A Better Way for Banks, Fintechs and Customers to Embrace Open Finance
Akoya is a Business Reporter client.
Fintechs have grown in number in recent years, with the onset of Covid-19 in 2020 only accelerating the trend. This has led to an increase in open finance and the free-flowing exchange of consumer financial data, which has impacted the financial services sector. But the proliferation of open finance has also given rise to unregulated entities that store large amounts of financial data, including consumer user IDs and passwords.
Access to financial data is a core component of fintech, as it powers use cases that enable financial planning, payments, budgeting, tax preparation and other services.
A key challenge is that most financial data is still accessed via “screen scraping.” This method of credential-based data aggregation brings both privacy and security risks as consumer data is captured and stored, creating honeypots of login credentials and account data. Not only that, but data is often accessed beyond consumer permissions, and in some cases, data is resold, creating significant risks to the financial system.
New technologies such as API, FAPI, OAuth and OIDC enable financial institutions to directly authenticate consumers and enforce data minimization policies, meaning that fintechs get only the minimum data needed to provide financial services to consumers.
Akoya is a network utility built to serve all players in open finance with fair and open access to industry-standard APIs, and it provides permissioned consumer data to recipients who agree to security terms. Akoya makes accessing and sharing financial data safe and secure while optimizing for security, transparency and scalability. It does this by leveraging a passthrough model that does not copy, store or hold any financial data or personal information.
Any financial institution or digital banking provider can use Akoya as a one-to-many connection to a growing network of fintechs and data aggregators, for API-based permissioned data access. Small community banks and credit unions benefit the most; through Akoya, these institutions can enable open finance for their customers, and share account information and data like larger financial institutions.
Increased usage of Akoya across financial services will provide valuable network effects to all participants, including increased data coverage and cost recovery-based pricing.
Data is king, and fintechs work hard to provide services to their customers using the data they get from customers’ financial institutions. What they don’t need is an unregulated entity in the middle that stores the data and uses it in ways not intended by the customer—including monetizing it. Open-finance data can be obtained via passthrough intermediaries such as Akoya in a safe, secure, reliable and scalable way, without creating significant risks to the financial system.
We’re ready when you are. Please contact us to learn more about how the Akoya Data Access Network can help your business.
This article originally appeared in Business Reporter.
Image: iStock id1365692265
