The finance sector has always seen a tremendous technological evolution over the years. A few years back, people used to stand in bank queues to pay their bills, withdraw money and transfer funds. Today all of that can be done from your smartphone within a few minutes. These massive transformations have made financial transactions easier than ever. Financial institutes, like banks, credit agencies and insurance companies, need the user’s financial data to validate their application and offer the best service.
The financial data is often scattered across different sources, and gathering all that data can be complicated and time-consuming. It can certainly increase the processing time of many financial processes like loan approval or insurance claims. To avoid that from happening, it’s essential to have all your financial data secured in one place. And This is what the account aggregation framework does. Before diving into AA use cases, you just need an introduction to the bank account aggregator app. It will help you understand how the AA network works and how the AA brands like Anumati can help to protect, gather and secure your financial data for easier and faster access to financial institutions.
What is the Account Aggregation Framework?
An account aggregator (AA) is an RBI-regulated Non-Banking Financial Company (NBFC) with an NBFC-AA license that helps users access and shares their financial information securely and digitally. The AA framework is the ecosystem that allows account aggregators like Anumati to secure the users’ financial data and offer access based on the customer’s consent. The AA can not share the data with anyone without the user’s consent. The customers have the choice to choose from many account aggregators. Any comprehensive guide to bank account aggregation can help you understand how AA works and how it can benefit financial institutes and customers.
The Financial Information Users(FIU) can establish various use cases in the AA ecosystem. Though the traditional use cases are already functional, the AA framework has the potential to support many other innovative use cases in the current era. Following are some of the major use cases of Account aggregation in India.
Getting a loan or credit from a bank can be a somewhat complicated process. The borrower must submit various documents related to his income, identity and address to validate their creditworthiness. The borrower also needs to visit the bank to submit their documents physically. This traditional method of collecting and accessing financial data is time-consuming and complicated. The borrowers miss out on the deadlines to submit the document and lack many essential documents. To avoid that, the AA network can make significant changes in the lending process.
Lending can be a great use case for the AA framework. Banks and NBFCs can take advantage of the AA features that can help improve the efficiency of the lending process. AA removes any roadblocks that limit or restrict access to financial data. Instead of manually scraping the data from various sources, the account aggregators like Anumati act as consent managers to securely store and share the data with financial institutions based on the user’s consent. This way, AA can help lenders reduce the risk of loan portfolios as they have all the necessary authentic financial data of borrowers.
Wealth management is one of the biggest sectors in India. Countless wealth managers are managing their customers’ assets based on their research findings about the assets. They often depend on their client to regularly provide them with financial data. The clients also have to share their credentials with their wealth managers. Though the clients can share financial data with the managers, it is not a secure and ideal way to share financial information.
To improve the efficiency of wealth management, the clients can provide consent to the manager to securely access and share their financial information with various financial institutes. The wealth manager doesn’t have to trouble the client for data regularly, and the client doesn’t need to share their banking credentials with the wealth managers. The financial data provided on the AA platform is digital so the wealth manager can feed that digital data into his own system without much hassle. This simplifies and improves the overall wealth management domain.
Only a few people in India use personal finance management (PFM) apps to manage their personal finances. Many believe they can manage their finances and don’t need anyone’s health. But that isn’t the case. Many people are still not aware of how these apps work and what process they follow. Many PFM apps work similarly, and they follow either of these two ways:
- Users upload their financial documents on the app
- User share rights/credentials to access the financial data
Though both methods might sound appropriate, they are equally inaccurate from the data security perspective. The client should not offer their credentials to anyone, and the manual uploading of the document can take time to process and approval. This is when the AA framework comes into the picture. The introduction of a bank account aggregator app in the personal finance domain can significantly reduce the processing and approval time.
The AA platforms like Anumati can act as a mediator between the user and financial information users(FIU) like banks, personal finance management firms, credit agencies, etc. They can secure your financial data and share access only to the entities authorised by the user. That means the AA platform cannot share the financial information of users with anyone without their consent
Financial data aggregation
The RBI has licensed several NBFCs to act as intermediary between the user and financial institutes like banks. These banks access and share the data from the users. The entire process can be risky and time-consuming as the user’s financial data is usually scattered across various sources. The AA platform helps bring all the scattered, unsecured data under one umbrella and securely store it in one place.
The financial institution that needs to access the user data must go through the AA, which has the user’s data and consent to share the data with only authorised entities. This data aggregation not only secures the data and avoids data breaches. It can help to improve the efficiency and timeline of many financial processes, like insurance claims, loan approval, investment ROI calculation, etc.
The account aggregators like Anumati have revolutionised the way financial transactions take place. Unlike the traditional way when the financial institutes used directly to access the data from users, AA helps to create a secure barrier between the user and possible threats to secure the financial data and provide regulated access to it.