Account aggregation is a software that can gather financial information from many sources, such as banks, credit cards, and investment accounts. These financial aggregation software consolidate the data into one platform to offer a comprehensive view of a person’s finances that is simple to examine and analyse.
With PSU banks joining regularly, it already has the most banks on its platform. The Reserve Bank of India (RBI) has successfully closed the gap between the demand and supply of retail lending in India by introducing the financial account aggregation framework. A sizable number of borrowers with little or no credit history can now obtain credit. A new class of non-banking financing organisations that can function as account aggregators was authorised by the RBI. The framework has been improved throughout time with a better description and comprehension of AAs, resulting in its public introduction.
Financial account aggregation offers a scalable, interoperable, and extendable data architecture, positioning it to become the UPI of data. A top-notch platform is essential but it cannot provide commercial value. Designing new products, use cases, customer experiences, as well as redesigning processes that experience data friction, will be necessary for success. There has been close collaboration with financial institutions that are prepared to be a part of the financial account aggregation ecosystem to make sure that their current procedures may be changed to take advantage of it.
The ecology of account aggregation consists of four parties:
- The end user, or data principal, who has an account with a bank, an AMC (Asset Management Company), an insurance company, etc.
- An organisation with whom the client has a financial account.
- An FIU may be a regulated institution that is governed by the Pension Fund Regulatory and Development Authority (PFRDA), the Securities Exchange Board of India (SEBI), the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI), and the Reserve Bank of India (RIB).
- Financial Information Users (FIUs) often take part in FIPs Account Aggregators (AAs), which are authorised organisations that assist Data Principals in securely accessing their data held by FIPs and sharing that data with FIUs of their choosing. In essence, financial account aggregation manages consent.
Possibility to carry out Derived KYC through AA
Imagine that a FI’s Anti-Money Laundering (AML) and Compliance teams can only approve Derived KYC based on the customer’s KYC-related parameters when they are obtained via the financial aggregation software data fetch mechanism (for banking data). This choice could be restricted to specified exposure and loan tenures that are permitted by the FI’s policies. Due to the fact that the data would be retrieved by a controlled method without any human interaction or manipulation, the adoption of derived KYC will simplify the customer onboarding process and reduce the likelihood of fraud. This will ease the process, given the costs and time associated with the FI undertaking KYC (all types of KYC included).
Fetching GSTN data via AA GSPs
A few issues remain unresolved due to the complexity and subtleties of a nationwide implementation, such as the consent capture period not being restricted to just 30 days when data is fetched via financial account aggregation or the use of an easier method to obtain consent from users rather than API enablement.
Possibility for Embedded Finance
By putting the Open Credit Enablement Network (OCEN) framework into practice, participating financial institutions (FIs) and market/e-commerce (Loan Service e2Providers) participants will provide consent-based access to verified information from numerous public and private data sources, thereby providing clients with cheap credit. As a result, the financial aggregation software will be able to produce cost-effective yet profitable solutions, and the Loan Service Providers will be able to develop Embedded Finance on their platforms. The benefits to the Loan Service Providers include minimal acquisition costs, access to confidential information, knowledge of how the extended credit will be used, and control over the flow of payments. These elements might encourage loan service providers to expand and eventually turn into lenders.
Account aggregation software advantages
Financial aggregation software offers a wide range of advantages, including:
1. Financial Perspective
The ability for customers to view and access their account information and financial insights in one place, whenever they choose, is the main advantage of account financial data aggregation. Better insight results in better-informed choices, which improve relationships and present more opportunities to increase revenue.
2. Fewer Questions
Information that is constantly current and accessible online eliminates the need for manual data gathering, updating, or filing, which enhances teamwork and decreases customer confusion while saving a lot of time.
3. Increased Service Provisioning and Revenue
Account aggregation software enables you to view the held-away assets and give your clients more thorough counsel and guidance since it gives you a complete, unfiltered picture of their financial status.
So what makes Anumati unique?
Anumati is currently in the lead despite the RBI having only granted six AAs so far. Anumati is a division of Perfios financial aggregation software, a market leader in data extraction, aggregation, and analysis for over 250 financial institutions. It is fluent in the language of the FIU. They are aware of what is necessary to provide FIUs and clients with a frictionless and secure experience while gaining access to and sharing sensitive data. Anumati is the biggest single network of FIPs, with 15 currently and more on the way, and it represents more than 40% of all retail and SME accounts. This number will increase dramatically once they are able to engage directly with the PSU Banks who are eager to join the network. Some of the key banks are the strategic investors. These organisations, which form the backbone of India’s financial account aggregation system, are devoted to seeing Anumati develop into the country’s biggest and most reliable data network.