Learn everything about AA Network, a financial data-sharing system, with FAQs.
Last week, India unveiled the Account Aggregator (AA) network, a financial data-sharing system that has the potential to revolutionise investing and credit by providing millions of consumers with greater access and control over their financial records and expanding the potential pool of customers for lenders and fintech companies. AA gives the individual authority over their own financial data, which is normally siloed.
This is the first step in bringing open banking to India and enabling millions of people to securely and efficiently access and share their financial data across organisations.
The AA system in banking was launched with the participation of eight of India’s biggest banks. The AA system has the potential to make lending and wealth management far more efficient and cost-effective.
Eight Indian banks said on Thursday that they are rolling out — or are about to roll out — a system called AA, which will allow users to combine all of their financial data in one location. (Banks participating include HDFC, Kotak, ICICI, Axis, SBI, IndusInd, IDFC, and Federal.) Four of them are launching the system on Thursday, while others claim they will do so shortly.
The goal of Account Aggregator (AA) is to combine all of an individual’s financial information, said M Rajeshwar Rao, deputy governor of India’s central bank, the Reserve Bank of India, during a virtual event Thursday.
The new system allows banks, tax authorities, insurers, and other financial institutions to collect data from consumers who have given their agreement in order to gain a better knowledge of their future customers, make informed choices, and ensure easier transactions.
Users who provide their approval — which only takes a few clicks — will be able to exchange their financial information from one AA participant to another via a centralised API-based repository. Users can specify how long they want their data to be shared with a certain Account Aggregator participant.
An NBFC Account Aggregator License, also known as an NBFC-AA License, is required for a business model that allows financial data to be shared between financial institutions. Any firm wishing to become an Account Aggregator must have a net owned fund of INR 2 Cores.
1) What exactly is an Account Aggregator?
An Account Aggregator (AA) is a sort of RBI-regulated company (with an NBFC AA license) that assists individuals in securely and digitally accessing and sharing information from one financial institution to any other regulated financial institution in the AA network. Data cannot be shared without the individual’s permission.
There will be several Account Aggregators from which to pick.
Account Aggregator substitutes the lengthy terms and conditions of ‘blank cheque’ acceptance with granular, step-by-step authorization and control over each usage of your data.
2) How will the new Account Aggregator network enhance the financial life of the typical person?
Today’s Indian financial system entails numerous inconveniences for customers, such as providing physical signed and scanned copies of bank statements, rushing around to notarize or stamp papers, or having to disclose your personal login and password with a third party to provide your financial history. All of this would be replaced by the Account Aggregator network, which would provide a simple, mobile-based, easy, and secure digital data access and sharing procedure. This will open up new chances for new forms of services, such as new types of loans.
All that is required is for the individual’s bank to join the Account Aggregator network. Eight banks have previously done so — four are already exchanging data based on consent (Axis, ICICI, HDFC, and IndusInd Banks), and four will be able to do so soon (State Bank of India, Kotak Mahindra Bank, IDFC First Bank, and Federal Bank).
3)What distinguishes Account Aggregator from Aadhaar eKYC data sharing, credit bureau data sharing, and platforms such as CKYC?
For KYC purposes, Aadhaar eKYC and CKYC only enable the exchange of four ‘identity’ data fields (eg name, address, gender, etc). Similarly, credit bureau information simply displays loan history and/or a credit score. The Account Aggregator network allows you to share transaction data or bank statements from your savings/deposit/current accounts.
4) What kind of information can be shared?
Banking transaction data (for example, bank statements from a current or savings account) is now accessible for sharing between banks that have gone live on the network.
Consumers will eventually be able to access all financial data, including tax data, pension data, securities data (mutual funds and brokerage), and insurance data, thanks to the AA framework. It will also go beyond the banking sector, allowing anyone to access healthcare and communications data through AA.
5) Can AAs access or ‘aggregate’ personal information? Is the data exchange safe?
Account Aggregators do not have access to the data; they just transfer information from one financial institution to another depending on an individual’s instruction and agreement. They cannot, despite the term, ‘aggregate’ your data. AAs are not like technological firms that gather your data and develop extensive profiles of you.
The data that AAs exchange is encrypted by the sender and can only be decoded by the receiver. The use of end-to-end encryption and technologies such as the “digital signature” makes the procedure far safer than transmitting paper documents.
6) Can a consumer choose not to share their data?
Yes. Consumers are entirely free to register with an AA. If the consumer’s bank has joined the network, they may register on an AA, pick which accounts to link, and transmit data from one of their accounts for some specified reason to a new lender or financial institution at the point of granting “permission” via one of the Account Aggregators. A client has the right to refuse a consent to share request at any moment. If a consumer agrees to share data in a recurrent manner over a period of time (for example, throughout a loan duration), such consent can be cancelled at any point afterwards by the consumer.
7) How long may a consumer use my data after sharing it with an organisation once?
At the moment of consent for data sharing, the consumer will be shown the specific time period for which the receiving institution will have access.
8) How can a client become a member of an AA?
You may join an AA by using their app or website. AA will offer a handle (similar to a username) to be used during the consent procedure.
Today, four applications with operating licenses to be AAs are accessible for download (Finvu, OneMoney, CAMS Finserv, and NADL). Three more have got preliminary permission from the RBI (PhonePe, Yodlee, and Perfios) and are expected to launch apps soon.
9) Is it necessary for a consumer to register with each AA?
No, a consumer may sign up with any AA to have access to data from any bank in the network.
10) Is it necessary for a client to pay the AA to use this facility?
This will be determined by the AA. Some AAs may be free since they charge banking institutions a service fee. Some may levy a modest fee for their services.
11) What additional services may a client obtain if their bank has joined the AA data-sharing network?
Access to loans and access to money management are the two major services that will be enhanced for an individual. If a consumer wants to acquire a small company or personal loan today, he or she must provide a number of documents with the lender. Today, this is a time-consuming and laborious process that impacts the time it takes to obtain a loan and access to one. Similarly, money management is challenging now since data is kept in several locations and cannot be readily brought together for analysis.
A firm may use Account Aggregator to rapidly and cheaply obtain tamper-proof protected data and to expedite the loan appraisal process so that a client can acquire a loan. A customer may also be able to obtain a loan without providing physical security by sharing reliable information about a future invoice or cash flow obtained straight from a government system such as GST or GeM.