Several American banks have joined forces with fintech firms to fund a non-profit organisation launched with the aim of tackling the issue of consumer data-sharing.
Several major banks including Bank of America, Citi, JP Morgan Chase and Wells Fargo, along with fintech giants such as Intuit, Xero and Yodlee, are backing Financial Data Exchange (FDX) in order to gain access to customer data.
The longstanding war between banks and third parties over access to consumer account data has been going on for quite a while over the recent years. While several fintech start-ups argue that customers want to have the opportunity to share their information, banks are reluctant to do so primarily for security reasons.
A recent survey reveals that neither of these assumptions are incorrect; while two thirds of consumers are extremely cautious when it comes to sharing private account data, 56% want to be able to monitor which data can be made accessible to third parties.
The FDX, created as a subsidiary of the Financial Services Information Sharing Analysis Center (FS-ISAC), has launched an interoperable standard and operating framework centred on an API called the Durable Data API (DDA).
The DDA promises to aid both sides by substituting the need for screen scraping and credential sharing. The system benefits everyone: clients will gain further control over their personal finances through improved authorisation methods, fintech firms will have full access to data thereby satisfying consumer needs, and FIs will be guaranteed a safe way of sharing data with third parties.
Lila Fakhraie, FDX co-chair and digital banking API team manager at Wells Fargo, believes that “the launch of FDX marks an industry turning-point toward the standardization of more secure financial data sharing.
“Our efforts will improve the efficiency and security around the exchange of financial information and empower consumers to control exactly what account data is shared with third-party applications.”