Nowadays, security has always been crucial in the banking industry. It is becoming more and more critical for responsible businesses to take action to strengthen their defences against the ongoing threat of fraud and data theft as there is a growing appetite for regulation in the banking industry and the fields of data security. The banking world is seeing growth in two areas: budgeting apps and account aggregators. In order to access the bank’s API and collect the account details, account aggregations apps frequently reverse the API of the user’s bank. As the credentials are the same, even if they are often configured only to enable read-only access, any breach of client data could allow unauthorised individuals to access and steal from the customer’s account. Many owners will ensure that the protected API may only be accessed by approved software.
What is an account aggregator?
An end user can effectively monitor and manage all of their bank accounts, investment accounts, and credit cards in one location through a process known as account aggregation. Apps that support account aggregation make it simpler for users to analyse and evaluate their financial situation, enabling them to make more informed spending, saving, and credit decisions.
How does a bank account aggregator work?
Banks provide account aggregation in two methods. The first is contained within just one organisation. With customers’ permission, the second occurs when account aggregation incorporates assets handled by non-financial institutions. Account aggregation apps provide the best service that banks offer to their clients, allowing them to aggregate information from all of their accounts and the benefits of other organisations with which they have accounts.
If customers want to use all the features and benefits of these accounts, they typically need to register and use them by providing their credentials (username and password). Each account’s data is downloaded and added to the aggregation using the information given. Direct connections and screen crawling, also known as data scraping, are the two most widely used techniques for aggregating data.
- Screen scraping is obtaining information from one app by entering user credentials and then displaying that information in another app.
- Application programming interfaces are used for direct interactions.
It is essential to remember that the data are in read-only format, meaning users and parties attempting to access them can only view them, not change them.
Practice in Account Aggregation:
Account aggregation is among the most effective accounting products with various technological conveniences. The following points will show you how it functions and provides services in practice:
- A check of income:
It keeps track of data connected to real-time transactions. It further ensures that these transaction details easily verify the data.
- Checking your accounts:
It has direct access to the account information from the bank. Thus, verifying account ownership in an error-free manner is much simpler.
- Finance manager:
There are various tools available for managing personal finances. Customers with many banking experiences benefit from a clear and comprehensive perspective of their money.
- Transactions:
It is guaranteed that easy access to the transaction will benefit firms. The financial data is structured clearly and consistently.
Features of Account Aggregation Apps for small business:
Account aggregations apps strike a compromise between the need for increased financial data sharing to enhance financial services and the preservation of customer data privacy.
- 100% Data security:
Data sent between AAs is encrypted by the sender and can only be decoded by the receiver. Customer data may not be kept, processed, or sold by AAs and may be transferred from one financial organisation to another with a person’s permission.
- Recurring access to data:
Consumers can withdraw their consent at any time for data sharing. Consumers can revoke their support for repeatedly sharing their data at any point. When a consumer agrees to data sharing, the precise time frame for which the receiving institution will have access will be made clear to them. Along with a system for customer complaints, the RBI has imposed stringent data security regulations on AAs.
- Real-time service:
Customers’ bank statements are currently sourced by businesses using a variety of indirect and entirely digital ways. As a result, only some of the inquiries for bank statements are fulfilled in real-time. Account aggregation apps enable a digital API link between FIP and FIU in order for Account aggregation to function. Through common APIs outlined in the AA architecture, the entire process is digital. The complete procedure is real-time and lasts up to two minutes.
- Consumer-friendly:
UPI’s OTP-based authentication and automated bank account retrieval and linking are used in the account aggregator design. The success of UPI is evidence that account aggregator will be consumer-friendly and therefore provide a very high conversion rate.
Advantages of Account Aggregation Apps for your small business:
However, account aggregation benefits more than just consumers. The following advantages are also available to businesses:
- Greater client satisfaction:
A better customer experience is usually more tailored to the person. As stated, account aggregation enables companies to provide their users with highly customised services. As a result, businesses are better positioned to give customers products they are more likely to use, fostering customer loyalty.
- Quicker and more affordable training procedures:
Customer onboarding can be a challenging process. Before granting entry to a product or service, some businesses must conduct extensive checks to confirm user’s identities. Requirements for knowing your customer and anti-money laundering can make the onboarding procedure take longer.
Account aggregation can aid in establishing a customer’s identification because it compiles data already confirmed by the user’s bank. This expedites the onboarding process while also satisfying legal business requirements.
- Processes data securely:
For the AA framework to adhere to, the RBI has established robust data sharing and privacy norms. The AA system will make use of protected digital signatures to differentiate shared data. While being sent from the originating bank to the company the customer is looking to borrow money from or purchase another financial product from, the data will be completely encrypted. An AA is data-blind because each information processing is encrypted and can only be deciphered by the FIU who requested it. The AA is not permitted to access or save data.
Summing it up
From the above mentioned, the account aggregator is a game-changer in the lending industry. It is unquestionably a step in the correct direction toward building a solid and innovative lending ecosystem. Banks and other financial organisations are transforming into digital lending behemoths as the economic hemisphere continues to experience a rapid rise in digitalization. However, many people still need help getting their digital lending ventures off the ground, and others want to up their digital lending game.
Also read: Why account aggregator app is smart way to manage money
