Account aggregators can bridge credit gap, a win-win for borrowers, lenders

Over the past few years, we have witnessed a wave built on the digitisation and availability of financial data. This shift has sparked innovation across the lending landscape, empowering large and small lenders to reimagine banking.

In contrast to the old paper-heavy and time-consuming loan processes, marked by inconsistent documentation and delays, digital banking and fintechs have introduced smarter, faster solutions. But to fully realise their potential, a secure and seamless way to share financial data is essential.

That’s where account aggregators (AAs) come in. Acting as digital intermediaries, they allow individuals to access and share financial data from multiple banks with just a single click, revolutionising how data can be accessed for loan processing.

What are account aggregators?

Account Aggregators (AAs) are regulated by the Reserve Bank of India (RBI) and enable consent-based sharing of financial data between individuals and lenders.

With digital consents, financial details from various banks and institutions can be securely shared with lenders, streamlining the lending process.

Built on principles of security, transparency and user consent, the AA framework includes three key players:

• Financial information providers (FIPs)
• Financial information users (FIUs)
• Account aggregators

This system eliminates the need to manually gather and submit financial documents or build separate API integrations. Instead, lenders receive a consolidated and real-time view of a borrower’s financial health, enabling smarter, faster decisions while keeping individuals in full control of their data.

How AAs are simplifying loan applications

In the past, applying for a loan involved collecting stacks of paperwork — from income proofs to bank statements — followed by long verification cycles. This led to delays, errors, and in many cases, loan rejections, especially for small business owners and self-employed individuals with limited financial history.

Through AAs, borrowers can grant digital consent to instantly share financial data with lenders. This eliminates paperwork, shortens processing times and may boost loan approval rates.

Real-time verified data helps lenders better assess creditworthiness, reducing default risks and expanding credit access to underserved communities.

Also read | Home loan interest: Rates dip below 8%, PSBs faster in passing on repo rate cut benefit

Benefits of account aggregators in lending

• Instant data access = Faster loan approvals

AAs provide immediate access to verified financial data, cutting down processing time and enabling quick credit decisions and faster disbursements.

• Data-driven decisions = Better credit access

Borrowers with non-traditional income or limited credit history can share alternative financial data, improving their chances of loan approval.

• Secure data aharing = Enhanced privacy

AAs use encrypted, consent-based channels to share data, ensuring your financial information stays protected and in your control.

• Reduced manual work = Lower operational costs

By removing the need for manual document collection, AAs reduce administrative overhead for both lenders and borrowers.

• Standardised data format = Consistent analysis

Financial data is presented in a uniform format, making it easier for lenders to analyse and reducing the risk of errors.

Also read | Understanding Digital Form 16: Why it's important for your ITR filing

The Road ahead for AAs 

As digital banking matures, account aggregators will play a pivotal role in reshaping lending. Wider adoption will lead to more data-backed lending, improved financial inclusion and stronger economic growth. Future integrations with AI and machine learning will further refine credit assessments, making loans more accessible and personalised.

However, awareness remains low and some borrowers are hesitant to share data digitally due to security concerns.

To unlock the full potential of this transformative system, greater awareness and education are essential. Helping borrowers understand the safety, benefits and ease of the AA framework will drive deeper adoption and participation.

The author is managing director, VAS- India & South Asia Markets, CRIF Solutions.

Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial, legal, or professional advice. While every effort has been made to ensure accuracy, readers should verify details independently and consult relevant professionals before making financial decisions. The views expressed are based on current industry trends and regulatory frameworks, which may change over time. Neither the author nor the publisher is responsible for any decisions made based on this content.