Page 37 - BFSI CHRONICLE 10 th Issue (2nd Annual Issue ) 23062 COPY.indd

BFSI Chronicle, 2 Annual Issue, 10 Edition July 2022
th
nd
sanction the loan; instead of a “ one size fits There is always a threat of hijackers obtaining
all approach”, banks can provide small ticket- the data illegally from the account aggregation
sized loans with flexible repayment periods and site. This information could then be fraudulently
introduce more innovative financial products. used to compromise the customer’s financial
position.
Those who have long been left out of traditional
lending – MSMEs and new-to-credit borrowers Storage of all financial records at a single focal
– will benefit hugely from the framework. The point aggravates the risk. It makes it a single
creditworthiness of such applicants can be point of vulnerability and is thus exposed
assessed through alternate data sources such as to severe risk if the data security wall gets
GST invoices, bank statements, bill payments, breached. Such apprehensions might inhibit
and other cash-flow surrogates. It removes the consumers from subscribing to the framework
requirement for physical collateral and boosts as they await more clarity and development in
access to credit for an untapped borrower pool. the system.

Account Aggregators may facilitate sharing Favourable agreement with the Financial
data related to taxes, pension, investment, and Information providers (FIPs) will also be a
insurance in the near future. deciding factor for the success of account
aggregators.
Data management :
Protecting user privacy is the crux of the Aggregators depend heavily on internet search
Account Aggregator network. It is developed traffic, making them vulnerable to algorithm
on consent mechanism and permission from changes for both organic and paid searches. To
individuals to share the data with FIU. The protect themselves from this potential threat,
consent method is designed by the principles they must build their brands and strengthen
of Data Empowerment and Protection brand recognition.
Architecture (DEPA), a policy proposed by
Regulatory changes could disrupt the revenue
NITI Aayog. Secondly, the data shared on AA model—for example, by banning certain
is end-to-end encrypted. The data is encrypted commission models or making the commission
by the sender and can be only decrypted by
fee transparent. Such a disruption would almost
the recipient. Thirdly AAs are not allowed to certainly affect aggregators’ competitors.
store, process, and sell the customer’s data.
These design principles ensure that ownership Aggregators are always vulnerable to new
of the data lies with individuals. There is no competitors, whether direct insurers or fintech.
conflict of interest. Data is shared across the The more crowded the market, the higher the
AA platform to provide individuals with better cost of customer acquisition. Aggregators need
financial services, and data is not monetized. to monitor the market actively and buy or build
Challenges: where appropriate.
Though it is stated that data will be encrypted, Suppose customers can easily interact with
there is an imminent risk to data privacy. The their data across a broader range of products
gravity of such apprehensions is exacerbated and seamlessly switch. In that case, it is
when it concerns sensitive data. likely to result in greater churn and margin
compression—posing a threat to incumbent

The Institute Of Cost Accountants Of India

37