System that empowers citizens with their data

Account aggregator framework facilitates data sharing between individuals and service providers, holding immense potential for the financial sector

Data is the new oil, goes the popular saying and for good reason. It is valuable, versatile and it fuels industries and economies. It implies that data demands responsible and cautious utilisation. This is especially pertinent in heavily-regulated industries like financial services. With the rise of digitisation, data is not just abundantly available but also fragmented. Right from bank accounts to insurance to personal finance, the vast availability of data doesn’t change the fact that it’s sensitive information which warrants sensitive handling and usage. Ensuring consumer consent is going to be of paramount importance. Enter the concept of consent managers and account aggregators (AA).

The AA framework empowers citizens with better control over their data. It operates on the principle of consent-based frameworks facilitating secure data sharing between individuals and service providers. Just the way Unified Payments Interface (UPI) transformed the payments landscape of India, AAs hold the potential to transform the access to financial services for the next billion.

Unlike traditional practices, AA operates on a data-blind model that acts as a custodian of data on behalf of users to ensure that sharing occurs with the explicit permission between data seekers and providers. In this framework, the data seeker is termed as a financial information user and the data provider is known as a financial information provider. The permission is dynamic, allowing users to review, pause, or revoke access as needed. Moreover, data seekers must adhere to Reserve Bank of India-licensed frameworks and obtain user consent through secure methods such as OTP-based authentication, ensuring transparency and security.

The advent of consent managers like AA is not limited to the financial services. With initiatives such as Digilocker, Aadhar and UPI, data governance extends across various sectors. AAs help service providers comply with regulatory requirements for data access, privacy, and security. By leveraging standardised protocols and encryption techniques, aggregators ensure that sensitive insurance information is securely transmitted and stored.

In a world heavily reliant on digital channels, keeping financial information safe across multiple channels can be challenging. AA systems allow individuals to consolidate and manage their financial information from various sources in one place securely. The systems provide a centralised platform for individuals to consolidate and manage their financial information from various sources, including bank accounts, investments, loans, and insurance policies. 

This simplifies the process of tracking and managing finances, saving users’ time and effort. For instance, AAs in insurance enable users to access all their policies, premiums, coverage details, and claims history from multiple insurers in a single interface. A consolidated view empowers consumers to have a comprehensive understanding of their insurance portfolio, including any overlaps or gaps in coverage. Consumers can compare benefits and costs across different insurers more efficiently, enabling them to make informed decisions about their insurance needs. The financial services industry is often perceived as complex or even intimidating.

Not just that, if we look at the insurance sector, AAs play a vital role in improving risk assessment and underwriting processes. Insurers can access information about policyholders’ financial backgrounds, including income, assets, and liabilities, enabling more accurate pricing and risk evaluation. With comprehensive insurance data, AAs can also facilitate personalised recommendations and insights to users. By analysing users’ insurance profiles and behaviour, aggregators can suggest relevant products and optimise coverage.

AAs play a key role in the economy. The next decade will be about harnessing the power of financial data to stimulate low-cost and high-quality financial services. Ensuring secure and centralised financial information access will lead to more people investing in financial services and contributing to the country’s economic development.

The writer is chairman and CEO, Policybazaar