Account Aggregator Framework Accelerates Cash Flow Based Lending


People looking for loans often end up getting one sanctioned at an unfavorable interest rate or terms. This can occur due to a lack of an appropriate credit rating due to the unavailability of data from multiple credit sources or due to a lack of proper compilation of the date to determine the precise credit rating.

To avoid such a situation, the role of an appropriate account aggregator framework becomes important.

“The Account Aggregator framework is one of the most promising innovations in the BFSI ecosystem (banking, financial services and insurance). Based on the regulator’s NBFC-AA framework, the AA platform was finally put into operation a few weeks ago and has already been positively adopted by some of the largest banks and financial institutions in the country, ”said Amit Das. , CEO and Co-founder,

“There are over 15 technical service providers, including Algo360, a flagship product of Think360, using AA’s algorithmic and data rails. Basically, there are currently 7 AAs, 12 TSPs of AA data standards, and 16 TSPs of data analysis. This number will (more likely) increase or decrease as the cycle of adoption of the AA framework begins, ”he added.

Das lists the reasons why one should be optimistic about what the AA framework will bring:

1. Its core design principles are digital first, data first. It is the first of its kind to create a highly scalable data gateway that allows regulated entities to obtain verified data.
2. It has customers at its center. The role of the object code, duration / duration of data and general adherence to data privacy standards – we are learning a lot from the experiences of global markets.
3. Many people will confuse it with open banking / DSP2 type innovations in Europe for example. But by decoupling the gateway from the processor / owner / user, the framework views economic incentives in a very different way.
4. One of the biggest issues in many BFSI processes is the end-to-end TAT for customer onboarding, grievance resolution, etc. AA should help us reduce TAT and therefore the costs of such activities; these benefits can be passed on to customers.
5. We also expect document and identity fraud to decrease with AA, as authenticated information comes directly from the Financial Information Provider (FIP) and is sent to Financial Information Users (FIUs).

How does good and bad credit history affect your chances of getting a loan on favorable terms?

“The opportunities are limitless, given that we are in the second phase of credit growth as an economy. The AA framework opens up a superior, faster and better way to approach cash flow based lending, which is extremely important in boosting MSME / small business lending. In addition, the self-employed segment may be able to get better terms and better access to quality finance, ”Das said.

Das suggests three things institutions need to do to unlock the potential of AA:

1) Create exceptional customer experiences to drive adoption

What several fintech companies have done with UPI focused on the exceptional user interface / UX. The extreme commitment to customer experience is why PhonePe, Google Pay, etc. make significantly larger volumes on UPI than banks.

2) educate clients

People fear what they cannot control or what may appear to be information risk. UPI is a transaction with a potential dispute resolution method, which can help get the money back. Data once lost, however, cannot be recovered.

3) Finally, like all ecosystems, demand and supply must converge.

All ecosystem partners must be committed to positively reinforcing the integration of AA into their core workflows and data delivery, even though this may appear to threaten their data. Like credit bureaus, in the long run AA will help broaden the credit landscape and deliver great value.

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