It is hard to get a loan. Even if we get one it doesn’t mean that one could get the kind of loan that one is expecting. The reason for such a mishap is the lack of necessary data between the applicant and the financial institute.
To solve this, the RBI has introduced the Account Aggregator. It is a revolutionary new aspect in the BFSI (banking, monetary administrations and protection) environment in India. It is an RBI entity with an NBFC-AA license. It is even embraced positively by financial institutes of the country.
The factor that makes it special is that it is digital and data-centric, making it the first of its kind in giving data to regulated entities. More importantly, it gives utmost importance to the clients. Many individuals will mistake it for open banking systems, but it is not.
One of the greatest trouble spots in BFSI measures is the failed transaction, harmonization of turnaround time and customer grievance resolution. These could be solved by the Account Aggregator, with benefits passed to its customers.
But this is the world where data is stolen and hacked. This is the major drawback of the system because there is an increased chance for fraud and hacking, as the validated data comes directly from the Financial Information Provider (FIP) and is shipped off the Financial Information Users (FIUs), they are digital spaces.
But the RBI has assured its safety. According to their statement, the Account Aggregator does not see the data. It is just a transporter of data from the client (with his consent) to the institute.
It is also secured with end-to-end encryption and has other features like digital signatures.
Of course, there is a thief to every lock, but the RBI will do its best to keep a high guard. This is the reason why one should consider it. Because this system opens up a superior, quicker and better way of moving toward income-based loaning.
This is critical for driving MSME loaning/private venture advances. In addition, the self-employed will have the option of improved terms and improved access to quality financing.
This easy transfer of account details and other such information has been adapted by 8 banks, with 4 more to join shortly.
This system will only work with the client’s consent. A client can register it through its app. Even registering is a voluntary factor; there is no compulsion towards it. It’s an almost free service. Through this, one can get their personal or small loans easily.
But before a financial institution could be part of it, they have to take care of a few factors. Firstly, build extraordinary client experience, secondly educate the clients about the new system. Lastly, the demand and supply sides need to merge.
If used properly it could transform the credit landscape.