It’s the dawn of a weekend, and a bank’s risk management team receives an alert; a long-standing borrower’s UPI transaction has dropped by 50% in the last 30 days while their credit card utilization has spiked significantly. This vital early warning signal, which would have gone unnoticed just half a decade ago, now empowers the team to trigger an immediate response that can potentially prevent another NPA, all thanks to the Account Aggregator (AA) framework. 

Financial Monitoring and its Evolution in India 

Financial monitoring has undergone a massive transformation. We have transitioned from an era where banks solely relied on quarterly reviews and annual bank statements to real-time and near real-time, consent-based financial intelligence offered by the AA framework. This shift highlights the technical evolution in the fintech space that transformed how financial institutions understand and respond to customer financial health. 

Voyaging From Data Silos to Unified Intelligence 

Trying to understand a customer’s portfolio health by looking at isolated metrics like repayment history or account balance is as futile as understanding a person’s vitals by looking at their temperature alone. The AA framework has changed how we view our data by creating a 360-degree view of financial health. 

FinBox AA Customer Data Platform (CDP) is meticulously curated to help banks and NBFCs leverage the AA data and seamlessly access and analyze -  

• Transaction patterns across multiple accounts 

• Insurance commitments 

• Pension contributions 

• Investment behaviors 

• GST filings 

And much more, all with the customer's consent! 

EWS, Loan Monitoring, and More: FinBox AA CDP a Game Changer for Portfolio Health Monitoring  

FinBox AA CDP works like a sophisticated health monitoring system. It tracks the obvious vital signs and understands and highlights the subtle patterns that might indicate future stress. 

For instance, it can be noticed when a regular salary earner starts receiving fragmented income credits, which could potentially indicate job instability. It can also be noticed when a business’s GST filing shows healthy revenue, but bank transactions indicate liquidity stress—a subtle insight that traditional monitoring might likely miss.  

With FinBox AA CDP, a mid-sized NBFC’s AA-based monitoring system can identify a pattern in which several SME borrowers from the same industrial area showed similar stress signals like reduced business credits, increased supplier payment delays, and unusual working capital utilization. This early warning can help them proactively engage with the entire cluster, discovering a local supply chain disruption that could have cascaded into multiple defaults. 

FinBox AA CDP unifies customer data across the web, mobile, server, and more without manual input. This makes for a great use case for building an Early Warning System based on the data captured across several sources.  For example, traditional banking data includes bounced EMIs, late payments, overdraft utilizations, reduced cash flow, credit card usage and repayment behavior, salary credit, and more. It can also analyze customer behavior from digital transactions like UPI payment patterns, changes in the volume of transactions, suspicious transaction patterns, merchant payment anomalies, and credit bureau information. New credit inquiries, changes in credit mix, credit limit utilization, and other lender exposure can also be assessed to generate credit intel for building a robust Early Warning System. 

The AA data warehouse has helped several banks and NBFCs in credit assessment and underwriting. Lendingkart, an NBFC offering SME loans and an early adopter of AA, highlighted a 25 percent improvement in multiple bank account discovery, leading to better underwriting with 66 percent lower cost incurred on fraud detection services. Additionally, credit defaults caused by fraudulent or tampered banking information are reduced to zero with AA data , as evidenced by a FinBox study.  

From Monitoring to Management

The real power of AA-based systems lies in their ability to enable proactive portfolio management. Banks and NBFCs, instead of waiting for defaults, can now: 

• Proactively offer restructuring options 

• Provide working capital support to viable businesses 

• Suggest financial planning services 

• Engage in meaningful conversations about financial health 

This can result in a substantial reduction in potential NPAs among monitored accounts.  

Privacy and Trust: The Foundation of Modern Monitoring 

AA CDP is built on trust and transparency. Unlike traditional monitoring that often felt intrusive, AA-based systems operate with explicit customer consent, creating a trust-based relationship between lenders and borrowers. Modern monitoring systems are beginning to predict potential stress months in advance. The consented cross-institutional data sharing enables a better understanding of sector-wide risks. 

The choice is clear for banks and NBFCs standing at the crossroads of traditional and modern portfolio monitoring. The question isn't whether to embrace AA-based monitoring but how quickly they can implement these systems to stay ahead in an increasingly competitive lending landscape.  

Through FinBox's AA360 platform, financial institutions are revolutionizing portfolio health monitoring. Are you ready to transform your portfolio monitoring? The future of intelligent lending awaits.