CFPB Requests for Information: Consumer Access to Financial Records:
This week’s update starts with a quiet, yet noteworthy escalation in the battle for access to consumer financial data collected by many of the account aggregation companies, as eight of them announced a new coalition called the Consumer Financial Data Rights industry group.
Who’s part of this group? Names that should be familiar are Envestnet | Yodlee, Betterment, and Personal Capital, with less-familiar B2C startups Affirm, Digit, Kabbage, Ripple, and Varo Money rounding out the list.
See, back in November 2015, large banks like JPMorgan Chase, Wells Fargo, and Bank of America “throttled” access to customer account data by account aggregation services that ultimately ended up on sites like Mint.com, Personal Capital and others, causing users of those services to have inaccurate information on their account transactions and investment holdings.
The banks acknowledged the throttling, saying they did it out of concerns for account security and to protecting customer data. Oh really?
Because by my research, account aggregation has been around for the better part of 28 years. How many known security breaches have been reported by the account aggregators? Zero.
So now all of a sudden the banks are concerned about security?
Obviously, there is some tension here, and I’m sympathetic to both sides.
And the tension is significant enough that even the Consumer Financial Protection Bureau has taken interest in the issue.
So here’s what I want you do to. When you’re done listening to, or reading, this week’s update, go to fppad.com/204 where I have links for this week’s stories, and at the top I’m going to link to the CFPB’s request for information about the use of account aggregation services.
If you’re using account aggregation to enhance the advice you give to your clients, or even just to see a comprehensive picture of their net worth, consider adding your comments on the rights you feel consumers should have to give permission to third-party aggregators in order to access their data.
Because if you don’t take the opportunity add your two cents, you can’t complain about what happens with the future of account aggregation.
I’m going to stay on the topic of account aggregation with the next story, because I find it interesting that this week JPMorgan Chase just announced its own agreement with Intuit to offer client account data access through an API.
So what’s different about this API? With most of the existing aggregators, a Chase customer would have to enter their username and password into account aggregation which would then go out and log in to the Chase servers, usually overnight when it’s not very busy, and pull in the account transactions. This new API, however, allows Chase customers to grant access to Intuit right within their Chase account. They don’t need to give their username and password to Intuit.
That’s great if customers who want aggregation operate within the Chase and Intuit ecosystem, but where I live in the real world, accounts are held all over the place.
I’m concerned that Chase will start reducing account access to aggregators like Envestnet|Yodlee, Fiserv’s CashEdge, and maybe even eMoney and force them to program to this new API. Now if the new API doesn’t cost anything, it’s probably a good thing, and certainly helps protect the security of a customer’s username and password, but if Chase starts charging a fee for access to this new API, well, that starts to get a bit political.
And another unknown is how Finicity may or may not be affected by this, because if you recall, Intuit said it was shutting down support for its account aggregation APIs and transitioned sales and support entirely over to Finicity. If a Chase client enables the API for Intuit, does that mean the Chase account data will be available through the Finicity relationship as well?
If *you* happen know the answer, let me know, and I’ll post a follow up and keep you in the loop.
So why spend all this time on account aggregation? I’m glad you asked! It’s because I continue to see strong demand for account aggregation services, with one example just this week where Wealth Access, operating out of Nashville, TN, announced that it now has $41 billion in assets tracked on its platform from 130 wealth management organizations, with both figures up over 50% from this time last year.
And in an email I received from Personal Capital, they’ve now crossed over $300 billion in assets that are tracked with their digital tools, of course, all powered by account aggregation.
And with the Department of Labor’s fiduciary rule, even with it’s fate in jeopardy, the momentum is already growing where advisors may need to use account aggregation to get the full picture of how a client’s existing portfolio is allocated BEFORE making a recommendation on how to make changes in a new portfolio.
How can you do that?
Unless you want to gather reams of paper statements from clients, the answer is account aggregation.
I’ve linked to all of the stories mentioned in this week’s broadcast over on my website, so be sure to check them out over at fppad.com/204
And next week I’ll be attending the TD Ameritrade Institutional National LINC conference along with my executive producer Steve Biermann, so if you’ll be at that event, be sure to stop me in the hallways and say hello.
And that wraps up this week’s broadcast on the best in advisor technology and more. If you have something to say, or have a story you think should be featured in a future episode, please send me a tweet on Twitter, I’m @billwinterberg, or if you’re not already receiving my email newsletter, you can sign up at fppad.com/subscribe
Thank you so much for listening, I’m Bill Winterberg, see you next time.