Account aggregation: Difference between revisions
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'''Account aggregation''' is a method that involves compiling information from different accounts, which may include [[bank]] accounts, [[credit card]] accounts, investment accounts, and other consumer or business accounts, into a single place. This may include a [[database]] or may be provided through "[[screen scraping]]" where a user provides the requisite account-access information for an automated system to gather and compile the information into a single page. Usually this database resides in a [[web-based]] [[application software|application]] or in [[client-side]] [[software]]. While such services are primarily designed to aggregate financial information, they sometimes also display other things such as the contents of [[e-mail]] boxes and news headlines. |
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{{news release|date=December 2010}} |
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{{refimprove|date=January 2018}} |
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'''Account aggregation''' sometimes also known as '''financial data aggregation''' is a method that involves compiling information from different accounts, which may include [[bank account]]s, [[credit card]], [[payroll]] accounts,<ref>{{Cite web |last=Johnson |first=Alex |title=Payroll Data + Fintech |url=https://newsletter.fintechtakes.com/p/payroll-fintech |access-date=2024-05-31 |website=newsletter.fintechtakes.com |language=en}}</ref> investment accounts, and other consumer or business accounts, into a single place. This may be provided through connecting via an [[API]] to the financial institution or provided through "[[screen scraping]]" where a user provides the requisite account-access information for an automated system to gather and compile the information into a single page. The security of the account access details as well as the financial information is key to users having confidence in the service.<ref>{{cite web |url=https://www.americanbanker.com/news/is-finras-dire-warning-about-data-aggregators-on-target |title=Is Finra's dire warning about data aggregators on target? |date=April 9, 2018 |author=Penny Crosman |publisher=American Banker}}</ref> |
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| ⚫ | One of the first major account aggregation services was [[Citibank]]'s My Accounts service, though this service ended in late |
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The database either resides in a [[web-based]] [[application software|application]] or in [[client-side]] [[software]]. While such services are primarily designed to aggregate financial information, they sometimes also display other things such as the contents of [[e-mail]] boxes and news headlines.<ref>{{cite web |url=https://www.wealthmanagement.com/technology/five-questions-you-should-be-asking-your-account-aggregation-provider |title=Five Questions You Should Be Asking Your Account Aggregation Provider |date=December 7, 2017 |publisher=Wealth Management|author=Lowell Putnam}}</ref> |
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== Account Aggregator System == |
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'''Independent Financial Advisors''' are another group that account aggregators are beginning to focus their attention. Having seen increasing competition from the wirehouses and breakaway brokers, positioning themselves as their client's '''primary advisor''' is not as easy as it once was. Account Aggregation should be able to help many of these advisors gain the competitive edge by providing a look into their clients held-away, and non-managed accounts. Aggregators such as '''Advisor Exchange''' and '''CashEdge''' specialize in working with the advisor industry and provide historical, transaction level data that is normalized and reconciliation ready. '''Advisor Exchange''' is taking it a step further in an attempt to bridge the technology gap that faces small advisory firms. With the Advisor Exchange model an advisor will be able to aggregate clients accounts and then push the aggregated data in virtually any third-party application that a financial advisor uses to run his business. With this technology, and the need for advisors to differentiate their services, the aggregation industry is poised for explosive growth over the next 5 yeears. |
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Account aggregator system<ref>{{Cite web|title=A Comprehensive Guide to Account Aggregators {{!}} Parallel - Blog|url=https://www.parallelhq.com/blog/what-are-account-aggregators-fintech|access-date=2022-01-26|website=www.parallelhq.com}}</ref> is a data-sharing system, which helps lenders to conduct an easy and speedy assessment of the creditworthiness of the borrower. |
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=== Components of Account Aggregator system === |
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No longer is Aggregation just a product, it is now the platform/engine upon which many new financial applications are built. |
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The Account Aggregator system essentially has three important components – |
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* Financial Information Provider (FIP) |
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[[ja:アカウントアグリゲーション]] |
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* Financial Information User (FIU) |
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* Account Aggregators |
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'''Financial Information Providers''' has the necessary data about the customer, which it provides to the '''Financial Information Users'''. The Financial Information Provider can be a bank, a Non-Banking Financial Company (NBFC), mutual fund, insurance repository, pension fund repository, or even your wealth supervisor. The '''account aggregators'''<ref>{{Cite web|title=Reserve Bank of India - Database|url=https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=3142|access-date=2022-01-21|website=www.rbi.org.in}}</ref> act as the intermediary by collecting data from FIPs that hold the customer’s financial data and share that with FIUs such as lending banks/agencies that provide financial services. |
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== History == |
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The ideas around account aggregation first emerged in the mid 1990s when [[bank]]s started releasing [[Internet banking]] applications. |
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In the late 1990s services helped users to manage their money on the Internet (typical desktop alternatives include [[Microsoft Money]], [[Intuit]] [[Quicken]] etc.) in an easy-to-use manner wherein they got functionalities like single password, one-click access to current account data, total net worth and expense analysis. |
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=== Initial setback === |
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| ⚫ | One of the first major account aggregation services was [[Citibank]]'s My Accounts service, though this service ended in late 2005 without explanation from [[Citibank]]. Much has been said in the financial services and banking industry as to the benefits of account aggregation – principally the customer and web site loyalty it might generate for providers – but the lack of responsibility and commitment by the providers is one reason for skepticism about committing to those same providers. |
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=== New applications === |
