FDX is the recognized standard for Open Finance API and enables transparent, secure, user-permissioned data sharing and utilization.

MX is a proud member of FDX, promoting Open Finance API standards to enable transparent, secure, user-permissioned data sharing and utilization.


What Is FDX and Why Does It Matter? | MX Blog

Today&rsquo;s world is ruled by data. Financial institutions, fintechs, big tech, and other companies leverage consumer financial data to create products, services, recommendations, and campaigns. Unfortunately, financial data isn&rsquo;t always collected through methods where the consumer is in control.
Consumer financial data access and control has historically been left up to the financial institutions, fintechs, and other third parties involved. While this approach has provided the groundwork for many innovations, it left consumers lacking the control, transparency, and security they so clearly want.&nbsp;
According to <a href="https://www.mx.com/research/financial-apps-fall-short/">MX&rsquo;s latest survey</a> of 1,000+ American adults, 80% of U.S. adults agree that it is important for them to know and manage who has access to their data. In addition, nearly half (49%) of U.S. consumers agree they would freely share their data if they knew it was securely protected. Consumers are showing us what they want from their data &mdash;&nbsp;control, transparency, and security.
MX has always been an advocate that consumers should be in control of who can access their data. We believe consumers should be able to easily grant or revoke access at any time. An <a href="https://www.mx.com/blog/what-is-open-finance/">open finance</a> ecosystem puts consumers in the driver seat. And, it enables smarter, faster, and more reliable money experiences.&nbsp;
Organizations like the <a href="https://www.financialdataexchange.org/">Financial Data Exchange</a> (FDX) are crucial to moving the industry forward, setting the standard for secure consumer-permissioned data sharing. 
In this post, we will cover:
<ul>
<li><a href="#what-is-fdx" target="_self">What is the Financial Data Exchange (FDX)?</a></li>
<li><a href="#what-does-fdx-api-include" target="_self">What does the FDX API include?</a></li>
<li><a href="#why-fdx-standards-matter" target="_self">Why FDX Standards Matter</a></li>
<li><a href="#consumer-benefits" target="_self">How FDX Standards Benefit Consumers</a></li>
<li><a href="#business-benefits" target="_self">How FDX Standards Benefit Businesses</a></li>
<li><a href="#what-role-does-fdx-play" target="_self">What Role Does FDX Play in Play in Open Finance?</a></li>
<li><a href="#implementing-open-finance" target="_self">Implementing Open Finance</a></li>
</ul>
<h2 id="what-is-fdx">What is the Financial Data Exchange (FDX)?&nbsp;</h2>
FDX is a non-profit industry standards body dedicated to unifying the financial services ecosystem around common, interoperable, and royalty-free technical standards for<a href="https://www.mx.com/blog/what-is-consumer-permissioned-data/"> user-permissioned financial data sharing</a>. Any company within the financial industry can contribute to the development, growth, and adoption of the FDX API and other objectives.
FDX is centered around<a href="https://financialdataexchange.org/FDX/About/About-FDX.aspx?WebsiteKey=deae9d6d-1a7a-457b-a678-8a5517f8a474&amp;hkey=dffb9a93-fc7d-4f65-840c-f2cfbe7fe8a6&amp;a315d1c24e44=1#a315d1c24e44"> five core data sharing principles</a> that empower users:
<ol>
<li style="font-weight: 400;" aria-level="1">Control</li>
<li style="font-weight: 400;" aria-level="1">Access</li>
<li style="font-weight: 400;" aria-level="1">Transparency</li>
<li style="font-weight: 400;" aria-level="1">Traceability</li>
<li style="font-weight: 400;" aria-level="1">Security</li>
</ol>
With <a href="https://www.financialdataexchange.org/FDX/FDX/News/Announcements/FDX%20Hits%2094%20Million%20Accounts,%20CFPB%20Publishes%20FDX's%20Standard-Setting%20Application.aspx#:~:text=Standard%2DSetting%20Application-,FDX%20Hits%2094%20Million%20Accounts%2C%20CFPB%20Publishes%20FDX's%20Standard%2DSetting,our%20Fall%20Adoption%20Metrics%20Survey.">more than 94 million consumer accounts</a> using the FDX API, the largest financial institutions and fintechs in the financial ecosystem widely adopt the FDX API standards.
FDX is governed by a diverse board of directors from across the financial services ecosystem, and FDX has a global membership that includes financial institutions, financial data aggregators, fintechs, industry utilities, payment networks, consumer groups, financial industry groups and other stakeholders involved in user-permissioned financial data sharing. Today, MX&rsquo;s Chief Advocacy Officer and Head of Public Policy Jane Barratt serves as the <a href="https://www.financialdataexchange.org/FDX/News/Press-Releases/MX%20Chief%20Advocacy%20Officer%20Jane%20Barratt%20Named%20Financial%20Data%20Exchange%20(FDX)%20Co-Chair.aspx">co-chair of the FDX Board of Directors</a>.&nbsp;
Is your organization a member of the<a href="https://www.businesswire.com/news/home/20220627005029/en/Financial-Data-Exchange-FDX-Reports-32-Million-Consumer-Accounts-on-FDX-API-to-Power-Open-Banking-and-Open-Finance"> 200 financial industry leaders</a> innovating the financial ecosystem?<a href="https://financialdataexchange.org/"> Learn more here</a>.
<h2 id="what-does-fdx-api-include">What does the FDX API include?</h2>
FDX&rsquo;s open finance standards provide a comprehensive toolkit for building interoperable APIs. It is the culmination of over 600 components related to sharing personal financial data, helping to keep consumer data safe by eliminating the need to share credentials with third parties. The FDX API includes three components:
<ol>
<li style="font-weight: 400;" aria-level="1">Security standards for authentication and authorization</li>
<li style="font-weight: 400;" aria-level="1">Specified recommendations for the user experience in selecting a data provider and throughout the user&rsquo;s financial data sharing journey</li>
<li style="font-weight: 400;" aria-level="1">Use-case specific data structures and endpoints</li>
</ol>
The FDX API is available on the FDX website without charge for parties that accept the terms and conditions of the FDX API License Agreement.&nbsp;
<h2 id="why-fdx-standards-matter">Why FDX Standards Matter</h2>
FDX standards put the consumer&rsquo;s needs first. Enabling consumers to easily connect their accounts to see all of their data in one place creates positive outcomes for consumers and businesses alike. This is the promise of Open Finance.
