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Account Aggregator Simplify Sharing of Financial Data And Reduce Processing Time
In September 2016, the Reserve Bank of India (RBI) had proposed setting up of an account aggregator that would act as a common platform capturing all your financial details in one place. The account aggregator will help individuals and small businesses share their financial data with third parties in a safe and secure manner, and give them greater control over how their data is being used.
The four major financial regulators — RBI, IRDA, PFRDA and SEBI (regulating banks, insurance, pensions and markets, respectively) – came together to allow regulated entities under their control to share data with user consent with account aggregators.
To promote the account aggregator ecosystem a body, named Sahamati, has been formed. It will work towards accelerating the adoption of the framework by building awareness about the new technology and supporting implementation and integration through various workshops. This is expected to revolutionise lending, wealth management and financial planning in the next few years, as individuals start to control the flow of their data held currently in silos across various financial institutions.
Sahamati is a Collective of Account Aggregator ecosystem being set up as a non-Government, private limited company.
Data Empowerment and Protection Architecture (DEPA) is a new approach, a paradigm shift in personal data management and processing that transforms the current organization centric system to a human-centric system. By giving people the power to decide how their data can be used, DEPA enables the collection and use of personal data in ways that empower people to access better financial, healthcare, and other socio-economically important services in real-time while preserving the safety, security and privacy of the user. The architecture of AA is based on the DEPA framework.
An Account Aggregator provides data to a Customer or Financial Information User (FIU) from a Financial Information Provider (FIP) based on the user’s explicit Electronic/Digital Consent.
No financial information of the user is retrieved, shared or transferred by the Account Aggregator without the explicit consent of the user.
An AA merely acts as a conduit between FIUs and FIPs and does not process the data. An AA is ‘data-blind’ as the data that flows through an AA is encrypted and can be processed only by the FIU for whom the data is intended. Also, an AA does not and cannot store any user’s data – thus, the potential for leakage and misuse of user’s data is prevented.
Without the AA framework and the construct, there is no mechanism available for end users to provide data securely to different entities. Several mechanisms such as
Each of these mechanisms results in friction in acquiring data securely and can result in data leakage, compromising data privacy.
The AA framework facilitates consented sharing of information in real-time and eliminates the above issues while ensuring data privacy.
The role of AA is not limited to financial data alone. AA framework will be extended to handle data from other domains also – very soon healthcare and telecom related data too will be available thru AAs.
An individual seeking a home loan will be able to quickly share her bank statements and other details required by lending institutions digitally through her preferred account aggregator. As of now, six account aggregators have received in-principle approval from the RBI for the data-sharing framework; these include National E-Governance Services Asset Data, CAMS FinServ, Cookiejar Technologies (Product named Finvu), FinSec AA Solutions Private (OneMoney), Yodlee Finsoft, and Jio Information Solutions. These companies are expected to roll-out their services by the end of 2019 after getting a final approval on operations from the RBI.
The cost involved will be borne by financial information users since they get to use the data. The costs will be decided between account aggregators and financial information users as it goes live. Financial information users may pass this cost to investors or borrowers.
The key feature of an account aggregator is that it’s ‘data blind.’ This means the account aggregator does not store or save any data transmitted between financial information providers and financial information users. The data that flows through the account aggregator is encrypted and can only be accessed by entities requesting the data.
In case there are discrepancies in the data shared with the users of financial information, an individual needs to get it rectified from financial information providers. Account aggregators don’t have any role, as they don’t have access to your data that is transmitted. You may have to take up errors in data or other issues with your bank/mutual fund house/ insurance company, and get them rectified, which will take some time. Once done, you may have to give your consent again to the account aggregator.
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