Account Aggregators (AAs) in 2023: Meaning, Top AAs, Responsibilities, Benefits, Challenges

Introduction

In the rapidly evolving world of financial technology, there’s always a new player ready to disrupt the status quo and redefine the landscape. The latest innovation poised to make a game-changing impact? Account Aggregators. As the financial world stands at the precipice of a digital revolution, Account Aggregators are set to redefine how we manage, share, and consume financial data. Imagine a world where financial data, rather than being siloed in individual institutions, can flow seamlessly and securely between parties, empowering consumers and businesses alike. It’s a world where loan approvals happen in minutes, not months, and where financial decisions are based on comprehensive, real-time data. This isn’t some distant, utopian vision—it’s the imminent reality promised by Account Aggregators.

But what exactly are Account Aggregators? How do they operate? Who regulates them, and what are their roles and responsibilities? More importantly, what are their benefits and drawbacks? Well, fasten your seat belts and hold on tight as we explain all of this to you in a simple manner.

What is the meaning of Account Aggregator?

In India, the Account Aggregator network went live in September 2021. An Account Aggregator is a financial entity, regulated by the Reserve Bank of India (RBI), that enables you to securely and digitally share your financial data between different financial institutions. An Account Aggregator acts as a secure data conduit between Financial Information Providers (FIPs) – organizations that hold your financial data like banks, insurance companies, mutual funds, etc., and Financial Information Users (FIUs) – organizations that consume this data to provide services like banks, lending agencies, personal wealth management companies, etc. This process is entirely under your control, and data cannot be shared without your explicit consent. An Account Aggregator operates under an NBFC-AA license and facilitates the sharing of information from one institution to another, all while ensuring your data is safe and protected. The data collection, collation and sharing are enabled through open application programming interface (API) connections. As an individual, you have the freedom to choose from multiple Account Aggregators based on your needs and preferences. Moving away from the traditional blanket acceptance of lengthy terms and conditions, Account Aggregators implement a granular approach to data consent. This means that each data sharing transaction requires specific consent, allowing you to keep track and maintain control over your financial data at all times. This approach ensures that your data is shared in a secure, transparent, and controlled manner.

Participants in the Account Aggregator System

1. Financial Information Providers (FIPs): These are regulated financial institutions that hold your data like banks, insurance companies, mutual funds, etc.. This could include banks, lenders, asset managers, and insurance companies.
2. Financial Information Users (FIUs): These are regulated institutions that consume this data to provide services like banks, lending agencies, personal wealth management companies, etc.
3. Account Aggregators (AAs): These are entities that facilitate data sharing from FIPs to FIUs while maintaining a record of the consent provided by the user.

How do Account Aggregators Work? Explained with Example

Suppose you want to apply for a personal loan and seek advice on financial planning. Usually, you’d be asked to provide various documents like bank statements, tax returns, and pay slips. If you’re seeking financial planning advice, you’d also need to give details about your bank accounts, your investments, details about your funds, and any insurance policies you have. This is where account aggregator apps come in. These apps collect data from various sources that have your financial information (FIPs). They then share this data with the financial institutions that need it (FIUs), but only after you’ve given your consent.  The best part is, with account aggregator solutions, you no longer have to provide physical copies of documents from different places, share your confidential login details, or visit multiple websites to gather and provide the required information. The app does all this for you, making it easier for lenders and financial planners to help you.

Roles and responsibilities of an Account Aggregator

The primary responsibility of an Account Aggregator is to facilitate the secure transfer of financial data from FIPs to FIUs, based on the consent of the customer. They ensure that the entire transaction is secure, the data is encrypted, and the consent of the customer is obtained before the data is shared. Here is a list of the roles and responsibilities of an Account Aggregator in India as outlined by RBI:

• Customer Consent: An Account Aggregator operates strictly based on the explicit consent of the customer. 
• Authorizations and Agreements: The services provided by an Account Aggregator are supported by proper agreements between the aggregator, the customer, and the financial information providers.
• No Transactions: An Account Aggregator is not involved in customer transactions. Its role is to facilitate the secure exchange of financial data.
• Customer Identification: Proper mechanisms are implemented by the Account Aggregator to identify customers accurately.
• Information Sharing: The financial information of the customer can only be shared with the customer themselves or any authorized financial information user as specified by the customer.
• Business Limitations: An Account Aggregator only engages in the business of account aggregation, without diverting to other business activities.
• No Data Storage: The Account Aggregator does not store any customer financial information obtained from financial information providers.
• Third-Party Service Providers: The Account Aggregator does not utilize third-party services for the business of account aggregation.
• User Authentication: The Account Aggregator is prohibited from accessing user authentication credentials relating to customer accounts with various financial information providers.
• Customer Protection Charter: An Account Aggregator must uphold to protect customer rights and only share the customer’s information with explicit consent.
• Data Discrepancies: In the case of any inconsistencies in financial data between the Account Aggregator and the financial information provider, the latter’s records are recognized as correct.
• Follow specifications: To ensure that movement of data is secured, duly authorised, smooth and seamless, Reserve Bank Information Technology Private Limited (ReBIT), has framed a set of core technical specifications for the participants of the AA ecosystem. NBFC-AA, FIPs and FIUs have to adopt these specifications, as updated from time to time.