<a href="https://www.mx.com/blog/what-is-open-finance/">Open Finance</a> enables access and sharing of consumer data to even more financial products and services &mdash; not just banking, like<a href="https://www.mx.com/blog/what-is-open-banking/"> Open Banking</a>. This includes loans, consumer credit, investments, and pensions. It also enables wider integration of financial data with non-financial industries, such as healthcare and government. In Open Finance, consumers can grant trusted third parties access to their entire financial footprint for better experiences and personalized solutions to improve financial wellness.
<h3 id="consumer-benefits">How FDX Standards Benefit Consumers</h3>
FDX standards allow consumers to more easily connect their various financial accounts and data together into a single view &mdash; enabling a more seamless money experience. And, with the freedom and flexibility that Open Finance enables, consumers have more choice and control over the data they share and how they engage with their finances. They can gain unparalleled access to a broader range of products and services. 
<h3 id="business-benefits">How FDX Standards Benefit Businesses</h3>
We previously wrote about the power of open access to data for financial institutions, fintechs, and other organizations. It enables:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Better Fraud and Risk Management: By leveraging an open finance API rather than screen scraping, consumers never have to share their username and password, and financial providers eliminate the risk of sharing credentials.</li>
<li style="font-weight: 400;" aria-level="1">More Accurate Customer Profiles: Financial providers can gain access to real-time financial data from their consumers. They can easily see where consumers are sharing their data and why it is being used. This helps identify product and partnership opportunities.</li>
<li style="font-weight: 400;" aria-level="1">Enhanced Customer Experiences: By putting consumers in the driver&rsquo;s seat, financial providers can build trust and improve relationships, leading to greater customer satisfaction and loyalty.</li>
<li style="font-weight: 400;" aria-level="1">Personalized Services: By analyzing their financial data, businesses can identify specific customer needs or preferences and tailor their offerings accordingly. For example, a bank may offer investment opportunities to customers who have a higher disposable income, or provide budgeting tools to those who struggle to manage their finances. By offering more personalized services, businesses can create a stronger connection with their customers, leading to increased loyalty and retention.</li>
<li style="font-weight: 400;" aria-level="1">Data-Driven Decision Making: Businesses can gain insight into trends and patterns that may not have been apparent before. This can help businesses identify new opportunities, optimize their operations, and make more informed decisions about product development and marketing strategies.</li>
</ul>
With greater visibility into their customers, financial providers can provide more personalized recommendations, products, and services to meet their needs. Consistent standards also form a foundation for increased innovation and industry collaboration. 
<h2 id="what-role-does-fdx-play">What Role Does FDX Play in Open Finance?</h2>
For business and consumers to benefit from the advantages of an Open Finance ecosystem, we believe the financial industry needs to embrace <a href="https://www.mx.com/blog/why-interoperability-matters/">interoperability</a>. This means consumer-permissioned data can easily flow from data providers &mdash; often credit unions and banks &mdash; to third-party data recipients (i.e., fintechs and other providers of financial products and services).&nbsp;
The FDX standard helps companies to build interoperable interfaces more easily by establishing clear technical standards that keep data flowing effectively and securely for consumers and businesses. This can help reduce cost, simplify integration with other parties, create more unified and reliable consumer experiences, and aid in regulatory compliance.
The U.S. Consumer Financial Protection Bureau (CFPB) published a final <a href="https://www.mx.com/blog/cfpb-dodd-frank-section-1033/">Section 1033 rule</a> in October 2024 that will give consumers greater control and rights over their personal financial data. While <a href="https://www.mx.com/blog/prioritizing-consumer-outcomes/">next steps are currently uncertain</a> in the face of multiple actions from Administration leaders and multiple lawsuits in the courts, this rulemaking fundamentally changes how consumers can access and share their financial data.&nbsp;As part of this rule, the CFPB calls out the need for &ldquo;consensus standards&rdquo; to meet requirements and a recognized standard-setting organization to help create that consensus. FDX received official recognition by the Consumer Financial Protection Bureau (CFPB) as an <a href="https://www.financialdataexchange.org/FDX/News/Press-Releases/FDX%20Recognized%20by%20CFPB%20as%20a%20Standard-Setting%20Body,%20a%20Step%20Forward%20for%20Open%20Banking.aspx">industry standard-setting body</a> for the U.S. open banking ecosystem in January 2025. FDX is now in the process of updating a consensus standard data format that aligns with relevant portions of the rulemaking and supports compliance.
<h2 id="implementing-open-finance">Implementing Open Finance</h2>
MX believes adopting FDX standards and embracing Open Finance will help build a more<a href="https://www.mx.com/blog/creating-a-fair-and-competitive-financial-environment/"> fair and competitive financial ecosystem</a> that gives consumers more choice in where and how they manage their money, as well as greater insights to take control of their finances.&nbsp;
Adopting FDX standards and embracing<a href="https://www.mx.com/blog/what-is-open-finance/"> Open Finance</a> will enable financial institutions and fintechs to truly empower everyone to be financially strong with access to the right insights and products to support their financial goals.
MX continues to be a driving force at FDX by chairing and collaborating in key task forces and actively engaging on the Board of Directors. MX is also enabling financial institutions of all sizes to accelerate open finance adoption and enhance the money experience for consumers through Data Access.<a href="https://www.mx.com/products/data-access/"> Data Access is an open API platform built on FDX standards</a> that improves time-to-market and reduces costs to deliver secure data sharing, as well as provide the groundwork for greater insights about customer behaviors, trends, and needs. It provides financial institutions with the ability to monitor and manage where consumers are sharing their financial data and the tools to implement a more secure data-sharing experience with token-based connectivity.

