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Open Banking: Is this the potential business model ahead?

Account Aggregator NBFC: Way Ahead & The Missing Link

Account aggregator NBFC license guidelines were issued almost 3 years back. RBI has now issued license to 6 players, who will share aggregated data of customers across banks, insurers, wealth etc. This is a wonderful initiative, which will help customers / smes in sharing their financial data with third parties with complete control (what data to be shared with whom and for what purposes)

Way ahead:

– This initiative will take time to implement as these NBFCs will have to integrate with each Bank / Financial Institution. This may take atleast 18 months to implement across 100s of institutions.

– This should reduce customer’s credit costs and hopefully it would reduce overall NPAs in the market.

Missing Link:

– This initiative has been created only for financial industry, which has been most open in sharing its frameworks (like UPI) for usage by any industry. Ecommerce players, Cab aggregators, Payment Gateways, Search engines which would use AAs / UPI can keep their own data as “PROPRIETARY”.

While I am in favor of the concept of account aggregator to simplify customer’s life, its implementation would work against financial industry as other industries would use these frameworks without giving anything back to them. Imagine if this framework had customer’s transaction data from ecommerce, cab aggregators, travel portals, payment gateways etc.

What do you think would be the impact of the aggregators on Indian ecosystem?

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