Account Aggregation: What it is, How it Works

When it comes to money, decisions are only as good as the data they’re based on. And yet, financial data, arguably the most crucial input for loans, wealth advice, insurance, and personal finance, has always been notoriously difficult to access in a secure, reliable, and user-consented way.

From uploading bank statements to relying on screen-scraping tools, we’ve spent years trying to work around a problem that needed a fundamental fix: getting accurate, consented, and real-time financial data, straight from the source.

That fix is finally here. And it’s called account aggregation.

The Broken Status Quo: Where Financial Data Access Went Wrong

Let’s start with how things worked before account aggregation came into play.

1. PDF Uploads and Manual Sharing

Borrowers were asked to download their bank statements, investment summaries, or GST filings, and upload them elsewhere. This method was:

• Error-prone (wrong files, password-protected files, incomplete data)
• Tamperable (easy to alter)
• Time-consuming for both users and credit operations teams

2. Screen Scraping

Certain applications started accessing the netbanking sites of users with their credentials to “scrape” information. This was convenient but posed serious threats:

• Violated user privacy and security norms
• Susceptible to failure with any UI or site modification
• Granted third parties way too much access to confidential data

3. Disjointed Silos of Data

Different financial institutions, banks, insurers, and mutual funds held data in their silos. There was no standard format or secure channel to bring it all together.

4. No Granular Consent

Once data was shared, it was often shared in bulk, with no limits on purpose, duration, or who else could access it.

For the user, this meant no transparency. For the lender or institution, this meant more friction, more fraud risk, and less real-time intelligence.

What is Account Aggregation?

Identifying these shortcomings, India’s financial regulators met to design a new solution, one which places users in command, secures and encrypts data, and makes sharing quick and regulatory-compliant.

This is where Account Aggregators (AAs) step in.

An Account Aggregator is a governed player who has been licensed by the RBI, where individuals and firms can exchange their financial data among institutions in a secure and digital manner, with purpose limitation, consent, and full transparency.

But account aggregation isn’t just about pipes and APIs. It’s about redesigning trust in the digital financial ecosystem.

How the AA Framework Works: A Simple Breakdown

• They provide permission to pass on certain information (e.g., last 6 months’ banking transactions) to a financial institution (e.g., a lender).
• The AA triggers a request to the corresponding Financial Information Providers (FIPs), such as HDFC Bank or Axis Mutual Fund.
• The FIPs authenticate consent and provide encrypted information to the AA.
• The AA provides it securely to the Financial Information User (FIU), such as an adviser or lender.
• Users can withdraw consent at any time through the AA interface.

The Solution: How Account Aggregation Fixes Each Problem

1. No More PDFs or Manual Uploads

With AAs, information is retrieved in real-time from the source, whether a bank or insurance firm. It’s formal, machine-readable, and digitally signed. No screenshots, no email trail.

2. Goodbye to Screen Scraping

No longer do users have to surrender login details. The AA framework utilizes token-based auth and encrypted APIs. It’s tidy, secure, and regulator-approved.

3. Standardized Data Across Institutions

The AA setting utilizes common schemas and protocols. ICICI or SBI, pensions or mutual funds, the format is standardized and can be easily processed.

4. Consent Is the Core Feature

Each request for data sharing is subject to a careful consent form that sets out:

• What data is shared
• Who gets it
• For what
• For how long

Why It Matters: The Benefits for Everyone

For Lenders and Credit Platforms:

• Real-time access to verified income and expense data
• Reduced turnaround time in underwriting
• Minimized fraud from tampered documents
• Enhanced credit models using cash flow, not just credit score

For Individuals and MSMEs:

• One place to manage all financial data
• Better access to credit with alternative data
• Full control over who sees what, and for how long

For the Ecosystem:

• A new layer of consent-driven infrastructure
• Compliance baked into design (aligned with India’s data protection bill)
• Enabler of embedded finance, open credit, and real-time monitoring

Real-World Use Cases

• Digital Lending: Lenders use AA data to assess cash flows, salary credits, EMI behaviour, and fund balance in real time, speeding up approvals and reducing risk.
• MSME Credit: Small firms with minimal formal records can share bank flows, GST data, and invoice behavior through AA, making working capital available.
• Wealth Management: Advisors have a comprehensive picture of client portfolios in banks, mutual funds, and insurance, enabling them to make more informed recommendations.
• Tax Advisory: Tax consultants can pull relevant financial data via AA and auto-fill returns, reducing errors and paperwork.
• Personal Finance Management: Apps can use AA to offer smarter budgeting, goal tracking, and cash flow management tools, using real-time insights.

Challenges That Still Exist

• User awareness is low. Many people don’t know what AAs are or how to use them.
• Not all FIPs are live. While most major banks are onboard, other sectors like insurance and mutual funds are still rolling out.
• Integration takes effort. For FIUs, embedding AA flows into apps or CRMs needs product work.
• Edge cases must be solved. Joint accounts, minors, and deceased accounts need well-defined playbooks.

The Road Ahead

Account Aggregation is a part of a larger narrative: India’s push for Digital Public Infrastructure (DPI). Together with UPI, DigiLocker, and ONDC, the AA framework is setting India up to be a global leader in secure, consent-based data empowerment.

What’s coming next?

• Integration of insurance and pension data
• Use in embedded credit flows on ONDC
• Connection to GST data for business underwriting
• Use of AA in cross-border KYC and open banking

This isn’t just a backend innovation. It’s an enabler of smarter, fairer finance.

Conclusion

Financial data access used to be a game of trust-with-no-transparency. Borrowers had to hand over sensitive documents. Lenders had to trust unverifiable PDFs. Institutions had to build hacks around broken systems.

Account Aggregation changes all of that. It gives individuals control, businesses clarity, and the ecosystem a single source of financial truth, consented, encrypted, and instantly available. 

At Deepvue, our Account Aggregator API makes this easier to adopt. With plug-and-play onboarding, standardized consent streams, and real-time structured financial data access, our API enables lenders and platforms to get faster credit decisions, improved risk transparency, and enhanced customer experience while remaining entirely compliant with India’s AA framework. 

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