Eight of India’s major banks (State Bank of India, ICICI Bank, Axis Bank, IDFC First Bank, Kotak Mahindra Bank, HDFC Bank, IndusInd Bank, and Federal Bank) have joined the Account Aggregator network. Together, these banks cover nearly 40 percent of India’s banking customers. This move ushers in India’s open banking moment and empowers millions of customers with the ability to digitally access and share their financial data across institutions in a secure and efficient manner. AA reduces the need for individuals to wait in long bank branch queues, use complicated internet banking portals, share their passwords, or seek out physical notarisation to access and share their financial documents securely. Just as UPI, NEFT, or IMPS are key financial utilities for secure flow of money, Account Aggregator is an urgent and powerful financial utility for the flow of data controlled by the individual. AA is one of the most sophisticated open banking infrastructures in the world, and has attracted interest from other countries who are interested in implementing similar infrastructures, including the EU, the UK, Japan, and Australia.
AA creates secure, digital access to personal data at a time when COVID 19 has imposed restrictions on physical interactions for services. It also reduces the fraud associated with physical data tampering by introducing secure digital signatures and end to end encryption for data sharing. These capabilities in turn open up many possibilities. For instance, whereas physical collateral is usually required for an MSME loan, with secure data sharing via AA ‘information collateral’ – or data on future MSME income – can be used to access a small formal loan. The industry will see much needed innovation as improved access to data helps meet critical financial needs like small-ticket MSME working capital loans, affordable micro-insurance products, better savings and money management, and others. HDFC Bank and Axis Bank have been using AA for auto loans, LendingKart has been using AA for MSME loans, while IndusInd Bank has been using it for Personal Finance Management. Secure access to financial data via open banking infrastructure was estimated by a McKinsey report to create up to 5% of GDP in value for India by 2030.
Four banks are already live with data accessible for consumers via Account Aggregators, and the rest will shortly go live. Many more banks are expected to join the AA ecosystem in the coming months to allow all customers, regardless of bank, to access their data. Four NBFC-AAs have received operational licenses (Finvu, OneMoney, CAMS Finserv, NESL), three more have received in-principle approval (PhonePe, Perfios, Yodlee), and many more are in different stages of application. Consumers using the AA financial utility will benefit not only from ease of access to data but also from greater choice of products, better pricing, and increased financial inclusion. With the Personal Data Protection Bill likely to become law soon, the AA framework will become essential for regulatory compliance and access to consented data flows.
The AA journey started six years ago in July 2015 when the Financial Sector Development Committee (FSDC) — chaired by the Finance Minister and comprising the key financial sector regulators RBI, SEBI, PFRDA, and IRDAI — came together in a visionary call for a unified, consented, data sharing ability for consumers across banking, securities, pensions, and insurance.
The innovative AA network includes Banks, NBFCs, RIAs, and other regulated entities as Financial Information Users and Providers with Account Aggregators as individual-facing consent managers.
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Quotes from ecosystem members
Shri M Rajeshwar Rao, Deputy Governor, Reserve Bank of India
“India is a world leader in building Public Digital Infrastructure, and the Account Aggregator framework follows that tradition. AAs enable secure, consented data flows while protecting user privacy. In conjunction with other platforms like the Unified Payment Interface, Account Aggregator creates in India the most cutting edge digital financial infrastructure in the world. It is encouraging to observe that more entities are seeing value in this initiative for furthering financial inclusion and cultivating innovation in financial services.”
Shri Anjani Rathor, Chief Digital Officer, HDFC Bank
“As India goes digital, data becomes a significant driver of growth. And, data belongs to the citizens. Enterprises are merely custodians of data. It is only right that we build this digital infrastructure of ‘account aggregators’ through which citizens can safely share data.
With AA, enterprises can both contribute and leverage data to create amazing experiences for their customers. This will lay a strong foundation for a data-driven society in India and HDFC Bank is proud to be a part of this journey.”