Table of Contents
What is an Account Aggregator?
What is the Account Aggregator Ecosystem?
How an Account Aggregator should be used?
Using an Account Aggregator – What are the Benefits?
The management of finances can be quite a complicated task in the modern, fast-paced digital era. It can be overwhelming to track multiple financial accounts, keep your financial data secure and share data with different institutions. Account aggregators prove to be a reliable, revolutionary solution which is fast changing the way finances are handled in India. Read and know all about Account aggregators and how these work for financial management purposes.
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What is an Account Aggregator?
This is a regulated entity which lets you access and share financial data digitally and safely across institutions, within the Account Aggregator network.
This type of data sharing needs an individual to give explicit consent, ensuring full control over personal financial information. Account aggregators are a huge advancement over traditional solutions, given the fact that these come with a mobile-based, streamlined approach that proves to be a viable alternative to laborious processes and paperwork.
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How Account Aggregators Work?
Account aggregators work like intermediaries between customers and financial institutions. These facilitate secure financial data transfer, based on the explicit consent of a person.
The financial data in question includes bank statements, transaction history and much more. This makes it convenient for people to access loans, credit and various other financial services.
What is the Account Aggregator Ecosystem?
Get an idea about the various stakeholders involved in the Account Aggregators ecosystem:
Financial Information Provider (FIP)
FIPs are the institutions holding the financial data of customers such as banks, pension fund repositories, insurance repositories, mutual fund depositories and non-banking financial companies (NBFCs).
Financial Information User (FIU):
These are entities which consume financial data from a Financial Information Provider to offer different types of services to end-customers, such as lending agencies and banks that offer financial services.
Account Aggregator (AA)
Account aggregators are intermediaries gathering financial data from financial information providers which hold the financial data of customers and share the same with financial information users. The Reserve Bank of India (RBI) regulates Account aggregators.
Technology Service Provider (TSP)
These service providers collaborate with financial information providers and financial information users, in order to offer account aggregator services and products. Technology service providers develop foundation modules for all the account aggregator present in the AA ecosystem.
Certifier
Certifiers confirm whether or not all participants in the account aggregator ecosystem are complying with the technical standards prescribed by the Reserve Bank of India (RBI).
How an Account Aggregator should be used?
These are the steps to follow:
Account creation
First and foremost, you have to register with an account aggregator of your preference through its website or app. You will get a unique handle just like a username – that must be used during the process of giving consent.
Account linking
After signing up, you will be able to link your financial accounts to the account aggregator and give your consent to share financial information with FIs that are authorized.
Data sharing
Once your accounts are linked, you can share particular financial information with other institutions such as FIUs and FIPs. This kind of data sharing is carried out through a stepwise and granular process of giving permission. It ensures that you only share the data that is needed for a specific purpose and nothing beyond.
Using an Account Aggregator – What are the Benefits?
You can get various account aggregator advantages:
Single View of Finances
With Account aggregators, you can get a unified view of complete financial information, which does away with the need to check out multiple platforms.
Tailored financial products
You can get access to complete financial data, which allows lending institutions to customize their services at products and personalize them to your particular requirements.
Quicker approvals of loans
With streamlined sharing of data, loan processing gets faster for you. It can reduce the time needed for you to get loan approval.
Better financial literacy
When you get access to financial information, you can be empowered. This is because; you can obtain improved insights into your own financial health.
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Privacy and security considerations
Account aggregators make your financial data privacy and security a top priority in various ways:
Financial data shared through Account aggregators is transferred to the recipient from the sender in an encrypted format. It indicates that there is full protection of your sensitive data from authorized people, even if it gets intercepted at the time of transmission. It cannot be read by others due to an absence of proper encryption key.
Your financial data is not stored or aggregated by Account aggregators. In other words, aggregators cannot access your private financial information or use it for some other purpose apart from facilitating data sharing from your end to banks and other financial organizations. You get complete control over your data and can revoke data sharing consent whenever you like.
It is possible for you to make a choice between the financial accounts to which you would like to link your Account aggregators and which of the financial institutions you would like to share your financial information with. It is always possible for you to revoke your consent from your end at any time you want.
The Reserve Bank of India or RBI regulates Account aggregators, which means that they are always subject to stringent privacy and security requirements.
Account aggregators need to implement various important security measures, such as Intrusion Detection systems and two-factor authentication. It can help keep your financial data safe from misuse and unauthorized access. You have a number of rights as a customer while using an account aggregator.
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Conclusion
Account aggregators stand as the future of financial transactions in India and can emerge as a major step towards open banking. These allow customers to access their financial data digitally and share the same securely. It can go a long way to improve financial data sharing. It can narrow down the gap between financial institutions and customers and foster financial inclusion.
All in all, there is a lot of potential for Account aggregators to bring about a major revolution in the financial domain, providing customers with control and bringing about a new age of financial empowerment.
