How should Bank CIOs prepare for the account aggregator network

The Reserve Bank recently launched the Account Aggregator Network (AA) to empower the customers, financial institutions to have secure access to necessary data and easily exchange data for the customers to avail financial services. The network will have account aggregators (AAs), financial institutions and customers. The customers (either retail or enterprise) will have to open an account with the AAs who will manage the security and profile of the customers. The Banks will act both as financial information consumers and publishers, (FIPs and FICs both).

This will be a separate line of business acquisition for financial institutions and they will have to make arrangements in their IT infrastructure to accommodate the requirements.

While this might fall under the CDOs purview in some organisations, it may also fall under the CTO, CIOs responsibility to prepare the organisation to source business, especially when customers and businesses are roaring to grow in the times of the pandemic.

So, what does it take for the CIOs to prepare ground for the relevant business functions and departments for business acquisition via the AA channel ? Basically, from a digital and IS perspective how should CIOs set the API infra and other parts of the IT infra to work seamlessly.

Data & Integration capabilities are two fundamental pillars of the AA ecosystem. To enable businesses to leverage the power of AA for new business acquisition one needs to take care of speed of integration, ease of integration, creating a frictionless journey for the customers & automating the process, post data acquisition. “The success for business lies in the tech capabilities of connecting to multiple sources like AA, GST, GeM, churning the data received, creating automated decision-making processes and then instantaneous fulfilment of the request,” says Avinash Raghavendra, EVP and Head of Information Technology, Axis Bank. For all this, one needs to ensure security at the core. Data exchanged (both Inbound & Outbound) through API is end-to-end encrypted as per regulatory guidelines (ReBIT) using PKI infrastructure.

“The AA API platform at Axis Bank is built and deployed as a cloud native platform to ensure scalability, resiliency, and high availability. The existing API infra is leveraged for internal integration and all downstream systems have been augmented accordingly,” informs Raghavendra. It’s important to note that Axis Bank is one of the eight banks to have joined the AA network. The other banks include State Bank of India, ICICI Bank, IDFC First Bank, Kotak Mahindra Bank, HDFC Bank, IndusInd Bank and Federal Bank.

Sankarson Banerjee, CIO, RBL Bank
Any Bank will decide its stance on the IT infrastructure scope allocation for the AA initiation based on what the aggregator offers and what it does not offer. Currently, banks are on a wait and watch mode.

Banks will act both as Financial Information Providers (FIP) and Financial Information Consumer (FIC). When banks act as Financial Information Providers (FIPs), the customer information exchange with the aggregators will happen between the Bank’s Core Banking System (CBS) and the aggregators via APIs, which already exist and thus cloud will not play any role here. In case if the aggregator wants the data in some other format then it depends upon the requirement coming from AAs.

The Bank’s IT infrastructure preparedness for AAs will depend upon the usecase adoption by the banks. Unless there is no projection of the usecase and thereby, demand & load that it will create in terms of the transactions, how can there be any system design prepared in advance. Many banks have ready open API infrastructure which can be used for AA related purposes. While banks have the underlying infrastructure for the aggregation business, there are many aspects that can only be decided once the aggregator partner is decided upon by the banks. To be specific, the kind of IT infrastructure the AAs have built. Many banks have integrated with private players but they are very high effort integrations.

For most banks, the aggregator integration will not require much effort. They are already running integrations with the payment providers, which is a high volume game. Whereas the transaction count in AA business will be a lot lesser.

Banks will have to ideate and plan on what are the kind of usecases that exist for sourcing business through AAs; the amount of business that can be targeted through this channel, etc.