Why FDX Matters — Promoting a Standard of Excellence in Financial Services

We believe that consumer-permissioned data access is the right path forward despite uncertainty about the CFPB’s future. 

Open banking is the right path forward despite uncertainty about the CFPB’s future.

Turbulence at the CFPB — What It Means for Open Banking

Like many in the financial services industry, we have been following the rapid changes at the Consumer Financial Protection Bureau (CFPB). To recap:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">On Jan. 31, former CFPB Director Rohit Chopra was dismissed from his post and newly appointed Treasury Secretary Scott Bessent briefly took the reins as Acting Director.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">On Friday, Feb. 7, Russell Vought became Acting Director of the CFPB.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Over the weekend, CFPB staff received a series of emails instructing them to cease performing all supervision and examination work tasks.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">In addition, the CFPB staff were informed that the CFPB&rsquo;s headquarters is closed this week (Feb. 10-14) and all employees and contractors in Washington should &ldquo;work remotely unless instructed otherwise from our Acting Director or his designee.&rdquo;</li>
</ul>
Understandably, this is creating an environment of confusion and uncertainty for participants in the financial data ecosystem. As long-time advocates of Open Banking, MX is focused on how these changes could affect the future of regulations related to Open Banking such as <a href="https://www.mx.com/blog/cfpb-dodd-frank-section-1033/">Section 1033 of the Dodd-Frank Act</a>.&nbsp;
Section 1033 became effective on Jan. 17, 2025. As a result of this effective date, it presently still stands, and its tiered compliance deadlines remain in place, with the first deadline in April 2026.&nbsp;
However, with this rapid pace of change under the current administration, anything could happen in the coming weeks and months. We will continue to keep ourselves updated on these shifts and share insights with our clients and the broader ecosystem. And, our focus on ensuring our products and services comply with Section 1033 will continue.&nbsp;
For more than a decade, MX has been a leader in Open Banking and consumer-permissioned data sharing. Our <a href="https://www.mx.com/products/data-access/">Data Access</a> solution combines an API platform that meets FDX standards with built-in analytics to create actionable intelligence.&nbsp;
But, we aren&rsquo;t champions of Open Banking because of regulatory compliance requirements. We truly believe that Open Banking creates a competitive advantage for financial institutions, an engine of innovation and growth for fintechs, and helps enable financial strength for consumers.&nbsp;
<h2>A Competitive Advantage for Financial Institutions</h2>
Consumers want personalized products, services, and offers across mobile and digital experiences. However, most financial institutions are missing key details on where consumers share data &mdash; details they can gain from Open Banking. What&rsquo;s more, <a href="https://www.mx.com/research/financial-apps-fall-short/">consumers are willing to share even more data</a> if they know it will result in a better experience.&nbsp;
<h2>An Engine for Fintech Innovation and Growth&nbsp;</h2>
For fintechs, interoperable open banking platforms and connections can deliver significant benefits to drive innovation and growth forward. It can help increase market reach, lead to faster integrations and reduce time to market for product launches, generate partnership opportunities, improve scalability, and lead to cost savings.&nbsp;
<h2>An Enabler of Financial Strength for Consumers</h2>
Open Banking puts consumers in control of their data, as well as creates a more secure ecosystem by eliminating the need to share credentials to access data or link accounts. And, with the freedom and flexibility that Open Finance enables, consumers have more choice and control over the data they share and how they engage with their finances. And, they gain unparalleled access to a broader range of products and services.&nbsp;
Open Banking (and Open Finance) helps put the right financial solutions in the hands of the right consumers at the right time while also fueling higher deposits and income for financial providers so they can pour more energy into innovation that moves the industry forward. Regardless of regulatory churn, this doesn&rsquo;t change. Open Banking is here and already well adopted across the globe.
We believe that consumer-permissioned data access is the right path forward despite uncertainty about the CFPB&rsquo;s future. We are committed to supporting our clients through this time of dynamic shift in technology, consumer expectations, and politics.&nbsp;

