In September 2021, the finance industry witnessed the coming alive of a concept that was into development for several years. This was the month when India's eight major banks — State Bank of India, ICICI Bank, Kotak Mahindra Bank, Axis Bank, HDFC Bank, IDFC First Bank, IndusInd Bank and Federal Bank — agreed to share their customers' data on common platforms called Account Aggregators.
The concept of Account Aggregators (AA) was in discussion since 2016 when RBI announced plans for the introduction of the new class of non-banking finance companies (NBFC). With time, RBI handed over AA licences to many entities including CAMSFinServ, Cookiejar Technologies (FinVu), FinSec AA Solutions (OneMoney) and NESL Asset Data Limited. There are also others like Perfios Account Aggregation Services, PhonePe Technology Services and Yodlee Finsoft who have received in-principal approvals.
What are account aggregators? What do they do?
Account aggregators are NBFCs who retrieve financial information from various entities to provide all savings and investment data at one place. Once fully functional, investors can register on any of the above platforms and get their bank account, mutual fund, insurance, PF investment, PPF and other financial data at one place.
At present, account aggregators provide only bank account details because SEBI, IRDAI and PFRDA are yet to come onboard.
Can RIAs and MFDs use these platforms?
Some account aggregators platforms already provide paid services to RIAs. CAMSFinserv has a B2B service that allows RIAs to view their clients’ financial records after taking their approval.
At present, the service for RIAs is limited to bank account details.
"Currently, only banks share data. Entities like mutual funds, insurance and depository participants which are regulated by bodies other than RBI are yet to join," said N R Sudarshan, Head of Sales and Alliances at CAMSFinserv.
However, MFDs cannot avail services of account aggregators as of yet. This is because RBI has permitted account aggregators to share data only with Financial Information Users (FIUs), Sudarshan said.
Entities, which are directly regulated by financial sector regulators like RBI, SEBI, IRDAI and PFRDA are known as FIUs. MFDs, who are regulated by industry body AMFI, do not qualify as FIUs. However, if an MFD has insurance agency or retirement advisory license, he can avail this service.
'AAs can make our job easier'
RIAs and MFDs say access to account aggregators has the potential to ease their job and allow them to better service their clients.
"It’s a path breaking initiative by RBI. It puts us on an equal footing with bankers. It will save our clients from the hassles of procuring financial information from several different entities. Account aggregators can help us plan clients' finances more effectively," said Gajendra Kothari, MD & CEO of Etica Wealth.
Viral Bhatt, the founder of Money Mantra, says even if MFDs are allowed the access, many may not opt for it, as the service will come at a fee. “Smaller MFDs may not be able to afford it," Bhatt said.
