9th September 2021
Let us reiterate an example of how AAs will be beneficial for consumers:
Lata runs a small Kirana store on the outskirts of her village. She is an average mobile phone user. She wants to get insurance so that she can secure her family's future.
- In a normal scenario (before AAs), she will have to go to a nearby bank, submit all her spend history + documents to get an insurance with affordable premium. But her expenses are scattered, and in some cases, unrecorded too. Most of her budget is mentally accounted for. How will she manage so many physical documents and time wastage due to the back and forth of the bank?
- After AAs, she will have access to instant insurance (loan, or any financial service) without having to go through all the trouble mentioned above. AAs will facilitate her data transfer by collecting it from all the scattered sources and providing it to the bank (or any financial body that needs it). Everything will happen safely and securely with the consent of Lata.
Think of AA as an app, that asks for your consent (yes/no) every time a Financial Information User requests your data.
Impact of AA on Fintechs and consumers
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Standardized Clean data: All Financial institutes will know exactly how the data has to be exported. Fewer resources will be spent on the cleaning of data.
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Target segment 1 products: Extremely personalized services & products for users can be offered. The typical/ mythical persona will die. View in Landscape mode 👇🏾
Authentic and Unauthentic User Data will now be combined
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Removes the hidden friction of Digital Data: No matter how digital the processes get, if the incoming data isn't digital, information might get tampered with during transfer. AA will securely help in removing this friction.
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Fintechs gotta innovate for increased Financial Inclusion and accessibility of all sectors of Bharat. The initial journey will be hard given the infrastructures are yet to be built.
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Increased Trust of consumers: AAs are double data blind. Even the FIPs won't know which FIU is requesting data. Plus, nothing happens without the consumer's consent.
Resources: AA community event - panel discussion, Digital Lending for MSMEs
Last essay Day 3: All about Account Aggregators or AAs
Next essay Day 5: OCEN: New lending paradigm