Account Aggregator: Challenges & Path Forward

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Arpit Agarwal

Legal & Policy

This may have been the first time you heard the term “Account Aggregator” and if so, you're on the brink of discovering a financial revolution in India. Let's take a moment to unpack what this means.

Connecting Financial Worlds with AA

Account Aggregators (AAs) enable you to view your financial data, such as your bank accounts, insurance policies, and investment portfolios from different financial institutions in a single place. You can view all your information, share your information with others, such as a lender or your advisor, and manage who can access your financial information.

This is precisely what Account Aggregator, introduced by the Reserve Bank of India, enables. And we at Fold have been at the forefront of this innovation. In a world where apps can read your emails for transaction data, AA represents a giant leap forward in privacy and security.

Progress and Promise: The Journey of AA

Since its inception, AA has made significant progress, but the road to becoming as ubiquitous as UPI is still under construction. It's like building a massive multi-party ecosystem where everyone must work together.

The Vision and Reality

In 2016, RBI initiated a trailblazing idea: enabling a network that allows seamless sharing of financial information, akin to the OAuth protocol. The goal was clear – make financial data sharing streamlined, secure, and consent-based.

Over the years, many banks and financial information providers (FIPs) have joined the AA network, opening doors for countless innovations. But the road hasn't been without bumps.

Challenges and Roadblocks

While the AA network's promise is vast, the current landscape is filled with inconsistencies. Here's a glimpse into some of the hurdles:

Joint Account, Current Accounts & Fixed Deposits

AAs only support individual accounts, whereas Joint accounts are very common in India and are used by families. Similarly, small and medium businesses rely on current accounts. Therefore, the MSME sector and many ordinary citizens will be unable to benefit from AAs. Additionally, most banks don't share details of fixed deposits. As long as partial coverage continues, paperless journeys for all will not be possible.

Missing Banks & Financial Information Providers

While most major banks have gone live on AAs, there are some noticeable holdouts which are slowing down the adoption. These banks include RBL Bank, Bandhan Bank, SMB Bank, among others. In the absence of such banks from the ecosystem, it is unlikely the financial industry will move to a completely paperless process.

Data Quality Issues

While most major banks have gone live, major implementation issues are holding back the adoption of AAs. One part of these issues is data quality issues, some of which we have discussed below:

  • Transaction Timestamps: The lack of standardized timestamp practices across banks leads to discrepancies, causing confusion for users. Most banks, including the likes of ICICI, Federal Bank, and others, have been sending incorrect transaction timestamps. This might appear minor, but for an end-user, it can be misleading and confusing.
  • Transaction Dates: Misalignment between transaction dates and timestamps further muddles the waters, detracting from the experience's simplicity. Imagine missing a loan repayment because of wrong due dates.
  • Transaction IDs: As per the ReBIT API specifications, every transaction should be marked with a unique id. However, this guideline is not universally adhered to. Banks like Axis Bank, State Bank of India, Yes Bank, and Indian Bank do not send transaction IDs at all, while HDFC Bank sends incorrect IDs. This creates issues like duplicate transactions, wrong account balance etc.
  • Transaction Narrations: Every bank seems to follow its own pattern with narrations. Some of the banks don't share this data. The absence of standardized transaction descriptions leaves users in the dark about where they've spent their money.

Performance Issues

Another issue with banks is performance issues with their APIs. While several banks are performing well, many, especially the public sector banks, are unable to scale their servers and serve data requests. Just because a bank is marked live by Sahamati does not mean data from the FIP is reliably available. You may face issues while trying to discover your bank accounts and fetching data from banks. Additionally, banks often face downtimes which can take days, weeks, or even months to fix. For example, 95% of account discovery requests by an AA to Kotak Bank fail, and this issue has existed for more than 6 months now.

And these are just the tip of the iceberg. There are some issues specific to certain banks and some common issues that show up in different stages of the process.

The Need for Cooperation

These challenges are significant, but they are not insurmountable. The Account Aggregator network is not just a technical marvel; it's a statement about India's collective potential and will democratize financial services in India. However, fulfilling this potential means addressing the present issues head-on.

We at Fold are proud to be part of this initiative, but we understand that success requires cooperation between financial information providers, regulators, and, most importantly, the people who rely on AAs. That's why we're not just pointing out problems; we're committed to being part of the solution. If you would like to work with us to help fix these issues write to us.

Together, we can forge a path that not only puts India ahead of the game but sets a new global standard. Let's make the promise of AA a reality for every citizen of India.