A better way for banks, fintechs and customers to embrace open finance

Finance

Sponsored by Akoya

Anil Mahalaha, Chief Evangelist, Akoya

Fintechs have been growing in number for some years, with the onset of Covid-19 in 2020 only accelerating the trend. This has led to increased open finance and free-flowing exchange of consumer financial data impacting the financial services sector. But the proliferation of open finance has, in turn, given rise to unregulated entities who store large amounts of financial data, including consumer user IDs and passwords.

Access to financial data is a core component of fintech as it powers use-cases that enable financial planning, payments, budgeting, tax preparation and other services.

A key challenge is that most financial data is still accessed via screen scraping. This method of credential-based data aggregation has both privacy and security risks. Consumer data is being captured and stored, creating honeypots of login credentials and account data. Not only that, but data is being accessed beyond consumer permissions, and in some cases being resold – creating significant risks to the financial system.

New technologies such as API, FAPI, OAuth, and OIDC enable financial institutions to directly authenticate consumers and enforce data minimisation policies, meaning fintechs get the minimum data needed to provide financial services to consumers.

Enter Akoya, a network utility built to serve all players in open finance with fair and open access to industry-standard APIs, to provide permissioned consumer data to recipients who agree to security terms. Akoya makes accessing and sharing financial data safe and secure while optimising for security, transparency and scalability. It does this by leveraging a passthrough model that does not copy, store or hold any financial data or personal information.

Any financial institution or digital banking provider can use Akoya as a one-to-many connection to a growing network of fintechs and data aggregators for API-based permissioned data access. Small community banks and credit unions benefit the most. Through Akoya, these institutions can enable open finance for their customers, and share account information and data like larger financial institutions.

Increased usage of Akoya across financial services will provide valuable network effects to all participants, including increased data coverage and cost recovery-based pricing.

Data is King. Fintechs work hard to provide services to their customers on top of the data they get from the customer’s financial institutions. What they don’t need is an unregulated entity in the middle that stores the data and uses it in ways not intended by the customer, including monetising it. Open finance data can be obtained via pass-thru intermediaries such as Akoya in a safe, secure, reliable and scalable way without creating significant risks to the financial system.

We’re ready when you are. Please contact us to know more about how the Akoya Data Access Network can help your business.