Bank of Baroda enables digital loans through the Account Aggregator framework – here’s what it means and how to use it

• Bank of Baroda today announced the rollout of digital loans through the Account Aggregator framework.
  
• This will allow both existing and new customers of the bank to obtain loans digitally.
  
• But what exactly is the Account Aggregator framework? Here’s a simple explainer to help you understand.
  

Bank of Baroda today announced the rollout of digital loans through the RBI-regulated Account Aggregator framework, joining the likes of SBI, ICICI Bank, HDFC Bank, and Axis Bank, among others.

“The Account Aggregator framework has many benefits, right from giving customers greater control over their financial information and enhanced customer experience to fraud prevention and better monitoring capability,” said Akhil Handa, chief digital officer, Bank of Baroda.

With this, Bank of Baroda’s existing as well as new customers can apply for a digital loan using the bank’s mobile app and website in a completely digital and paperless mode – what this essentially means is customers don’t have to manually sign, scan or send any physical documents for availing loans.

So faster, paperless loans – is that what the Account Aggregator framework is all about? Or is there more? Here’s a simple explainer.

What is the Account Aggregator framework?

As the name suggests, the Account Aggregator framework allows an individual to easily access their information from a financial institution, and share it with another financial institution if they want to.

Both the financial institutions need to be on the framework if you want to seamlessly share your data from one institution to another.

What are Account Aggregators?

Think of Account Aggregators like a courier service which works with your direction and consent, and relays your information from financial information providers (FIP) to financial information users (FIU).

FIPs are banks, mutual fund houses, insurance providers, brokerages and other such institutions.

FIUs are entities which use this information.

For example, if you have an account with HDFC Bank, your data, like transactions, are collected and stored by HDFC Bank. This means HDFC Bank is the FIP.

Now, if you want to obtain a loan from SBI, and need to share your information with SBI to help it determine your creditworthiness, you can direct an Account Aggregator to share your HDFC Bank account information with SBI. In this case, SBI is the FIU.

Once SBI receives your data, it will determine your eligibility just like it would with a regular loan application. Once done, your loan will be disbursed digitally.

How does the Account Aggregator framework benefit me?

Until the arrival of the Account Aggregator framework, users had to gather all their financial information like bank account statements, identity documents, and any other information required by financial institutions, and submit physical copies.

The Account Aggregator framework makes this entire process digital and all you have to do is provide consent for your data to be shared with FIUs.

Additionally, the framework also keeps your data updated.

Is my data private and safe?

Your data is not shared without consent. Users also have the option to share data for a specific period or duration, or one-time only. Additionally, data is encrypted and access can also be revoked if needed.

Your data is stored in an encrypted form by the FIP, and can only be decrypted by the FIU when you share it. This is similar to the end-to-end encryption feature that modern messaging services use.

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