Wilfred Sigler
Traditional loan process is slow and paper-heavy, requiring borrowers to manually submit financial documents, leading to delays and restricted credit access. Account aggregators (AAs), regulated by the RBI, streamline this by enabling secure, consent-based data sharing between individuals and financial institutions like banks, insurers, and NBFCs. Acting as digital intermediaries, AAs provide real-time access to financial data with user authorisation, ensuring security, transparency, and control while enhancing financial inclusion.
How account aggregators work
Before AAs, loan applications required physical visits, extensive paperwork, and lengthy verifications, often delaying approvals, especially for small businesses and self-employed individuals. With AAs, borrowers can digitally consent to instant financial data sharing, eliminating paperwork, speeding up processing, and improving credit access through accurate assessments.
Control over financial data
AAs give customers full control over their financial data. Users can decide which institutions can access their information and for how long, ensuring privacy and security. Unlike traditional methods, where data is shared via physical documents or unsecured channels, AAs use encrypted pathways, preventing unauthorised access and data breaches. This enhances security and ensures data accuracy.
Costs
Typically AAs offer services free of charge for consumers who want to register and use the platform to share their financial data. There is usually no subscription or other fees for using the service. However, AAs may charge financial institutions like banks or lenders based on the type of data they fetch, such as statements, profile data, or summary data on a per transaction basis
Future of AAs in India
As digital banking evolves, AAs will play a crucial role in reshaping lending. Increased adoption will lead to more data-driven lending decisions, fostering financial inclusion. AI integration with AAs will refine risk assessment, making lending more precise and accessible.
With continued innovation and regulatory support, Account Aggregators will revolutionize the Indian financial landscape, making loans simpler, faster, and more secure for all stakeholders.
GFX
Benefits of using account aggregators in lending
Instant access to verified financial data reduces processing time, leading to quicker credit decisions.
Borrowers with informal income sources or limited credit history can share alternative financial data, increasing their chances of securing loans.
AAs use encrypted channels, ensuring that financial data remains secure and accessible only with user consent.
Elimination of manual documentation lowers administrative expenses and improves operational efficiency.
Financial data is presented in a uniform format, minimising errors and fraud while enhancing credit assessment accuracy.
Source: DECCAN CHRONICLE, 08th March, Mumbai
