The Account Aggregator (AA) ecosystem is the heart of creating inclusive growth in India, especially due to the unique architecture of consent-based data sharing transaction, said Nandan Nilekani, non-executive chairman Infosys.
“The unique thing about AA is its architecture because around the world there have been many attempts to create different ways of open data, but the challenge has been on driving consent. The genius of the Indian idea is the notion that the AA is an impartial independent player regulated by the central bank for all the regulators. And they act as the fiduciary to make sure your data comes from the right place,” explained Nilekani. He was addressing the Annual conference for account aggregators called SamvAAd-2023, organised by Sahamati.
The AA framework allows data sharing with user consent without the need of physical documents. Touted as the UPI moment for lending, AAs are licensed by the RBI to access data between financial information providers and financial information users.
Nilekani also added that AA system is highly important and strategic in taking the Digital Public Infrastructure (DPI) to the next level in India. “A lot of things that we have done so far are transactional in nature, for instance, using UPI for payments or Aadhaar to do KYC. But the notion of using once own data to improve once lives or business is a dramatically different concept,” he added.
For instance, millions of small businesses can use their digitial foot-print to improve their lives. Of course the most compelling case now is lending, where small businesses can get access to credit using their digital invoices or digital payment records or individuals can get access to credit using their salary slips and their financial transactions.
According to Sahamati, about Rs 6,000 crore of loans were disbursed through the AA ecosystem in FY23. The ecosystem has seen 10 million successful consent-based data sharing transaction so far and this base is seeing 30 per cent growth month-on-month, said Sahamati the non-profit industry alliance working towards the adoption of AA model.
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Nilekani also shared that AA lays the foundation for creating a bigger formal economy. “In many countries including India, there is a very narrow formal economy as many are left outside the system. Historically there has been no incentive for someone to join the system and it also meant more bureaucracy, paying taxes, and all the other consequences of formalisation but the AA model is providing them a grand bargain,” he added.
Nilekani also shared that India’s success at implementing the digital public infrastructure (DPI) has taken root around the world and many countries want to understand what we have done in India, how we made it happen, how this transformation was made and now they want to implement that too.
“The notion that you need a have digital public infrastructure at population scale with interoperable standards allowing innovation to flourish is now getting widely accepted around the world. India’s presidency of the G20…and we have had many meetings and more and more countries are impressed by India’s digital transformation,” said Nilekani.
