Why in the news?
- In September 2021, India unveiled the Account Aggregator (AA) network, a financial data-sharing system.
- The Account Aggregator system in banking has been started off with eight of the India’s largest banks. The Account Aggregator system can make lending and wealth management a lot faster and cheaper.
What is an Account Aggregator (AA)?
- An Account Aggregator (AA) is a type of RBI regulated entity (with an NBFC-AA license) that helps an individual securely and digitally access and share information from one financial institution they have an account with to any other regulated financial institution in the AA network.
- Data cannot be shared without the consent of the individual.
- There will be many Account Aggregators an individual can choose between.
Why needed?
- India’s financial system involves many hassles for consumers today — sharing physical signed and scanned copies of bank statements, running around to not arise or stamp documents, or having to share your personal username and password to give your financial history to a third party.
- The Account Aggregator network would replace all these with a simple, mobile-based, simple, and safe digital data access & sharing process. This will create opportunities for new kinds of services — eg new types of loans.
Which banks have joined the AA System?
- The individual’s bank just needs to join the Account Aggregator network. Eight banks already have — four are already sharing data based on consent (Axis, ICICI, HDFC, and IndusInd Banks) and four are going to be able to shortly (State Bank of India, Kotak Mahindra Bank, IDFC First Bank, and Federal Bank).
How is it difference from Aadhaar eKYC and CKYC?
- Aadhaar eKYC and CKYC only allow sharing of four ‘identity’ data fields for KYC purposes (eg name, address, gender, etc). Similarly, credit bureau data only shows loan history and/or a credit score.
- The Account Aggregator network allows sharing of transaction data or bank statements from savings/deposit/current accounts.
Which types of data will be shared?
- Gradually the AA framework will make all financial data available for sharing, including tax data, pensions data, securities data (mutual funds and brokerage), and insurance data will be available to consumers.
- It will also expand beyond the financial sector to allow healthcare and telecom data to be accessible to the individual via AA.
Account Aggregator can not view data
- Account Aggregators cannot see the data; they merely take it from one financial institution to another based on an individual’s direction and consent.
Account Aggregator is fully voluntary for consumer
- Registering with an AA is fully voluntary for consumers. If the bank the consumer is using has joined the network, a person can choose to register on an AA, choose which accounts they want to link.
- A customer is not needed to register with every AA. A customer can register with any AA to access data from any bank on the network.
Which types of benefits are available?
- The two key services that will be improved for an individual is access to loans and access to money management.
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