Account Aggregators
One of the greatest benefits of the interconnectedness of digital technologies is the potential ability to bring together data from myriad sources in one place for its effective use. In the world of financial services, cutting-edge technologies and the disruption introduced by on-demand aggregators and marketplaces has brought about a shift in consumer expectations of speed, safety, security and convenience. These changing customer expectations have led to the emergence of the concept of account aggregation.
Account aggregators (AAs) are entities that facilitate structured financial data sharing from FIPs to FIUs while retaining a record of the consent provided and offering the functionality to manage and rescind consent.
Any supervised financial sector institution that offers financial services and products such as banking, lending, asset management and insurance is classified as a financial information provider (FIP).
An institution that is registered and supervised by any of the financial sector regulator (across banking, lending, financial planning and investments, insurance and pension— the Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA) is considered a financial information user (FIU). FIUs can solicit consent from a user by providing details of the data to be captured through an account aggregator identifier.
Account aggregators (AAs) are entities that facilitate structured financial data sharing from FIPs to FIUs while retaining a record of the consent provided and offering the functionality to manage and rescind consent.
Any supervised financial sector institution that offers financial services and products such as banking, lending, asset management and insurance is classified as a financial information provider (FIP).
An institution that is registered and supervised by any of the financial sector regulator (across banking, lending, financial planning and investments, insurance and pension— the Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA) is considered a financial information user (FIU). FIUs can solicit consent from a user by providing details of the data to be captured through an account aggregator identifier.
Why We Need Account Aggregators
Account aggregators are a set of non-banking financial companies, which work as technology intermediaries between companies seeking financial data of customers (financial information users) and those holding that data (financial information providers).
FIPs and FIUs include banks, non-bank lenders, insurance companies and mutual funds, who require financial information and documents from customers. The account aggregator system hopes to ease data sharing between these various financial services players.
With a customer’s consent, the aggregator can digitally grab documents from your bank (FIP) and share it with another financial service provider (FIU). This, in turn, would mean customers don’t need to run around collecting documents to open accounts, get loans or access other financial products.
For financial service providers, it makes the process of customer acquisition smoother.
FIPs and FIUs include banks, non-bank lenders, insurance companies and mutual funds, who require financial information and documents from customers. The account aggregator system hopes to ease data sharing between these various financial services players.
With a customer’s consent, the aggregator can digitally grab documents from your bank (FIP) and share it with another financial service provider (FIU). This, in turn, would mean customers don’t need to run around collecting documents to open accounts, get loans or access other financial products.
For financial service providers, it makes the process of customer acquisition smoother.
Institutional Adoption so far for Account Aggregators
At least four banks, including HDFC Bank Ltd., ICICI Bank Ltd., Axis Bank Ltd. and IndusInd Bank Ltd., have started testing account aggregators services for a select set of customers, before they open up these platforms to everyone.
Other banks, including State Bank of India, Federal Bank Ltd. and Kotak Mahindra Bank Ltd. are set to join the account aggregator framework shortly. Non-bank lenders such as Bajaj Finance Ltd., LendingKart and DMI Finance are also joining, Mahesh said. Sahamati is also in talks with insurers to join the framework.
Other banks, including State Bank of India, Federal Bank Ltd. and Kotak Mahindra Bank Ltd. are set to join the account aggregator framework shortly. Non-bank lenders such as Bajaj Finance Ltd., LendingKart and DMI Finance are also joining, Mahesh said. Sahamati is also in talks with insurers to join the framework.
The Road Ahead
In the testing phase, banks have started with a small set of services that can be accessed if customers have their data available through an account aggregator. Some of these lenders have starting offering personal loans and small business loans on the platform.
The financial services providers can come up with multiple use cases over time. This could include broader loan categories, opening bank accounts, investment products such as mutual fund schemes and even insurance plans.
For consumers, the account aggregators can help make a number of financial transactions paperless and reduce the turnaround time. A simple authorisation to the account aggregator to share information from, say, your bank accounts with an asset management company, can help complete a transaction such as a mutual fund investment. Similarly, you may be able to process a loan within minutes if you authorise your account aggregator to share information, such as your bank account statements, with the entity you are seeking a loan from.
