Account Aggregator Reduces Financial Fraud By 45 per cent: Report

In India’s first analysis of account aggregator performance, a B2B credit infrastructure fintech company FinBox revealed that 90 per cent of people who used account aggregator completed their loan applications, almost double the conversion rate as observed in net banking and manual PDF upload methods. The company surveyed over 3.8 lakh accounts to understand the current landscape and adoption model.

The report also states that financial statement fraud dropped by an impressive 45 per cent after the FinTech integrated the account aggregator framework into their risk assessment solution.

This comes at the heels of eight PSBs, including State Bank of India (SBI), joining the account aggregator ecosystem. The remaining four are still in the testing phase and are expected to join soon. Presently, there are 18 banks (including PSBs and private lenders), live on the ecosystem, alongside 20 NBFCs.

In the six months preceding FinBox’s integration, the percentage of overall fraud detected in financial statements stood at 11.04 per cent. However, in the following six months, as more customers chose account aggregators to share financial information, the overall percentage of fraudulent uploads fell to 6.4 per cent. This is due to the account aggregator integration that eliminated fraud from all account aggregator-powered applications.

FinBox integrated the functionality with its already robust credit intelligence portfolio that includes a DeviceConnect, a risk assessment and alternative data-driven credit decisioning engine.

This report is based on proprietary data gathered from FinBox’s first-hand experience over the last six months, assessed on three primary criteria:

•Adoption

•Conversion

•Fraud prevention

“When we launched the account aggregator functionality, I predicted it would bring a sweeping transformation in India’s lending space - and what we’re seeing is that transformation in action. it’s made lending more efficient, and data-sharing much more transparent”, says Rajat Deshpande, CEO, FinBox.

Soon after the launch, IIFL became one of the first big NBFCs to launch account aggregator-driven onboarding through FinBox. “We’re so proud to be working with one of the first companies to go live with the account aggregator framework. We’ve seen a significant improvement in our lending metrics since FinBox’s integration and are looking forward to bigger and better things in the future!”, said Arihant Jain, Head of Data Science & Risk, IIFL.

Among other findings, the report states that when compared to already existing options such as net banking and bank statements, borrowers overwhelmingly preferred using account aggregators to upload financial data such as bank statements. This is chalked up in part to the seamlessness of the account aggregator functionality (already offered to an extent by the existing netbanking option). Another big reason for this preference is the security it ensures for user data.

In addition, account aggregators saw the highest conversion rate as compared to other modes of sharing statements, coming in at 90 per cent. The corresponding rates for manual uploads and netbanking were a little more than half this number. This boost in conversion can be attributed to the ease offered by this method - borrowers simply enter their phone number and approve the access request, and the information is fetched automatically. Encouraged by these numbers, the report states that there is ample evidence to suggest that the account aggregator framework will usher in a UPI-like moment for financial data aggregation in India.