5 Mins September 23, 2022
The BFSI (Banking, Financial Services, and Insurance) industry is leading the pack in adopting innovative technologies due to the race to remain ahead of the digital disruption curve across several disciplines. Hence, there is a high demand for BFSI customer-facing process support and enhancement technologies.
The Account Aggregator is a project that can provide convenience for customers to deal with financial institutions. It helps people securely access and share information between any two regulated financial institutions that are part of the Account Aggregator network. Data sharing is not permitted without the subject’s consent. Since it is regulated by the Reserve Bank of India, the chances of it being misused are low.
A customer who experienced the efficacy of the Account Aggregator system says: "It is a good digital journey where I can avail loan at my convenience while sitting at home. I did not have to submit any documents, which makes it a straightforward process. An executive from Axis Bank asked for OTP of my number linked to my bank account, and I got a good offer. Overall, a smooth process."
It has also made life easier for the bank sales personnel, too, as they can avoid a lot of the paperwork and documentation they had to do earlier. As one of them points out, “Account aggregator as a mode for income assessment is a blessing for us. We do not have to ask the customer to provide bank statements, which sometimes increases the overall TAT of the process; as well as it’s also easier as customers need to enter their mobile number, validate it, and get the offer. This step will help reduce TAT and provide our customers a better experience."
How does it function?
To put it simply, the Account Aggregator System functions as a middleman to gather information from Financial Information Providers (FIP) that store the customer’s financial data and distribute it to Financial Information Users (FIU), such as lenders that provide financial goods.
Benefits for customers seeking loans
With the clients’ data security in mind, AA can significantly speed up and reduce the cost of lending and wealth management.
Like UPI revolutionised payments, AA can use the current digital infrastructure to make financial services, such as loans and credit facilities, far more streamlined and available for everyone.
The collection of data by AA is made simple for businesses that offer financial services. It permits quicker processing and faster access to goods or services. Service providers can better assess your demands when your complete financial profile is in one location. There is minimal room for error because each synchronised account’s information is accurate and readily available online.
Faster loan processing
Lenders will be able to evaluate a customer’s financial history extensively and process loan applications more quickly by using the customer’s consented financial data obtained by the AA system.
Does it affect your data privacy?
No, data sharing is subject to your consent; AAs cannot use your personal information without your approval. AA does not store or process any of your data. With AA encryption, all of your financial information is secure. You have the option to provide or revoke access to your active consent.
In conclusion, the Account Aggregator is a ground-breaking step in the lending industry. It’s undoubtedly a positive start toward developing a solid and innovative loan ecosystem. Banks and other financial institutions are becoming digital lending powerhouses due to the financial sector’s rapid emergence of digitisation.
The government is also lending its support to the system because of how easy it makes financial transactions!
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.