One of the most significant advantages of digital technologies' interconnection is the prospective capacity to bring data from several sources together in one location for optimal usage. With the shifting customer expectations, the concept of account aggregation has emerged.
What is an Account Aggregator?
An Account Aggregator (AA) is an RBI-regulated firm that assists an individual in securely and digitally accessing and sharing information from one financial institution to any other regulated financial institution in the AA network. Without the consent of the subject, data cannot be shared. There will be numerous Account Aggregators from which to choose.
Account Aggregator refers to a non-banking financial organization that performs account aggregation services for a fee or otherwise.
Account Aggregator replaces extensive terms and conditions with granular, step-by-step permission and control for each usage of your data.
Benefits of Account Aggregator
Consumers in India's financial system face numerous challenges today, including exchanging physically signed and scanned copies of bank statements, rushing about to notarize or stamp papers, and revealing your personal username and password to provide third party access to your financial history. All of them would be replaced by the Account Aggregator network's easy, mobile-based, straightforward, and secure digital data access and sharing method. This will open the door to new forms of services, such as new types of loans.
No paperwork or KYC
The procedure of sharing data becomes simple once your bank or institution provider is registered, as the institution is connected to the AA system via APIs. You don't need to submit any paperwork for KYC if you need a new loan, want to acquire an insurance policy, or want to invest in a mutual fund, for example. All you have to do is give AA your permission to share your data with banks and organizations. The AA will digitally extract the information from your bank and send it to the bank or organization where you are asking for a new loan or investment.
Eight banks have joined Account Aggregator network
Eight banks have already joined the network; four are sharing data with each other based on consent (Axis, ICICI, HDFC, and IndusInd Banks), and four more will be able to do so soon (State Bank of India, Kotak Mahindra Bank, IDFC First Bank, and Federal Bank).
Control data sharing
You will have complete choice over the quantity of data you wish to disclose on an AA platform, as well as the time period during which the data will be available for any bank or financial institution to access. You can also choose whether to transmit only loan information or only credit card information, for example. Other information intermediaries, such as a credit bureau, are used by the lending institution to obtain extra data on you.
Banking transaction data, like bank statements from a current or savings account is now available to be shared across the banks that have joined the network.
Consumers will eventually have access to all financial data, including tax data, pension data, securities data (mutual funds and brokerage), and insurance data, thanks to the AA framework. It will also go beyond the banking sector, allowing individuals to access healthcare and communications data through AA.
Data sharing security
Account Aggregators do not see the data; they simply transfer information from one financial institution to another with the permission and direction of the individual. They can't 'aggregate' your data. AAs aren't like tech businesses that compile your data and construct extensive profiles of you.
The sender encrypts the data that the AAs share, and only the recipient can decrypt it. The method is far more secure than transferring paper documents because of end-to-end encryption and the usage of technology like the "digital signature."
Consumers have the option of registering with an AA. If the consumer's bank is a member of the network, they can register with an AA, pick which accounts they want to link, and exchange data from one of their accounts with a new lender or financial institution for a specific reason at the point of obtaining "permission" via one of the Account Aggregators.
Account Aggregator and Aadhaar eKYC
For KYC purposes, Aadhaar eKYC and CKYC only allow the sharing of four "identification" data fields (eg name, address, gender, etc). Credit bureau data, on the other hand, only shows loan history and/or a credit score. Transaction data or bank statements from savings/deposit/current accounts can be shared over the Account Aggregator network.