Episode 119 - The API to Streamline and Secure Account Access - Don Cardinal, GM, Financial Data Exchange

The “supermarket” days of financial institutions providing all of our financial services and holding all of our accounts are long over. Brokerages, insurance companies, and the expanding array of fintechs compete to hold, manage, or organize our assets.

With so many custodians of our financial data, it can be difficult for an individual to generate a complete picture of her finances. That’s been a longstanding problem that was addressed over two decades ago by data aggregators like personal financial management app Mint.

Individuals found this single portal approach quite useful. All we had to do was provide the aggregator with the login credentials to each of our online accounts. The aggregator would then log into that account on our behalf, “read” our data off of the web page, and display all of that data in a single consistent fashion (this is “screen scraping”, the method of data gathering that started it all).

This single view capability has been a compelling proposition that dozens and dozens of firms have emulated in the years since.

Further, use cases have proliferated where a fintech, for example, simply needs access to one or two accounts in order to fulfill its goals. The mobile app model has just accelerated the expansion of apps needing access to user account data.

Yodlee and Plaid, now a Visa company acquired in a whopping big transaction, are examples of companies selling access to user account data either through screen scraping or, in a more modern approach, direct integration to individual financial institutions.

Direct integration to each bank or credit union’s data is, of course, inefficient because each banks exposes its own interface. The syntax and functions of each vary making everyone’s development and maintenance tasks more difficult..

Evolution of a Standard

Into this gap is the Financial Data Exchange organization. With over 100 members https://financialdataexchange.org/pages/members
from a wide range of companies - Chase, Plaid, FS-ISAC, Intuit, PNC, Fannie Mae, Truist, Cashflow Solutions - its goal is to standardize the domain of permissioned at a sharing through an API layer in operates in front of financial institution data.

FDX is a true standards organization. Its members pay dues, yes, but their more important contribution is time and effort. Working groups take on particular technical and usage aspects, develop them, and generate draft standards for the entire membership to ratify.

One of its working groups focuses, for example, on the user experience, on the use cases that benefit from data sharing and how to make that process transparent and secure for end users.

In this Payments on Fire® episode, George and FDX Managing Director Don Cardinal discuss the API, its many reasons for being, and the standards development process.

They also discuss Akoya, Fidelity’s former data sharing unit that is now owned and operated by The Clearing House and 11 member banks. Akoya serves as a central integration provider making it easier for a fintech app to connect its users to the banks subscribing to the Akoya service.

So take a listen. FDX is important to the fintech and financial services community. It’s important to end users. And it’s a great example of how comprehensive standards can be developed swiftly.