Why is open banking being adopted by leading financial institutions worldwide, including the United States?
What is open banking? At its core, open banking is about a consumer’s right to provide their financial data to their third party financial service providers. This data sharing not only supports the consumer’s ability to better manage their financial wellbeing, but also drives expansive innovation within the financial industry for consumers and business, as well as new and incumbent financial institutions, lenders, advisors and technology companies.
How is Open Banking being defined in the United States?
While open banking is well underway in Europe thanks to regulations like PSD2, it’s a developing ecosystem in the United States. Policy makers, regulators, and the industry are working to craft the overarching regulatory framework and technical standards. Envestnet | Yodlee is proud to be involved in these seminal efforts, including:
- The Financial Data Exchange (FDX) is an industry consortium whose members are dedicated to jointly evolving the Durable Data and OFX API standards to improve connectivity, transparency, and security when sharing consumer financial information.
- The North American chapter of the Financial Data and Technology Association (FDATA NA), a group which seeks to educate and advocate for consumers’ rights to access and use their data via the providers of their choice.
Why Open Banking? Why Now?
As mainstream consumers become more reliant on technology and expect everything to be instant, hyper-personalized, and mobile, the financial world is responding. While mobile banking isn’t new and there’s a substantial number of FinTech providers competing and collaborating with traditional institutions, it’s become clear that the consumer financial data ecosystem must evolve to service the market.
As these opportunities become more prevalent for consumers, reliable consistent access to financial data becomes a critical requirement, yet absent a regulatory mandate, institutions are generally reluctant to facilitate this access due to security, financial or competitive concerns.
But open banking changes that, providing connectivity via well-managed and reliable interfaces that address the inherent risks of traditional data sharing via the customer-facing interface.
How is Envestnet | Yodlee helping with the transition
Envestnet | Yodlee is a proponent of open banking across the globe. We believe consumers should have open and unfettered access to their transactional and other financial data. As API-based connectivity grows, Envestnet | Yodlee continues to provide safe and reliable access using available technologies, with the same commitment to consumer protection principles, as we do today.
This includes our Envestnet | Yodlee Financial Data API Platform. These APIs adhere to our core value propositions and are enhanced by open banking.
We provide data from over 21,000 global data sources. As connections become more reliable and standardized via open banking APIs, data coverage and connectivity will be improved.
Clean, Easy to Use, Enriched Data
Our Core APIs will continue to provide clean, ready to use, enriched data delivered through a consistent, normalized data feed as your business grows globally, including automatic categorization of data (income, expense, transfer).
Flexible Customer Experience
As open banking begins to penetrate the marketplace, there’ll be a need to handle both traditional and OAuth authentication flows within the data aggregation experience. Envestnet | Yodlee FastLink provides your customers with an intuitive, trust-inspiring experience to link both their open banking and non-open banking enabled providers.
Developer Tools to Get to Market Quickly
Developers can easily build, launch, and scale powerful solutions which benefit from our enriched, high-quality data delivered at faster speeds by a finely tuned Core APIs.
Higher Level Security and Trust
While open banking does offer a higher level of security in the release of data from the financial institution, we’ll also continue to provide bank grade security and governance in the handling of your customers’ financial data through the full lifecycle of the user experience. As a Technology Service Provider examined by the United States Federal Banking Agencies, we ensure that our operations meet the stringent risk and security requirements of consumer financial data handling.
As a global services provider with twenty years of continuous operation and evolution, our operations and security programs are designed to support the needs of our large enterprise clients as well as growing fintechs.