The Promise of Open Banking Persists in the Face of Turbulence at CFPB

Fraud prevention is a constantly evolving challenge that requires ongoing collaboration and innovation.

Fraud prevention is a constantly evolving challenge that requires collaboration and innovation to build a safer, more secure financial ecosystem for everyone.

Fighting Fraud with Open Finance, Data Literacy, and More

Financial fraud is a huge problem in this country, and it&rsquo;s not going away any time soon. In fact, its continued rise is one of our <a href="https://www.mx.com/webinars/top-trends-grow-desposits-engagement-2025/">key predictions for 2025</a>. Fraudsters are often the early adopters of every advancement in technology &mdash; so financial institutions and fintech alike need to keep investing to protect their customers from fraud. And, it&rsquo;s just because it&rsquo;s the right thing to do. It is essential for customer retention.&nbsp;
<h2>Fraud is Now Part of American Daily Life</h2>
The statistics are staggering, and getting worse each year. According to the Federal Trade Commission (FTC), consumers reported losing more than <a href="https://www.ftc.gov/news-events/news/press-releases/2024/02/nationwide-fraud-losses-top-10-billion-2023-ftc-steps-efforts-protect-public">$10 billion to fraud in 2023</a>. This was a 14% increase from 2022.
When I was in the process of purchasing a house in Utah, I almost became part of this statistic. Fraudsters hacked into the email system of the title company we worked with, and spoofed its email with one letter changed in the email address. They sent us wire transfer instructions including the exact, correct amount of money for our down payment. They even had links in the email to a fake version of the title company&rsquo;s website, with fake phone numbers and emails to contact if we had questions.&nbsp;
This fraud attempt was so convincing that we hit send and almost lost an unthinkable amount of money to the scammers. Thankfully, our friends at USAA had systems in place to detect abnormalities in the transaction, and put a hold on the transaction until we called them. Let me tell you &ndash; nothing inspires institutional loyalty more than an experience like this with a bank. We&rsquo;ll be USAA customers for life.&nbsp;&nbsp;
Unfortunately, many Americans aren&rsquo;t as lucky. A recent study revealed that <a href="https://www.ipx1031.com/fraud-and-identity-theft-in-america/">30% of Americans have been scammed</a> in the last 12 months, and 40% receive suspicious emails, messages, or phone calls every day.&nbsp;
While the increased digitization of the financial world makes our lives exponentially easier every year, it also leads to an increase in certain types of fraud. Technology makes it challenging for even the most vigilant consumers and financial institutions to detect and prevent fraud.&nbsp;
<h2>Technology is the Problem&hellip;</h2>
<h3>Traditional Technologies</h3>
Phone calls, text messages, and emails are a key access point to consumers that scammers use to illegally gain access to financial data through impersonation, fake email links (phishing), and fraudulent requests for personal information &ndash; often tricking individuals into revealing sensitive details such as passwords, account numbers, or Social Security numbers. The ubiquity of these technologies makes them attractive to scammers, who can make hundreds of attempts per day, and only need one hit with an unsuspecting consumer to succeed.&nbsp;
<h3>Generative Artificial Intelligence</h3>
Fraudsters now have access to powerful tools like generative AI to make deepfake videos, fictitious voices and fake documents easily and cheaply. A bad actor can mock up a fake image of a government-issued ID in seconds, making traditional methods of identity verification less secure. Generative AI can be used to craft more sophisticated phishing emails, malware, and social engineering attacks, targeting financial institutions and their customers with highly personalized and believable content.&nbsp;
<h3>Quantum Computing</h3>
Currently, bank transactions are protected by cryptographic algorithms, better known as encryption technology, which currently ensures the private, safe and secure transfer of your financial data. But according to experts, quantum computers will soon be able to break traditional encryption algorithms &mdash; threatening standard security protocols that banks and fintech currently rely on to keep their customers safe. That would also upend security in the cryptocurrency space, requiring Bitcoin and other popular cryptocurrencies to update their protocols to use post-quantum encryption.&nbsp;
<h2>&hellip; And Technology (and Awareness!) Is the Solution</h2>
So, what chance do banks and fintechs have against these rapidly evolving technologies and emboldened scammers? There is a lot that financial institutions and fintechs can do to protect themselves and their customers from fraudulent transactions.
<h3>Continually Educate Your Customers</h3>
One of the most important things you can do to support your customers in the fight against fraud is to educate them about it. There are a number of things you can do to develop a robust fraud prevention education campaign:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Engage in proactive customer communications that share examples of recent scams</li>
<li style="font-weight: 400;" aria-level="1">Conduct fraud awareness campaigns through email and social media, as well as provider educational workshops and seminars&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Educate your customers on tools they can use to protect themselves like multi-factor authentication and spending alerts</li>
<li style="font-weight: 400;" aria-level="1">Educate your customers on common scams and typical entry points (phishing, romance scams, card skimming)</li>
