Account aggregation framework, loan, credit score, credit rating, banking, financial services, insurancePeople who seek loans often end up getting an interest rate penalty or unfavorable terms and conditions.

People who seek loans often end up getting an interest rate penalty or unfavorable terms and conditions. This may occur due to the lack of an appropriate credit rating due to unavailability of data from multiple credit sources or due to the lack of proper compilation of history to determine an accurate credit rating.

To avoid such a situation, the role of a proper compute factor framework becomes important.

“The Account Aggregator framework is one of the most promising new innovations in the BFSI (Banking, Financial Services and Insurance) ecosystem. On the regulator’s NBFC-AA framework bank, the AA platform was finally launched two weeks ago and has been favorably accepted by some banks and financial institutions. largest in the country,” said Amit Das, CEO and co-founder of Think360.ai.

“More than 15 technical service providers — including Algo360, a flagship product of Think360 — are riding the algorithms and data bars into AA. In essence, there are initially 7 AA companies, 12 AA data standards, TSPs, and 16 TSPs to analyze the data, even Now. This number will (probably) increase or decrease as the AA Framework adoption cycle begins.”

Das lists reasons why one is optimistic about what the AA framework will achieve:

1. Its basic design principles are digital first, data first. It is the first of its kind to create a highly scalable data portal for regulated entities for verified data.
2. It has clients at its center. The role of purpose code, data duration/duration, general adherence to data privacy standards – we bring a lot of learning from the experiences of global markets.
3. Many people will confuse it with Open Banking / PSD2 type innovations in Europe for example. But by separating the gateway from the processor/owner/user – the framework looks at economic incentives quite differently.
4. One of the biggest weaknesses of many BFSI operations is the overall TAT of customer enlistment, grievance resolution etc. AA should help us lower TAT and therefore, costs of these activities; These benefits can be returned to customers.
5. We also anticipate document and identity fraud with AA, since the authenticated information comes directly from the Financial Information Provider (FIP) and is sent to Financial Information Users (FIUs).

How does a good and bad credit history affect your prospects for a concessional loan?

The opportunities are limitless, given that we are in the second phase of credit growth as an economy. The AA framework opens up a better, faster, and better way to approach cash flow-based lending – which is very important to drive SME/small business loan. Moreover, the self-employed sector may be able to get better terms and higher access to quality financing.”

Das suggests three things organizations should do to unlock the potential of AA:

1) Build great customer experiences to drive adoption

What many fintech companies have done with UPI has been to focus on exceptional UI/UX. Extreme commitment to customer experience is the reason why PhonePe, Google Pay, etc. do much higher volumes on UPI than banks.

2) Customer awareness

People are afraid of what they cannot control or what may be perceived as an information risk. UPI is a transaction with a potential dispute settlement method, which can help a person to recover money. However, data cannot be recovered once it has been lost.

3) Finally, like all ecosystems, the supply and demand side must converge.

All ecosystem partners must positively promote commitments towards bringing AA into their core workflows, and making data available, insofar as it may appear to threaten their data. Like credit bureaus, AA’s will help in the long run to extend credit and provide significant value.

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