The information shared is in fully machine-readable format, which their (service provider's) underwriting models can use. So lets say a customer is seeking a loan, the lender can issue the approval within a couple of minutes, as they are able to access a customer's bank account details with their consent.
This capability will take time to evolve, however, and there has to be buy in from a larger number of financial institutions and customers to be on-boarded.
The financial services providers can come up with multiple use cases over time. This could include broader loan categories, opening bank accounts, investment products such as mutual fund schemes and even insurance plans.
For consumers, the account aggregators can help make a number of financial transactions paperless and reduce the turnaround time. A simple authorisation to the account aggregator to share information from, say, your bank accounts with an asset management company, can help complete a transaction such as a mutual fund investment. Similarly, you may be able to process a loan within minutes if you authorise your account aggregator to share information, such as your bank account statements, with the entity you are seeking a loan from.
The information shared is in fully machine-readable format, which their (service provider's) underwriting models can use. So lets say a customer is seeking a loan, the lender can issue the approval within a couple of minutes, as they are able to access a customer's bank account details with their consent.
This capability will take time to evolve, however, and there has to be buy in from a larger number of financial institutions and customers to be on-boarded.
Section - 5
We have reimagined the ways how the process of new age policy making would be.
Over the last decade, the government has taken a more professional approach to policy making.There has been a movement away from policy advice by generalists to one informed by concepts of risk, management, and delivery of services.
Our approach to policy advisory incorporates the perspectives of ministers as well as civil servants, since policy is the responsibility of both parties, and a product of their joint efforts. Bureaucrats, members of standing committees, joint parliamentary committees and opinion leaders can be persuaded to take a more proactive and participatory role in the emerging grey areas in policy dialogues.
Over the last decade, the government has taken a more professional approach to policy making.There has been a movement away from policy advice by generalists to one informed by concepts of risk, management, and delivery of services.
Our approach to policy advisory incorporates the perspectives of ministers as well as civil servants, since policy is the responsibility of both parties, and a product of their joint efforts. Bureaucrats, members of standing committees, joint parliamentary committees and opinion leaders can be persuaded to take a more proactive and participatory role in the emerging grey areas in policy dialogues.
Section -6
India remains a complex market. It is best to view India not as a single market, but as a series of interconnected regional markets where the regulatory and investment climate changes from one state to another.
Many states have created investment cells to attract business and have framed policies around them but the lack of coherence between the launch of new policy initiatives and policy stewardship leaves a lot to be desired. While most of the state civil servants acknowledge that they have to be innovative in their approach, there is a lack of clarity over what this means in practice. The ensuing implementation of reform policies is therefore likely to be heavily shaped by the culture. It has been the case that few states in India, receive the new policy ideas like Smart City Mission and Ayushman Bharat very attractive and scalable yet difficult to implement due to logistical and legacy issues.
To correct such perceptual anomalies and resistance, policy discussion needs to be tailored to the culture and existing economic opportunity present in the state.
Many states have created investment cells to attract business and have framed policies around them but the lack of coherence between the launch of new policy initiatives and policy stewardship leaves a lot to be desired. While most of the state civil servants acknowledge that they have to be innovative in their approach, there is a lack of clarity over what this means in practice. The ensuing implementation of reform policies is therefore likely to be heavily shaped by the culture. It has been the case that few states in India, receive the new policy ideas like Smart City Mission and Ayushman Bharat very attractive and scalable yet difficult to implement due to logistical and legacy issues.
To correct such perceptual anomalies and resistance, policy discussion needs to be tailored to the culture and existing economic opportunity present in the state.
Section -7
Many companies have attained stepladder growth by identifying the winds of change in policies, which sometimes open up new business models. Those companies are also able set the agenda for future industry reforms through sustained dialogues.
Policy agenda might be construed as a specific policy ask, but this is not always the case. Moreover, a good policy agenda is accomplished only after several revisions, lengthy discussions, and healthy debate. Therefore, in the best interest of industry, leading companies deliberate, discuss and voice their concerns to the policy makers and parliamentarians.
