The Indian consumer behaviour has shifted rapidly from physical to digital access of financial services and products. In such a scenario, managing personal finances and investments has become increasingly simple yet complex. Individuals often find themselves juggling multiple financial accounts, ranging from bank and neo bank accounts, credit cards to investment portfolios and insurance policies. The need to consolidate and streamline these diverse financial assets to benefit users has paved the way for Account Aggregators (AAs).

At its core, an Account Aggregator is a technology-driven platform that allows individuals to view and manage their financial information from various sources in a single location. This consolidation not only offers a comprehensive overview of one’s financial health but also facilitates efficient decision-making in wealth management. On user consent, AAs act as intermediaries between Financial Information Users (FIU) and Financial Information Providers (FIP) providing a seamless and secure way to access, share financial data and create new use cases with financial data. For example, Indmoney has implemented a net worth tracker covering all type of user assets + bank balance. Same is the case with fi and Jupiter. Additionally, another player in the industry using AA, ‘Dhan’ has built a stock tracker where users can track all their stock holdings bought through different brokers within Dhan app.

How it helps investors

Holistic financial insights: AAs helps consolidate data from different sources, such as bank/NBFC accounts, investment portfolios, mutual funds, insurance policies, and more. This comprehensive snapshot helps users track their financial goals, assess their risk exposure, and optimise their investment strategies.

Simplified portfolio management: AAs help by offering a centralised dashboard to monitor investments’ performance, asset allocation, and risk exposure. Users can rebalance their portfolios with greater accuracy and timeliness. 

Goal-based planning and investing: Setting and achieving financial goals are integral to wealth management. AAs enable users to define specific goals such as buying a home, funding education, or planning retirement. With access to real-time data, individuals can make informed decisions to align their investments with their objectives. 

Risk Assessment and mitigation: A crucial aspect of wealth management is understanding and mitigating risks. Account Aggregators can analyse the aggregated data to provide insights into potential risks and vulnerabilities. This empowers users to make adjustments to their financial strategies and enhance their risk management practices.  

Customised insights: AAs can offer personalized insights based on individual financial behaviors and goals. Machine learning algorithms can analyse data patterns to suggest tailored investment options, tax planning strategies, and more.

Use case for service providers

Whether it is KYC or new customer sign-ups, AA can fetch user information available on other existing platforms. Cohorting and cross selling become easier with the vast amounts of financial data of users available to FIUs. They enable financial advisors to offer more accurate and personalised advice by accessing a client’s consolidated financial data, their risk tolerance and financial goals. AAs can aid lending institutions in assessing of individuals by looking at their behaviour across different accounts. AAs can also assist advisors and lawyers in estate planning by providing an overview of an individual’s assets and liabilities.

Compliance

AAs adhere to stringent data privacy and security regulations. This ensures that the sharing of financial information is done securely and in compliance with the law.

The writer is Founder and CEO, smallcase

Related Topics
comment COMMENT NOW