The RBI, or Reserve Bank of India, brought in the Account Aggregator (AA) system in September 2021 to ease access to financial details and support financial incorporation. One of the greatest challenges customers and financial services providers come across is the need for a flawless, secure method to access and share financial information. An aggregator gathers a user’s digital financial information from one or many accounts and sends it to the financial organisation providing services such as insurance or loans to the user. Thus, the usage of the best account aggregator framework decreases the manual work and safety problems included in sharing perceptive, all-inclusive data that has the possibility to affect financial access and business operation cycles.
In this post, we will carefully assess AAs and why their acceptance is essential in enhancing India’s fintech standards.
What is the Account Aggregator Framework?
An account aggregator is an NBFC or Non-Banking Finance Company that offers services such as fetching or gathering financial information associated with its customers’ financial resources. It requires a licence to initiate operations and perform these activities under an agreement in exchange for a fee.
The AAs’ network can be implied as a one-stop interface for all the documents a candidate may require to apply for a loan, such as previous loan details, repayment reports, salary and bank statements, and information on assets and investments. All this data comes straight from the financial organisations the applicant has shared with, such as the bank, insurance firm, credit card issuer, mutual fund company, and more.
Since the operation format expands, the aggregation environment could turn into a report card of an applicant’s financial well-being, where information on investments, savings, credit, insurance, pension, spending plans, and tax history are accessible on one secure dashboard. In addition, the best account aggregator framework also surfaces the way towards easing open banking in India.
Transformation of AA Framework or Digital Infrastructure in India
The banking system and digital infrastructure in India have undergone various changes. UPI-based payments, digital banking, and other innovations have brought many individuals into formal banking arrangements and simplified financial matters.
Moreover, the lending edge of banking has widely remained dormant for the previous decades, as conventional banks are generally hesitant to take risks.
The RBI’s AA structure seeks to fix this and will ease the lending and borrowing procedure. Thus, what UPI did for the online payment methods, the best account aggregator framework, targets to do for the loan process by decreasing the steps needed for a debtor to apply for a loan.
Effect of AAs on the Financial Prospect
The financial data of a person or a company is generally segmented and scattered across the data storehouses of FIs, government firms, and different business entities. There is no method to distribute this data flawlessly, swiftly, and securely with the user’s consent whose information is being allocated.
This segmented detail is a data mine, which, if successfully optimised, can give complete, personalised service delivery to users.
Here is how the usage of the best account aggregator framework can affect the financial prospect:
1. Advantages for MSMEs
The allocation of financial data will help improve credit access for MSMEs (micro, small, and medium enterprises). The RBI has also added the GST network as a financial data provider under the best account aggregator framework. Returns listed by MSMEs will now be the origin of financial information for aggregators.
This flawless data allocation will fast-track loan processing and also widen the outlook of financial services accessible to MSMEs. Loan providers can base decisions on meticulous cash flows to furnish the working capital needs of the credit-starved segment.
Moreover, specialists think that there is a requirement to shift from financial allocation and collateral-based credit checks to cash-flow-supported credit verification, lending dependent on calculated cash flows. One can evade the account books; still, perverting GST data is not possible. So, offering lenders a more trustworthy source for their lending verdicts.
2. Customer Consent
Despite the best efforts of the conventional banking system in India, a large number of underserved and underbanked customers still exist. Furnishing these underserved customers is difficult, specifically when financial viability is speculated. The accessibility of trustworthy, low-cost data generally becomes an obstacle to financial inclusivity. The best account aggregator framework aims to fill this gap.
Promptly accessible customer data will enhance credit sharing and the capability to offer credit to underbanked individuals. By using this, AAs will let new-to-credit customers become dependable. Further, lenders can check a number of data points, like assets, transactions, and history of repayment, to check their creditworthiness.
More useful financial know-how, combined with the AA system, will help customers make successful decisions and comprehend the outcomes of their financial options.
3. Consolidate The Lending Procedure
The AAs network affects the lending procedure in various positive ways. For instance, organised data allocation via these aggregators will address the present credit crux in the Indian economy. The network can enable formal lending, with an overall positive impact on the entire economy.
It assists lenders in checking the applicant’s creditworthiness more effectively, allowing for successful lending verdicts and lessening bad loans. The aggregation arrangement can also assist financial organisations in increasing their approach and debtor base.
Furthermore, users gain from the best account aggregator framework, which eases the tiresome loan application procedure. Borrowers can also anticipate better customised financial solutions made using their financial information accessible on the dashboard
In Summar
In the end, having the best account aggregator framework in place is a good way to boost the loan application process. Therefore, it helps both the lender and the user.
All the same, financial institutions may come across challenges and obstacles when incorporating their systems with AAs. This is why front-line fintech platforms like Anumati are shaping the digital infrastructure of India. Its suite of services can assist you in accessing financial information in real time. To understand more about the tools that can help you better, explore Anumati!
