Pragati - The Sahamati Newsletter April 2024

The Account Aggregator (AA) ecosystem ushers in a paradigmatic shift in the way individuals and MSMEs access financial services in India. Empowering customers with their “digital capital” requires fostering trust in the ecosystem. Although the ecosystem has fulfilled 70.46 million successful consent-based data-sharing transactions and linked 66.14 million financial accounts to AAs until April 2024, the customers are yet to experience the optimal user experience due to technological, procedural, and business challenges participating entities face in the network. 

The ecosystem has come together in participatory governance forums to address challenges such as interoperability, fair use of AA, and economic disincentives. In the past six months, the Fair Use Committee and the PFM & Lending Use Case Councils have deliberated on reasonable data usage parameters for various use cases, such as underwriting, risk monitoring, defaulter collections, and spend analytics. The participatory governance forums have finalized consent templates (CTs) to be implemented as guardrails for consent parameters and data usage. With extensive ecosystem collaboration, the fair use initiatives have finally reached fruition.

In addition to these self-regulatory initiatives, it is time the industry starts harnessing customer education and awareness to nudge users to demand an alleviated customer experience from their data fiduciaries and AAs. Through dedicated campaigns, the ecosystem must create a customer push to strengthen user choice of AA and awareness of reasonable consent parameters. 

A recent customer research exercise on the penetration of AAs in India conducted by CGAP of the World Bank Group revealed intriguing insights. The findings spotlighted the adoption hurdles encountered by nascent ecosystems. The research found that although the concept of AAs is relatively unknown, a significant portion (22%) of the survey respondents were willing to adopt similar frameworks. This presents a prime opportunity for the ecosystem to augment adoption and usage through customer education. 

While 44% of respondents suggested discomfort with sharing financial data online, more than 73% of the respondents had expressed their discomfort with the involvement of a third-party application. This insight highlights the need to strengthen communication on the security & safety of the ecosystem and nurture trust.

As an overarching principle, we believe AA customer communication must be crafted cautiously to avoid overburdening the users. We believe the value propositions customers resonate with across geographies & generations are “convenience without compromising security & privacy” and “granular data-sharing with explicit, informed consent.” Consequently, communicating how AAs enable convenience, control, and consent will bolster financial inclusion and strengthen customer trust in the financial sector.