Putting consumers first in fintech

Over the past few years, Plaid has been working with a growing number of groups throughout financial services to deliver better access to financial data. We focus on helping developers build great products for consumers, but we also recognize that the technologies we’re building raise questions around data access, consumer protections, and bank-developer interactions.

We wrote the following white paper because we believe it’s important for all players in this space—traditional financial institutions, fintech startups, and companies like ourselves—to develop a common understanding of the issues at play and work together to address them. Today, we’re excited to announce the publication of our first white paper on financial data access: Establishing a consumer-first framework for financial services and technology. Below, you’ll find a brief overview of the issues discussed in the paper.

Introduction and Commentary

Financial technology companies have delivered a host of product innovations over the past several years, from competitive loan offerings to better financial tracking tools. Many of these rely on consumer access to data, and, in turn, deliver key services to consumers. For example, EARN uses consumer data to automatically match savings that low-income households set aside in their accounts—effectively using data-exchange technology to make financial success more accessible.

But, as our paper points out, clear rules around data access will be key to enabling continued growth and consumer choice. “Leveraging advances in technology is revolutionizing how nonprofits like EARN can meet our mission to help people save money more efficiently and become better informed consumers,” noted Leigh Phillips, CEO of EARN. “We are proud to help drive efforts to bring financial success to hardworking families.”

The questions around the best way to enable this access are not easy to answer. But failure to answer them could leave consumers without access to key services.

Our paper offers three recommendations to guide the development of an inclusive financial services ecosystem:

Protect innovation and consumer choice:

Protect the ability to innovate and compete, because consumers need choices;

Provide consumers control over their data access:

Grant consumers control over their personal financial information, so they can deploy it how they wish; and

Build a secure infrastructure:

Promote better security for personal financial information, because consumers ought to have confidence that their choices are backed by strong security.

The stakes around data access are high. And it isn’t just individual consumers and their families who stand to be affected, as leaders at OnDeck, a platform for small business lending, have pointed out. Much is also at stake for owners of small businesses and innovators whose services rely on consumer access and aggregators.

“We believe that fair and secure access to financial data can help small businesses access capital and enhanced services,” said Daniel Gorfine, OnDeck’s Vice President of External Affairs. “As we are seeing in other parts of the world, we are strongly supportive of thoughtful and inclusive efforts focused on formulating principles that can guide evolving open data standards and satisfy privacy and security expectations.”

Indeed, the questions that face the financial industry are not unique to the United States. Earlier this year, the European Union Parliament adopted a framework that recognizes the need for meaningful protections for consumer access to data—and the importance of aggregators and data exchange companies in facilitating these protections. Similarly, the United Kingdom is addressing these topics by bringing together government officials, industry stakeholders, consumer advocates, and open data experts to develop new standards to reconcile consumer control of their own data with business, security, and privacy concerns.

“As with any complex institutional challenge, meaningful positive change can only happen when all parties come together around their common goals,” said Raj Sharma, co-founder of Public Spend Forum, a platform that encourages public sector innovation by bringing together buyers and suppliers to learn, collaborate and drive value together. “Putting consumers first, embracing transparency, and protecting innovation will be essential to any effort to address finance’s challenges responsibly.”

So while questions around the best way to enable this access are not easy to answer, we believe that the right path forward is an informed and thoughtful dialogue that prioritizes consumer interests. That dialogue is already happening.