Financial Services
Account Aggregator ecosystem - The future Universal Data Interface (UDI)
14 Oct 2022
Imagine you’ve been planning to buy a new house for a long time. After working relentlessly for years and reaching some sort of settled position in life, you’ve finally realized that now is the right time. You’re all the way excited to get a home loan from a reputed bank. You visit the bank for the first time and just within 15 minutes of meeting with your relationship manager, you get handed over a long list of documents you need to furnish to prove your eligibility for the loan. Anyone looking to obtain a loan, insurance, or any other financial service will get overwhelmed by the tedious process of compiling each document and requesting a statement from each bank they have an account with.
Our information is dispersed over several banks and financial service providers, including money in pension funds, insurance, and mutual fund investments, as well as two to three distinct bank accounts. We can access our account information through various channels, logins, and platforms provided by each of these service providers. You can't, in essence, access your data from a single touchpoint. While there are existing tools like CIBIL to evaluate a borrower's creditworthiness, their use is restricted.
The question is: Is it worth spending so much time and energy on this arduous process, especially in a digital world like today where things are happening at the click of a button? What will seem miraculous is if along with your 100 other things, you could outsource even this process to some third-party so they can electronically send your account statements and other documents to the entity providing you with the loan without viewing the data.
Account Aggregators serve as these third parties who try to bring together ‘Financial Information Providers’, or FIPs, such as banks, mutual fund houses, etc. to connect them to other organizations that may use this information (upon user consent) to offer a variety of services that may improve the quality of life for the end user.
The Account Aggregator can't access or use this information, though. This concept was introduced by RBI in September 2021 and is a first step towards bringing ‘open banking’ in India enabling millions of users to securely access and exchange their financial information across institutions online. As of September 30, 2022, there are more than 162 participants and 1.41 million customer accounts have already been linked to the ecosystem.