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Account Aggregators to Fuel your Financial Solutions with Secure Data Sharing
Account Aggregators to Fuel your Financial Solutions with Secure Data Sharing

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The digital financial infrastructure of India often spotlights the scope and edges of data sharing. Sharing your financial data is vital while you seek any sort of financial solution – be it opening a current account, applying for a personal/ business loan or even wealth management solutions.

Why should you share your financial data while accessing financial solutions?

The financial data you share aids the financial solution provider in gaining a comprehensive picture of your credit/ cashflow history and thereby assess your repayment ability accurately. Your eligibility for loans and the amount of financial assistance provided will be completely based on the same. In addition to it, data sharing is yet another means of assuring that there will be no hassles in the future.

But is it always safe to share your financial data? Indeed, risks exist during such data sharing process. The user is very often put to a stance where he has no control over who can assess his data, for how long the data can be accessed and what purpose the data will be used for.

On September 2, 2021, the Reserve Bank of India launched a breakthrough framework called account aggregators (AA), after considering its vast capabilities since 2016. It is believed to be an efficient roadmap to simpler, swift & secure data sharing. At present, there are 14 account aggregators in India.

What is an account aggregator?

Designed for the larger objective of financial inclusion, account aggregator is an NBFC-AA licensed entity under the regulation of the RBI. Account aggregator makes access to financial solutions like credits, loans, and wealth management easier than ever before, through the capability of secure and swift data sharing.

To understand the account aggregator framework better, some grasp on the parties involved in the AA framework is essential. The four major participants of the framework include:

  1. Customers – The various individuals and businesses looking out for different financial solutions like loans and wealth management
  2. Financial Information Providers (FIP) – FIPS include financial institutions like banks, NBFCs, mutual funds and pension funds, acting as the overseers of the customer data. These entities form the source of customer data during the data sharing process. Account aggregators make the customer data available to the Financial Information Users with the consent of the customer. From the sustenance perspective, all entities should be FIPs before gradually turning to FIUs.
  3. Financial Information Users (FIU) – FIUs utilize the customer data shared by the FIPs with the consent of the customer. A data-sharing agreement or Consent Artefact lucidly articulates the guidelines of customer data usage – who can access the data, the purpose of data retrieval and the duration for which the data can be accessed.
  4. Account Aggregators- Account Aggregators act as a link between the FIPs and the FIUs. AAs collect data from the FIPs and securely share with the FIUs once the customer approves the data sharing consent request.

How can account aggregators make financial data sharing easier & safer?

 The most salient aspect accompanying account aggregators is data security, enabling the customer to be in charge of their data. The data is shared in an encrypted form, preventing the data from being visible to any individual/entity other than the FIP that shared the data with the customer’s consent and the FIU that requested the data.

Account Aggregators facilitate the data sharing process; however, AAs cannot view, read or resell the customer’s data. The role of AAs confines to making the entire process seamless by allowing the customer to share consent with just a click and help the data sharing happen in a matter of seconds. The hassle-free experience that AAs provide can save a lot of time and efforts, thereby ensuring that the individual or business seeking financial solutions gains the access to the same in the fastest pace and easiest manner.  

Who can benefit the most through Account Aggregators?

A quantum leap in the nation-wide financial inclusion approach, the AA framework is a need of the hour that can benefit millions of businesses and individuals. Credit access, especially business loans, is a rather time-consuming process inclusive of gathering & submission of financial information from multiple sources on the customer's end and repayment capability assessment from the financial institution’s end. Account aggregator poses the simplest solution to this delay by

  1. Letting the customer have all his financial data from multiple sources available in one place, in a shareable shape.  
  2. Allowing the customer to share consent for the data flow & initiate the data sharing instantly

Therefore, any business/individual who are in immediate need of loans/financial solutions will find tremendous solace in AAs.

Individuals who are setting off on a wealth management journey, can utilize AAs to their best advantage. Sharing the data with wealth managers & advisors through AAs can mitigate the scope of any data theft and security issues at once.

How exactly do Account Aggregators work?

The first and foremost step in the AA framework is that the individual/business in need of financial solutions should open an account with the AA of their choice. The account opening creates a funnel of the user’s financial assets. The user links all his bank accounts, mutual funds, insurance policies etc. to the AA account. Once the AA account is created, the FIU that requires access to the customer's data raises a request for the data to be the shared from the FIPs. The request is then reviewed by the customer who can accept or reject the request. Once the customer accepts the request, data is retrieved and shared from the FIP’s end in a secure fashion.

How to choose your Account Aggregator?

Some of the most significant features to look for while selecting your account aggregator are as follows:

  1. RBI approval – Remember that account aggregators are always approved and regulated by the Reserve Bank of India. Therefore, while choosing your account aggregator it is crucial to check for RBI approval to avoid adverse effects to your data.
  2. Consent Management – You should be able to have complete control over your data. Hence, the best account aggregator will allow you to accept/reject/pause or revoke data sharing consents as per your wish. You should also be able to decide the timeline for which the data will be shared.
  3. Real-time data sharing capability – Account aggregators perform to the optimum when the data sharing happens on a real-time basis. Here lies the key to faster data sharing potential.
  4. Selective data flow – You should be the master of your data with the power to decide what data to share rather than giving the financial entities a complete view of all your financial assets.
  5. Availability of comprehensive financial data – Your AA should be able to provide you with an overall picture that consolidates all your financial asset data spread across multiple banks, mutual funds, pension funds, insurance policies and the like. This would facilitate better fund management.
  6. Multiple users – If multiple users (like your business partner/accountant) can be linked to your AA account and access the required data, a whole lot of hassles can be spared.

 


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