Axis Bank leverages the Account Aggregator Framework to grow its Loan Book

Axis Bank leverages the Account Aggregator Framework to grow its Loan Book

          The Account Aggregator (AA) framework is gathering speed in India. In the last couple of months, almost all major Banks in India have onboarded the AA platform.

          The AA platform enables financial institutions as FIUs to seek banking account information of FIPs via the AA channel.

          Please note Financial Institutions are expected to be FIPs and FIUs

          The full form of FIP is Financial Information Providers

          The full form of FIU is Financial Information User

          In AA terminology, FIPs are the institutions having customer financial data and can share it to FIU or customer through Account Aggregators (AA). Ex – Banks, NBFC, Mutual Fund depository, Insurance Repository etc. As on date Banks, a couple of NBFCs have onboarded AA as FIPs

          In AA terminology, FIUs are institutions that consume the data from a FIP to provide various services to the end  consumer.

For e.g. a lending Bank wants access to the borrower’s data to determine if a borrower qualifies for a loan. The lending Bank is the FIU. Banks play a dual role – both as a FIP and an FIU. Ex – Lending firms, personal finance, wealth management companies

The 4 major benefits of this are: -

Benefit 01) In a strategic move, Axis Bank has onboarded multiple AA Apps as FIPs. These enable Axis Bank to leverage the FIUs features to grow its loan book.

Benefit 02) As the Bank Account Statement is retrieved through a secure channel, there are NIL chances of data manipulation. This removes the numerous steps associated with Bank Account Verification process

Benefit 03) The FIU features can be leveraged by any Financial Institution if it is already a FIP on the respective AA App. It is a Give and Take feature

Benefit 04) The sourcing teams can focus on quick disbursement of the Loan rather than focus on the Bank Account verification process.

 

As an example, Axis Bank is a FIP in one of the AA Apps.

On the same app, apart from Axis Bank, the following banks are also live: -

Karnataka Bank Ltd

Punjab & Sind Bank,

AU Bank

UCO Bank

YES Bank

HDFC Bank,

Canara Bank

Federal Bank

IDFC First Bank

Indian Overseas Bank

Karur Vysya Bank

IndusInd Bank

Union Bank of India

Bank of India

ICICI Bank

These means any of the above Banks can request account holders of other banks to share their account details via the FIU module.

These opens up endless possibilities to speed up the Loan sanctioning process

 

Brilliant, isn’t?

 

          As the Joy of AAs spreads around, more and more bank account holders will see a reduction in TAT for their Loan applications. This in turn will encourage more folks to route their transactions via formal banking channels.

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          Additional Reading:

Axis Bank - 24x7 Personal Loans made easy with Account Aggregator dt.April 18, 2022 @ https://www.axisbank.com/progress-with-us/money-matters/borrow/how-account-aggregators-make-24x7-personal-loan-applications-easier

Axis Bank starts digital lending through Account Aggregator Framework dt September 22, 2022 @ https://www.axisbank.com/about-us/press-releases/axis-bank-starts-digital-lending-through-account-aggregator-framework#:~:text=Account%20Aggregators%20are%20entities%20licensed,in%20democratizing%20access%20to%20credit.%E2%80%9D

 

Disclaimer: These are my personal views only. The bottom line is Safe ePayments. Nothing More – Nothing Less.