{"id":152186,"date":"2021-12-09T20:29:17","date_gmt":"2021-12-09T14:59:17","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=152186"},"modified":"2021-12-09T20:29:17","modified_gmt":"2021-12-09T14:59:17","slug":"open-banking-puts-banks-on-notice-digitise-or-perish","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/open-banking-puts-banks-on-notice-digitise-or-perish\/","title":{"rendered":"Open banking puts banks on notice-Digitise or perish"},"content":{"rendered":"

<\/span><\/p>\n

News<\/span><\/b>– India has\u00a0<\/span>unveiled Account aggregator framework<\/span><\/b>\u00a0<\/span>in september,2021 that can\u00a0<\/span>that could revolutionize investing and credit, giving millions of consumers greater access and control over their financial records and expanding the potential pool of customers for lenders and fintech companies.<\/span>\u00a0<\/span><\/p>\n

What is Account\u00a0Aggregator\u00a0(AA) framework?<\/span><\/b>\u00a0<\/span><\/p>\n

An AA is a\u00a0<\/span>new class of NBFC\u00a0<\/span><\/b>approved by the Reserve Bank of India (RBI) to manage consent for financial data sharing of\u00a0users.\u00a0It\u00a0will allow lenders to conduct an\u00a0<\/span>easy and speedy assessment of the creditworthiness of the borrower<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n

What advantages does account aggregator offer?\u00a0<\/span><\/b>\u00a0<\/span><\/p>\n

1)<\/span>Account aggregators can further ease credit processes<\/span><\/b>-Digital access to data from credit bureaus, know your customer norms,\u00a0and\u00a0GST\u00a0has significantly reduced\u00a0the credit processing time for small business and consumers. But there\u00a0is\u00a0<\/span>still some information like bank statements for which banks resort to hard copies. With the introduction of account aggregators,\u00a0this data can be assessed digitally,<\/span><\/b>\u00a0which would further improve the Indian lending landscape.<\/span>\u00a0<\/span><\/p>\n

2)\u00a0<\/span>Opportunities for new lenders<\/span><\/b>\u00a0-All\u00a0<\/span>incumbent banks have lots of account related and\u00a0behavioural\u00a0data<\/span><\/b>\u00a0related to their customers which only few of them put to optimum use.\u00a0<\/span>Account aggregators framework ensures that such an asset is made available to\u00a0new age lender which can\u00a0put it to an optimum\u00a0use\u00a0and their\u00a0digital capabilities will not\u00a0be\u00a0constrained due to their limited consumer base<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n

What is open banking?<\/span><\/b>\u00a0<\/span><\/p>\n

Financial experts say opening the network to all customers, as has now been done, is the first step towards bringing open banking in\u00a0India.\u00a0<\/span><\/b>Under\u00a0open banking,\u00a0<\/span>banks allow access and control of customers personal and financial data to third-party service providers,<\/span><\/b>\u00a0<\/span>which are typically tech startups and online financial service vendors.<\/span>\u00a0<\/span><\/p>\n

\"\"<\/span><\/p>\n

\u00a0<\/span>How Banks can take benefit of this new\u00a0opportunity(AA)?<\/span><\/b>\u00a0<\/span><\/p>\n

1)Banks should start\u00a0<\/span>building up their data analysis capacity<\/span><\/b>\u00a0and act by reaching out to customers with appropriate offerings.\u00a0<\/span>\u00a0<\/span><\/p>\n

2)They should\u00a0<\/span>identify consumers who are dissatisfied with their services<\/span><\/b>\u00a0and try to earn their loyalty<\/span>\u00a0<\/span><\/p>\n

3)\u00a0<\/span>Banks should see their data holistically-<\/span><\/b>Banks have customer data from\u00a0websites ,branch\u00a0visits, call\u00a0centres, mobile apps.\u00a0This\u00a0<\/span>data if properly captured and analyzed can tremendously benefit banks and provide them with a sustainable source of competitive advantage<\/span><\/b>.<\/span>\u00a0<\/span><\/p>\n

4)\u00a0<\/span>Data privacy law<\/span><\/b>\u00a0\u2013 All countries that have enacted OB have data privacy\u00a0laws,\u00a0India also needs to enact one soon. This would\u00a0<\/span>provide customers confidence and also facilitate investment by various players in customer protection data system<\/span><\/b>.\u00a0Also,\u00a0government needs to legally enable data sharing to the extent needed.<\/span>\u00a0<\/span><\/p>\n

Conclusion<\/span><\/b>-Proper utilization\u00a0of\u00a0Account\u00a0aggregator framework will help to harness the\u00a0<\/span>potential of Open\u00a0banking<\/span><\/b>.\u00a0This has potential to give a\u00a0<\/span>fillip to credit processing and help us achieve our goals of financial inclusion.<\/span><\/b>\u00a0<\/span><\/p>\n

Source<\/span><\/b>–<\/span>\u00a0This post is based on the article \u201c<\/span>Open banking puts banks on notice-Digitise\u00a0or perish\u201d\u00a0<\/span><\/b>published in\u00a0<\/span>Livemint<\/span><\/b>\u00a0on<\/span>\u00a09\u00a0th\u00a0Dec 2021<\/span><\/b>.\u00a0<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

News– India has\u00a0unveiled Account aggregator framework\u00a0in september,2021 that can\u00a0that could revolutionize investing and credit, giving millions of consumers greater access and control over their financial records and expanding the potential pool of customers for lenders and fintech companies.\u00a0 What is Account\u00a0Aggregator\u00a0(AA) framework?\u00a0 An AA is a\u00a0new class of NBFC\u00a0approved by the Reserve Bank of India… Continue reading Open banking puts banks on notice-Digitise or perish<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10501],"class_list":["post-152186","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704937077},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/152186","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=152186"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/152186\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=152186"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=152186"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=152186"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}