The news recently that TD Bank’s U.S. subsidiary will sign up with the Akoya Data Access Network was a more indication of how the market is attempting to leave screen scraping in the dust.
Though banks have actually attempted to sharpen making use of application shows user interfaces for many years, the most typical method aggregators and fintechs gain access to consumer account information is still scraping the info with making use of a customer’s login qualifications.
But Akoya, which is owned by 11 banks consisting of TD, is an example of a supplier intending to assist banks take their usage of APIs to another level. TD, the 4th big bank to sign up with the network, will have the ability to see an information website established by Akoya to keep track of all of its API connections and provide clients their own website to track how their account information is being accessed.
“Delivering customers’ financial data to Akoya through APIs will eliminate the need for customers to share their banking login ID or password for services they want to use that are supported by Akoya,” said Rizwan Khalfan, chief digital and payments officer at TD Bank Group.
Wells Fargo launched an in-house data-sharing portal, known as Control Tower, to help consumers view their API connections three years ago. But third-party providers such as Akoya are expected to enable more banks to develop similar portals.
U.S. Bancorp, which is based in Minneapolis and has $559 billion of assets, was the first bank to join the Akoya network in November 2020. It was followed by JPMorgan Chase and February and Wells Fargo in June. All three are among Akoya’s 11 bank owners.
APIs are considered more secure and efficient than screen scraping. In early September, the Financial Data Exchange reported that 22 million consumer accounts are now linked to the FDX API, a standard data-sharing platform, an increase from 16 million in April.
Besides Akoya, Plaid and MX are amongst the business competing to be banks’ information portal companies. Each has a somewhat various profile in the market. Akoya has actually banks devoted to its service, however not yet information aggregators and fintechs. Plaid has 5,000 fintechs registered for its service and has actually been working to enhance its often adversarial relationships with banks. MX deals with both banks and fintechs, stating that it is agnostic about who can gain from its software application.
U.S. Bancorp deals with both Plaid and Akoya.
“We believe customers should have easy and secure access to their information, and we know many customers want to connect their accounts to third-party experiences,” stated Gareth Gaston, executive vice president and chief digital officer for platforms and abilities at U.S. Bank. “That is why we developed the U.S. Bank Developer Portal and are a founding member of Akoya. We also participate in groups like the Financial Data Exchange to move the industry forward.”
Akoya was initially introduced by FMR LLC, the moms and dad business of Fidelity Investments, in 2019 and was spun off as an independent business in February 2020. It’s now collectively owned by Fidelity, The Clearing House Payments Co. and 11 banks that are all members of The Clearing House.
“Our goal is to facilitate consumer permissions to access data in a safe, secure, transparent way,” stated Stuart Rubinstein, CEO of the Boston-based Akoya. “It’s only used by the recipients who need it and Akoya therefore is a pass-through network. For banks on our network, we help their customers use their data in other places, other apps or even financial institutions where they need access to that data.”
Rubinstein stated Akoya won’t take a look at the consumer account information or keep a copy of it.
“You can think of Akoya as the post office: We pick up a letter, we deliver the letter, we don’t open it, scan it, keep a copy of it, analyze it, aggregate it, combine it with others, train our models on it or anything,” Rubinstein stated.
Today, information aggregators such as Plaid, MX and Finicity play this post workplace function. According to Rubinstein, Akoya was formed since these existing gamers were stagnating rapidly enough to ease lenders’ issues about how their information was being caught and utilized. He described the suits banks like PNC and TD Bank have actually submitted versus Plaid, which have actually been settled or dismissed.
“We were formed to make sure that 100% of the data that’s connected to Akoya is by API and is governed by agreements and input and output according to FDX specifications,” Rubinstein stated.
But information aggregators have actually revealed issue that Akoya might end up being a chokepoint through which banks reject fintechs access to their information.
