Open Banking Archives - Page 9 of 33

Searching for the best open banking network, or what historically people referred to as financial account aggregators can mean combing through a ton of choices. In fact, when you search for financial data APIs on review site G2, you’ll see a whopping 92 options. How do you parse through so many companies to find the one right for your fintech company’s needs?

Because it can be a difficult decision for fintech companies, we’ve put together this guide to define financial data aggregation and to help identify the features to look for.

Understanding Financial Data Aggregation

Account aggregation, also known as financial data aggregation, is a process that collects a person’s financial data in one place. This data can include checking and savings accounts, transactions, investments, credit and tax data.

Having this data in one place benefits many parties, not only consumers. It also benefits banks, lenders, investors and financial advisors. A lender, for example, can use account aggregation to see all the relevant financial information for a consumer applying for a loan, including their transaction history, employment history, income, assets and more. Individuals and families can use the aggregated data to make better financial decisions and small and midsize businesses can use it to better run their operations or access critical capital. Fintech companies can use it to make better apps for their clients.

At Finicity, a Mastercard company, we believe that true empowerment of consumers comes from giving them full control of their data. Consumers should have total control over how their data is used, how frequently it’s accessed and how long it will be retained. The steps to manage data permissions should be easy, quick, and intuitive. Aggregators and ecosystem participants can work together to ensure the highest level of clarity and accessibility, making it easy for consumers to understand and manage their data permissions.

In addition to pure convenience, financial data aggregation through open banking eliminates the need for each party to update this data manually. This saves time and minimizes mistakes for both companies and their clients. It’s all part of open banking—allowing consumers, financial institutions, and third-party providers to access consumer-permissioned data for empowering consumers and small businesses through new and innovative financial services.

How does it work? Historically, data has been collected through screen scraping with a secure login. Much of today’s innovation has been built on the foundation of screen scraping. Recently, however, more data aggregators are using direct API connections with a financial institution. Finicity, for example, pulls the majority of its data through direct API connections in the United States. This method provides cleaner data and is more secure because it uses tokenized access instead of consumers’ login credentials.

Data aggregators use bank-level encryption, which safeguards the personal and financial data of consumers. Finicity operates its aggregation platform with a transparent, consumer-first ethos. Consumers should be explicitly informed in plain language how their data will be used and who will be using it.

What to Look For in Open Banking Providers of Financial Data

When you’re searching for financial data aggregation services, you’ll want to find one that has wide coverage, core provider capabilities and specialty products for your company’s needs. It should also maintain a good price point, with a user-friendly platform and the assurance of accurate data.

Coverage

Does the aggregator have a wide breadth of access to financial institutions, or do you need a depth of coverage in one area? Finicity maintains its connections, which cover more than 95% of financial accounts. This means that anyone who uses our services can be confident that they will get the best possible insights into their client’s financial situation.

Core Provider

While there may be many companies that offer data aggregation solutions, many of them are simply reselling data from another aggregator. Finicity is one of a select few aggregators who maintain all of their connections to banks, credit unions and other financial institutions. When errors arise, you want to be dealing with the actual provider of the data, who can make changes. Otherwise, you may be consuming data they’re getting from somewhere else, and never have the ability to make essential adjustments.

You also want to know where your data is coming from for traceability purposes. Knowing how many different companies touch the data can also be an important piece of the puzzle.

Specialty

Does the aggregator specialize in your industry? Whether you’re a lender, financial advisor, investor or private individual, it’s important that your financial data aggregation software be tailored to your company’s needs. For example, if you’re a lender, you’ll need to see assets, income, employment, cash flow, statements, transactions and scoring attributes to ensure that you are making the right decision. Where the data comes from is also important. Does the aggregator connect with the largest investment brokerages or stick to simply banks and credit unions? The source of the data is also an important component of an aggregator’s specialty.

Cost

What’s your budget? Where’s breakeven from a revenue and cost perspective? Many financial aggregation companies offer pricing on a tiered basis by volume, which may be something like free trial, pay-as-you-go or enterprise. Determine what your needs and priorities are—maybe you need verification of assets but not verification of income. See which tiers or packages offer your highest priority data and what your expected volumes would be.

User Friendliness

Are the APIs readily available for you to use? If fintech companies can’t test out APIs before making a commitment, it’s hard to know if the features and user experience will fulfill their needs.

“The industry has been around for more than 20 years and technologies vary when it comes to working with a modern development team,” said Michael Deleon at Tearsheet. “You’ll want to find a match between your firm’s capabilities and the UI/UX of the data aggregation industry.”

Data Accuracy

Is the data they’re pulling cross-verified with multiple data sources and bank-validated deposit streams? You want to be confident in the quality of the data. That way you won’t have to do any further cleaning of the data and can plug what you receive directly into your current workflows.

