The Future of Financial Empower(mint)
November 6, 2023 | 4 min read
This week, David Whitcomb, VP of Product at MX, and Ron Shevlin, Chief Research Officer at Cornerstone, tackled five questions in 25 minutes based on the latest report from Cornerstone Research on Selecting an Open Banking Data Aggregation Vendor. Here’s a quick summary of the answers:
1. What undercurrents are driving the need for open banking adoption here in the U.S., and what did you [Cornerstone] discover while doing the research?
The top factor driving Open Banking is convenience to the consumer. Consumers have more financial accounts than ever. This is especially true of Gen Z and Millennials, where one couple could have 30 to 40 different financial providers. The ever-expanding nature of financial accounts demands the ability to sync data and information between those accounts. This can give financial institutions a complete picture of a consumer's financial profile. To achieve this, both fintechs and financial institutions need to partner with intermediaries and data aggregators.
2. What did you uncover as the primary indicators to consider when selecting an open banking data partner?
Financial institutions and fintechs should start by looking at the aggregator’s capability stack, which amounts to three things that make up the key indicators of an excellent open banking data partner:
In addition to this, it's crucial to assess their business model and determine how it meshes with your own. Ensuring alignment can be the difference between helping increase the pace of innovation or hindering it.
3. When considering a vendor, what are the most important questions to ask when evaluating solutions?
We live in an imperfect world where things will go wrong, and banks and fintechs must explore how the aggregators will handle customer service when things don't go as planned.
To that end, it is essential to ask:
4. One of the recommendations for vendor selection is around evaluating the aggregators' buyer and seller relationships. In that, it mentions trust and how they approach their APIs. Can you share more about what you should be looking for or asking?
First, a vendor needs to determine what service or experience their company adds to the market and does the data aggregator support that niche? When selecting an aggregator, walk them through your goals and then have them show you how their processes are aligning with those goals.
Another thing to consider is that the API may do well at moving the data, but does it facilitate the timeliness of that connection or do "more" for analysis? By knowing what you're trying to accomplish and what you want the data to look like, you are going to get the most out of the API's. Ask yourself, "Does this meet my needs and increase opportunities beyond the immediate need?"
5. Knowing that all data partners are not created equal, what would be your advice for potential red flags or risks that should be considered? What did you learn while doing the research?
When it comes to red flags to watch for, there are two primary factors:
Be sure to watch the full replay to hear more from Cornerstone Research on these questions and more.
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