In essence, the role of an Account Aggregator is to facilitate the secure, consent-based sharing of financial information between the customer and authorized financial information users, adhering strictly to the guidelines set by the regulators.

Benefits of Account Aggregators

Here’s a list of benefits associated with Account Aggregators:

• Secure Data Sharing: Account Aggregators provides a secure and efficient way of sharing financial information across different financial institutions. Data is transferred in an encrypted manner, ensuring privacy and security.
• Customer Control: Users maintain complete control over their data. They can dictate which pieces of information are shared, with whom, and for what duration, ensuring granular control over personal data.
• Efficient Lending Process: By providing lenders with accurate, real-time, and verifiable data, Account Aggregators can streamline the lending process. This can lead to quicker loan approvals and disbursements.
• Boost for MSMEs: With easier access to their financial data, MSMEs can more effectively demonstrate their creditworthiness to lending institutions. This can improve their access to credit and support business growth.
• Paperless Transactions: Account Aggregators eliminates the need for physical documents, making financial transactions more efficient and environmentally friendly.
• Data Consolidation: Account Aggregators can consolidate financial data from multiple institutions, providing a more comprehensive view of a customer’s financial position.
• Reduced Compliance Costs: With real-time, tamper-proof data fetched directly from the source, Account Aggregators can lower the cost and burden of data verification for both borrowers and lenders.
• Increased Transparency: Account Aggregators can foster greater transparency in financial transactions, which can boost trust between financial institutions and their customers.
• Financial Inclusion: By reducing information asymmetry, Account Aggregators can extend financial services and credit to previously underserved or unserved segments of the population.
• Innovation Catalyst: By opening up access to financial data, Account Aggregators can spur innovation in the fintech sector, leading to the development of new services and products.

Challenges for the Account Aggregator system

Here is a list of some of the potential challenges and drawbacks associated with the implementation of the Account Aggregator system in India:

• Onboarding Customers and Financial Institutions: Achieving the desired objectives of the Account Aggregator system depends on onboarding a large number of customers and financial institutions. This is a significant challenge due to the various factors like understanding of the system, the need for digital literacy, and gaining trust in the security of the platform.
• Data Security: The Account Aggregator system handles sensitive financial data, making data security a primary concern. The system needs to ensure that the data is handled in a completely safe and secure environment to maintain the trust of the users.
• System Integration: Linking a variety of customer accounts maintained across different financial entities cutting across financial sector regulators to the Account Aggregator system is a complex task, posing technical and interoperability challenges.
• Development of Viable Business Models: The development of a viable business model for the Account Aggregator system in India is another significant challenge. The business model needs to be sustainable and profitable to encourage growth.
• Regulatory Coordination: The Account Aggregator system was created by an inter-regulatory group of government agencies. This can lead to challenges with coordination and standardization across different sectors and regulators.

List of Top Account Aggregators in India

According to Sahamati, the following are Account Aggregators with operating NBFC-AA license from RBI:

• CAMSFinServ
• CRIF Connect Private Limited
• Cookiejar Technologies Private Limited (app called Finvu)
• Dashboard Account Aggregation Services Private Limited (app called Saafe)
• FinSec AA Solutions Private Limited (app called OneMoney)
• NESL Asset Data Limited (NADL)
• Protean eGov Technologies Limited (formerly NSDL E-Governance Infrastructure Limited) (app called Protean SurakshAA)
• Perfios Account Aggregation Services Pvt Ltd (app called Anumati)
• PhonePe Technology Services Private Limited 
• Unacores AA Solutions Private Limited
• Yodlee Finsoft Private Limited

For a detailed comparison of Account Aggregator apps in India, click here.

List of Account Aggregator Apps in India

S.No.	Account Aggregator	Web App	Android App	iOS App
1	Anumati	Sign Up	Install
2	CAMSfinserv	Sign Up	Install
3	Finvu		Install
4	NADL	Sign Up	Install	Install
5	OneMoney	Sign Up	Install
6	PhonePe	Sign Up	Install	Install
7	Saafe	Sign Up	Install	Install
8	Protean SurakshAA	Sign Up	Install	Install

List of banks which are a part of Account Aggregator Network in India

According to Sahamati, the following banks (public sector banks and private sector banks) are live (i.e. the service is available for citizens to use) in the Account Aggregator ecosystem:

• Bank of Baroda
• Bank of India
• Bank of Maharashtra
• Canara Bank
• Central Bank of India
• Indian Bank
• Indian Overseas Bank
• Punjab & Sind Bank
• Punjab National Bank
• State Bank of India (SBI)
• UCO Bank
• Union Bank of India
• Axis Bank
• City Union Bank
• Federal Bank
• HDFC Bank
• ICICI Bank
• IDBI Bank
• IDFC First Bank
• IndusInd Bank
• Karnataka Bank
• Karur Vysya Bank (KVB)
• Kotak Bank
• Yes Bank

Conclusion

So there you have it. From a concept in a government policy paper to your smartphone, Account Aggregators are set to revolutionize the financial landscape. They will make financial transactions smoother, more secure, and more transparent. While we’re still at the beginning of this journey, the potential impact of Account Aggregators on the fintech industry and beyond is immense. As we navigate through this new era of financial data sharing, the Account Aggregator system will undoubtedly play a crucial role in shaping the future of fintech.

---