Account Aggregator

3 Entities

There are 3 entities in Account aggregation ecosystem:

1. FIP (Financial information provider) – Financial Information Providers (FIPs) are institutions entrusted with the role of safeguarding customer’s data, such as Banks, NBFCs (Non-Banking Financial Companies), Mutual Fund Depositories, Insurance Repositories, Pension Fund Repositories, Asset Management Companies, and others, which supply data to Financial Information Users (FIUs).

2. FIU (Financial information user) - Is an entity registered with and regulated by any financial sector regulator. An FIU consumes the data from an FIP to provide various services to the end consumer e.g., a lending Bank wants access to the borrower’s data to determine if the borrower qualifies for a loan. The lending Bank is FIU.

3. Account Aggregators (AA) - Account Aggregator acts as an intermediary by collecting data from FIPs that hold the customer’s financial data and share that with FIUs such as lending banks\agencies that provide financial services after getting the customer’s consent. AAs can charge a fee for the service. AAs cannot store customers’ data.

AA Ecosystem Model

The basic account aggregator model has 4 segments, they are Customer, Account Aggregator (enabling financial data sharing between FIP and FIU), FIP and FIU.
AAs will act as consent managers, obtaining user permission to access their financial accounts and aggregate and organize all their financial information in one place.
The data shared by the AA system will have secure digital signatures. The data will be shared in an encrypted format from the Bank to the institutions from which a customer is seeking a loan or other financial product.
AAs allow users to choose whom to share their data with, what data they want to share, for what purpose, for what period, as well as to revoke permissions to access their data.

This data will be with the bank or an NBFC only as long as it is needed to process the application. Federal Bank is live in Account Aggregator from September 2021.

User Journey on AA platform

Create a handle through one or multiple account aggregators like a Virtual Payment Address (VPA) in UPI e.g., 9876543210.fbl@finvu
During this process, the user will link his accounts with AA.
When a customer wants to share his data, he will share his AA handle with FIU.
FIU will send a consent request to the customer on the respective AA application.
The consent will have parameters like purpose of the consent, data fetch frequency, expiry of consent and account number linked to the consent and other details.
Once the customer approves the consent, FIU will ask for the data from FIP through a data fetch request.
In response to this FIP will provide the data after verifying the consent artefact.

Benefits of AA Framework

Financial data can be shared instantly.
Customers have the control to share their financial data with consent and revoke the consent which leads to enhanced customer experience, fraud prevention and better monitoring capability.
Data Security
Reduces processing time for Financial Information Users entity.
More personalized and engaging Customer experience

For example, Digital Lending through AA platform: If an applicant applies for a digital Personal Loan from any bank, he can just give his/her consent to share the financial data in a hassle-free, digital, and completely secure manner. This leads to faster loan processing and superior customer experience.