Financial aggregators are paving the way for the future of financial services. Financial data aggregation providers possess the ability to organize data in a way that creates infinite possibilities for financial institutions. By using data aggregation, financial institutions can offer more relevant and personalized services to their customers including wealth management, faster payment processing, personalized financial wellness advice, and more.
What Is a Data Aggregation Service?
A financial data aggregation service is the link between banks and consumers’ banking information, which pulls it together into one spot, such as a mobile banking application that lets users set and track budgets automatically. That’s what the first financial aggregation platforms did for consumers, and their service offerings have only gotten more sophisticated. They aggregate data from consumers' bank account information, like spending habits, investments, or credit history, from various banks to create a personal finance wealth management tool for consumers.
This is made possible through open banking, or the consumer approved sharing of financial data via secure third party application programming interfaces (APIs) on the open banking network. Financial institutions create partnerships with third party financial service providers to connect to their APIs, and in exchange, the third party financial service provider gets access to the bank’s financial data. Data aggregation service providers use that financial data to give consumers who opt-in for a service to receive relevant and accurate summaries of their finances.
Open banking requires financial institutions who want to share or leverage data on the open banking network to follow strict rules and security protocols to ensure consumer’s financial data is safe and out of harm's way from malicious hackers.
The security of the open banking network and all of the data that’s shared on it help contribute to its popularity among consumers who expect only the highest level of data security and best practices from who they bank with, and the third party APIs they connect their bank account information with.
Are Account Aggregators Safe?
While financial data aggregation services are highly useful and now expected by consumers, banks are sometimes reluctant to allow their institution’s data to be accessed by financial data aggregation companies. Aggregation services are certainly safe, but there are functional issues that sometimes occur that may leave customers confused about the security of their financial data, a risk no financial institution is willing to take.
The issue typically happens during the screen scraping process, or when financial data aggregation companies have to robotically log in to a consumer’s account to pull, or scrape, data. Screen scraping is how data aggregators work around many banks and financial institutions outdated technologies that don't provide a direct link to set up and start exchanging data.
When data aggregators must scrape data, they may need to log into a consumer’s account multiple times to refresh the information into an app or other service. The repetitive logins risk raising flags for the bank’s security measures into thinking there is a hacker, and potentially logging customers out of their accounts.
Financial data aggregation companies can connect to APIs almost seamlessly and without risk of being mistaken for a hacker, making it the better alternative for linking to a financial institution's data.
Benefits of Financial Data Aggregation Companies for Consumers
There are several benefits that financial data aggregation companies offer consumers as their expectations for their banking services continue to rise. Banks who do not rise to the occasion and offer data access to customers’ financial information will be left behind when their customers find other banks that offer data aggregation capabilities.
1. Manage All Bank Accounts in One Place
Envestnet | Yodlee’s suite of financial data aggregation tools pull in financial information into one interface, enabling consumers to manage their personal finances from a single dashboard. Consumer permission is required for these services to access their financial accounts before any data aggregation begins.
2. Personalized Financial Advice
Financial account aggregation capabilities allow banks to offer consumers personalized financial services, including personal financial management tools. Recommendations and insights are all based on the specific consumer’s financial data, so they’re accurate, data-driven, and unique to the user.
3. Cut Down on Paperwork With Financial Aggregators
With all of their financial accounts in one place, consumers no longer have to rely on paper bank statements to stay on top of their finances. Intuitive dashboards enable consumers to conveniently transfer money, make payments, or other basic transactions with just a few clicks.
Benefits of Financial Data Aggregation Companies for Financial Institutions
Consumers aren’t the only ones who benefit from partnerships with financial aggregators. Banks can take advantage of the technology to provide the capabilities and experiences consumers increasingly expect from their banks.
Increase Brand Loyalty
Meeting and exceeding customer expectations for data aggregation services makes them more likely to remain a loyal customer. Banks that partner with Envestnet | Yodlee to offer the latest and greatest tools and solutions don’t have to worry about consumers looking at competing financial institutions with the convenience and personalization they’re looking for.
Keep Up With the Competition
Banks should consider the market for data aggregators to see just how much consumers value financial wellness tools. There are plenty of customers to attract with personalized solutions that help existing customers just the same. Why? Because they’re looking for better banking experiences, and if that’s Gain Financial Customer Insights
Financial data aggregation companies like Envestnet | Yodlee enable banks with access to highly valuable financial data that can be used to fuel even more innovation in the FinTech sphere. Open banking APIs and rigorous security protocols make accessing the data possible so banks can learn and understand more about what their customers want and why. This can lead to insights that fuel innovative services and solutions for even better banking experiences in the future.
Get Access to Financial Aggregation Benefits With Envestnet | Yodlee
As the market leader in financial data aggregation, Envestnet | Yodlee offers banks all of the capabilities discussed in this blog. From payment processing solutions, personalized financial advice, wealth management, and more, the possibilities for banks to provide consumers better ways to do their finances are infinite. Get started with Envestnet | Yodlee today.
Check out additional Data Aggregation Resources for further reading.