<li style="font-weight: 400;" aria-level="1">Partner with government agencies and advocacy groups to expand the reach of your anti-fraud resources&nbsp;</li>
</ul>
<h3>Modernize Your Systems</h3>
Banks must take a proactive, forward-looking approach to counter the growing threats posed by generative AI, advanced email and phone scams, and the emerging risks of quantum computing. These technologies threaten many of the traditional methods of security that we&rsquo;ve come to rely upon as a society &mdash; and all businesses, especially financial institutions, will need to step up their game to meet the new reality.
The adoption of <a href="https://www.mx.com/blog/what-is-open-banking/">open banking</a> APIs can help <a href="https://www.mx.com/use-cases/fraud-risk-management/">mitigate fraud</a>. Secure APIs for financial data sharing provide a <a href="https://www.mx.com/whitepapers/how-open-finance-improves-security/">significant opportunity</a> to alleviate security concerns and improve the experience for the consumer by offering:&nbsp;&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Tokenized data connections that take consumer credentials out of the ecosystem where they can land in the wrong hands&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Reliable access to accurate financial data that is permissioned by the consumer</li>
<li style="font-weight: 400;" aria-level="1">Compliance with new regulations that establish industry standards, help protect consumers and ensure consumers have control over their data</li>
</ul>
Businesses can also leverage AI and machine learning to enhance fraud detection by establishing behavioral baselines for customers, flagging anomalies like unusual spending patterns or login locations.&nbsp;
Another useful tool is to employ risk-based authentication that can dynamically adjust security protocols based on the context of a transaction (e.g., applying stricter controls for high-value transactions or risky geolocations).
<h3>Don&rsquo;t Go It Alone</h3>
Meeting the future needs of fraud detection and prevention will take collaboration across the financial data ecosystem to keep consumers&rsquo; data safe. MX provides support in building secure APIs connections, and end solutions like <a href="https://www.mx.com/products/instant-account-verifications/">account verification</a>, behavior analytics, and proactive alerts all work in concert to keep a customer&rsquo;s data safe. Innovative companies like Sardine.ai are providing AI technology to detect fraud are joining the market to help fintech and banks use AI to detect and prevent fraud in cutting edge ways.&nbsp;
And, public-private partnerships that drive awareness and collaborative execution to fight fraud are gaining traction around the country, including here in Utah. At MX, we&rsquo;reworking with the Utah Bankers Association to participate in the newly-formed Utah Fraud Prevention Coalition because we know how important this issue is for financial institutions and consumers alike. Partnership across the industry is a key ingredient to effectively fight against fraud and scams.&nbsp;
<h2>Policy Recommendations</h2>
There are many ways that the U.S. Congress and federal agencies can help combat fraud and scams. Some key areas of focus should be:&nbsp;
<h3>Consumer Control Over Data Sharing</h3>
Americans deserve clarification and enforcement of their data rights as consumers. The final <a href="https://www.mx.com/blog/cfpb-dodd-frank-section-1033/">Section 1033</a> rule is a great starting point for this, but consumers deserve clarity across all their online data. Federal privacy legislation that codifies a consumer&rsquo;s data rights should be a priority for this session of Congress. Strong privacy protections would not only enhance trust in financial institutions but also empower consumers to take charge of their financial security in an increasingly interconnected world.
<h3>Account Verification Requirements</h3>
Secure account verification is such a useful tool in verifying that money is going where it&rsquo;s supposed to go. Implementing robust verification measures reduces the risk of fraud, ensures accountability, and builds confidence in financial transactions. By mandating secure account verification processes for large transfers, financial institutions can prevent fraudsters from exploiting system vulnerabilities and protect consumers from devastating financial losses.
<h3>Financial and Data Literacy&nbsp;</h3>
The next generation of Americans would benefit enormously from strong financial literacy programs in schools to educate students about how to manage their money effectively and avoid financial scams. We support legislation like H.R.2943, the Student Empowerment and Financial Literacy Act, which was introduced in the last Congress to establish a competitive grant program to increase financial literacy instruction in elementary schools and secondary schools. But, we also believe that we should consider data literacy the next educational frontier for consumers.&nbsp;
This will set up the next generation of Americans to understand how to manage their digital data AND make informed financial decisions to build wealth and safeguard their financial futures.
Fraud prevention is a constantly evolving challenge, but with collaboration, education, and innovation, financial institutions, policymakers, and consumers can work together to build a safer, more secure financial ecosystem for everyone. We look forward to playing our part.

Fraud (and Fighting it) Is the Future

Open Banking is a driving force behind this data-driven personalization and is key to success for financial institutions.

Open banking adoption will speed up as those who implement it now will gain the competitive advantage.

