Why PhonePe abandons AA ambitions? Focuses on partnerships instead
PhonePe’s exit from the AA business marks a shift in its strategy, as it focuses on partnering with other AAs rather than continuing its own platform.
In a strategic shift, PhonePe announces its exit from the Account Aggregator (AA) business, citing challenges in scaling up partnerships.
PhonePe Exits Account Aggregator Business
PhonePe, India’s largest fintech firm, has decided to exit the Account Aggregator (AA) business after struggling to onboard enough financial information providers (FIPs). The company also announced that it would surrender its NBFC-AA license to the Reserve Bank of India (RBI) and begin winding down its AA operations.
Struggles in Scaling the Platform
Despite registering nearly 5 crore Indians onto its AA platform in under two years, PhonePe acknowledged that it could not meet its expectations in terms of partnerships with FIPs. The company said that competing business priorities led to a delay in growing its platform to the desired scale, ultimately prompting the exit from the AA sector.
Commitment to Financial Inclusion
PhonePe emphasized its commitment to financial inclusion, noting the importance of a thriving AA ecosystem in enabling easier access to financial services. The company had received its AA license in June 2023 with hopes of accelerating the growth of the AA ecosystem, despite its usual focus on B2C products.
Partnering with Other AAs
Moving forward, PhonePe will collaborate with other established AAs to provide services instead of managing its own platform. The company plans to reach out to its existing AA user base to inform them of the transition and ensure a smooth handover in accordance with regulatory guidelines.
