Can Account Aggregators replicate UPI’s success?

Imagine, if you will, that a young self-employed businesswoman in her early 30s fancies the Citroen C3 Aircross SUV and decides to buy it. Unable to purchase it outright, she decides to pay for it through an auto loan. Unfortunately, her own bank refuses to extend her any credit. And so, she approaches an NBFC for the loan. 

Now, there are two paths that the NBFC, which has had no business dealings with the woman in the past, can take in deciding whether to extend the loan. First, it can check the loan seeker’s  credit repayment history with credit bureaus.

Second, the NBFC can seek the businesswoman’s consent to pull out her financial history from her own bank, and use that data to arrive at an underwriting decision. That second scenario — and other similar ones harnessing data — has once again got the financial world agog. Because it will become a reality in a data-sharing universe  called the Account Aggregator (AA) ecosystem.

The excitement, at least among some entities in the ecosystem, is understandable. India has long been trying to bring in open banking with free flow of data between institutions, but progress has been painfully slow.