How can Account Information Services affect our everyday lives? Have a look at the in-depth guide of what is AIS, where it is used, and what is its role in the FinTech industry.
How can Account Information Services affect our everyday lives? Have a look at the in-depth guide of what is AIS, where it is used, and what is its role in the FinTech industry
Open Banking is the representation of future financial services.
It is backed by the idea that Third-Party Providers will help get more access to new products and services in the financial sector.
Account Information Services(AIS) might be the most visible advancements Open Banking has offered us. This is one of the third-party providers that enables businesses and institutions to share their data with other financial providers.
Partnerships between brands, financial institutions, and Account Information Service Providers (AISPs) have brought us the new wave of tools that help businesses and their users take control of their financial data and be more transparent.
So what is the Account Information Service framework, and how is it used?
This article will briefly cover everything about account information services and dive deep into this topic to tell you all about its value, benefits, and role in the FinTech industry.
Account Information Services (AIS) is a tool for businesses and institutions to share their data with other banks, financial providers and third-party providers. At the same time, it facilitates the verification of new customers and the assessment of their credibility.
Through an AIS relationship, the user will allow an Account Information Services Provider (AISP) access to their data, which can then provide insights into their financial behaviour. For the end-user, it means that their request for a loan can be accepted faster.
The biggest value of Account Information Services is that it is a backbone of Open Banking by broadening the access to financial data and giving consumers more control over the data they generate.
AISPs can be used to build better experiences for the customers by accessing the user’s account balance, direct debits, transaction history etc.
The main benefits of AIS can be seen through the digitalization of banking transactions. Business risks and costs are lowered with access to accurate, machine-readable data available.
The most useful benefits include:
Less manual processing
The Digital Account Check improves customer experience by giving banks access to cleanly analyzed and aggregated data through AISPs and saving the customer from tedious paperwork.
Easy exchange of information
Once the customer has allowed AISP(Account Service Information Providers) access to their online account, that information can be used by online credit providers, comparison portals, or online shops integrated into the Digital Account Check.
Lower business cost
The customer gains power over their data and no longer needs to send and receive account statements or salary slips for granting a loan. Digitalization also comes with a lower business cost thanks to less manual processing.
Reducing business risk
AIS improves transparency in the actual financial status of prospective customers of the financial service provider. By gaining access to the prospective customers’ bank balances, the determination of creditworthiness is much faster and more accurate.
New, better customer experience
Compared to the existing model (off site verification, statements sent over post or pdf via mail.
AISP refers to the Account Information Service Providers. Mainly, these are the companies that analyze and consolidate the data they get from an individual's bank account information.
They are authorized to receive data from a financial institution with the individual's explicit consent.
This information can be used to assess potential clients' credibility and financial health with 'read-only' access to their accounts. This means AISPs can look at bank account information but cannot initiate transactions.
AISPs can be used as personal finance tools. They bring together data from multiple accounts to monitor spending, create a budget etc. Additionally, they act as a middleman between the lender and customer to provide better insights for the lender and streamline loan applications for the customer. How to choose the right AISP?
Firstly, account information services providers should have a proper license. There is a list of local and global companies with AISP licenses on the internet. It is important to make sure that your AISP is licensed.
Secondly, you must give explicit consent to access, collect, and transfer your financial data to third party providers. AISPs cannot initiate any transactions from your account, and they must comply with data protection legislation.
Make sure your AISP provides an easy and understandable overview of your financial situation with maximum security - an AISP must allow you to know and manage who has access to your data, for how long, and for what purpose.
Additionally, choose AISPs that issue transparent and reliable service descriptions that include legal and technical constraints, rules of services, features, and benefits.
AISPs are not only used by banks and financing companies, but other service providers take advantage of this framework as well. The positive impact of AIS can be seen in real estate, cryptocurrency, retail, online casinos etc.
However, the primary beneficiaries of AIS services are loan providers who do not have a long enough customer history to assess the customer’s credit rating. Currently, AIS is being used by global international companies such as Check24, Finiata, N26, etc.
The primary difference between these two is that AISPs cannot initiate transactions. They have a ‘read-only’ view of the customer’s bank account. PISPs, on the other hand, trigger payments or transactions on behalf of the customer at the account-holding bank.
For example, AISPs can be used to monitor spending or create budgets. While PISPs can trigger real transactions in an online banking account on their behalf.
On the business side, PISPs can be used to securely manage payments and collections, have greater payment visibility and make real-time bank transfers. AISPs mainly provide customer information.
When talking about the use cases, speed and convenience are the main components in improving customer experience.
For example, when it comes to granting loans with AIS, applicants can allow the lender to access their financial history and thus create a new data stream when underwriting credit. The applicant can find out on the spot whether they are eligible for a loan or not.
Services using AIS can make opening savings accounts much faster and easier for customers or offer loans on third-party sites. Customers of AISPs can also manage and organize their finances more conveniently.
A bank can use third-party partnerships to grow its balance sheet outside the home market. They can also provide new services for the customers through exporting data to personal finance managers or small business accounting apps.
AIS is an essential component of the infrastructure required for developing new apps and services in FinTech. The Digital Account Check is crucial in new FinTech services like online instant loans, multi-banking apps, account change services, and factoring services for self-employed individuals.
This framework allows banks and emerging FinTech companies to share and use account information and functions effectively.
Finally, account information services is a great improvement from traditional banking services. Through the Open Banking framework, AIS can reduce business risks, lower costs, and help you to exchange information easily.
Here at TransactionLink, we build a one-stop-shop to help you build FinTech solutions. We are the Account Information Service Provider that allows you to confirm your users’ identities and learn their personal information.
We help you confirm that your users have bank accounts and get information on all of their transactions from the past three months. You can later access this data through our API and use it to create your products and services.
Have a look at our AppStore and learn more about the products we offer to fuel innovation and assist in creating innovative solutions in the ever-growing FinTech industry.