Account Aggregator model is cross-sectoral, can be used beyond finance: Nandan Nilekani

Nandan Nilekani

The account aggregator (AA) framework is cross-sectoral and can be used beyond the financial sector for skilling, healthcare and education, among other things, said Infosys chairman, cofounder and Aadhaar architect Nandan Nilekani, highlighting the possibility of inclusive growth using this model.

“Within the financial sector itself, it is across banking, capital markets, insurance, pension and so on, with the same architecture applying to them. But it is also cross-sectoral, as it can be applied for skills, educational records and health records,” Nilekani said while addressing a session at Sahamati’s Samvaad 2023, on May 24.

Nilekani has worked extensively on the architecture and execution of the Indian digital public infrastructure (DPI) including Aadhaar, UPI, ONDC and AA.

While the ease of lending will be seen as the engine-driver, taking off in a big way with the help of the AA framework, according to Nilekani, the model holds various possibilities for innovation in other sectors as well.

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“There are many use cases, we do not know what we have unleashed with this framework, when it comes to innovation,” he said.

Touted as the UPI moment for lending, the AA framework ensures quick data sharing with the consent of the user and eliminates the need for physical documents.

AAs are licensed by the RBI to enable the flow of data between Financial Information Providers (FIPs) and Financial Information Users (FIUs). The user has to give consent on what data can be shared.

The RBI, Insurance Regulatory and Development Authority (IRDA), Pension Fund Regulatory and Development Authority (PFRDA), and Securities and Exchange Board of India (SEBI) collaborated to allow regulated entities under their control to share data with account aggregators after obtaining user consent.

Nilekani also said that the AA framework is incentivising people to join the system, boosting the growth of a formal economy.

“Historically, there has been no incentive for joining the system. It meant more cumbersome bureaucracy, paying taxes, and all the other consequences of formalisation but the AA model is providing them a grand bargain,” said Nilekani.

He said that the AA framework is at the heart of creating inclusive growth in India as it allows individuals and small business owners to avail credit with the help of the digital footprint they create.

According to the Infosys co-founder, with the AA framework providing this data in the hands of the user it belongs to, individuals and MSMEs can now use it to improve their lives. “AA is at the heart of creating inclusive growth in India, not just a digital transformation but a social transformation,” he added.