Getting the best out of account aggregation

Sabyasachi Goswami

Updated on Jun 22, 2021

 

As we wrote earlier, Account Aggregation is poised to become the UPI of data by providing a scalable,  interoperable and expandable data architecture. However, a world-class platform is by itself necessary  but insufficient in deriving business value. Success will need you to design new products, use cases,  customer experiences, as well as redesign processes which suffer from data friction.  

At Perfios-AA, we have been closely working with FI’s ready to participate in the AA ecosystem ensuring that their incumbent processes could be redesigned to leverage the benefits thereof.  

The following use cases of AA, in our opinion, would provide a great fillip to sales, business processes  and user engagement models of the FI’s:  

  1. Provision to conduct Derived KYC via AA 
    Consider a scenario that a FI’s AML and Compliance teams can approve Derived KYC based on the KYC  related parameters of the customer only when received via the AA data fetch mechanism (for banking  data). This decision could be limited to specific exposure and loan tenures that the FI’s policies would  approve of. Adoption of Derived KYC will ease the customer onboarding process and minimize the  chances of fraud because the data will be fetched by a regulated mechanism without any human  intervention/alteration. We foresee this route to be a game changer for the industry given the costs  and time involved in conducting KYC (all modes of KYC included) by the FI.  
  2. Revamped journeys for Retail users 
    By virtue of working with over 250 clients in the country which includes largest Banks, NBFC’s,  Insurance companies, Fintech’s, and others; we are an active participant in their respective ongoing  digital transformation journeys. From the vantage point that we are at, we are a witness to the  complete overhaul of retail use cases due to the advent of the AA framework. With access to  repeatable consented data from Banks, CBDT, EPFO, etc., to extend asset and liability-based products  to the retail customer is a task that every FI has been seriously considering. The added advantage to  the FI’s is the significantly lower chances of fraud given the data fetch from authorised sources.  
  3. Provision to fetch GSTN data via AA  
    GSP’s are underway in participating in the AA ecosystem. Considering the complexity and the finer  nuances of a nationwide implementation of this order, a few points are left unaddressed, such as  consent capture not being limited to just 30 days when data is fetched via AA, or an easier mechanism for the user to give consent instead of API enablement, etc. We predict multiple streams of business  use cases being built around the gaps in the current ecosystem:  

    1. i) Revamped supply chain financing / Vendor bill discounting/factoring 

    With consent from the customer, the FI can get repeatable access to invoice-level data for a stipulated  period and extend fund-based/non fund-based loans to it. The FI could also consider building rules  with inputs as e-invoice related schema fields which can be accessed via the same consent. Currently,  not all e-invoice schema fields get updated on GSTR-1; however, the upside is a seamless and hassle free journey to avail credit for the customer at the click of a few buttons.  

    1. ii) Modularized credit monitoring/ Early warning / Annual quarterly review

    The evolution and stabilization of the AA ecosystem will definitely aid in modularizing the necessary  task of periodic monitoring by the FI’s. FinTech-product companies like Perfios Software have built a completely configurable credit monitoring platform that can help FI’s in fetching data via myriad sources such as AA, MCA, Bureau, CRILC, Stock statements, Legal checks, dedupe checks, FI’s internal systems, etc., and generate dashboards, triggers, and alerts for the FI’s teams to act upon. 

    iii) Business Finance Management  

    With almost 7 Cr SME/MSME’s in the country, the FI’s have a challenge of servicing them with relevant  and customised products. One such utilitarian product can be a tool for Business Finance  Management. These tools ingest repeatable and authentic data from  Banks, GSTN, CBDT, etc., and can provide a single view of all type of transaction, ledger position, forex  commissions etc., to the SME/MSME. This tool can be integrated with the FI’s downstream and  upstream applications for synchronous experience to the customer. We feel that this is a need for the  SME/MSME’s in the wake of other costly accounting software on offer. At the FI’s end, this tool can aid in gaining access to held away wallet share for the customer and in making relevant cross sell/upsell decisions. Internal policies of the FI’s can govern permissible range in deviation between data points obtained from these sources of data.  

