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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if any belong to the original copyright holder only.
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.
