A primer on Account Aggregators and their current status in India
If you are reading our blog for the first time, let me start from the basics.
A financial data-sharing system called Account Aggregator (AA) was unveiled last year in India, revolutionizing investing and credit by giving consumers more control over their financial records and expanding the pool of potential customers for lenders. AAs (Account Aggregators) are RBI-regulated entities that allow individuals (with NBFC-AA licenses) to securely and digitally access information from one financial institution they have an account with to any other regulated financial institution in the AA network. The individual's financial data cannot be shared without their consent. With AA, you can use this data to access a wide range of financial services, whether they are for your business or personal use.
Given you are on the same page, let us go deeper into AA-more specifically from perspective of their impact on consumers.
Let's understand who are the main parties in AA?
The key components of the AA ecosystem are the Account Aggregator (AA), the Financial Information Provider (FIP), and the Financial Information User (FIU) who collaborate to simplify the data sharing process.
A Financial Information Provider (FIP) has all the financial data which is to be used.
Account Aggregators (AA) are the consent managers that deliver your data with your consent.
Financial Information Users (FIU) are the entities that provide products or services.
Above sounds great!
But what's next?
Why is AA deemed to be the UPI moment in India?
How will it impact the consumer?
Indian consumers face many financial hassles today -- sharing bank statements that have been physically signed, notarizing and stamping documents, or having to share your username and password when sharing your financial history. Through an account aggregator network, all these barriers will be replaced with a simple, mobile-based, secure, and simple process to access and share digital data. As a result, new types of financial services, such as loans, will be available. The AA mechanism will become immensely successful if all financial services providers, government entities such as Income Tax and GST, and other businesses are on board. It mainly helps in
Less physical interactions
Less Turnaround Time and
Improved Financial Understanding
Using the AA framework will greatly increase the competitiveness of small businesses that are seeking loans to upgrade their businesses. Like the UPI, account aggregators will revolutionize the Indian financial ecosystem for years to come, with the ultimate beneficiary being the end user.
Btw, fasten your seat belts, AAs are speeding up!