Open Banking Creates a Competitive Advantage for Financial Providers

According to new MX research, 55% of U.S. consumers agreed they would give their financial provider access to more of their data if they knew it would result in a better experience. This is a significant jump from <a href="https://www.mx.com/news/manual-methods-consumer-research/">May 2024</a> &mdash; when 46% agreed with the same statement.&nbsp;
<a href="https://www.mx.com/blog/what-is-open-banking/">Open Banking</a> is a driving force behind this data-driven personalization and is key to success for financial institutions. It enables consumers to seamlessly connect their financial accounts into one view, providing them with a comprehensive look at their finances and arming financial providers with greater insights to deliver the right solutions, tools, and insights to meet their financial needs.
In 2025, we predict Open Banking adoption will speed up as those who lead from the front seek to gain the competitive advantage.
<blockquote>
MX sees 5 key trends shaping success for financial providers in 2025, from AI to fraud to app consolidation to Open Banking. Learn more about our top predictions in our <a href="https://www.mx.com/whitepapers/2025-predictions/">whitepaper</a> or <a href="https://www.mx.com/webinars/top-trends-grow-desposits-engagement-2025/">watch the webinar</a> with expert insights.
</blockquote>
<h2>New Open Banking Regulations</h2>
Today, there is no open banking conversation without first touching on regulations. It was a big year for new industry-wide regulations on consumer data sharing rights in 2024. Both the <a href="https://www.mx.com/blog/1033-is-here-whats-next/">Section 1033 ruling of the Dodd-Frank Act</a> from the Consumer Financial Protection Bureau (CFPB) and Canada's <a href="https://www.mx.com/blog/canada-open-banking/">2024 Fall Economic Statement</a> have unveiled consumer-driven banking frameworks across North America. These new regulations solidified key aspects of Open Banking:
<ul>
<li style="font-weight: 400;" aria-level="1">Consumers own their data and should have control over how it is accessed and shared</li>
<li style="font-weight: 400;" aria-level="1">Privacy should be an integral part of data sharing</li>
<li style="font-weight: 400;" aria-level="1">Financial institutions should have to continue to compete for their consumers&rsquo; deposits by offering the best service possible</li>
</ul>
<h2>Open Banking as a Competitive Differentiator</h2>
Even though Open Banking is not new, many financial institutions are not harnessing its full power. With new regulations top of mind, Open Banking will continue to speed up. Those that fully invest in Open Banking will lead from the front.
A good open banking strategy will help businesses better mold their products and services to meet the needs of consumers and create personalized offers. Financial providers who start now will be able to better deliver on consumer expectations and stand out from the competition.
With compliance deadlines still over a year away and a new presidential administration taking shape in the United States, some institutions may opt to wait to take action. But waiting to see how things play out will stop businesses from capitalizing on the opportunity that Open Banking presents.&nbsp;
Businesses who fail to adopt Open Banking will be at a vulnerable place and will find it more difficult to catch up with those that were early adopters. In today&rsquo;s age of competition, financial institutions that are proactive in their open banking approach will be better positioned to win in 2025.

Gaining a Competitive Advantage with Open Banking

The CFPB's Section 1033 of the Dodd-Frank Act is an important milestone in ensuring consumers have the right to their financial information.

Join us on Monday, November 6, for a virtual roundtable discussion to ask questions and share your perspective. 

What is CFPB Dodd-Frank Act Section 1033?

