The account aggregator (AA) ecosystem is growing steadily, having added more than 600 entities to its ecosystem, but has the potential to add more than 10,000 compliant regulated entities going ahead, BG Mahesh, CEO of Sahamati, an industry association of AAs, tells businessline. Edited excerpts:
How has AA progressed in India, and what are you doing to make people aware of the framework?
Whenever a new ecosystem is introduced, in this case, the account aggregator (AA) framework, everybody needs time to integrate, test, pilot, and then scale their implementations. Last year, the ecosystem’s scale, scope, and performance have improved steadily. We have now reached a stage where industry can introduce customer awareness campaigns. If we had carried out such campaigns in the first year, in my opinion, it would have been counterproductive because the ecosystem was not ready.
Now that we have 600 entities, around 3 lakh consents are being fulfilled daily and over ₹8,000 crore of loans are being disbursed monthly. We wanted the ecosystem to reach a scale before we could carry out the customer awareness campaigns in collaboration with FIPs (financial information providers), FIUs (financial information users), and AAs. Three years ago, we had to press and tell that AAs are RBI-licensed entities, now–through product and word of mouth–we can increase awareness.
What is the current scale of AA, both in terms of consent and institutions?
There is a potential of 10,000 regulated entities under the four regulators eligible to be part of the ecosystem. Currently, we stand at 600+ regulated entities participating in the ecosystem. Nearly 30-40 entities are added to the ecosystem every month.
On the supply side, 168 financial institutions have integrated as FIPs. While on the demand side, 522 financial institutions have integrated as FIUs. Nearly 3-3.5 lakh consents are being fulfilled each day. This includes everything, from home and car loans to personal finance management and insurance. In terms of loans, AA is being used to disburse loans worth ₹8,000 crore. These are actual disbursements and not just inquiries related to the loan. Consents are growing steadily at around 13-17 per cent per month.It should continue to grow because every FIU adds AA to their product journey, automatically ensuring the ecosystem grows.
Are loans the biggest use case at AA?
Currently, the biggest use case is lending, but we have seen that new use cases are coming up. For example, AA is even used to onboard new customers. FIs can compare PAN and phone numbers to open up a DMAT. AA can also be used to auto-fill the form. Some companies use AA for risk management, and more use cases we had not thought of earlier are slowly coming up.
What could be the growth in the loan segment?
This will depend on how much each lender pushes the pedal. The loan disbursed has been doubling every six months. For H1FY24, it was ₹2,000 crore every month; in H2FY24, it was ₹4,000 crore, and in H1FY25 it was ₹8,000 crore. The potential for it to double or triple every quarter or half-yearly exists. If you fast-forward two years from now, theoretically, every loan in the country will use AA.
How do you see the use-cases building for AA?
It will progress more and more. It could be used for anti-money laundering and compliance. We believe every product and compliance report will use DPI in the near future.
There are concerns about data aggregation delays, limited time periods for data sharing and poor data quality
The problem you stated is from the bank/ financial institution, not the AA. AA is only a consent manager. For example, in the case of a UPI transaction, a customer gives consent for the payment. If the bank server is down to make or receive the payment, you cannot blame the UPI layer. It is also a function of maturity. Once the implementations and ecosystem mature, the performance of data sharing and the range of data will improve significantly. It is a process.
Some argue that banks must share the data on joint accounts and FDs. Do you believe the same?
Currently, bank statements are the most predominant FI type being shared. Although few banks provide FD and RD data, too, we must broaden the scope of institutions providing banking data. We are working with banks to activate the Joint Account data on the ecosystem, which should be live soon.
What are some key challenges you see in addressing the growth?
We must ensure that every entity entering the AA ecosystem goes live with all the FI types and products. We are also working on the smaller data issues. Though it is not as bad as everyone talks about, if it were, we wouldn’t be able to give out billions of dollars every month. There will be some growing-up challenges and pains, as well as some technical challenges, all of which the participants have planned for and have taken into account. Over the next six months, we need to work on customer awareness. We need to educate the customer that if they are applying for a loan, insurance, or any other service where they need to share any financial data, they should insist on sharing the data only through AA.
Published on December 11, 2024
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