Account Aggregator ecosystem supplementing the next fintech growth story in India

August 7, 2023

Since 2016, India has witnessed a significant increase in the number of fintech startups, thanks to the India stack that is driving the government’s digital India initiative. The first three layers of India Stack (Presenceless; Paperless; Cashless) have provided a strong foundation for enabling seamless digital transactions in the market. The UPI’s milestone of 2.3 Billion transactions in a month is a witness to the democratization of the Indian payments economy. The fourth pillar, the consent layer, will propel the Indian economy towards an inclusive mission by facilitating the easy exchange of financial information between the interested parties which will greatly tackle the current information asymmetry in the market. The data from insurance providers, mutual fund houses, tax/ GST platforms and banks will be aggregated and used for decision making.

This layer would be managed by consent managers or Account Aggregators (AA). Any entity can leverage the AA ecosystem and provide various financial offerings like insurances, Consulting & advisory and wealth management. The major beneficiary of this ecosystem would be the lending sector, especially MSME lending. Currently, less than 10% of MSMEs and individuals have access to formal credit or borrow from an institution. This huge credit gap can be addressed by the Loan service providers (LSPs), who will act as intermediaries for the lenders and provide end-end services, from loan origination to collections. Other important players in the ecosystem would be TSPs (technical service providers) who will provide the required backend architecture and development of modules in underwriting, lending & onboarding, SME scoring, etc.

There is interest from the big players in the fintech space to monetize by participating in this ecosystem. CRED, a credit card bill payments startup, recently floated a subsidiary Dreamplug AA to leverage this ecosystem. Jio and perfios too received in-principal approval for AA and have acquired startups that are complementary to their offerings. Neobanks catering to SME & MSME has a strong inclination towards the offerings of LSPs to finance their customers. New themes like embedded finance are also a beneficiary of this ecosystem, which can transform any business into a fintech. Based on our discussion with stakeholders and industry veterans, it is clear that many of the big players are scouting for innovative startups who can provide complementary services/products by leveraging the AA ecosystem. Although AA is currently in the early stages of execution, the impact that it can create is similar to what UPI did for payments.

Fundraising is one way to scale the business, but partnering with early-stage startups has also been an attractive choice for the big players. It is the quick adaptability to the next bullish signal in the market that makes early startups differentiating. The signals could be technological disruption, regulatory changes or new government initiatives to boost economic activities.

We at Growthpal understand the aspirations of the fintech in India and help them identify the right partner to grow their business. With our wide range of coverage of early-stage startups across sectors, we will source and provide the best of the recommendations thus increasing your probability of winning the transaction. Are you ready for the next big leap in fintech? Let’s discuss at


Livemint, Economic Times, Sahamati, Financial Express, World Bank, Financial Express, LSE, Finextra

Wrapping Up

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