In this post, we will cover:
<ul>
<li><a href="#what-is-1033">What is the Dodd-Frank Act Section 1033?</a></li>
<li><a href="#what-is-the-cfpb">What is the Consumer Financial Protection Bureau (CFPB)?</a></li>
<li><a href="#why-is-1033-important">Why is Section 1033 Important?</a></li>
<li><a href="#what-data-is-covered">What Data is Covered by Section 1033?</a></li>
<li><a href="#compliance-dates">When Will Financial Providers Need to be Compliant?</a></li>
<li><a href="#whats-next">What&rsquo;s Next?</a></li>
<li><a href="#why-data-rights-matter">Why Consumer Financial Data Rights Matter</a></li>
<li><a href="#why-standardized-apis">Why Standardized APIs are Important</a></li>
<li><a href="#how-mx-can-help">How MX Can Help</a></li>
<li><a href="#additional-resources">Additional 1033 Resources</a></li>
</ul>
At MX, core to delivering on our mission to empower the world to be financially strong is the ability for consumers to access, direct, and control their financial data to improve their financial outcomes.
We believe in the power of financial data to unlock new insights and drive better money experiences that benefit companies and consumers alike. To enable better decisions, experiences, and outcomes, financial data should be accessible and actionable for all consumers to better enable decisions, experiences, and outcomes. And, increased competition, a level playing field, and increased digital innovation can help improve financial outcomes for consumers.
However, until now, consumer financial data access and control has primarily been left up to the financial institutions, fintechs, and other third parties involved. MX has been working with our clients, partners, and the wider financial services ecosystem to accelerate <a href="https://www.mx.com/blog/what-is-open-banking/">Open Banking</a> and secure, <a href="https://www.mx.com/blog/what-is-consumer-permissioned-data/">consumer-permissioned data</a> sharing for nearly a decade.
On October 19, 2023, the Consumer Financial Protection Bureau (CFPB) published its long-awaited <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rule-to-jumpstart-competition-and-accelerate-shift-to-open-banking/">notice of proposed rulemaking (NPRM)</a> for personal financial data rights under Dodd-Frank Act Section 1033. We believe that the success of the financial industry, future innovation, and the financial health of Americans can all be greatly enhanced by increased clarity of data rights and the promulgation of this 1033 rulemaking. Now, we&rsquo;re likely just weeks away from the anticipated final rule from the CFPB.
Once final, the clock starts for financial data providers and recipients to meet outlined compliance timelines and requirements. The compliance period will vary depending on the size of each institution. But, that doesn&rsquo;t mean wait. The time is now for financial institutions to begin getting ready to meet obligations under this new rule.
<h2 id="what-is-1033">What is the Dodd-Frank Act Section 1033?&nbsp;</h2>
In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, also known as the Dodd-Frank Act. Section 1033 is an important milestone to ensure consumers have the right to access and control their financial information.
It authorizes the CFPB to prescribe rules requiring &ldquo;a covered person [to] make available to a consumer, upon request, information in the control or possession of the covered person concerning the consumer financial product or service that the consumer obtained from such covered person, including information relating to any transaction, series of transactions, or to the account including costs, charges and usage data.&rdquo;
<blockquote>
Getting ready for 1033? <a href="https://www.mx.com/open-banking-made-easier/" target="_blank" rel="noopener">Schedule a strategy session</a> to help you prepare for the final rule.
</blockquote>
<h2 id="what-is-the-cfpb">What is the Consumer Financial Protection Bureau (CFPB)?</h2>
The Consumer Financial Protection Bureau (CFPB) is a U.S. government agency that aims to protect consumers from unfair treatment by financial institutions. In its own words, the CFPB is &ldquo;dedicated to making sure you are treated fairly by banks, lenders and other financial institutions.&rdquo; It implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive.
<h2 id="why-is-1033-important">Why is Section 1033 Important?</h2>
This rulemaking is one of the most substantive regulatory changes to happen in the financial industry in many years. It fundamentally changes, for the better, how consumers can access and share their financial data. And, it will lay the groundwork for the United States to move into the next chapter of fintech innovation.
A clear, cross-agency regulatory framework will accelerate adoption of <a href="https://www.mx.com/blog/what-is-open-finance/" target="_blank" rel="noopener">Open Finance</a>, improve the money experience, and help drive better financial outcomes for millions of Americans.
But, Open Finance isn&rsquo;t simply a checkbox to meet forthcoming 1033 compliance and regulatory obligations. It provides significant benefits to consumers and financial services providers.&nbsp;
Consumers gain more choice and control over the data they share and how they engage with their finances with the freedom and flexibility that Open Finance enables. And, they gain unparalleled access to a broader range of products and services.
It also allows consumers to more easily connect their various financial accounts and data together into a single view &mdash; enabling a more seamless money experience.
For financial services providers, Open Finance enables:
<h3>Better Fraud and Risk Management</h3>
By leveraging an open finance API rather than screen scraping, consumers never have to share their username and password, and financial providers eliminate the risk of sharing credentials.
<h3>More Accurate Customer Profiles</h3>
Financial providers can gain access to real-time consumer-permissioned financial data. This helps them better understand their customer needs and identify product and partnership opportunities.
<h3>Enhanced Customer Experiences</h3>
By putting consumers in the driver&rsquo;s seat, financial providers can build trust and improve relationships, leading to greater customer satisfaction and loyalty. And, with better visibility into a consumer&rsquo;s financial life, financial providers can deliver more personalized, intuitive experiences to meet them where they are.
<h2 id="what-data-is-covered">What Data is Covered by Section 1033?&nbsp;</h2>
It&rsquo;s important to note that the CFPB isn&rsquo;t attempting to cover the entire financial ecosystem with this initial rule under Section 1033. It specifically calls out Regulation E accounts and Regulation Z credit card accounts to start, as well as digital wallets and payment facilitation products.
This includes:
<ul>
<li>Checking accounts</li>
