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SBI gets a foot in door of accounts aggregator biz with Cashfree

Though the accounts aggregator business in the market is at a very nascent stage, there is a huge potential as an asset-light financial infrastructure business

SBI invests in Bengaluru-based fintech Cashfree SBI invests in Bengaluru-based fintech Cashfree

The country's largest bank State Bank of India's investment in the Bengaluru-based fintech Cashfree comes with more than just the payment gateway business.

Pasfar Financial Services, a subsidiary of Cashfree, is focused on the new emerging accounts aggregator business. Reserve Bank of India (RBI) had opened licences to NBFCs to undertake account aggregation business, which is expected to revolutionise the financial services business.

Though the accounts aggregator business in the market is at a very nascent stage, there is a huge potential as an asset-light financial infrastructure business.

Just the way banks and institutions share data of borrowers with credit bureaus, that started some two decades ago, accounts aggregator is likely to become a nodal agency to receive customer data (from savings account to loan to investments) from various banks and institutions and share it with any institution for a fee which is onboarding an existing customer of a different institution.

There will be no hassles of submission of account and loan details to a new bank. The process of onboarding customers will also be faster. CAMS FinServ, Jio Information, National E-Governance Services, Perfios, Aditya Birla Trustee Company are some of the entities that have got RBI's approval to start the account aggregation business. 

Currently, banks are a bit reluctant to join the network. In fact, two private sector banks -- Indusind Bank and Axis Bank -- were the first to go live as 'financial information provider' under the new 'Accounts Aggregator Framework'. The regulatory push, innovation, and new technologies like AI and ML will drive the accounts aggregator business in the near future.

Sources suggest that the SBI's investment in Cashfree should be seen from the future potential in the new emerging business. The largest bank will certainly evaluate its investment for more exposure as the business would unfold in the near future.

The parent Cashfree, where the SBI has taken an exposure, operates as a payment gateway and full-stack payments solution provider. The company is backed by investors like Apis Partners, Smilegate, and Y Combinator.

Cashfree is currently used by businesses like Zomato, CRED, Nykaa, Delhivery, Acko, Shell etc. Apart from India, Cashfree's products are used in eight other countries including the USA, Canada, and UAE. The company was founded by IIIT Hyderabad alumnus Akash Sinha and IIT Kharagpur graduate Reeju Datta.

Also read: SBI invests in Bengaluru-based fintech start-up Cashfree

Also read: Scrap plan to set up payment network: SBI union, others write to RBI