This article is a follow up to Double and Triple entry bookkeeping and
Aurigraph DLT Protocol and Platform in using Aurigraph DLT platform for Open Banking solutions
Background
In the Current Banking scenario, Bank hold enormous amounts of consumer data in separate silos and are unable to map consumer’s 360-degree profile. Banks and financial institution depend on agencies such as CIBIL to aggregate consumer loan repayment history to determine a consumer’s credit rating. The loan repayment history, while providing precedents is not a true indicator of the consumer’s current and future credit rating and loan repayments. Many consumers who do not have loan repayment history end up with low ratings, making them ineligible for financial products and services, thereby reducing customer base. In case of informal economies with low banking penetrations and large populations, a sizeable portion of population is left out of financial inclusion, thereby, lowering incomes and quality of life.
Now, some of that customer data is being shared with third parties in a global movement known as “Open Financial Data” or “Open Banking.” Half a decade in the making, it is unlocking a wave of digital financial innovation and disruption.
Brought on by a combination of government regulation and market forces, open financial data allows an expanding universe of players — both financial and non-financial — to access customer accounts and data to offer new products and services (all contingent on customer consent) For customers, open financial data affords greater flexibility in how their money is managed, allowing, for instance, better visibility of accounts and more convenient access to payments.
Around the world, this trend is evolving in diverse ways. In the European Union, the United Kingdom, South Korea, Australia, and India, governments have mandated large banks to open their vast troves of customer accounts to other companies, in a bid to stimulate competition. In the United States and China, it is a market-led movement, with companies establishing open-banking relationships among themselves. Singapore is using a blend of the two models.
Open Banking
Open Banking provides an alternative to current credit rating systems by providing a 360° view of customers based on cash flows and assets, thus based on a customer’s current. Open Banking systems allow Requesters to seek user data through the Open Banking platform from User Data providers with User Consent. Data Providers need user consent before sharing data with Requesters. Users have complete control on data being shared. The entire process maintains transparency, immutability and user privacy while providing requested data.
Over seventeen governments and central banks have passed legislation and notifications for Open Banking, opening new financial services opportunities. Aurigraph Open Banking platform will enable Fintech offerings and financial institutions to rapidly build applications and services to expand reach and volumes.
Aurigraph Open Banking Platform
Aurigraph Open Banking SaaS Platform delivers low TCO and high ROI with cloud based Open Banking service to Data Providers and Requesters. Users may sign up with their eKYC and link their financial data from various data providers to complete their 360-degree profile. When applying for any financial product or service, a financial service requester needs to merely sign a tokenized smart contract seeking a user’s information. The request will be routed to the respective financial information provider, who in turn, would seek the user’s consent. Once User’s consent is granted, the information is routed to the Requester through the platform. All activities are logged onto the Immutable Ledger, providing complete transparency, immutability, and non-repudiation. Each smart contract will be powered by Aurigraph tokens to pay for Transaction fees, taking care of fulfilment and reconciliation of the Request.
RBI’s Account Aggregator
India has adopted the Account Aggregator model for Open Banking to deliver financial inclusion to the bottom of the financial pyramid and move its large population from informal economy to formal economy, thereby, unlocking financial inclusion to the informal sector at the bottom of the pyramid. Account Aggregator includes financial institutions, such as banks, NBFCs, micro-lending providers, Insurers, AMCs, and non-financial services providers, such as utility providers, as well. Banks and financial services providers can play the role of financial data providers and requesters while Account Aggregators function as mediums of communication between consumers, banks, and lenders. The four-step process is as follows:
1. An individual or business opens an account with an account aggregator. Then, they create a funnel for their financial data by linking their bank accounts, insurance policies, etc. — which are accounts holding the customer’s financial data.
2. The customer can supply consent to a lender to access their financial data through the NBFC-Account Aggregator. This usually happens when the customer is looking for a loan or similar financial product that requires their financial information to be collated.
3. After user’s consent is given, the account aggregator seeks permission from the financial data providers to access the customer’s data.
4. Data is given by financial data providers to the account aggregator, which, in turn, empowers lenders to better evaluate the customer’s financial profile and risk associated with providing a financial product.
Aurigraph Account Aggregator platform can reduce the cost of verification and disbursement of funds to a dollar or less, based on volumes. The key USP of Aurigraph Account Aggregator being in-built settlement and reconciliation with remarkably high throughput of request handling.
Aurigraph BillPay (EBPP & BNPL)
Aurigraph BillPay is an integrated Electronic Bill Presentment & Payment (EBPP) solution with Bill-Now-Pay-Later (BNPL) solution in the USA for utility bill payments Billers and Merchants, send out monthly bills that are settled before the next billing cycle. Billers receive payments through multiple payment channels daily that needs reconciliation and settlement daily, leading to operational overheads and costs.
Aurigraph BillPay aggregates bills at both the consumer and the billers, thereby increasing consumer experience and convenience while lowering their interest costs, while on the other hand, reduce business drudgery and costs attributed to banking, accounting, and administration
Figure 9 Aurigraph BillPay with BNPL
Consumers may make their bill payments from their Aurigraph BillPay account with a single click and replenish monthly, with very charges.
Aggregation of bills, payments, and settlements for billers on the Aurigraph BillPay will reduce their operational costs by an estimated over 15–20% while reducing operational losses to suspense accounts and tracking.
Our solution is to aggregate bills at both the consumer and billers end of business, thereby delivering value to both
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