What is Account Aggregator: How It Works, Example & List of Account Aggregators in India

In today’s digital age, managing finances efficiently is more crucial than ever. As more and more industries develop their operations around digital integration, financial institutions also need to transform. 

One of the latest innovations aiding this process is the account aggregator. This technology acts as a bridge between financial institutions and their customers to reduce the burden of completing manual paperwork. 

If you’re unfamiliar with the term, don’t worry! In this blog, we will cover everything you need to know about account aggregators in India, their functioning, and their benefits.

What is an Account Aggregator?

In the financial landscape, an individual or a company in India can use diverse financial services. These can include:

• Bank Accounts
• Investment Portfolios
• Insurance Policies
• Loans

Now suppose, you avail these services from different financial institutions. In such a scenario, wouldn’t it be complicated to manage these accounts? It is almost impossible to get a complete picture of your financial exposure.

Here comes the concept of account aggregators (AA). So, who are account aggregators? These are financial intermediaries that consolidate information from multiple financial accounts and provide the complete picture in a single, easy-to-understand overview. 

By definition, account aggregators in India are entities licensed by the Reserve Bank of India (RBI) to facilitate the collection and sharing of financial data. They bridge the gap between the following:

• Financial Information Providers (FIPs): They are the providers of data, the account holders. FIPs include banks and financial institutions that hold the financial data.
• Financial Information Users (FIUs): They are the users of financial information like banks, NBFCs, insurance companies, etc.

The primary purpose of account aggregators in India is to provide a unified view of your financial information, enabling easy management and analysis.

How Account Aggregators Work?

Here’s a step-by-step breakdown of the working of account aggregators:

• User Registration: The FIPs register with the account aggregator.
• Linking Accounts: FIPs link various financial accounts that they maintain with the AA platform.
• Consent Management: The user provides explicit consent for data sharing with FIUs.
• Data Aggregation: The AA collects data from the linked accounts and aggregates it.
• Data Sharing: Upon receiving consent from the FIP, the aggregated data is shared with FIUs.

Account Aggregator Example

To understand how Account Aggregators work in a better way, let’s take an example. Suppose, you are a bank (FIU) and Mr. A applies for a personal loan with your bank. He needs to submit the following documents to get the loan:

• Financial Documents
• Bank Statements
• Income Tax Returns

These documents are needed to assess the financial health of Mr. A.

• Without an Account Aggregator: Mr. A would have to physically collect all the required documents, visit your bank, and submit them. As you can see, it takes a lot of time and effort. And sometimes, the turnaround time of your loan can go up to days, just because of this shortcoming.
• With an Account Aggregator: You can register your bank with the account aggregator as an FIU and ask for access to the financial data of Mr. A.

Upon receiving the request, the account aggregator in India collects and aggregates data from various accounts held by the FIPs and shares it with you. With access to Mr. A’s data quickly, it becomes easier to assess his eligibility for a loan. This reduces the turnaround time of your loan.

*Note: For this to function, both the FIU and FIP should be registered with the AA.

List of Account Aggregators in India

Under the Sahamati Scheme of the Government of India, RBI has given license to the following NBFCs to act as account aggregators in India. These AAs are at the forefront of revolutionising financial data management in India. Here’s a list of account aggregators in India:

• AAs with Operating License in India

• AAs with In-principle approval from RBI

Benefits of Account Aggregator

Using the information from Account Aggregator, you can:

• Apply for loans
• Plan your investments
• Get a clear picture of your financial health

It also simplifies the sharing of financial information with users like financial institutions, insurers, etc. Instead of asking for physical documents every time, users can ask banks and financial institutions to share viewing access to these details through an account aggregator.

Here are the benefits of using AAs:

• Simplified Financial Management: You can get a unified view of all financial accounts, which helps in better financial management.
• Efficient Loan Processing: AAs reduce the time for the documentation process of a loan. As a result, there can be faster loan processing and accurate assessments.
• Enhanced Financial Planning: You can get better insights into investing and saving, allowing you to make changes that increase your return on investments.
• Data Security: AAs provide secure data sharing that can happen only after your consent.

Are Account Aggregators Safe?

Another major concern with AAs is, are account aggregators safe. AAs act like your trusted assistants. With a strict regulatory framework and cutting-edge technology, they promise secure, efficient, and user-friendly solutions. 

AAs use end-to-end encryption and user consent-based data sharing, ensuring that your financial information is safe and secure.

Account Aggregator Ecosystem in India

Here are the key participants who form the account aggregator ecosystem in India:

• Account Aggregators (AAs): These are the licensed intermediaries that aggregate the financial data.
• Financial Information Providers (FIPs): Entities like banks, NBFCs, Insurance companies, etc., that provide financial data.
• Financial Information Users (FIUs): Entities like banks and financial institutions that use the aggregated data for services like loan processing, investment advice, etc.
• Regulators: RBI is the regulator that oversees the functioning and compliance of account aggregators in India.

To conclude, account aggregators in India are set to revolutionise financial data management by providing a secure platform for data aggregation and sharing. AAs make financial management easy and efficient with their user-friendly interface. 

Whether you are an individual looking to streamline your finances or a financial institution seeking to enhance service delivery, account aggregators offer a promising solution.