Presented by Envestnet | Yodlee
As open banking initiatives gain traction, fintechs and innovative financial firms are in an ideal position to deliver personalized products, apps, and services based on consumer-permissioned data. Learn how to prepare and more in this VB Live event!
Progress is continuing on the open banking front, and the forward movement is promising, says Brian Costello, VP of Data Strategy and Strategic Initiatives at Envestnet | Yodlee.
Open banking gives consumers more control over their financial data. New privacy regulations allow consumers to more easily access and share their account information to find solutions that best suit their financial needs. The opportunity for financial institutions is significant: as consumers give permission to third-party companies to use their data, banks and fintechs can provide a variety of applications and services to improve their financial wellbeing — including managing personal finances, obtaining loans, making payments, providing investment advice, and more.
And there are clear signs of progress toward the widespread adoption of open banking, explains Costello. It can be measured by the number of data access agreements now being signed between aggregators and financial data providers, and the engagement of stakeholders, data providers, aggregators, and fintechs.
Membership in initiatives like the Financial Data Exchange, FDX, and the Financial Data and Technology Association, FDATA North America, is growing in the U.S. and Canada. Additionally, the advisory council on consumer-directed finance in Canada did a series of stakeholder meetings in the fall, and on December 31, 2020, put a recommendation on the desk of the Minister of Finance. And when the Consumer Finance Protection Bureau establishes public rulemaking around Dodd-Frank 1033, it should put a regulatory underpinning on the open banking initiative in the U.S., including an affirmative right for a consumer to access and use their own data.
“As much progress as we’re making in enabling consumers and small businesses to engage with third parties for positive financial outcomes, as much progress as we’re making in building an environment for innovators and developers to turn their ideas into a service, an app, a customer engagement,” he says, “we also need to make sure we’re protecting consumers as we’re shifting these types of financial services to these innovative, wholly digital propositions.”
For financial institutions and fintechs that haven’t jumped on the open banking bandwagon, it’s not too soon to get started, he says, even if it’s not on the road map from a technical standpoint.
“An FI that’s not familiar with what’s going on might think that there is a lot to do before they can even get started, and that simply isn’t so,” Costello says. “They can crawl, walk, and run into a safer, more customer-impactful role in the U.S. open banking ecosystem right now, today. There is no reason to be on the fence anymore.”
The whole ecosystem is about choice, he says. It’s about the consumer’s and small business’s choice to engage with a third party that is right for them. It is about the developer’s, the innovator’s choice, and fintech’s choice to engage with the platform provider that’s right for them. The challenge with choice is, when you have a lot of selections at the table, it’s sometimes hard to choose how to start, but that shouldn’t stop a consumer or an FI, he says.
“If you’re a consumer, look at what your needs are and start doing the research, talk to people,” he says. “If you’re an innovator and you’ve got a great idea, we need that idea in practice today. If you’re an FI and you’re sitting back waiting to see how things are going to coalesce, they’re coalescing right now. We need you involved now.”
Don’t miss out!
Attendees will learn:
- What’s happening with open banking in the U.S.
- How open banking ecosystems work
- Ways open APIs drive financial wellness
- How to leverage deep consumer insights
- How to prepare for open banking
- Peter Polson, Founder, Tiller Money
- David Nohe, CEO, FinGoal
- Brian Costello, VP, Data Strategy and Strategic Initiatives, Envestnet | Yodlee
- Evan Schuman, Moderator