    1. iv) Revamped mechanism for Drawing Power limit set up 

    The FI’s can access repeatable and authentic data (sales/purchases/invoices related) from GSTN which  will provide insights into the inventory position of the SME/MSME’s. Depending on the type of  Industry of the SME/MSME’s, GST data fetched via AA when read singularly or in conjunction with the  Stock Statements can help the FI’s Operations team in setting up the Drawing Power (DP) Limit every  month with minimal follow ups with the customer.  

  4. Provision to re-think current user journeys 
    Following are the additional fields which will always be available to the FI when the customer gives her consent to provide Banking data via AA:  

    • Account holder’s Information 

    ○ Date of birth  

    ○ Mobile number  

    ○ Nominee of the account  

    ○ Status of cKYC compliance[u3] [SG4]  

    ○ PAN number  

    ○ E-mail  

    • Summary information 

    ○ Branch information  

    ○ Type of facility 

    ○ IFSC Code  

    ○ MICR Code  

    ○ Account Opening Date  

    ○ Current OD Limit  

    ○ Drawing Limit  

    1. i) Common knowledge is that a major roadblock in the digital journeys is customer drop-offs. Mostof  thesedrop-offs are due to multiple steps of filling the application form. One may be either aware or  will be happily surprised to learn about the additional fields that fetching data via AA will provide to  the FI’s. These can then be smartly used to design better journeys with reduced number of  touchpoints.  
    2. ii) Various departments within the bank such as the Remittance Department could availthis  opportunityto check the ‘Account Opening Date’ parameter from the data fetched via AA to ascertain  the vintage of the customer’s account which should be at least 12 months as per the Regulator. In the  current scenario, the Remittance Departments of the Banks ask for 12 months of bank statements to  just confirm the vintage without necessarily analysing the data fetched.  
  5. Opportunity for Embedded Finance and much more 
    Implementation of the OCEN Framework by the participating FI’s and marketplace/e-commerce (Loan  Service e2Providers) players will ensure consent-based access to verified information from multiple  public and private data sources thereby offering affordable credit to the customers. This will help the  FI’s to create affordable yet profitable products and help the Loan Service Providers to build  Embedded Finance on their platforms. The advantages in favour of the Loan Service Providers are low  cost of acquisition, access to proprietary data, visibility of end use of the credit that has been  extended, and control over the flow of payments. These factors could contribute to the growth of  Loan Service Providers, eventually becoming lenders. In recent times, GeM and Sahay are two popular  and reference implementations for AA and OCEN frameworks.  
  6. Opportunity to re-think PFM and Robo-Advisory 
    We appreciate the endless opportunities of improvement in the UI/UX of the PFM and Advisory  applications that now seem like a possibility with the emergence of the AA ecosystem. Adoption of AA  ecosystem among its participating FSR’s (such as RBI, SEBI, PFRDA, IRDA and GSTN), FIP’s and FIU’s  will benefit the customer by seamless linking of all types of asset classes with only a single consent  approval in order to generate a 360-degree view. Most banks, NBFC’s and Fintechs already offer  Financial Management tools to their customers and active participation in the AA ecosystem will serve  as a shot in the arm for them. Reliance on recurring data fetch via AA will help in customer clustering  and VAS-like upselling/cross selling opportunities without user intervention.  With the Personal Data Protection (PDP) Bill underway and the compliance of AA framework to PDP,  the FI’s participating in this ecosystem have heaps to gain and benefit from.   

    We would love to hear your thoughts on the prospective growth models, feel free to reach out to us on  support@perfios-aa.in 

Author Name: Sabyasachi Goswami

Designation: CBO, Perfios Software Solutions Pvt. Ltd.

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