The significant U.S. bank information aggregators state they are devoted to making use of APIs and the FDX procedure. Plaid has actually pledged to have 75% of its data-sharing traffic relocation through APIs by the end of this year.
In addition to the big banks that have actually devoted to utilizing Akoya’s network, the business has actually likewise gotten in touch with Jack Henry so that 400 smaller sized bank and cooperative credit union clients can sign up with Akoya’s network. More core companies will be revealed quickly, Rubinstein stated.
Khalfan stated TD’s combination with Akoya “will accelerate adoption of secure and transparent data-sharing practices in the open banking ecosystem.”
“This constructs on our earlier financial investment in Akoya and will allow information receivers like fintechs and information aggregators to demand API-based access to TD Bank’s consumer information through Akoya,” Khalfan said.
The bank, which has about $1.67 trillion of assets, will begin providing portal access for U.S. customer data through Akoya as early as October 2021, he said.
“As a data provider, we will be able to discover and connect with aggregators and fintechs on the Akoya network more efficiently,” Khalfan said. “Akoya acts as a secure bridge facilitating many-to-many connections between financial institutions, aggregators, and fintechs, by eliminating the need for individual bilateral agreements and one-to-one connections.”
Khalfan said that today customers often share their banking credentials to access products and services without the knowledge of where their credentials are being stored or for how long.
“There is also a vast amount of data that the aggregator could access with the customer’s credentials above and beyond what they need to service the customer,” Khalfan said. “API-based data sharing enabled through Akoya will allow customers fine-grained control over what they share with third parties. TD Bank’s integration with Akoya eliminates the need for TD Bank customers to share their banking information, specifically a login and password, with third parties who are connected to Akoya.”
Akoya has been in discussions with the major U.S. data aggregators, Rubinstein said, though it hasn’t announced any partnerships yet. For the past year, Akoya has been building connections to its bank members, he said.
“Building a two-sided network takes a little bit of time,” Rubinstein said.
Akoya can help financial institutions manage their direct agreements with data aggregators, Rubinstein said. It does this through a platform and through a managed service, he said. Its portal for consumers lets them see from which bank accounts they are sending data and to which fintechs.
Plaid’s network impact
Plaid, the biggest U.S. aggregator of savings account information, has the benefit of network impact. About 5,000 fintechs, consisting of Venmo, Coinbase and Robinhood, usage Plaid to draw consumer information from bank and card accounts. In its early days, the San Francisco-based Plaid had actually bothered relationships with banks, which often obstructed the business from screen scraping information.
But Plaid has actually made an effort to deal with banks. It worked with Ginger Baker, who formerly operated at Facebook and Square, as head of monetary access to interact with banks and assist ravel issues. It made its dedication to send out 75% of the savings account information it shares through APIs by the end of 2021.
Several banks, consisting of Wells Fargo and U.S. Bank, have data-sharing contracts with Plaid through which they send out information to fintechs by means of APIs.
MX’s open source method
MX, a Provo, Utah-based business that supplies information aggregation and other services, likewise has an information website for banks to see their data-sharing activity.
MX does not provide an app straight to customers and sees this as a benefit.
“We believe that the controls belong in the ecosystems of the banks, where they are the sources of the data,” stated David Whitcomb, vice president of MX.
MX developed its website utilizing open source code, Whitcomb stated. That implies a bank might utilize it by itself without dealing with MX, he stated.
“It’s trying to truly power financial institutions to control their destiny versus being bound to a reliance on a third party,” Whitcomb stated.
He anticipates MX will have a number of banks reside on the website in the next 2 to 3 months. One of the banks deals with a number of information aggregators and desires them to plug into MX’s website. The very first banks MX is dealing with are mid-sized to bigger organizations.
“They’ve already started having conversations about shifting from screen scraping to using the FDX APIs,” Whitcomb stated. “The banks get to see which applications their users are connecting to, how often they’re connecting and what data is flowing. The bank can have the power of understanding where their customers are accessing financial services that hopefully are improving their financial lives.”