How can the Account Aggregator Framework transform the Fintech Industry?

The concept of open finance offers a wide range of features that makes it simpler for fintech service providers to do much more -one of those is forming the financial profiles of customers. The overall financial profile is crucial. The primary function is facilitating companies in the execution of demographic analysis of the respective users -like consumption ability, income, credit score, and so more. This is wherein the role of account aggregator comes in. 

Do you remember how the concept of UPI completely changed the manner in which people send & receive money? Irrespective of the awkward splitting of restaurant bills or analyzing the exact change off the friend who has been bugging you for several months, the technology has transformed the concept of transacting money. The advent of account aggregators is going to ensure the same for other types of financial transactions throughout the nation. 

Whether you are a financial giant or a fintech startup, it is crucial to understand the inside-out of the list of account aggregators in India and how you can leverage them to your advantage.


What is an Account Aggregator? 

Account aggregators are dedicated frameworks that help in sharing data securely between FIUs and FIPs. 

  • FIUs or Financial Information Users: These are organizations or parties that leverage financial data to deliver consumer services -including banks, personal wealth management organizations, insurance companies, lending agencies, and so more.  
  • FIPs or Financial Information Providers: Organizations responsible for holding the financial data -including banks, mutual funds, insurance companies, pension funds, and so more. 

The use of an account aggregator will help in facilitating the process of receiving consent -just like how the UPI application will facilitate the transfer of funds from a single bank account to another. AAs are also used for transferring financial data in comparison to funds. 

The Role of AAs in Bridging the Financial Literacy Gap 

Formalized financial systems have offered individuals access to high-end financial solutions for several years. Multiple programs have come up towards helping in bringing forth millions of unbanked individuals into the forefronts of the banking and financial systems. Still, there is a larger pool of underbanked and underserved customers out there.  

Most providers of financial services will agree to the fact that it is quite simple to offer financial services and products to the customers who are present in the existing network. They will already have access to a dedicated credit history, some investments, accounts into savings or current accounts, and so more. Some of the major issues that need addressing are -how to serve conventionally underserved individuals and how to achieve the same in a manner that is economically viable.  

One of the major challenges of the financial services ecosystem is availability of trustworthy information at a reduced cost. The AA framework possesses the capability of democratizing the data network by bridging the gap existing between FIUs and FIPs through a strong and managed customer consent approach for prioritizing customer interests. 

It is believed that the AA framework will bring about major benefits and ample opportunities towards improving the inclusion agenda of the nation. It will have a major impact on the credit distribution networks along with improving the capability of assessing and underwriting the under banked and NTC or New to Credit customers. Quite similar to the design of the UPI framework, there is a strong belief that AA will also support the development of the UDI or Universal Data Interface. 

AAs as facilitators for simplifying complicated Loan Processes in the Lending Industry 

There are several factors that determine the availability of credit to the borrower. Having relevant credit history serves to be one of the most significant factors out there. It is difficult for first-time borrowers with minimal or no credit history to get access to easy and affordable loans from NBFCs and banks. Moreover, those having a fluctuating income -like business owners with seasonal or volatile sales or independent contractors, have more expensive and fewer financial capabilities. The ongoing demand from high-end credit institutions towards pledging collateral to get access to credit facilities will serve as the additional deterrent for those who wish to seek loans. 

At its minimum, account aggregators help in sharing quality and trustworthy information about the cash flows, banking behavior, and systematic payment tendency of the customers. By going through alternative behaviors and data points, financial institutions are able to assess the financial behavior and assets while making an improved assessment for the extension of credit lines. Across the entire lending and credit ecosystem, cash flow-centric lending can receive a major push through the adoption of the account aggregator framework 

Ensuring Innovation in the Financial Sector 

The AA framework tends to touch the heart of customer-centric data landscape. Therefore, it is effectively referred to as the UPI use case of the open data environment. It holds the potential to disrupt customer-centric journeys wherein data-driven, real-time decision-making can help in creating a competitive edge.  

AA-based data is capable of minimizing information symmetry. For instance, large-scale banks and financial institutions are capable of going back to their customers with improved offers as they have access to the financial data of customers. In this manner, information symmetry leads to ample competition as well as innovation in the modern fintech industry.  

As account aggregators are system-generated and available in real time, they are capable of accelerating data-empowered innovation at a highly reduced cost. Fintechs are able to enter the domain of incumbent banking institutions towards providing access to cutting-edge products and services to underbanked groups while effectively extending improved offers to existing customers. 


While there are early stages of the AA ecosystem, the government and regulatory push will lead to its rapid takeoff. The entire framework is effectively supported by early adopters like fintech organization. In the ongoing phase, improved User Experience (UX) for onboarding as well as educating customers on the AA framework will help in unlocking the opportunity exponentially. 

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