Why Finicity is One of the Best Financial Data Aggregators

If you’re one of the many fintech companies looking for a financial data aggregator, Finicity is a great option for you. Tearsheet did a handy comparison, and if you’re here you’ve probably already heard about our competitors.

How does Finicity compare? No other data aggregator subjects their products to the FCRA, a statute that focuses on consumer rights and protection. Additionally, our data is battle-tested in the most rigorous lending market, mortgage, so you know you can count on its accuracy. We lead the way in coverage in the United States, with access to over 95% of financial accounts. Finally, our platform has deep data intelligence to deliver data in a smart way with the insights you need, whether you need it for payments, lending or helping your customers manage their money.

The best open banking platforms provide the vital links that allow fintechs and traditional financial services providers to continue building innovative products and services that enhance the customer experience.

Data coverage and reliability – Finicity’s open banking platform provides direct API access so you don’t have to worry about connecting across different standards or connection types. Being the leader in direct data connections to financial institutions ensures the most reliable data direct from the data stewards (banks, payroll providers, wealth management firms, etc.).
Data analytics and quality – The data you get out of those connections is tested daily and has been proven by the most stringent investors for its accuracy, usable insights and key data analysis. Finicity data is widely used for verifications, scoring, cash flow or other analytics.
Trusted partner in innovation – An open banking platform should be your partner in innovation. Finicity provides the right data, from the best sources, over the best connections. This means you can rapidly integrate, innovate and move your products forward, staying ahead of the industry and your competitors.

We know that finding a data provider can be a daunting task. As you begin your search, request a demo of Finicity to see if it’s the right data aggregator for you. If you’d rather test out the technical side of things, check out our developer documentation.

DECEMBER 14, 2021 | NEW YORK

Report finds more than 80% of consumers in the U.S. – and 90% of younger consumers – are already connecting their bank accounts to technology apps.

Mastercard released a new report today, The Rise of Open Banking, demonstrating the mainstream adoption of technology to power smarter, more meaningful digital experiences. Open banking puts consumers at the center of where and how their data is used to more effectively provide the services they want and need. Fintech companies and banks use this consumer-permissioned data to provide easier and more inclusive access to credit, personal financial management, digital wallets and payments services.

Open banking is already embedded in several areas of our daily lives, including personal financial management tools, linking of financial accounts and account opening. According to the report, nine in 10 consumers in the U.S. and Canada use online and mobile financial applications to manage money, with paying bills (82%) and banking (80%) as the most popular use cases.

“Open banking gives consumers choice by enabling them to use their own data to obtain financial services solutions quickly, simply and securely,” said Chiro Aikat, Executive Vice President, Product & Engineering, North America. “Mastercard plays a central role in this ecosystem as a trusted intermediary and secure data network that powers smarter, more meaningful experiences and empowers consumers to practice good financial habits that enhance their day-to-day lives.”

Accelerated Shift to Digital

The survey uncovered that over the past year consumers have increasingly conducted common transactions digitally including:

Sending money to friends, family and businesses, with 59% of consumers using digital apps, products and/or services to do so and 36% in the U.S. using this technology for the first time in the last year
Securing or refinancing a loan (28% of consumers)
Emerging use cases like buying or selling cryptocurrency and crowdfunding

Open banking is at the foundation of many of these applications, where fintech companies, banks and financial institutions are connecting financial data securely and seamlessly to enable a wide range of financial products and services.

Willingness to Connect Financial Accounts

Critical to driving many, if not all, of these transactions is the ability for consumers to securely link their bank or payment accounts and authorize their financial data to be used in online financial applications. The report found that:

74% of consumers in the U.S. (65% of Canadians) have, or would, consider connecting their bank accounts to financial apps and services to automate financial tasks
68% in the U.S. (69% of Canadians) would do so to easily send money to someone

Trust in Fintech

Consumers are already connecting their data via multiple platforms to manage finances, and thus make their data work harder for them. Of those surveyed:

59% of US respondents (55% of Canadians) feel very confident using technology to manage money
Convenience is a top driver for using financial technology, with 59% of consumers in Canada and the U.S. saying fintech saves them time and is less work.

Putting consumers at the center of how and where their financial data is used ensures greater transparency and in turn helps fintech companies, banks and financial institutions gather feedback, scale faster and create new financial products and services more efficiently. Mastercard is a trusted partner and provides the highest levels of security and protection in every interaction and data transfer, adhering to its own data protection principles and standards: Consumers own the data they produce every day — and have the right to understand and control how it is shared and used.

To read more about the Rise of Open Banking, download the report here.

According to Mastercard’s The Rise of Open Banking study, security, privacy, and trust are at the center of innovation. Open banking technology is paving the way for hundreds of millions of people to enter the digital economy. Three-quarters of U.S. consumers have already linked their bank accounts to automate financial tasks. They’re confidently adopting digital apps, products and services to make everyday financial tasks easier and quicker. Consumers are looking for more secure and simple ways to pay bills, send money to friends and open online accounts.

