For decades, people have wanted a way to see all their finances in one place online. This process, known as financial account aggregation, started in the mid-1990s with the rise of a multiplicity of aggregation standards that were infrequently updated and didn’t return enough data fields to be truly useful. 

For these reasons and more, the bulk of external financial account connections today occur via screen scraping — the process of gathering financial data from one app by inputting user credentials (such as username and password) and displaying that data in another app. 

However, the process of screen scraping also carries a range of shortcomings, especially when the connections aren’t whitelisted. For instance, screen scraped connections intermittently break, and they carry an element of risk as consumers share their credentials, which potentially increases risk across the ecosystem, compromises privacy, and poses security threats for fintech companies, financial institutions, and consumers alike. 

Modern connectivity: The future of finance

Because of these shortcomings, MX provides access to tokenized, credential-free API connections that use OAuth 2.0 protocols and are built with the highest security standards. 

This modern approach provides customers with the ability to approve, manage, and revoke access to their financial data. As financial institutions deploy new, modern data sharing services, MX is securing data-sharing agreements, building connections, and migrating users faster than any other provider in the market. 

The benefits of modern connectivity are wide-ranging and extend beyond just aggregating accounts into one view. Let’s take a look at three main areas of mutual benefit to both consumers and financial services providers. 

1. From screen scraping to tokenized, credential-free connections

Technology is advancing how modern financial data can improve a customer’s financial journey. Tools are being created that are helping financial institutions and fintech companies deliver better product experiences that increase user engagement and consumer satisfaction. Innovation empowers financial services providers in their pursuit of business objectives while simultaneously elevating the end-user experience for consumers. Whether an organization needs to gather more consumer financial data, enhance and better utilize the data they already have, or increase the speed to market with web and mobile financial experiences, intelligent and personalized solutions are now more within reach than ever before. 

While today screen scraping is still an important method to ensure coverage, cutting-edge providers are now moving to a more modern approach to connectivity. Modern connectivity is tokenized, credential-free API access that is built with the highest security standards. This

provides customers with the best experience while interacting with a financial institution’s products. The idea is to power a platform that intelligently routes customers to the best connectivity experience and provides them the ability to approve, manage, and revoke access to their financial data. 

Today, MX clients experience upwards of 65 percent of their traffic through direct connections. By the end of 2021, MX predicts that number could be as high as 85 percent. These direct connections facilitate the fastest, most secure, and most reliable financial data connectivity network in the industry. 

2. Powering open finance

If modern connectivity methods are to power our future financial world, open banking must continue to power retail use cases — from budgeting and lending to payments — where data is securely accessed and shared via APIs. Open finance powers other use cases like tax and investments to provide even more utility. Further innovations include embedded APIs and platform banking, where APIs will drive completely new use cases like Uber Money and Google Cash. 

When it comes to connectivity, there is a profound shift going on in the industry away from the monetization of people’s personal data. Wise data aggregators avoid the traditional business of scraping data from point A and selling that raw data to point B. 

With API-based data sharing, the benefits for consumers are wide ranging. Jane Barratt, Chief Advocacy Officer at MX, stated: “The controls that have been put in place around customer permissions will now be in the hands of the customer. These open banking APIs give consumers visibility into where data is going as well as the ability to revoke consented access at any time.” 

Barratt continued, explaining the benefit to financial services providers: “It also brings control into the hands of data providers, issuing tokens with specific data fields for specific use cases that have customer permissions, vs. screen scraping where all data points are shared.” 

Regardless of where someone chooses to bank, borrow, transact or make payments, everyone should be able to securely access, and transparently share their financial information — through open-source, open-standard solutions that help bring credential-free API connections to consumers faster. 

3. Seamless IAV, complete coverage, and app-to-app biometrics

Modern connectivity allows for more seamless innovation than ever possible with antiquated connectivity methods. By moving away from legacy approaches and their associated risks, the industry is helping all institutions — regardless of size — have a secure and enhanced experience by enabling and deploying their own credential-free API connections. This is the essence of open banking — providing an open source platform, the future of data sharing.

Shayli Lones, VP of Go-to-Market at MX, stated: “From better user experiences to higher transparency, when consumers have access to their data, they benefit from a wide variety of financial services. These connected experiences help organizations by allowing them to deliver more relevant offers, intelligent financial management tools, and safer ways to connect account information, which all lead to a better digital banking experience.” 

As technology has advanced, more streamlined experiences are available. App-to-app authentication through biometrics allows for a consumer to permission data sharing from their primary FI mobile app, using Face ID, Touch ID, etc. We can also verify accounts with instant account verification (IAV) through API connections for many institutions. Standard connections and micro deposits are also available, providing complete coverage across the financial ecosystem. 

Conclusion

Financial services providers and consumers alike are enjoying the most rapid technological advancements the industry has ever seen. Modern connectivity is replacing legacy connectivity methods at scale, creating a much faster, safer, and reliable financial data ecosystem. 

About MX 

MX is the leading data platform for the financial world, providing the industry’s fastest, most secure, and most reliable connectivity network. MX partners with 16,000+ banks, credit unions, fintechs, and 85% of digital banking providers to power the money experience for over 200 million consumers.