Account Aggregator? What is it? One more complication or actually a simplification … let’s find out.
If you have ever applied for a loan, you would relate, the loan application process is cumbersome for an individual and entity. The borrower is required to submit various documents, including bank statements, salary slips, income-tax returns, Aadhaar and a permanent account number (PAN) as an individual and if you are entity the list of document is never ending. The borrower has to arrange for these documents from various sources and submit them to the Bank/NBFC. The lender has to collect, send and verify all these documents. There is an additional cost for the lender and the processing time in the verification process is the longest.
On similar lines, if you approach a portfolio management company for your investment planning, you would have to submit your mutual fund account statements, insurance policy documents, bank account details etc along with your KYC documents.
To solve this problem, RBI has taken a step forward in setting up an ecosystem called the Account Aggregator. Account Aggregator will be a common platform to capture all your financial details in one place. There are four major financial regulators in India, namely, RBI, IRDA, SEBI and PFRDA for Banks, Insurance, Securities and Pension Fund respectively. These regulators will share their customer data with lending financial institution securely through an Account Aggregator. Data will be provided based on customer explicit consent only and no data will be stored in Account Aggregators Systems before or after the transaction.
From 2016 till now, six account aggregators have received in-principle approval from RBI to setup the data-sharing framework. These include National CAMS Financial Services, E-Governance Services Asset Data, Cookiejar Technologies (Product named Finvu), FinSec AA Solutions Private (OneMoney), Yodlee Finsoft, and Jio Information Solutions. These companies are expected to roll-out their services by the end of 2019 after getting a final approval on operations from the RBI.
Recently Nandan Nilekani, former Chairman of UIDAI took this initiative further and formed Sahamati. Sahamati is the pilot organization that will work to accelerate the adoption of the framework by building awareness on the new technology, as well as supporting implementation and integration through various workshops.
In future, by using account aggregator of your choice, all these details can be shared with lending financial institutions and processing time and cost can be reduced. At the same time, you would have one view of your entire wealth portfolio.
A welcome initiative for the financial industry, we reckon.