data based on their consent with financial institutions, which will enable them to create tailor-made products without the cumbersome offline procedures.
The stage has been set for the rollout of new technology infrastructure called account aggregator (AA). Built on the theme of the Unified Payments Interface, it is projected as a game-changer in providing financial products and services based on data.
Eight major banks in the country — State Bank of India, ICICI Bank, Axis Bank, IDFC First Bank, Kotak Mahindra Bank, HDFC Bank, IndusInd Bank, and Federal Bank — have joined the account aggregator network. The technology was launched at a virtual event on Thursday.
The account aggregator platform is an open banking system where the data of individuals is consensually collected and shared among the financial institutions so that they have a better understanding of the potential customers and provide services or products that are more suitable to them.
Image credit: Sahamati
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Unlike the conventional banking system where physical assets are taken as security, AA will purely rely on data to make the decision.
RBI Deputy Governor M Rajeshwar Rao said, “India is a world leader in building public digital infrastructure, and the Account Aggregator framework follows that tradition. AAs enable secure, consented data flows while protecting user privacy. In conjunction with other platforms like the Unified Payment Interface, Account Aggregator creates in India the most cutting edge digital financial infrastructure in the world.”
A statement from iSPIRT, a think-tank representing Indian software product companies, noted that AA reduces the need for individuals to wait in long queues at the bank, use complicated internet banking portals, share their passwords, or seek out physical notarisation to access and share their financial documents securely.
It is expected that the improved access to data will help meet critical financial needs like small-ticket MSME working capital loans, affordable micro-insurance products, better savings and money management, and others.
HDFC Bank and Axis Bank have been using AA for auto loans, LendingKart has been using AA for MSME loans, while IndusInd Bank has been using it for Personal Finance Management.
Four banks are already live with data accessible for consumers via Account Aggregators, and the rest will shortly go live. Four NBFCs – Finvu, OneMoney, CAMS Finserv, and NESL — have received operational licences while three more — PhonePe, Perfios, and Yodlee — have received in-principle approval.
Sumit Gwalani, Co-founder, Fi — a fintech startup and part of this AA ecosystem, said, “We have been extremely bullish on the power and potential of the AA ecosystem as it opens a wide variety of use cases and advantages for the users. We collaborated with the AA from the very early stages.”
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Edited by Kanishk Singh