A fintech startup’s challenges with India’s vaunted account aggregator framework

Three years after India unveiled the account aggregator, or AA, framework to facilitate consented sharing of consumers’ financial information, multiple gaps still plague the system that was rolled out as an overarching network connecting various regulators and market players.

The account aggregator framework is meant to give individuals greater visibility and control over all their financial data in one place. It is also meant to make wealth management and availing credit easier, by allowing individuals to share relevant financial data with other platforms securely.

Fintech startup Fold Money is a digital platform connected to the account aggregator framework. Among other services, Fold allows its users to connect their bank accounts on its platform so they can track their savings and expenses and share their bank statements securely. However, this only applies to banks on the Fold Money network.

Mint spoke with Akash Nimare, co-founder and chief executive of Fold Money, on the advantages of the account aggregator system and the challenges that it needs to overcome to reach its full potential.

The account aggregator network was established by the Reserve Bank of India in cooperation with the Securities and Exchange Board of India (Sebi), the Insurance Regulator and Development Authority of India (Irdai), and the Pension Fund Regulatory and Development Authority (PFRDA).

Edited excerpts from the interview:

Tell us about Fold Money.

It is a personal finance management platform that uses AA to help you see your finances in one place, prioritising privacy and a clean user interface.

Are you regulated?

Yes, as a Sebi RIA (Sebi-registered investment adviser).

How many users do you have?

Currently, more than 50,000… We will do a launch for the general public in December, and double down on reaching more users.

Which categories do you use AA for?

We use AA for a savings account. But there are downtimes, delays and some issues with data quality. For example, (AA) gives only 6 months of data or missing timestamps or (faces) downtimes during weekends or only works from midnight to 7 am.

What is also very important, and we hope we see soon, is support for joint accounts.

• For FD (fixed deposits)... most banks have not started sharing this data.
• For mutual funds, MFCentral (another fintech startup) is better. But AA has made significant improvements and we will soon be integrating this into Fold.
• Loans and credit cards are not on AA. We take user consent to read emails. But we do this on a user’s phone only, for privacy safeguards.
• For EPF (employee provident fund), we use APIs (application programming interface, or software connectors) from fintech firms.
• For PPF (public provident fund), no APIs are available. Like (with) credit cards, we will build our own proprietary solution.
• For NPS (national pension system), yes, we are enabled on AA and will soon live on Fold.
• Real estate is not enabled on AA as it is not covered under the definition of financial information under the regulations.
• Stocks, yes, (we are enabled) via AA. But NSDL/CDSL (National Securities Depository Ltd and Central Depository Services Ltd) don’t have purchase prices, and as it depends on settlement, there is a lag of 1-2 days from the transaction date.
• IT (income tax) returns are not live on AA, but work is happening to bring it within AA.

How critical is it that AA works across categories?

Very critical. Because it enables a consent-based recurring data fetch for our use case without relying on SMS scraping or PDF processing. We are a startup with limited time, so we have to think about building our own solution if data is not available on AA.

Account aggregator is a system set up by the RBI… to facilitate consent-based sharing of financial information. It involves three players—financial information providers, or FIPs, financial information users, or FIUs, and account aggregators, or AAs, which are the gatekeepers of the system.

AAs are supposed to be data-blind—they merely administer the transmission of data from FIP to FIU.

So far, the largest use case of AA has been lending. Banks and NBFCs (non-banking financial companies) get information on a customer’s accounts in other banks in order to approve a loan.

However, from a wealth management or personal finance management standpoint, hardly any progress has been made. This is largely because banks have been reluctant to share information. FD data is only now being shared.

Critical gaps still remain. There’s no sharing of loans or credit card data. The sharing of security data (stocks and bonds) doesn’t include purchase prices. For MFs (mutual funds), an alternative system, MFCentral, competes with AA. Important savings like EPF and PPF are not yet part of the AA system.

As a result, fintechs like Fold Money are forced to use other methods like reading emails and SMS to get data on some aspects or source APIs from firms outside the AA system.

Even in places where banks are sharing data, it is full of gaps. In some cases, the full narration is not shared, making it hard for the FIU to classify the transaction. In some cases, there’s no sharing on weekends or there’s only sharing at night, making life difficult for FIUs.