IGI Logo

Finnovate, Finvest, Finnext #2: Insights from account aggregators reaffirm confidence on its potential scope

Following up on our maiden note in ‘Finnovate, Finvest, Finnext #1’ on account aggregator (AA) network (Link), we interacted with industry participants including account aggregators, Sahamati, and service providers to gain deeper insights and perspective on this latest addition to India’s financial digital infrastructure for data empowerment and data democratisation. Our interaction with Mr. B.G. Mahesh (co-founder & CEO of Sahamati), Mr. Munish Bhatia (co-founder of Finvu), Mr. Srikanth Rajagopalan (CEO of Perfios Account Aggregation Services) and a few others in the ecosystem reaffirms our confidence that this data empowerment platform has potential to revolutionise credit, insurance and investment by making it a lot more effective and efficient. Similar to the game-changing payment platform UPI, account aggregator is cutting-edge digital financial infrastructure in the world bringing about structural shift in financial data landscape reducing information asymmetry.

Sahamati, an industry alliance for the AA ecosystem, is shaping the future of data sharing in India by bringing together financial institutions, technology service providers, and certifiers to implement the account aggregator framework. Finvu is one of the first NBFC-AAs to have received the operational license from RBI and the first to have integrated with all partners of the ecosystem. Perfios Account Aggregation Services has received an in-principle approval from the RBI for NBFC-AA. We present key takeaways from our interaction below.

Why do we need account aggregator framework?

* Consumers generate a lot of data, but it is not easy to share the data granularly in a trusted manner with the service providers. Also, once the data is shared, consumers do not have control on who uses it, how and why. Therefore, data fetching process should be frictionless and secure. Not more than 13-14% of retail / SME lending happens digitally. There is need for a framework for straight-through data sharing in a standardised format and solve the fundamental mistrust. More so, there is need for a regulated and scalable mechanism to get digital data.

* The basic premise for establishing this platform currently is: customer data is highly fragmented and exists in silos in databases of banks, lenders, insurance companies, government bodies and other entities. Account Aggregators enable the data owners to share their data from their financial service providers (FIPs) with financial information users (FIUs). The FIPs, AAs and FIUs use standardized APIs to interact with each other. The data is shared in a secure and consented manner. No more running around collecting documents to open accounts, file for taxes, get loans or access other financial products. It is a safe, consent-based framework giving consumers/businesses control over data and quicker access to financial services. More so, access to information is at a much lower cost.

To Read Complete Report & Disclaimer Click Here

For More ICICI Securities Disclaimer https://www.icicisecurities.com/AboutUs.aspx?About=7

Above views are of the author and not of the website kindly read disclaimer