The pandemic has already boosted the usage of UPIs and more people are choosing it as a payment option over the traditional ones. While this UPI has started to revolutionize the payment options in the country, AA or Account Aggregator is another framework that is getting traction at present.
Let us dive in deeper and find out about what account aggregation is and how it is helping the entire financial service ecosystem with the idea of account aggregation and how it can help individuals, MSMEs and financial service providers to a large extent.
What is Account Aggregator Framework?
The Account Aggregator framework allows sharing information of the consumer from a financial institution where their account is to any other financial body which is registered under the AA network.
The objective behind launching AA is to reduce manual processes which make financial services more accessible. Using the power of digital infrastructure, the financial services landscape is growing and penetrating digitally in India. The idea is to create a framework where individuals can have a unified view of all their financial and non-financial data with better control on who can access and how much can access.
Functioning of AA framework
Normally, the financial information and transaction histories are stored in a fragmented way amidst the other databases of the bank. But this AA framework will provide an articulated shape to all the details of the individual.
RBI has mentioned that the customers need to pay a negligible fee to the AA systems for onboarding account aggregation. Previously the borrowers or a certain individual had to submit all the documents by being present in the bank physically. But now that everything is present in a cloud, any financial institute or organization can easily access the details of the borrower from anywhere. But definitely with the permission of the individual.
In the case of taking a loan, the MSMEs find the current steps cumbersome with a lot of complexities in the process where they need to show several details such as bank documents, transaction history, and many more. Submitting the hardcopy of these documents quite often takes up a lot of time, but now, with an account aggregator network one can get done with the loan application in no time!
How are the SMEs going to be benefitted from its usage?
One of the best and most beneficial points about this AA system is that small and medium-sized businesses can easily get access to credit at the time of their needs.
Sharing information was always a time-consuming and hectic process but AA will allow sharing the data collectively now with just a handful of clicks
There are several other notable advantages of using the account aggregation services such as:
- Aggregated dashboard view
Be it numerous business accounts in different banks or own bank accounts, everything will be present within a single digital framework and the individual can view the complete details as a cluster. This is a benefit that applies to both SMEs and customers.
- User-friendly database
The account aggregator system allows the end-users to share their data with lenders, Wealth management service providers, and anyone from whom they need a certain service. Be it for framing their portfolio in a specific manner or for getting a loan.
The owner of the data will be able to handle for how long they are willing to allow the other party to access their data and everything will be stored in the system, including the purpose of sharing the info to the details of the party with which it is being shared with.
- User maintained data sharing
Data will be shared only when the individual grants permission to do so. Access can be revocable too. So if there is an issue with their client and s/he denies permission in the middle of the project, there is no way AA service providers can help to fix it if the customer revokes their consent.
Benefit for Customers
- Better control on data sharing
- Instant data sharing and no offline processes
- Able to get instant service response: loan can be issued immediately, they can see their investment portfolio in real-time
- Cost-effective: As they are not traveling and wasting time, not paying anything
Benefit for Lenders/Wealth Managers/ – FIUs
- Ability to offer better customer experience: As they are not harassing them to travel and submit hard copies
- Low cost: Entire process digital, no need any employee, process to collect documents
- Higher conversions: Low drop-offs as the customer journey flow in the app is good. Hence you will save CAC
- Ability to get recurring access
Therefore, no one would have access to all the details except the owner of the data. It will definitely reduce the chances of misuse of the data which happens quite often when data is shared physically.
The account aggregation technology has been launched recently and most entities are still trying to understand how it can be beneficial for your business. If you are unable to figure out where to start from, you can easily seek guidance from Pirimid Fintech who is registered tech service provider by Sahamati for Account Aggregation implementations. We have a strong focus on building solutions which offers seamless integration and frictionless customers experience.