In the testing phase, banks have started with a small set of services that can be accessed if customers have their data available through an account aggregator.
“Some of these lenders have starting offering personal loans and small business loans on the platform,” Mahesh said. “Currently, lending and personal finance management are available as use cases for account aggregators.”
The financial services providers can come up with multiple use cases over time. This could include broader loan categories, opening bank accounts, investment products such as mutual fund schemes and even insurance plans. Sahamati is working with them through a consultative process, Mahesh said.
Nikhil Kumar, chief evangelist officer at Setu, said the use of a consent-based information framework for financial services, is a global first.
“The number of use cases which can be built on the account aggregator framework are huge,” Kumar said. “It will allow for better underwriting of credit for customers and also help financial institutions provide customised financial services and products.”
For consumers, the account aggregators can help make a number of financial transactions paperless and reduce the turnaround time. A simple authorisation to the account aggregator to share information from, say, your bank accounts with an asset management company, can help complete a transaction such as a mutual fund investment.
Similarly, you may be able to process a loan within minutes if you authorise your account aggregator to share information, such as your bank account statements, with the entity you are seeking a loan from.
“The information shared is in fully machine-readable format, which their (service provider’s) underwriting models can use. So lets say a customer is seeking a loan, the lender can issue the approval within a couple of minutes, as they are able to access a customer’s bank account details with their consent,” Mahesh said.
Banks are going in, but with caution.
Shalini Warrier, executive director and business head retail at Federal Bank, thinks the account aggregator framework needs to mature.
“We’re excited about the possibilities that account aggregation offers. We are well advanced on our certification journey,” she said. “This capability will take time to evolve,however, and we need a larger number of financial institutions and customers to be on-boarded before we are able to use the platform to its full potential.”