The news last week that TD Bank's U.S. subsidiary will join the Akoya Data Access Network was a further sign of how the industry is trying to leave screen scraping in the dust.
Though banks have tried to hone the use of application programming interfaces for years, the most common way aggregators and fintechs access customer account data is still scraping the information with the use of a consumer's login credentials.
But Akoya, which is owned by 11 banks including TD, is an example of a vendor aiming to help banks take their use of APIs to another level. TD, the fourth large bank to join the network, will be able to view a data portal developed by Akoya to monitor all of its API connections and offer customers their own portal to track how their account data is being accessed.
"Delivering customers' financial data to Akoya through APIs will eliminate the need for customers to share their banking login ID or password for services they want to use that are supported by Akoya,” said Rizwan Khalfan, chief digital and payments officer at TD Bank Group.
Wells Fargo launched
U.S. Bancorp, which is based in Minneapolis and has $559 billion of assets, was the first bank to join the Akoya network in November 2020. It was followed by JPMorgan Chase and February and Wells Fargo in June. All three are among Akoya's 11 bank owners.
APIs are considered more secure and efficient than screen scraping. In early September, the Financial Data Exchange reported that 22 million consumer accounts are now linked to the FDX API, a standard data-sharing platform, an increase from 16 million in April.
Besides Akoya, Plaid and MX are among the companies vying to be banks’ data portal providers. Each has a slightly different profile in the market. Akoya has banks committed to its service, but not yet data aggregators and fintechs. Plaid has 5,000 fintechs signed up for its service and has been working to improve its sometimes adversarial relationships with banks. MX works with both banks and fintechs, saying that it is agnostic about who can benefit from its software.
U.S. Bancorp works with both Plaid and Akoya.
"We believe customers should have easy and secure access to their information, and we know many customers want to connect their accounts to third-party experiences," said Gareth Gaston, executive vice president and chief digital officer for platforms and capabilities at U.S. Bank. "That is why we developed the U.S. Bank Developer Portal and are a founding member of Akoya. We also participate in groups like the Financial Data Exchange to move the industry forward."
Akoya was originally launched by FMR LLC, the parent company of Fidelity Investments, in 2019 and was spun off as an independent company in February 2020. It’s now jointly owned by Fidelity, The Clearing House Payments Co. and 11 banks that are all members of The Clearing House.
“Our goal is to facilitate consumer permissions to access data in a safe, secure, transparent way,” said Stuart Rubinstein, CEO of the Boston-based Akoya. “It's only used by the recipients who need it and Akoya therefore is a pass-through network. For banks on our network, we help their customers use their data in other places, other apps or even financial institutions where they need access to that data.”
Rubinstein said Akoya won’t look at the customer account data or keep a copy of it.
“You can think of Akoya as the post office: We pick up a letter, we deliver the letter, we don't open it, scan it, keep a copy of it, analyze it, aggregate it, combine it with others, train our models on it or anything,” Rubinstein said.
Today, data aggregators such as Plaid, MX and Finicity play this post office role. According to Rubinstein, Akoya was formed because these existing players were not moving quickly enough to allay bankers’ concerns about how their data was being captured and used. He referred to the lawsuits financial institutions like
“We were formed to make sure that 100% of the data that's connected to Akoya is by API and is governed by agreements and input and output according to FDX specifications,” Rubinstein said.
But data aggregators have expressed concern that Akoya could become a chokepoint through which banks deny fintechs access to their data.
The major U.S. bank data aggregators say they are committed to the use of APIs and the FDX protocol. Plaid has vowed to have
In addition to the large banks that have committed to using Akoya's network, the company has also connected with Jack Henry so that 400 smaller bank and credit union customers can join Akoya’s network. More core providers will be announced soon, Rubinstein said.
Khalfan said TD's integration with Akoya “will accelerate adoption of secure and transparent data-sharing practices in the open banking ecosystem.”
“This builds on our earlier investment in Akoya and will enable data recipients like fintechs and data aggregators to request API-based access to TD Bank's customer data through Akoya," Khalfan said.
The bank, which has about $1.67 trillion of assets, will begin providing portal access for U.S. customer data through Akoya as early as October 2021, he said.
“As a data provider, we will be able to discover and connect with aggregators and fintechs on the Akoya network more efficiently,” Khalfan said. “Akoya acts as a secure bridge facilitating many-to-many connections between financial institutions, aggregators, and fintechs, by eliminating the need for individual bilateral agreements and one-to-one connections.”
Khalfan said that today customers often share their banking credentials to access products and services without the knowledge of where their credentials are being stored or for how long.
“There is also a vast amount of data that the aggregator could access with the customer's credentials above and beyond what they need to service the customer,” Khalfan said. “API-based data sharing enabled through Akoya will allow customers fine-grained control over what they share with third parties. TD Bank's integration with Akoya eliminates the need for TD Bank customers to share their banking information, specifically a login and password, with third parties who are connected to Akoya.”
Akoya has been in discussions with the major U.S. data aggregators, Rubinstein said, though it hasn’t announced any partnerships yet. For the past year, Akoya has been building connections to its bank members, he said.
“Building a two-sided network takes a little bit of time,” Rubinstein said.
Akoya can help financial institutions manage their direct agreements with data aggregators, Rubinstein said. It does this through a platform and through a managed service, he said. Its portal for consumers lets them see from which bank accounts they are sending data and to which fintechs.
Plaid’s network effect
Plaid, the largest U.S. aggregator of bank account data, has the advantage of network effect. About 5,000 fintechs, including Venmo, Coinbase and Robinhood, use Plaid to draw customer data from bank and card accounts. In its early days, the San Francisco-based Plaid had troubled relationships with banks, which sometimes blocked the company from screen scraping data.
But Plaid has made an effort to work with banks. It hired Ginger Baker, who previously worked at Facebook and Square, as head of financial access to communicate with banks and help smooth out problems. It made its commitment to send 75% of the bank account data it shares through APIs by the end of 2021.
Several banks, including
MX’s open source approach
MX, a Lehi, Utah-based company that provides data aggregation and other services, also has a data portal for banks to view their data-sharing activity.
MX does not offer an app directly to consumers and sees this as an advantage.
“We believe that the controls belong in the ecosystems of the banks, where they are the sources of the data,” said David Whitcomb, vice president of MX.
MX built its portal using open source code, Whitcomb said. That means a bank could use it on its own without working with MX, he said.
“It's trying to truly power financial institutions to control their destiny versus being bound to a reliance on a third party,” Whitcomb said.
He expects MX will have a couple of banks live on the portal in the next two to three months. One of the banks works with several data aggregators and wants them to plug into MX’s portal. The first banks MX is working with are mid-sized to larger institutions.
“They've already started having conversations about shifting from screen scraping to using the FDX APIs,” Whitcomb said. “The banks get to see which applications their users are connecting to, how often they're connecting and what data is flowing. The bank can have the power of understanding where their customers are accessing financial services that hopefully are improving their financial lives.”
