Why do we need to aggregate accounts?

Triston Martin Updated on Dec 07, 2022

When a person or family aggregates their accounts, financial information from all of their accounts is compiled in a single location. Accumulating financial information goes under other names as well.

In the case of online banking, users may have access to a dashboard that displays data from each of their accounts in one convenient location, including but not limited to current balances, recent transactions, and account history. Online and mobile financial management tools, such as Quicken and Mint, also offer account aggregation features.

Methods of consolidating multiple accounts with account aggregation:

Account consolidation typically occurs only between accounts held at the same financial institution. However, if the account owner gives permission, the account may be expanded to cover assets stored elsewhere.

Users of various personal finance services can consolidate information about their many banks, brokerage, and monetary asset accounts at any financial institution they choose.

To use these aggregation services, customers must often supply credentials (usernames and passwords) for each account they desire to combine. Account balances and other data are "scraped," or downloaded, from each account and then aggregated using this information.

In most cases, however, account aggregation technology is restricted to viewing simple balance and transaction details. Furthermore, many aggregation platforms do not let customers purchase from within the service for security reasons.

Some aggregation services and software, especially those used by skilled financial advisers on their customers' behalf, collect additional net-worth data, such as up-to-date home-value estimations, in addition to data from savings, checking, brokerage, and some other financial accounts. Account aggregation platforms may also be able to classify monetary transactions.

The financial picture may even contain debt liabilities for some services. Credit card accounts, for instance, may be included in account aggregation platforms or services, whether the same financial institution issues them as the aggregated accounts or by a different financial institution.

Is it risky to combine accounts?

The process of combining accounts using an API is very safe. It verifies information with the user's bank to lessen the possibility of fraud and then discards or does not disclose the data.

In place of open banking, some businesses provide account aggregation via screen scraping. Screen scraping is similar to keylogging in that it collects user account information; however, it does so by gathering credentials such as usernames and passwords from a single screen, usually a "mirrored" login page. The information is then converted for usage in another program.

Screen scraping is less secure than account aggregation via API since third parties must utilize and retain these details. Since financial data access is not individualized, users may be forced to reveal more information than they intend to third parties.

In contrast to screen scraping, open banking is appropriate for account aggregation due to its stringent legal framework and high-grade security measures. Account information service providers are the organizations that supply AIS in the United Kingdom under the country's open banking regulations (AISPs). All other types of information are off-limits to these groups.

Specifically, AISPs can't do anything with a user's account; therefore, if the user wants to make a payment, the payment must be initiated by a payment initiation service provider (PISPs). Users have complete control over which service providers have access to their information and under what circumstances they can cancel that access at any moment.

If clients have multiple accounts, what are the benefits of doing so?

There are several benefits for customers when they combine accounts:

The improved financial perspective it provides:

The typical consumer uses multiple financial institutions for their everyday transactions. In 2020, the average British citizen held 2.8 accounts, the most significant number in Europe. To receive a complete picture of their financial situation, consumers would need account aggregation. Otherwise, they would have to compile data from various online banking providers manually.

This is made more accessible and efficient by using automated account aggregation. Users can see their entire financial picture because all their data is in one spot. Apps can then analyze this information to provide deeper insights across accounts.

Adding in more one-on-one options:

Incorporating visual representations of data is only one aspect of account aggregation. By using this data, businesses will provide their financial services to each customer's needs. By examining a user's checking and savings accounts, Revolut may recommend the best credit cards, loans, and overdrafts for that individual.

You can also utilize this information to find deals worth taking advantage of. Apps aggregating your accounts can tell you how much you spend on utilities and Internet service every month. They can then recommend alternate service providers who offer the same amenities at reduced costs.

But that's not the end of potential savings measures. Apps like Chip utilize AI to make sense of massive amounts of user-generated data. It then provides users with customized advice on how to save money, potentially saving them hundreds or even thousands of dollars annually.

Assistance with Credit Decisions:

Users may better understand their financial situation with aggregated account data. Therefore, it's no wonder businesses use this information to assess creditworthiness. In circumstances where an applicant's credit history is limited, lenders may utilize it instead of credit ratings. Thus, the user can make decisions more quickly and with less effort.

Important Conclusions:

In this article, you got to know about what account aggregation is and what account aggregators are. Some of the key takeaways are mentioned below:

  • When a person's various bank accounts are compiled into a single location, it's called account aggregation.
  • Any or all of the account holder's financial information from the various institutions they conduct business may be included.
  • Credit card debt information is just one type of debt that may be included in an aggregation service's database.


What are Account Aggregators?

An Account Aggregator (AA) is a licensed non-bank financial company (NBFC) that facilitates customers' secure, electronic data transfer between their accounts at various participating financial institutions. If you have someone else's private information and you give it out without their consent, you are breaking the law.

Compared to other KYC platforms like CKYC and Aadhaar eKYC data sharing, how does Account Aggregator stand out?

Only four 'identity' fields can be shared across Aadhaar eKYC and CKYC for Know Your Customer checks (e.g., name, address, gender, etc.). Similarly, credit reporting agencies only provide details on past loans and associated credit scores. Shared access to savings, deposit, and checking account information is made possible by the Account Aggregator network.

Where can you find information on the four data collectors?

Factual, Acxiom, Infogroup, and Localeze are the four most prominent data aggregators. There is no denying the importance of these data suppliers, as they are relied upon by the vast majority of listings sites and large directories. Structured citations on popular websites can't be built without data aggregators.

Who gets to be the account aggregator?

It's only legal for a corporation to act as an Account Aggregator; no other legal structure can do so.