Many domains have been pushed to adopt emerging technologies to stay ahead of the digital disruption curve, with the BFSI sector leading the charge. Technologies that support and improve BFSI customer-facing processes are in high demand worldwide. Account Aggregator is one such effort that has the potential to transform clients’ digital experiences and convenience while working with financial institutions.
An Account Aggregator (AA) is an RBI-regulated entity that allows customers to securely and digitally access and share their financial information. It controls the information flow from one financial institution to any other regulated financial institution via the AA network to extend credit and other banking services based on the user’s consent. The data can only be shared with the client’s permission to preserve customer protection and control. Financial experts see account aggregation in India as another game-changer in the provision of financial products based on the Unified Payments Interface (UPI) concept. Based on the revolutionary AA network, numerous account aggregation apps like Anumati have emerged that offer secure and trusted consent management of users’ financial data. The user gets better control over their critical financial data and empowers them with the choice of whether to allow or revoke access to their financial information. Along with that, here are five ways the account aggregator framework can benefit customers.
- No need for paperwork or KYC
KYC stands for ‘know your customer.’ It is an effective technique for an organisation to confirm and verify a customer’s validity. Before investing in various assets, the customer must present complete KYC papers. The RBI requires all financial institutions to verify customer details for all customers before allowing them to conduct financial transactions. Whether the customer utilises online KYC or offline KYC, the process is straightforward and only needs to be done once.
Once your bank or institution provider is registered on the AA, the process of sharing data becomes straightforward because the institution is linked to the AA system via APIs. If you need a new loan, an insurance policy, or want to invest in a mutual fund, you do not have to present any documentation for KYC. All you have to do is authorise AA to share your data with banks and businesses. The AA will digitally extract your bank information and submit it to the bank or organisation where you are requesting a new loan or investment. As the customers are not mandated to present their KYC documents, the document processing time is negligible, and financial activity like loans or insurance can be processed with minimum time.
- Better user control over financial data
The consent framework is simple, and the user will understand who the data is shared with, why the data is shared, and the frequency and duration of the consent. Currently, only banking data may be accessed via the AA system. However, by combining investment, insurance, and tax data, a unique representation of the user’s net worth can be created, making it easier for lenders to make credit-related judgments. It will eventually increase credit availability for small enterprises that struggle with documentation when seeking loans.
- Secure data processing
As more social and economic activities move online, privacy and data protection are becoming more widely recognised. According to reports, India experienced a catastrophic data breach of its Aadhaar database in 2018, exposing over a billion Indian individuals’ IDs on the internet. The World Economic Forum’s Global Risks Report for 2019 was the largest such breach that year.
According to research from the Netherlands-based cybersecurity firm Surfshark VPN, India ranked second in the world for the number of data breaches in the first half of 2022. According to an IBM report, the global average cost of a data breach for surveyed firms reached an all-time high of $4.35 million.
The RBI has established strong data sharing and privacy norms for the AA framework to follow. The AA system’s data will be signed with secure digital signatures. While in transit of data from the originating bank to the institution from which the customer wishes to obtain a loan or other financial instrument, the data will be fully encrypted. Account aggregation in India is data-blind because any data processed through it is encrypted and can only be handled by the FIU that requested the data. The data cannot be seen or stored by the AA.
- Regulated data sharing
The user will have complete control over how much data they choose to share on an AA platform and how long the data will be available for any bank or financial institution to access. You can also specify whether to send only loan or credit card information. The lending institution will employ other information intermediaries, such as a credit bureau, to gather additional data on you. Banking transaction data, such as bank statements from a current or savings account, is now available for sharing among the network’s banks.
- Single, Intuitive Dashboard
AA systems let customers access numerous bank financial service ratings through a single interface. AA determines which financial information to get and share with which bank/lender based on the customer’s agreement and preference. The borrower has complete control over the data and may specify when the data will be available for the bank to pull and share in the system. All of these processes occur under an AA app’s single, user-friendly platform. The dashboard offers faster and easier access to allow or revoke consent for a particular financial transaction. Once you register on the app with your number registered with the bank and set up a 4-digit security PIN, you can access the dashboard, where you will have all the features in one place. The dashboard allows quick permission or denial of financial data access as easy as making UPI payments. Financial data security is one of the major global concerns. Every year, countless businesses face the wrath of data breaches and suffer millions of dollars in losses. The AA framework places the power of data protection in the hands of the user. That way, the user has all the privileges and control over their data and determines who can or cannot access their critical financial data. The AA framework has undoubtedly revolutionized the digital transaction sector in India.