Open Finance presents a variety of features that make it easier for fintech service developers to do more things; one of those is to form their customers' financial profiles. This financial profile is essential, and its function is to facilitate companies in conducting a demographic analysis of their users, such as income, consumption ability, credit score, etc. The Account Aggregation makes it easy to form this profile.
As the current Open API (Application Programming Interface) service develops, fintech developers don't have to bother developing features such as Account Aggregation because they can take advantage of infrastructure services from trusted Open Finance developers. Apart from saving more resources and costs, utilizing these ready-to-use features allows companies to focus on their core business goals. The reason is that developing financial features—especially those closely related to users—is not easy because they must meet specific standards from regulators.
The following is a review of the Account Aggregation service and the benefits that fintech developers can get from it.
What is Account Aggregation and how does it work?
Account Aggregation is one of the products from Open Finance that aims to provide alternative data to form the financial profile of fintech platform customers. This is done by connecting user accounts into a single dashboard. Account Aggregation services can also provide useful customer insights by studying trends in financial transactions and utilizing smart technologies such as Machine Learning.
There are various benefits that users can get from using Account Aggregation, such as:
- Users or customers; make it easier for them to obtain their financial profile without going to the bank and performing cumbersome administrative tasks.
- Fintech platforms; can perform data collection seamlessly, instead of manually, such as asking users to upload checking accounts. In addition, account aggregation can minimize the risk of document falsification because all of the data entered is verified directly by the bank system or related financial services.
The following is an overview of the workings and processes that occur in the Account Aggregation platform:
- First, the user will log into the Account Aggregation platform connected to specific financial services. Then, they will be asked for approval regarding the use of the financial data in their accounts.
- Second, users can allow or link any accounts listed in the dashboard. They can choose a bank account or e-wallet history that they think best represents their financial condition.
- Third, from the data provided, the system will display an analysis of the financial data. The technology in Account Aggregation can also help fintech companies analyze these customers.
Finantier provides a Widget feature for the Account Aggregation service that makes it easier for customers to onboard the service. If needed, the developer can create their display in-house while still connecting the application's backend with the Finantier API.
A dashboard is also provided to make it easier for fintech partners who use the Account Aggregation service from Finantier to manage the data that its users have provided. The intelligence applied to Finantier's Account Aggregation service can also classify the types of transactions in the linked accounts, for example, categorizing by type of expenditure such as transportation, investment, food, and others. The application of APIs, widgets, and Finantier's Account Aggregation dashboard can be used for website-based fintech services or mobile apps.
Various scenarios of using Account Aggregation
Account Aggregation can be applied to a variety of financial products. Take personal financial services in the form of recording user cash flows, for example. With Account Aggregation, application developers can allow users to connect their bank accounts or digital wallets. So that, when there is an income or expense, it will be recorded automatically — users won't need to enter it manually anymore. Moreover, the Account Aggregation service model quickly synchronizes data updates in user accounts. So, when there is a new transaction, the data in the application will be updated in real-time.
In another scenario, by having a user's financial profile, fintech lending services will be able to help provide a fairer credit assessment. It is easier to show their actual ability to pay from the consumer side, so manual methods, such as uploading bank statements, can be eliminated. As a result, the process will be faster and more efficient.
Advantages of Account Aggregation in Open Finance
Basically, for end consumers, Account Aggregation is a gateway to sharing digital financial data easily and connecting financial accounts held in a centralized container. Meanwhile, for developers, it makes it easier to get a picture of the financial condition of potential customers instantly.
Interestingly, various other infrastructure services in the Open Finance ecosystem also help the financial industry. So, the use of Account Aggregation services through Open Finance providers has many benefits for developers; for example:
- There is an easy integration process with a simple API.
- They can get end-to-end service support, from the verification process to payment.
- It meets the needs of various scenarios and growing fintech business models.
- It is a cost and time-effective option for developing innovative digital finance features.
For more information about Account Aggregation products and use cases, please get in touch with the Finantier team via this page.