Data collection has been a major challenge in the preparation and review of Financial Plan(s). Technology has provided easy solution through account aggregator. They are registered entities to provide individual clients data on request and in a secured manner. It will make the clients life hassle free from the botheration of collating client’s financial data in a safe, secured and convenient manner.  

1. What is an Account Aggregator?

An Account Aggregator (AA) is a type of RBI regulated entity that helps an individual share information securely from financial institution(s) to any other regulated financial institution/intermediary. Data can only be shared with the consent of the individual.

The AA came into being through an inter-regulatory decision by the regulatory bodies: the RBI, Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA) through Financial Stability and Development Council (FSDC)

2. How do account aggregators work?

Account aggregator collects an individuals or household’s financial data to make it available in the market. It allows customers to aggregate data of all their financial assets. The data is then stored in the account aggregation software.

3. How will the new Account Aggregator network improve an average person’s financial life?

India’s financial system involves many hassles for consumers today – sharing physical signed and scanned copies of bank statements, running around to notarise or stamp documents, or having to share your personal username and password to give your financial history to a third party. The Account Aggregator network would replace all these with a simple, mobile-based, simple, and safe digital data access & sharing process. This will create opportunities for new kinds of services.

The individual’s bank just needs to join the Account Aggregator network. Eight banks already have — four are already sharing data based on consent (Axis, ICICI, HDFC, and IndusInd Banks) and four are going to be able to shortly (State Bank of India, Kotak Mahindra Bank, IDFC First Bank, and Federal Bank).

4. What kind of data can be shared? 

Today, banking transaction data is available to be shared (for example, bank statements from a current or savings account) across the banks that have gone live on the network.

Gradually the AA framework will make all financial data available for sharing, including taxation data, Mutual funds, shares and insurance etc will be available to consumers. It will also expand beyond the financial sector to allow healthcare and telecom data to be accessible to the individual via AA.  

5. Can AAs view or ‘aggregate’ personal data? Is the data sharing secure?

Account Aggregators cannot see the data; they merely take it from one financial institution to another based on an individual’s direction and consent. Contrary to the name, they cannot ‘aggregate’ your data. AAs are not like technology companies which aggregate your data and create detailed profiles of you.

The data AAs share is encrypted by the sender and can be decrypted only by the recipient. The end to end encryption and use of technology like the ‘digital signature’ makes the process much more secure than sharing paper documents.

6. Can a consumer decide they don’t want to share data?

Yes. Registering with an AA is fully voluntary for consumers. If the bank the consumer is using has joined the network, a person can choose to register on an AA, choose which accounts they want to link, and share their data from one of their accounts for some specific purpose to a new lender or financial institution at the stage of giving ‘consent’ via one of the Account Aggregators. A customer can reject a consent to share request at any time. If a consumer has accepted to share data in a recurring manner over a period (e.g. during a loan period), it can also be revoked at any time later as well by the consumer.

7. Does a customer need to pay the AA for using this facility?

This will depend on the AA. Some AAs may be free because they are charging a service fee to financial institutions. Some may charge a small user fee.

8. Some ways in which the AA framework is poised to benefit the individual and small business users:

8.1. Consolidated dashboard: The user can get an aggregate view of all his bank accounts in one place at a click of a button in the personal financial management use case. Not only that, the user will be spared the effort of running around to collect banking documents to get loans or access other financial products.

8.2. Single digital framework: The Account Aggregators enable the user to share data easily with financial service providers such as lenders, or Portfolio Management Service / Wealth Services providers, by consolidating his/ her own data in one place and by providing a single digital framework to share it in real-time.

8.3. User controlled data sharing: Data will be shared only on user’s consent. Customer will have access to all consents given. All consent provided through AA are also designed to be revocable. If the individual revokes his consent for his personal or business data, the FIU needs to engage with the borrower offline to find a remedy. Thus, customer truly becomes the owner of his data.

8.4. Simplistic control: The consent framework is very simple. The user will always know –
a. Who is the data being shared with?
b. What is the purpose of sharing the data?
c. What is the frequency and duration of the consent?

Currently, only banking data can be made available through the AA system but with the imminent integration of investment, insurance and tax-related data, a holistic view of the user’s net worth can be created.

8.5. Data security: The framework will also reduce instances of misuse of account-related data shared in physical form. The user can breathe easy as the data shared is encrypted and only decrypted at the receiver’s end.

Source: RBI