Banks and payment techies benefit when they stop being rivals
This has been a pivotal year for consumer empowerment. Between data privacy regulations expanding from the EU into the U.S. and rising scrutiny into the operations of companies like Facebook, it’s clear that consumers will have more control over their data in 2020 and beyond.
Banking is no exception. Open banking — an approach using open APIs that would allow banks and fintechs to securely share customer-authorized financial data — is already growing in popularity across the U.K., EU, China, and India. With the help of fintechs, some of the world’s largest financial institutions have gotten ahead of the curve to implement data sharing programs that put the consumer first.
Wells Fargo recently announced a partnership with Plaid, creating a new API allowing customers to easily access and manage all of their online finances in one place. The API connects the two companies’ servers, enabling consumers to more securely share their financial data with a Plaid-supported app. Most importantly, users have full control over what data is shared and how it is used.
This comes just one year after Wells Fargo launched Control Tower, a digital experience that “provides customers a single view of their digital financial footprint.” Within Control Tower, customers can manage how their data is shared across several accounts and cards. In succession, Wells Fargo has shown a consistent commitment to boosting consumer data privacy.
In a similar move, U.S. Bank has partnered with several fintechs and data aggregators to expand its suite of API tools in the U.S. Bank Developer Portal. The portal will make it secure and simple for third-party applications to connect to U.S. Bank customers’ account information — helping them to “bank when, where, and how they want.”
U.S. Bank also announced future plans for capabilities that allow customers to gain a 360-degree view of how their account data is shared. This emphasis on the customer perspective is noteworthy: Both U.S. Bank and Wells Fargo are prioritizing initiatives that not only support data privacy, but also continue to improve the digital user experience.
Data sharing innovations extend beyond banking as well. Credit reporting agencies have recently prioritized consumer-permissioned methods for incorporating alternative data into credit risk models.
Banks and fintechs will always be in friendly coopetition to create the best possible experience for customers. But when they join forces, consumers get the ultimate benefits, and the financial ecosystem evolves into an open, transparent platform of collaboration and innovation.