Major Indian banks launch Account Aggregator project
Eight Indian banks have launched the country’s new Account Aggregator (AA) service, designed to enable customers to consolidate their financial data.
HDFC Bank, Kotak Bank, ICICI Bank, Axis Bank, SBI, IndusInd Bank, IDFC and Federal Bank are rolling out the new system, with half going live last week.
A collection of regulatory bodies designed the framework for AA. Among them are the Reserve Bank of India (RBI), the Securities and Exchange Board and the Financial Stability and Development Council (FSDC).
RBI will issue licences to AA-qualified firms, who are defined as non-bank financial data collectors and providers.
The system operates three tiers of connectivity between an AA, a financial information provider (FIP) and financial information user (FIU).
An FIP can be a bank, mutual fund, insurance firm or more. The FIU could also be a lending bank wanting access to the borrower’s data.
The AA operates as a method for the identification and verification of a user in the system. It shares consensual information between a customer and the institutions the customer is interacting with.
“AAs enable secure, consented data flows while protecting user privacy,” says M Rajeshwar Rao, deputy governor for RBI.
“In conjunction with other platforms like the UPI, AA creates in India the most cutting edge digital financial infrastructure in the world.”
Currently there are 19 different categories of data which count as “financial information” under the AA system.
Data transmitted through the AA is encrypted, and the firm is prohibited from storing, processing or selling user data.
“Account Aggregators are an exciting addition to India’s digital infrastructure as it will allow banks to access consented data flows and verified data,” says Anjani Rathor, chief digital officer at HDFC Bank.
“This will help banks reduce transaction costs, which will enable us to offer lower ticket size loans and more tailored products and services to our customers.”