Mumbai, NFAPost: As an offshoot initiative of the UPI-led fintech revolution, eight Indian banks announced that they are rolling out an Account Aggregator platform to enable consumers to consolidate all their financial data in one place.
According to RBI release. participants of the Account Aggregator include banks HDFC, Kotak, ICICI, Axis, SBI, IndusInd, IDFC and Federal. Four of them are rolling out the system on Thursday; others say they will roll out the new system soon.
The apex bank-regulated account aggregator (AA) platform went live two months back. The platform will give customers consolidated financial information such as savings, fixed deposits, mutual funds, equity investments and insurance.
This information can be voluntarily shared with financial institutions to get loans and better deals on other financial products quickly. According to sources, more than 7,000 accounts have been linked so far and nearly 6,000 people have used AA to share data, according to estimates by industry experts.
Reserve Bank of India deputy governor M Rajeshwar Rao said the objective of Account Aggregator (AA) is to aggregate all financial information of an individual. Users who provide consent — and it only takes a few taps to do so — will be able to share their financial information from one Account Aggregator participant to another through a centralised API-based repository. Users get to decide for how long they wish their data to be shared with a particular Account Aggregator participant.
Commenting on the development, Arvian Research said many developed countries globally already have privacy laws that recognize the rights of individuals.
“We have to factor in that individuals and businesses have the right to exercise their control over their data. In that context how the account aggregator (AA) platform will operationalise on the consent basis of customers. We hve to wait and watch what all the other issues that will crop up once it is fully implemented,” states Arvian Research.
Infosys chairman Nandan Nilekani, who’s been an adviser to the initiative and revealed about the project during Bengaluru Tech Summit 2020 (see above NFAPost tweet), said Account Aggregator is built in part to also help consumers and businesses access financial services, such as loans.
“Existing credit bureaus in India have data of only a fraction of the nation’s 1.4 billion population, which makes it very difficult for most in the country to access working capital,” he said.
Most of these individuals have made enough digital financial transactions and businesses have enough cashflow to show that would make them eligible for financial services, he said.
“Digital footprints, when properly used, empowered by consumers using their own data, enables a huge amount of credit to small businesses. It can lead to the democratisation of credit. Talks are on to onboard telecom operators as well,” he said. Nandan Nilekani highlighted the fact the system has already achieved the sophistication that it could be extended to other industries.
“It’s an architecture that can now be applied to several additional industries, like healthcare, fitness and testing labs as examples. We can confidently say that there is no other country in the world that has built a robust infrastructure at this scale where its people can leverage their data. This approach is now getting global recognition,” said Nandan Nilekani.
The AA platform was created following a decision by RBI, the Securities and Exchange Board of India (Sebi), the Insurance Regulatory and Development Authority (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA) through the Financial Stability and Development Council.
RBI issues licences to AAs. Seven entities have already got the RBI licence or an in-principle nod to operate as AAs, including CAMS Financial Information Services, PhonePe, Finvu, OneMoney, Yodlee and NESL Asset Data Ltd, a wholly owned subsidiary of NeSL.