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| ⚫ | Account aggregation evolved with [[single sign-on]] (SSO) at most major banks such as [[Bank of America]]. With SSO (usually implemented via [[Security Assertion Markup Language|SAML]]) major financial institutions are now expanding their aggregation services into new areas. Rich Presentment (getting all the information about a bill that you owe) is a service that uses aggregation extensively and can be seen at [[AOL]], using AOL Bill Pay. Aggregation also powers applications such as funds transfer, new account opening, card-based bill pay and so on. |
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=== Independent financial advisers === |
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[[Independent financial adviser]]s are another group on which account aggregators began focusing their attention. Having seen increasing competition from the other different financial advisers, positioning themselves as their client's ''primary advisor'' was not as easy as it once was. |
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=== Open banking === |
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Starting in 2015 developments such as [[open banking]] made it easier for third parties to access bank transaction data and introduced standard API and security models. |
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=== Income and Employment verification === |
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By integrating data from bank accounts, payroll systems and other financial sources, account aggregation provides a holistic picture of a borrower’s financial situation and [[verification of employment]]. By leveraging the technology, lenders can meet the rigorous standards set by entities like [[Fannie Mae]] and [[Freddie Mac]], ensuring compliance while benefiting from increased operational efficiency. |
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* [[Online banking]] |
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* [[Open banking]] |
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* [[Payment Services Directive]] |
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* [[Password manager]] |
* [[Password manager]] |
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* [[ |
* [[Password fatigue]] |
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==References== |
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{{reflist}} |
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{{DEFAULTSORT:Account Aggregation}} |
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{{Advertisement}} |
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[[Category:Account aggregation providers| ]] |
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[[Category:Customer relationship management software]] |
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[[Category:Password managers]] |
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Latest revision as of 03:22, 9 June 2024
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Account aggregation sometimes also known as financial data aggregation is a method that involves compiling information from different accounts, which may include bank accounts, credit card, payroll accounts,[1] investment accounts, and other consumer or business accounts, into a single place. This may be provided through connecting via an API to the financial institution or provided through "screen scraping" where a user provides the requisite account-access information for an automated system to gather and compile the information into a single page. The security of the account access details as well as the financial information is key to users having confidence in the service.[2]
The database either resides in a web-based application or in client-side software. While such services are primarily designed to aggregate financial information, they sometimes also display other things such as the contents of e-mail boxes and news headlines.[3]
Account Aggregator System
[edit]Account aggregator system[4] is a data-sharing system, which helps lenders to conduct an easy and speedy assessment of the creditworthiness of the borrower.
Components of Account Aggregator system
[edit]The Account Aggregator system essentially has three important components –
- Financial Information Provider (FIP)
- Financial Information User (FIU)
- Account Aggregators
Financial Information Providers has the necessary data about the customer, which it provides to the Financial Information Users. The Financial Information Provider can be a bank, a Non-Banking Financial Company (NBFC), mutual fund, insurance repository, pension fund repository, or even your wealth supervisor. The account aggregators[5] act as the intermediary by collecting data from FIPs that hold the customer’s financial data and share that with FIUs such as lending banks/agencies that provide financial services.
History
[edit]The ideas around account aggregation first emerged in the mid 1990s when banks started releasing Internet banking applications.
In the late 1990s services helped users to manage their money on the Internet (typical desktop alternatives include Microsoft Money, Intuit Quicken etc.) in an easy-to-use manner wherein they got functionalities like single password, one-click access to current account data, total net worth and expense analysis.
Initial setback
[edit]One of the first major account aggregation services was Citibank's My Accounts service, though this service ended in late 2005 without explanation from Citibank. Much has been said in the financial services and banking industry as to the benefits of account aggregation – principally the customer and web site loyalty it might generate for providers – but the lack of responsibility and commitment by the providers is one reason for skepticism about committing to those same providers.
New applications
[edit]Account aggregation evolved with single sign-on (SSO) at most major banks such as Bank of America. With SSO (usually implemented via SAML) major financial institutions are now expanding their aggregation services into new areas. Rich Presentment (getting all the information about a bill that you owe) is a service that uses aggregation extensively and can be seen at AOL, using AOL Bill Pay. Aggregation also powers applications such as funds transfer, new account opening, card-based bill pay and so on.
Independent financial advisers
[edit]Independent financial advisers are another group on which account aggregators began focusing their attention. Having seen increasing competition from the other different financial advisers, positioning themselves as their client's primary advisor was not as easy as it once was.
Open banking
[edit]Starting in 2015 developments such as open banking made it easier for third parties to access bank transaction data and introduced standard API and security models.
Income and Employment verification
[edit]By integrating data from bank accounts, payroll systems and other financial sources, account aggregation provides a holistic picture of a borrower’s financial situation and verification of employment. By leveraging the technology, lenders can meet the rigorous standards set by entities like Fannie Mae and Freddie Mac, ensuring compliance while benefiting from increased operational efficiency.
See also
[edit]References
[edit]- ^ Johnson, Alex. "Payroll Data + Fintech". newsletter.fintechtakes.com. Retrieved 2024-05-31.
- ^ Penny Crosman (April 9, 2018). "Is Finra's dire warning about data aggregators on target?". American Banker.
- ^ Lowell Putnam (December 7, 2017). "Five Questions You Should Be Asking Your Account Aggregation Provider". Wealth Management.
- ^ "A Comprehensive Guide to Account Aggregators | Parallel - Blog". www.parallelhq.com. Retrieved 2022-01-26.
- ^ "Reserve Bank of India - Database". www.rbi.org.in. Retrieved 2022-01-21.