The India-based payments company has begun the process of surrendering its NBFC-AA licence to the Reserve Bank of India (RBI) and will wind down its AA operations.
Despite exiting the AA space, the Walmart-backed fintech intends to collaborate with other AAs in the market to advance financial inclusion. PhonePe initially launched its AA service in June 2023 through its subsidiary, PhonePe Technology Services, to accelerate the ecosystem’s adoption. The company received in-principle approval from the Reserve Bank of India (RBI) to operate as an Account Aggregator back in 2021.
The AA framework enables consumers to securely share their financial data – including bank statements, insurance policies, and tax filings – with regulated Financial Information Users (FIUs) for loan applications, insurance purchases, and investment advisory purposes. However, PhonePe stated that while it successfully onboarded nearly 50 million users, it was unable to integrate as many FIPs as planned due to competing business priorities.
According to a company statement, in less than two years, PhonePe onboarded nearly 5 crore users. However, it could not integrate as many financial information providers (FIPs) as initially planned due to competing business priorities.
The AA framework, introduced by the RBI on 2 September 2021, serves as a consent-based data-sharing mechanism that allows users and businesses to manage financial data securely. The system operates under an NBFC-AA licence, enabling regulated institutions to access and share financial information with user consent. The framework has gained traction in India, driven by regulatory support and increased adoption of Open Banking-based services.
According to the DigiSahamati Foundation cited by CNBC, the AA ecosystem has surpassed 100 million consents, with approximately 80-90 million users leveraging the system. The number of FIPs and FIUs has grown to 155 and 475, respectively, as of August 2024. In 2023, the ecosystem included 146 FIPs spanning banks, insurance firms, and other financial institutions, alongside 363 FIUs.
A FIP stores and shares user financial data, while a FIU requests and utilises this data for various financial services. As of November 2024, the RBI had granted NBFC-AA licences to 14 entities, including Setu AA by Agya Technologies, Anumati by Perfios Account Aggregator Services, and PhonePe. PhonePe’s departure from the AA space marks a strategic shift in its business approach, aligning with its focus on core financial services while continuing to support the AA ecosystem through partnerships with existing providers.
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