Can the use of multiple Account Aggregators make customer onboarding smoother?

Remember the “good” old days when one needed to furnish copies of bank statements to avail financial services? It’s safe to say we’ve come a long way since then – for the most part, at least. Today, getting aboard a financial service platform takes mere minutes and fewer documents, if any. As for bank statements, the account aggregator (AA) framework is well on its way to eliminating most of the paperwork involved.

I’ve been knee deep in the digital lending business for over a decade now. And I, for one, can vouch for this robust piece of Digital Public Infrastructure or DPI. Since its launch over two years ago, AA has played a crucial role in fast, efficient, and paperless onboarding for banks and NBFCs. The framework has been leveraged for transaction analysis, further equipping lenders to detect frauds, underwrite borrowers, and set risk-based pricing.

It's safe to say that the use of AA can now be the difference between a smooth and bumpy application process. And a bumpy experience isn’t good for business—especially when close to 97% of applications started are abandoned. So, for lenders, a smooth onboarding process can determine their long-term growth trajectory. And AAs, from experience, are a great way to eliminate lengthy onboarding processes. This, however, is not to say that Account Aggregators, as they stand today, don't come with challenges:

- Downtime: Like all things data and tech related, downtimes and glitches from AAs are inevitable. This means that onboarding journeys must make room for contingent processes. For example, in the event of an AA downtime, the borrower can be asked to upload a PDF bank statement or wait till the network comes back up.

- Limited Financial Information Providers (FIPs): Account Aggregators provide data from FIPs (i.e., regulated entities like banks, NBFCs, etc who have information about an existing customer) to Financial Information Users (FIUs) (i.e., entities that require information regarding the customer for analysis). However, not all regulated entities may be onboard with all account aggregators. If an AA-service cannot fetch FIP data, the onboarding journey may have to rely on a non-digital process for transaction analysis.

A case for multiple Account Aggregators

In the business of building API technology, backups are a simple, effective, and necessary solution to downtimes and failures. The same goes for the single-AA challenge. Having a healthy mix of AA services on an origination stack enables journeys that can complete transaction analysis, without the customers furnishing documents themselves.

Here are some pros of using a multi-AA approach in onboarding:

- Better coverage of FIPs: Using multiple account aggregators ensures that more FIP-entities are covered. The FIU’s system (i.e., lender that is onboarding the customer) fetches data from the AA that is most compatible, enhancing the success rate of the usage of AA in the onboarding journey.

- Reduced Drop offs: A smooth, quick onboarding experience means lesser chances of customers abandoning their online loan applications.

- Standard User Experience: With more users being covered on AA, lenders can guarantee a uniform experience across all products and cohorts. This can help them build their brand value over time and retain customers in the long run.

It is important to note that great onboarding is the sum of many parts. While a multi-AA strategy can help drive success in transaction analysis, there are various factors that go on to choose the right AAs to collaborate with.