Current Affairs
Daily Bits

Account Aggregator System

  • Posted By
    10Pointer
  • Categories
    Economy
  • Published
    7th Sep, 2021

Recently, eight major banks have joined the Account Aggregator (AA) network that will enable customers to easily access and share their financial data.

Context

Recently, eight major banks have joined the Account Aggregator (AA) network that will enable customers to easily access and share their financial data.

What is an Account Aggregator?

  • An Account Aggregator is a non-banking financial company engaged in the business of providing, under a contract, the service of retrieving or collecting financial information pertaining to its customer. 

Key -Points 

  • Eight of India’s major banks joined the Account Aggregator (AA) network that will enable customers to easily access and share their financial data

    • State Bank of India 
    • ICICI Bank
    •  Axis Bank
    • IDFC First Bank
    • Kotak Mahindra Bank 
    • HDFC Bank
    • IndusInd Bank
    • Federal Bank
  • An AA is a framework that simply facilitates sharing of financial information in a real-time and data-blind manner(Data flow through AA are encrypted) between regulated entities (Banks and NBFCs).
  • The AA framework was created through an inter-regulatory decision by RBI and other regulators including 
    • Securities and Exchange Board of India, 
    • Insurance Regulatory and Development Authority, and 
    • Pension Fund Regulatory and 
    • Development Authority (PFRDA)
    • initiative of the Financial Stability and Development Council (FSDC). 
  • The licence for AAs is issued by the RBI, and the financial sector will have many AAs.
  • AAs enable flow of data between Financial Information Providers (FIPs) and Financial Information Users (FIUs).
  • The architecture of AA is based on the Data Empowerment and Protection Architecture (DEPA) framework.
    • DEPA is an architecture that lets users securely access their data and share the same with third parties.

Significance of AAs 

  • It reduces the need for 

    • Individuals to wait in long bank queues, 
    • Use Internet banking portals, 
    • Share their passwords, or 
    • Seek out physical notarisation to access 
    • Share their financial documents. 

Financial app Ask.Fi

  • Users have multiple bank accounts, so when they leverage a feature like Ask.Fi, 

    • Ask for example how much they’ve spent, or how much they’ve saved, 
    • Fi can now give them an answer that scans all their accounts, in milliseconds. 
  • This is a big step towards a connected financial ecosystem.

Verifying, please be patient.

X