Given the potential for a seismic shift in our nation’s political and regulatory landscape, we believe; these are times when close attention should be paid to regulatory developments. In times to come, when regulatory supervision is only going to increase, more proactive companies would continue to bear the fruit of favourable and accommodating rules.
Policy agenda might be construed as a specific policy ask, but this is not always the case. Moreover, a good policy agenda is accomplished only after several revisions, lengthy discussions, and healthy debate. Therefore, in the best interest of industry, leading companies deliberate, discuss and voice their concerns to the policy makers and parliamentarians.
Given the potential for a seismic shift in our nation’s political and regulatory landscape, we believe; these are times when close attention should be paid to regulatory developments. In times to come, when regulatory supervision is only going to increase, more proactive companies would continue to bear the fruit of favourable and accommodating rules.
Section -8
The ripple effects of a tumultuous 2020 are likely to be even more enduring and impactful than the forces that initially triggered them. In the aftermath of Covid the government is determined to build the economy through incentives like PLI schemes to boost domestic manufacturing, amending FDI regulations, setting aside startup funds, accelerating digital transformation, building infrastructure and going ahead with its ambitious disinvestment and asset monetization plans.
All of this would entail administrations pulling regulatory and legislative levers to implement its priorities. We are here to help your business along with implications for how to respond to shifts. Numerous companies and hyper growth startups have been a beneficiary of our advocacies and interventions.
All of this would entail administrations pulling regulatory and legislative levers to implement its priorities. We are here to help your business along with implications for how to respond to shifts. Numerous companies and hyper growth startups have been a beneficiary of our advocacies and interventions.
Section - 9
We have reimagined the ways how the process of new age policy making would be.
Over the last decade, the government has taken a more professional approach to policy making.There has been a movement away from policy advice by generalists to one informed by concepts of risk, management, and delivery of services.
Our approach to policy advisory incorporates the perspectives of ministers as well as civil servants, since policy is the responsibility of both parties, and a product of their joint efforts. Bureaucrats, members of standing committees, joint parliamentary committees and opinion leaders can be persuaded to take a more proactive and participatory role in the emerging grey areas in policy dialogues.
Over the last decade, the government has taken a more professional approach to policy making.There has been a movement away from policy advice by generalists to one informed by concepts of risk, management, and delivery of services.
Our approach to policy advisory incorporates the perspectives of ministers as well as civil servants, since policy is the responsibility of both parties, and a product of their joint efforts. Bureaucrats, members of standing committees, joint parliamentary committees and opinion leaders can be persuaded to take a more proactive and participatory role in the emerging grey areas in policy dialogues.
Section -10
India remains a complex market. It is best to view India not as a single market, but as a series of interconnected regional markets where the regulatory and investment climate changes from one state to another.
Many states have created investment cells to attract business and have framed policies around them but the lack of coherence between the launch of new policy initiatives and policy stewardship leaves a lot to be desired. While most of the state civil servants acknowledge that they have to be innovative in their approach, there is a lack of clarity over what this means in practice. The ensuing implementation of reform policies is therefore likely to be heavily shaped by the culture. It has been the case that few states in India, receive the new policy ideas like Smart City Mission and Ayushman Bharat very attractive and scalable yet difficult to implement due to logistical and legacy issues.
To correct such perceptual anomalies and resistance, policy discussion needs to be tailored to the culture and existing economic opportunity present in the state.
Many states have created investment cells to attract business and have framed policies around them but the lack of coherence between the launch of new policy initiatives and policy stewardship leaves a lot to be desired. While most of the state civil servants acknowledge that they have to be innovative in their approach, there is a lack of clarity over what this means in practice. The ensuing implementation of reform policies is therefore likely to be heavily shaped by the culture. It has been the case that few states in India, receive the new policy ideas like Smart City Mission and Ayushman Bharat very attractive and scalable yet difficult to implement due to logistical and legacy issues.
To correct such perceptual anomalies and resistance, policy discussion needs to be tailored to the culture and existing economic opportunity present in the state.