The study also revealed an accelerating demand for more complex needs, like financial forecasting, crypto investing and crowdfunding. This isn’t a surprise. Open banking is shifting and elevating what consumers can expect and demand from their financial apps and services. Payments are instant and automated. Adding financial data to boost credit scores is available. Buying and selling cryptocurrencies or stocks are immediate on many digital platforms. Banks, financial institutions and fintechs are connecting financial data securely and seamlessly to make these services a reality.

Convenience is Paramount, and Open Banking Offers It

Time is our most precious resource. The consumers surveyed made that abundantly clear. Of all the respondents, 59% cited the time and work saved by speed and ease of use as the reason they’re adopting financial technology. Nine in 10 consumers in the U.S. utilize technology to manage their finances.

The top use cases are financial task automation and peer-to-peer (P2P) payments. One of the major P2P platforms saw a 58% year-on-year increase in pure volume. Everyone loves being able to pay their friends quickly for dinner and drinks, or being able to send funds to a family member in need. These services continue to grow, quarter by quarter.

Consumers are also happily automating payments for rent, bills, gym memberships and streaming service subscriptions. The average consumer in the U.S. is spending $273 per month on various subscriptions. For each consumer, this could mean initiating a multitude of relatively small payments on a monthly basis. If that’s done manually, it would needlessly soak up extra time and create tedious work. Open banking provides consumer-permissioned data to facilitate these real time payments simply and easily.

What the Future Holds

The survey also revealed a rising appetite for more complex needs like crypto investing and crowdfunding. As the adaptation of these tasks grows, this does not come as a surprise. In our hyperconnected world, consumers are used to tapping a few buttons on a screen to complete any task instantly. This expectation of immediacy has been groomed for years by other digital habits such as social media apps, email services and SMS text messaging. Until recently, those expectations haven’t moved into the financial arena, but now consumers are finding the same convenience in finances.

Alleviating pain points and privacy concerns for consumers would significantly boost adoption of open banking apps and services. Respondents wanted more control over their data. They want to own it, control it and benefit from it. They want financial institutions and payment networks to keep it secure. Twenty-nine percent of U.S. consumers and 28% of Canadians said they’d be willing to adopt digital financial apps and services if they knew what financial details are being shared, how often they were being shared, and if tools to revoke sharing access were offered. Mastercard’s data principles around consumer data ownership, control and security are aligned with these desires. They’re a key foundation to driving more consumer adoption of open banking.

With privacy and security being a leading concern for digital finances, control over data and protection from fraud is the way forward. Seventy-five percent of consumers actively try to protect their private data and 54% of U.S. consumers think additional authentication steps can help ease concerns when it comes to linking financial accounts.

The critical elements of the success and promise of open banking are access, control and trust. By turning more control of their financial data over to the consumer, they will reap more benefits. In turn, banks, financial institutions and fintechs will have greater opportunity to create new financial products and services for these consumers.

Read the full Rise of Open Banking report here.

Digital innovation in banking is opening doors for businesses big and small. Access to capital remains a major pain point for small businesses. Fintechs and financial institutions need to find ways to quickly and accurately assess credit risk to keep pace with the growth in this rapidly expanding segment. This panel discusses how a new approach led by open banking will transform the experience for lenders and small businesses going forward.

Panelists:

Steve Smith, Chief Engagement Officer, Mastercard Open Banking

Denada Ramnishta, GM & Head of Corporate Development, Lendio

Gene Marks, President & CEO, The Marks Group

Peter Renton, Co-Founder & Chairman, Lendit Fintech

To learn more about Mastercard’s open banking and open finance solutions, visit https://www.finicity.com/open-banking. To learn more about small business lending, visit https://www.finicity.com/lend. And to request a demo of our consumer-permissioned data products, visit https://www.finicity.com/fintech-demo.

Open banking technology is responding to the demands of an expanding market, creating new payment choices for consumers within the ACH network. Electronic payments are growing at an exponential rate, quarter by quarter. In 2020 alone, 26.8 billion payments were initiated, moving $61.9 trillion, up 10.8% from 2019. Internet-initiated consumer payments for bills, account transfers and other payments increased 15% to more than 7.7 billion. It’s clear that open banking payment apps and services are a major factor contributing to the increased ACH volume, and they are gaining mass adoption due to the added value of digital enablement.

The transition to convenient digital payments and banking services is picking up speed. Friction-hampered, outdated account validation processes are increasingly unacceptable to consumers. Remember when borrowers faxed in voided checks to set up ACH payments? While ridiculous today, clunky account validation processes persist. Loan servicers need accurate data to confirm account ownership. Finicity, a Mastercard company, and its open banking platform simplifies this and expands possibilities for both lenders and borrowers through the FinicityPay™ solution set.

