Data has driven incredible improvements in the way people have experienced financial services over the last decade. Services that once could only be done at bank branches can now be easily accessed online. And people now have powerful financial information, products, and management tools at their fingertips via their mobile devices.
The expansion of open banking is creating a new turning point in the money experience. Open banking allows consumers to share their financial data with third-party developers and fintechs in exchange for new services—unlocking the potential of financial data to catalyze another generation of innovation across the industry. Services such as providing financial data to build credit and gain immediate access to capital, initiating a direct payment to a business or individual, and managing household expenses and budgets fundamentally change the boundaries of banking relationships.
Responsible data practices are required for participants to best take advantage of this technology. The key differentiator that sets the world of open banking apart from previous innovation environments is the requirement for consumer consent in data sharing and adherence to core data principles: control, access, transparency, traceability, and security (CATTS).
In order to enable open banking and empower customers, data access agreements (DAA) must be in place to ensure access to financial data that financial service providers need to innovate and provide new services and benefits in a digital world. These agreements define common rules for how two parties—usually an open banking platform or financial data aggregator and a financial institution—will communicate and exchange financial data. More secure data access agreements mean more connections that financial service providers can use to empower consumers with greater control over their financial health.
Finicity’s Market Leadership in Financial Data
Finicity’s connections cover 95% of direct deposit accounts in North America. And thanks to 20 signed direct access agreements with some of the nation’s largest financial institutions, we support 60% of our traffic with direct API access. We expect that direct-API traffic share to grow to over 80% by the end of 2021, greatly reducing the use of user credentials and screen scraping in the financial services market.
Since 2017, we have led in signing data access agreements with the top FIs including Wells Fargo, Bank of America, Chase, Fidelity and many others. And, in just the past year, Finicity has worked to strengthen the open banking ecosystem by creating stronger, more secure data access agreements and partnerships with key financial institutions and fintechs, including Charles Schwab, TD Bank, Citi, Brex, Chime, US Bank, and BMO Harris.
And where Finicity has been leading, the market is following. Along with an increasing number of financial institutions and other financial service providers, more payroll providers are recognizing that consumers can benefit from the data they hold. As a result, these providers are adopting API connections to open banking platforms that expand the use of financial data in lending, tenant screening, background checks, government verification and personal financial management. Finicity announced a Direct Access Agreement with the leading payroll provider in September 2020, representing 16% of the payroll provider market.
DAAs provide the broader fintech and financial services community with access, through Finicity, to consumer-permissioned financial data that enables a variety of apps and services across financial management, payments, lending, and beyond. And a key result for all parties is enhanced data stability, accuracy and improved security through reduction of user credentials.
A direct access agreement with Finicity ensures the most reliable data security for financial institutions while still enabling fintechs and financial service providers to deliver solutions that empower consumers and foster financial inclusion. To learn more about becoming a supported financial institution and how that benefits you and your customers, be sure to check out our financial institutions page.