Consumers in India now face numerous difficulties with the country’s financial system, such as exchanging hard copies of bank statements that have been signed and scanned, physically notarizing and stamping papers, or providing your login information with third parties in order to access your financial history. A straightforward, mobile-based, secure digital data access and sharing method would take the place of all of these through the Account Aggregator network and the account aggregator guidelines.
Recent account aggregator guidelines that you must know
By creating data intermediaries known as Account Aggregators (AA), the RBI’s Account account aggregator guidelines seek to increase the accessibility of financial data. These AAs will gather and distribute user financial information from a variety of organizations that hold consumer data, known as Financial Information Providers (FIPs), to a variety of organizations that are requesting consumer data, known as Financial Information Users (FIUs), with the consent of the user.
To verify a user’s creditworthiness, for instance, if they want to request for a loan, the lender (an FIU) will need access to their prior financial statements, which are kept by their bank (an FIP). the account aggregator guidelines will help the information flow in the following ways:
- The FIU will ask the AA to provide the needed financial data.
- In order to communicate financial information with the FIU, the AA will ask the user for permission. The client used by the Account Aggregator for communication with the customer must be a mobile app or a web application.
- The AA will ask the FIP and, in this case, the user’s bank to provide the financial data if the user agrees.
- The encrypted data will be sent by the FIP to the AA, which will thereafter forward it to the FIU.
What is the usefulness of account aggregator guidelines?
When customers give their agreement, account aggregation is the act of gathering and merging data from several bank accounts into a single platform or view. Banking, credit card, investment, and other financial accounts are examples of this type of account. Your ability to view all of your financial accounts in one location can help you manage your budget, keep tabs on your spending, and make wise financial decisions. Other services that some FIUs provide include alerts when you’re getting close to your budget constraints and the ability to categorize transactions automatically. For individuals and small organizations with numerous financial accounts and a desire for a convenient method of managing them all in one location, account aggregation can be especially helpful.
The reason for having an account aggregator guidelines framework in India
Following are some of the reasons for having an account aggregator guidelines framework:
Offers more convenience
Because consumers can examine all of their accounts in one location rather than having to log in to various accounts separately, account aggregator guidelines can make it easier for people and organizations to access and manage their financial accounts.
Robust financial management
Account aggregation can facilitate the process of tracking your expenditures, creating budgets, and making well-informed financial decisions by offering a unified view of all your financial accounts.
Offers safety of data
By enabling users and organizations to access and manage their financial accounts via a single, secure platform instead of needing to log into numerous accounts independently, account aggregation can assist in improving data security.
Provides financial inclusivity
By facilitating access to and management of financial accounts for both people and small enterprises, account aggregation can enhance financial inclusion.
Steps for evaluating an account aggregator
Depending on the particular aggregator’s goals and objectives, as well as the demands of its users, a number of measures can be used to assess an account aggregator’s performance. Several metrics can be employed to assess an account aggregator’s performance, such as:
- Satisfaction for users
Surveys and other methods of getting input from account aggregator users could be used to measure this.
- Accuracy of data
It is critical that users of account aggregators receive accurate and current information. Regular reviews of the information supplied by the aggregator could be used to gauge this.
- Security of data
Account aggregators’ first priority is ensuring the protection of financial data. Data breaches and unauthorized access to financial data are two examples of security-related metrics.
- Engagement of users
The degree to which users interact with the account aggregator may serve as a reliable barometer of the tool’s worth and utility. Metrics like session duration, frequency of use, and the number of active users could be used to gauge this.
What are the terms associated with account aggregator guidelines?
- Establishments that give lenders the records they require in order to evaluate loans. These consist of mutual fund houses, banks and NBFCs, insurance companies, and platforms for taxes and invoices.
- The electronic consent artifact is a platform that gathers and retains the documents provided by the FIPs. It functions similarly to a lockbox, with access granted to lenders only with the borrower’s approval.
- Lenders, including digital lending platforms, banks, credit card firms, and NBFCs, among others.
The account aggregator guidelines, in the opinion of the FIUs, will simplify, improve accessibility, and lower the cost of credit risk assessment. There will be new client use cases as more people become part of this ecosystem. The micro, small, and medium-sized businesses that are seeking loans to grow their operations will also profit from this framework, in addition to individuals.
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