A fintech startup’s challenges with India’s much-vaunted account aggregation framework

Three years after India unveiled the Account Aggregator, or AA, framework to facilitate consented sharing of consumers’ financial information, many gaps still plague the system that was rolled out as a global network linking various regulators and market players.

The account aggregation framework aims to give individuals greater visibility and control over all their financial data in one place. It also aims to facilitate wealth management and access to credit, by allowing individuals to securely share relevant financial data with other platforms.

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 that they can track their savings and spending and share their bank statements securely. However, this only applies to banks in the Fold Money network.

Mint spoke to Akash Nimare, co-founder and CEO of Fold Money, about the benefits of the account aggregation system and the challenges it needs to overcome to reach its full potential.

The account aggregator network was created 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 view your finances in one place, prioritizing privacy and a clear user interface.

Are you regulated?

Yes, as a Sebi RIA (Sebi Registered Investment Advisor).

How many users do you have?

Currently, more than 50,000… We will do a general public launch in December and redouble our efforts to reach more users.

For which categories do you use AA?

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

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

• For FDs (term 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 bring them to Fold soon.
• Loans and credit cards are not on AA. We take user consent to read emails. But we only do this on a user’s phone, for privacy reasons.
• For EPF (Employees Provident Fund), we use APIs (Application Programming Interface, or software connectors) from fintech companies.
• For PPF (Public Provident Fund), no API is available. Like (with) credit cards, we will build our own proprietary solution.
• For NPS (National Retirement System), yes, we are activated on AA and will soon be living on Fold.
• Real estate is not enabled on AA as it is not covered by the definition of financial reporting under the regulations.
• Actions, yes, (we are activated) via AA. But NSDL/CDSL (National Securities Depository Ltd and Central Depository Services Ltd) do not have purchase price, and as it depends on settlement, there is a lag of 1-2 days from the transaction date.
• IT returns (income tax) do not depend on AA, but work is underway to integrate them with AA.

How essential is it for AAs to work across categories?

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

The Account Aggregator is a system set up by the RBI… to facilitate consent-based sharing of financial information. It involves three actors: financial information providers, or FIPs, financial information users, or CRFs, and account aggregators, or AAs, who are the gatekeepers of the system.

The AAs are supposed to ignore the data: they simply administer the transmission of data from the FIP to the FIU.

So far, the biggest use case for AA has been for loans. Banks and NBFCs (non-banking financial companies) obtain information about a customer’s accounts at other banks in order to approve a loan.

However, from a wealth management or personal finance management perspective, little progress has been made. This is largely due to the reluctance of banks to share information. FD data is only being shared now.

Critical gaps remain. There is no sharing of loans or credit card data. Sharing of securities data (stocks and bonds) does not include purchase prices. For MFs (mutual funds), an alternative system, MFCentral, competes with AA. Major 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 obtain data on certain aspects or sourcing APIs from companies outside the AA system.

Even where banks share data, it is full of gaps. In some cases, the full narrative is not shared, making it difficult for the FIU to classify the transaction. In some cases, there is no sharing on weekends or only at night, which makes life difficult for FIUs.