One cannot overstate the value of financial data aggregation considering each and every facet of today’s organizations are managed digitally. To learn more in detail about the topic, read ahead…
Aggregating financial data means collecting a consumer’s financial information from various sources. A data aggregator can gather information from payroll, bank accounts, credit card accounts, investment accounts, lending platforms, and any other financial app a consumer uses to manage their finances. Hence, there is little question that data aggregators are enabling consumer finance innovation.
By cracking open access to consumers’ financial data, financial data aggregators have made open banking and open finance possible. Solutions that data aggregators provide can include both business-to-business and direct-to-consumer services. For example, fintechs and financial institutions can use this payroll data for things like income and employment verification or paycheck-linked lending.
A well-known example of financial data aggregation is compiling data from various bank accounts from either one bank or multiple banks and utilizing it in one place. This allows the user to see all of their accounts in one place without navigating between various interfaces.
The biggest problem that can occur in data aggregation is the possibility of hackers or cybercriminals getting into the institution’s database. Data aggregation companies store customers’ data in a single system. If a hacker gets into the system, this would be a problem. Moreover, if these institutions created vulnerable mobile phone apps, this could also pose a risk to their customers. Hackers can use this as a gateway to the system. Cyber fraud, unauthorized transactions, and identity theft are the biggest risks that consumers might encounter when using data aggregation.
Some companies practice safety measures to keep their customers’ information secure. However, some don’t consider this. Even though they implement ways to keep the data safe, sometimes data breaches can occur. If this happens, it will compromise all of a person’s identity.
Cybersecurity threat is the biggest problem standing between financial data aggregation and consumers. However, there are other problems that do exist too. Technical difficulties can be experienced by both customers and banks due to data aggregators. Data aggregators who scrape accounts daily to update their clients’ dashboards can disrupt a financial institution’s website. If a data aggregation company has millions of users refreshing their page, this could cause problems to banks’ websites because of the increase in traffic coming in.
In other words, having access to consolidated financial data is a huge help for banks and other financial organizations. In addition to ensuring the happiness and loyalty of your current clientele, attracting new ones and staying ahead of the competition are two other benefits of offering a more simple option. When clients are pleased with the service they receive, they are more inclined to continue using your business.
By pooling their data, banks may better serve their consumers by facilitating superior wealth management, streamlined payment processing, and tailored financial advice. It doesn't matter if it's an internal app or service or a third-party fintech app or service.
An ideal financial data aggregator must have some essential capabilities such as-
A financial data aggregator takes the guesswork out of translating your transaction descriptions and harmonizes your financial data so that you can understand and make better financial decisions. In short, they create a better money experience for the customers. They also help consumers connect their accounts by bringing your finances together in one place, including bank accounts, credit cards, loans, and more for a full picture of your financial life.
In addition, it gives consumers a choice of controlling access by allowing them to share as much or as little of their personal information with banks, credit unions, and other organizations. This helps customers maintain ownership of financial information, so they can always allow or revoke access as per preference.
With a financial data aggregation provider, consumers can also view, and interact with their money at a glance, making it easier for them to manage finances anytime, anywhere, and in real-time. This can aid them in focusing on meeting their financial goals today, and setting milestones for the future.
These types of financial apps and services may use financial data aggregators to access consumer data.
Financial data aggregation is the process and methods by which data from multiple sources are collected, standardized and made available through a common interface. Here’s how the process works:
While financial data aggregation services are highly useful and now expected by consumers, banks are sometimes reluctant to allow their institution’s data to be accessed by financial data aggregation companies. Aggregation services are certainly safe, but there are functional issues that sometimes occur that may leave customers confused about the security of their financial data, a risk no financial institution is willing to take.
The issue typically happens during the screen scraping process, or when financial data aggregation companies have to robotically log in to a consumer’s account to pull, or scrape, data. Screen scraping is how data aggregators work around many banks and financial institutions outdated technologies that don't provide a direct link to set up and start exchanging data.
When data aggregators must scrape data, they may need to log into a consumer’s account multiple times to refresh the information into an app or other service. The repetitive logins risk raising flags for the bank’s security measures into thinking there is a hacker, and potentially logging customers out of their accounts.
Financial data aggregation companies can connect to APIs almost seamlessly and without risk of being mistaken for a hacker, making it the better alternative for linking to a financial institution's data.
VisionERA’s IDP platform can help financial data aggregators with process automation. Leveraging AI, ML and other technologies, we can make it possible for you to automate processes to manage tasks like understanding new rules and regulations or creating personalized financial reports for individuals. Additionally, our IDP capabilities can make it easier for them to present the information in a way that's easier to understand apart from allowing bankers to make loan decisions in seconds, not months.
Bankers can even assess risks and spending patterns, and even look at alternative sources of data, such as payment history of rent and utilities. By automating the decision making process with our IDP platform, bankers can reduce their risk of default loans, as well as improve customer experience by reducing the number of abandoned applications from frustrated borrowers who are tired of the long process that are manual and paper intensive.
Data aggregation is currently experiencing high growth in the financial services world, and that growth won’t be slowing down anytime soon. With financial data aggregation, the convenience and speed demanded by consumers is made possible. Ultimately, maximizing the power of data through data aggregation services benefits consumers, businesses, and financial institutions alike.
Hence, leveraging an IPD platform can aid financial data aggregators improve retention, increase engagement, and drive revenue. Using clean, accurate and enriched transaction data, financial data aggregators can provide actionable insights that support customers' financial wellness and help an institution's bottom line.
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