Account Aggregation: Definitions and Benefits

What Is Account Aggregation?

Account aggregation is the process of bringing various financial accounts together in a single view. This might include checking accounts, savings accounts, car loans, mortgages, 401(k)s, HSAs, and more.

The term is essentially synonymous with financial data aggregation, though the latter emphasizes the fact that transaction data for each aggregated account is compiled in a single view. As this transaction data gets cleaned, enhanced, and augmented, users can put the data to use in a variety of ways.

How Does Account Aggregation Work?

There are two common methods of data aggregation: screen scraping (also called data scraping) and direct connections. 

Screen scraping is the process of gathering data from one app by inputting user credentials (such as username and password) and displaying that data in another app. Direct connections, by contrast, occur via application programming interfaces (APIs).

Currently, most aggregation occurs via screen scraping, but that situation is quickly changing as companies like MX work to optimize API integrations with financial institutions and fintech companies.

To learn more about bank APIs, read our Ultimate Guide to Bank APIs, which covers everything you need to know.

What Are the Benefits of Account Aggregation?

The benefits of account aggregation are wide ranging. They include the following:

• Avoid Manual Gathering. Account aggregation enables consumers to access data from a range of sources without having to sign into a range of sources every time they want to see their account and transaction information.
• Get Fast Access. Account aggregation also gives fast access to users who want to see it. By empowering users to sign into a single portal and see everything at once, companies that offer account aggregation make life easier for their users.
• Automate the Process. After a user aggregates their accounts, they can automatically see new transaction data. This is especially true for API connections, which, unlike screen scraped connections, have reliable uptime and connectivity.
• See Current Data. Because connections aren’t manual, consumers are able to sign in and see their most recent transactions every time.
• Enjoy Reliability. With direct connections via an API, consumers can be certain that they’ll be able to see all their data whenever they log in.
• View the Big Picture. Best of all, consumers and companies alike will be able to see the big picture with account aggregation. Consumers will be able to see all their financial data instantly, and companies will be able to have a 360-degree view of their consumers. This means that companies that offer account aggregation will be able to see what their competitors are up to — directly via their own banking portal. Every time a customer connects an account with your competitor, it gives you the upper hand. (Likewise, every time one of your customers connects an account with you to your competitors, it gives them the upper hand, illustrating the importance of being the first to offer account aggregation.)

What Is Account Aggregation Software?

Account aggregation software makes account aggregation possible. In the past, account aggregation software mostly focused on screen scraping, as we mentioned above. 

Increasingly, however, account aggregation is taking the form of account aggregation APIs between financial aggregators, such as MX, and other companies, including financial institutions and fintechs. 

To understand the industry and the options available here, see our list of financial data aggregation companies.

What Are the Risks of Account Aggregation?

Every time data gets shared online, there’s always an element of risk involved. That’s why it is so important to choose the right partner when it comes to account aggregation.

With tokenized, credential-free APIs and whitelisted screen scraping partnerships from MX, account aggregation is safer than ever. APIs enable companies to verify, authenticate, and aggregate data without ever sharing usernames or passwords, and whitelisting enables companies to know who is pulling what data.