Using ACH transactions, Financial Institutions can set up a new account, fund a loan, retrieve closing costs and origination fees, or set up recurring payments across mortgage, auto, small business and personal loans.

FinicityPay serves up rich data sets in seconds, verifying account details, account owners and balances to enable accurate, confident payments. Our real-time retrieval of account financial data helps mitigate fraud risk, reduce payment failures and fees, enable onboarding and aid in maintaining compliance.

Leveling Up With Finicity Open Banking

Finicity recently reached an integration agreement with LoanPro, a tech-forward SaaS-based solution in loan servicing software.

LoanPro will utilize consumer-permissioned data and smart analytics from FinicityPay solutions to verify account ownership and account credentials to fund loans, and help mitigate payment failure and fraud. LoanPro’s SaaS-based loan servicing, management, and collections platform offers a full-featured, configuration-first, API-based lending solution, designed to streamline both loan servicing and loan collections workflows. FinicityPay seamlessly adds real-time account verification capabilities to LoanPro’s digital repayment solutions.

Using Finicity’s smart data, account owner and balance check, can be verified in seconds, before initiating a payment. LoanPro can now offer improved payment success rates, reducing the risk of NSF fees. Payment fraud and failure are also minimized with FinicityPay’s secure, encrypted digital data flow.

“Finicity’s work with LoanPro is a great example of how open banking can help providers create a seamless payments experience,” said Steve Smith, Chief Engagement Officer, Open Banking at Mastercard. “Through the integration, LoanPro’s customers will be able to validate account information in real time before pushing out funds and scheduling repayments, initiating a more strategic and accessible approach to loan servicing.”

The COVID-19 pandemic has increased the demand for digital repayment solutions, as consumers move more of their finances online. LoanPro’s Loan Management System (LMS) software integration with Finicity Pay adds speed, security, and increased payment success to the platform, an absolute necessity as the growing payments market goes digital.

Pay Confidently

With FinicityPay, you receive fast, reliable data from the largest financial institutions, with 95% market coverage. The deep learning analytics layer in our data services mitigates fraud risk, payment failure and fees. Finicity’s solution suite is also aligned with Nacha’s WEB Debit Rule, so consumers and businesses can set up and manage their accounts with confidence.

To learn more about how open banking affects payments, download our latest eBook, Consumer-Permissioned Data Powers Payments at the Speed of Now or visit our website for more information on our FinicityPay solution set.

Nick Baguley, V.P. of Data Science at Finicity, a Mastercard company, won the HousingWire 2021 Tech Trendsetter award.

Nick and his team have improved income identification and categorization to better recognize all income streams. These new streams are key in the transforming the digital mortgage experience by helping reduce the complexity of the mortgage process using AI-powered digital verification for income, assets and employment. This enhances the entire lending process, delivering a more streamlined experience for borrowers and reducing risk, while increasing ROI for lenders through Finicity Mortgage Verification Services.

Congratulations to Nick! See his award and all of the other winners here.

Open banking is unlocking the data needed for innovation in financial services. Consumers are increasingly connecting their data to access new or improved financial services and experiences. Even so, it’s still early days. Financial services innovators must leverage the power of consumer-permissioned data to maintain or increase share in a changing marketplace.

This panel explores the benefits of consumer-permissioned data and how financial services providers can keep pace in a rapidly –evolving digital environment.

From this panel, you will learn:

Key consumer desires fueling innovation
Data strategies to provide differentiated services, revenue and operational efficiencies
How data connections affect the quality and reliability of data, and ultimately the customer experience
How consumer-permissioned data can help drive financial inclusion

Panelists:

Steve Smith

Mastercard Open Banking

Mastercard Chief Engagement Officer — Global Open Banking

Theodora Lau

Founder

Unconventional Ventures

Moderator: Mike Sisk

Contributing Editor

American Banker

To learn more about Mastercard Open Banking, visit https://www.finicity.com/open-banking. For a demo of our solutions, visit https://www.finicity.com/fintech-demo.

Finicity’s Chief Engagement Officer Steve Smith lays out the open banking payment security landscape with PYMNTS. Democratization of data. The consumer-centric mindset. Walking the tightrope between consumer ease of use and security. These are concepts that Steve has developed and incorporated into Finicity’s platform from the beginning. Complete, end-to-end digital transformations of verticals like personal finance management and payments are the next phase of open banking technology, Steve says. “Open banking is going to impact every aspect of financial services over the next decade.”

Watch the video here.

Mastercard’s EVP of Technology Development, New Digital Infrastructure & Fintech Bob Schukai lays out the landscape of emerging data privacy technologies in the Mastercard Developers portfolio of programs. Next-gen Privacy Enhancing Technologies like data masking, homomorphic encryption and differential privacy create the secure environment that powers new open banking innovation.