Making sense of data access approaches

Consumer access to financial data has become a hot topic of late—and with good reason. U.S. consumers are embracing a proliferation of digital financial services, spanning everything from alternative lending to automated investing. Innovation in this space rests on consumers’ ability to grant access to their personal financial data, which often sits within a bank or other financial institution. This dynamic has raised difficult questions around security, data, and user experience, to name a few.

The conversation is advancing from whether consumers should be able to access personal financial data in the platform of their choice—to the more complex question of how to make this possible. Stakeholders including financial institutions, app developers, and regulators hold a variety of views. And the terminology used in these discussions amounts to a veritable alphabet soup; these include screen scraping, DDA, OFX, and OAuth. Even for an informed observer, it can be challenging to cut through. Many commentaries focus on only one aspect of the data access equation (such as screen scraping). Yet it is difficult to give adequate treatment to any one of these data access methods without also considering the broader ecosystem.

Against this backdrop, we’re excited to announce the publication of our second whitepaper, Financial Data Access Methods: Creating a Balanced Approach. The paper describes and assesses the most common data access methods under consideration in the United States today.

Among the insights in the whitepaper:

• Not all data access methods compete. In fact, each has slightly different objectives. A key distinction can be made between authentication and data transmission. For example, screen scraping falls under data transmission, and has nothing to do with authentication.

• The ecosystem needs a balance between interoperability and flexibility. Developers need interoperability in order to focus on innovation itself, rather than on how to plug in to the diverse infrastructure of thousands of financial institutions. By the same token, institutions need flexibility to enable secure data access in a way that works for their technology infrastructure and operating practices.

• No data access method is likely to be a silver bullet. To thrive, the digital financial services ecosystem must balance interoperability and flexibility—which may mean finding room for a range of specifications. Different institutions may adopt different standards, but the top priority is ultimately that stakeholders create an inclusive infrastructure in which any consumer has secure access to digital financial services.

Finding a workable set of data access methods is crucial to digital innovation in financial services, and achieving this will require partnerships across the ecosystem. Reliable data access has the potential to lower barriers for developers and in turn encourage greater innovation. Embracing the digital financial services ecosystem can allow financial institutions, too, to more deeply engage with their customers. Those institutions that establish themselves as best-in-class within the new digital ecosystem are most likely to cement customer loyalty.

Our whitepaper aims to equip stakeholders with a common foundation on which to build this thriving ecosystem.