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.