<li>Savings accounts</li>
<li>Credit cards</li>
<li>Prepaid cards</li>
<li>Digital wallets</li>
<li>Other electronic payments</li>
</ul>
But, it does exclude first-party payments as part of those payment facilitation products, which the CFPB defines as a transfer initiated by the payee or an agent on behalf of the underlying payee. First-party payments include payments initiated by a loan servicer.
Within these types of accounts, specific covered data outlined includes:
<ul>
<li>Transaction information, including historical transaction information</li>
<li>Account balances</li>
<li>Information to initiate payment to or from a Regulation E account</li>
<li>Terms and conditions related to providing a consumer financial product or service</li>
<li>Upcoming bill information</li>
<li>Basic account verification information</li>
</ul>
Exceptions to this covered data would include:
<ul>
<li>Any confidential commercial information, including an algorithm used to derive credit scores or other risk scores or predictors</li>
<li>Any information collected by a data provider for the purpose of preventing fraud or money laundering, or detecting, or making any report regarding other unlawful or potentially unlawful conduct</li>
<li>Any information required to be kept confidential by any other provision of law</li>
<li>Any information that a data provider cannot retrieve in the ordinary course of its business</li>
</ul>
<h2 id="compliance-dates">When Will Financial Providers Need to be Compliant?</h2>
In the final rule, the CFPB has extended compliance deadlines beyond the NPRM to allow for more time for data providers and third parties to meet expectations. And, the smallest institutions (banks and credit unions with less than $850 million in assets), will not be required to provide data under the rule.
Compliance deadlines in the final rule for institutions with more than $850M in assets are:
<img src="https://cms.mx.com/assets/4a891c23-7bb4-48d7-880e-2391f7ee3df8?width=1200&amp;height=738" alt="1033 Compliance Deadlines" />
<h2 id="whats-next">What&rsquo;s Next?</h2>
With the final rule in place, now is the time to start understanding what it means for your organization and make plans to meet outlined compliance data.&nbsp;
In addition, the CFPB finalized a rule in June 2024 that outlines the qualifications to become a <a href="https://www.consumerfinance.gov/personal-financial-data-rights/applications-for-open-banking-standard-setter-recognition/#:~:text=The%20rule%20identifies%20the%20attributes,process%20and%20appeals%2C%20and%20transparency." target="_blank" rel="noopener">recognized industry standard-setting body</a>, which can issue consensus standards that companies can use to help them comply with the CFPB&rsquo;s upcoming Personal Financial Data Rights Rule. The rule identifies the attributes that standard-setting bodies must demonstrate in order to be recognized by the CFPB as an open banking standard setter, including:&nbsp;
<ul>
<li>Openness: The process must be open to all interested parties.</li>
<li>Transparency: Procedures must be transparent and publicly available.</li>
<li>Balanced decision-making: No single special interest should dominate the process. The decision-making power to set standards must be balanced across all interested parties, including consumer and other public interest groups.</li>
<li>Consensus: Standards development must proceed by consensus, with fair consideration of comments and objections.</li>
<li>Due process and appeals: The body must use documented, publicly available policies and procedures, including adequate notice of meetings, time for review, and an impartial appeals process.</li>
</ul>
The <a href="https://www.mx.com/blog/why-fdx-matters/#what-is-fdx" target="_blank" rel="noopener">Financial Data Exchange (FDX)</a> submitted the first application to be recognized as an industry standard-setting body for open banking. The CFPB is currently taking public <a href="https://www.consumerfinance.gov/about-us/blog/cfpb-launches-public-comment-process-for-open-banking-standard-setter-recognition/" target="_blank" rel="noopener">comments on the FDX application</a>. Today, more than <a href="https://financialdataexchange.org/FDX/News/Announcements/FDX%20Hits%2094%20Million%20Accounts,%20CFPB%20Publishes%20FDX's%20Standard-Setting%20Application.aspx" target="_blank" rel="noopener">94 million consumer accounts</a> are now actively using the <a href="https://www.mx.com/blog/why-fdx-matters/#what-does-fdx-api-include" target="_blank" rel="noopener">FDX API</a> for secure, permissioned data sharing.
<h2 id="why-data-rights-matter">Why Consumer Financial Data Rights Matter</h2>
<a href="https://www.mx.com/whitepapers/open-finance-creates-a-better-money-experience/">Today&rsquo;s money experience is inherently messy</a> both for consumers and financial providers seeking to meet increasingly complex consumer needs. Consumers must look across a multitude of financial accounts to try to manage their financial life &mdash;&nbsp;with most maintaining relationships with an average of 5 to 10 different financial services organizations, from their primary bank to PayPal and Venmo to various credit cards, investment accounts, and loans. And, today&rsquo;s closed financial ecosystem makes it difficult for consumers to switch to a new financial provider or take their financial data with them.&nbsp;&nbsp;
We&rsquo;ve all heard the expression that knowledge is power. Engaging with their finances on multiple platforms means they don&rsquo;t have a consolidated view of their financial data or who may be accessing it. And, if they ever choose to leave their current providers, it&rsquo;s not easy to transfer and take their financial data with them.&nbsp;
Consumers should own, have access to, and have the ability to control all their financial data. Full stop. And, <a href="https://www.mx.com/research/what-influences-where-consumers-choose-to-bank/">consumers overwhelmingly agree (82%) that they own their financial data</a> and should be able to control who has access to it.&nbsp;
This empowers consumers to better understand their finances and make financial decisions that will improve their overall health (e.g., seek improved interest rates, increase savings rates, etc.) &mdash;&nbsp;as well as spur innovation and competition in the marketplace.&nbsp;
<h2 id="why-standardized-apis">Why Standardized APIs are Important</h2>
Most financial data sharing still relies on less reliable and less secure methods that require consumers to share credentials with a third party. This <a href="https://www.mx.com/blog/screen-scraping-vs-bank-apis-whats-the-difference/" target="_blank" rel="noopener">screen scraping</a> or credential sharing is less reliable and places a heavy technical burden on bank infrastructure, which creates an unstable customer experience. Connections frequently break as passwords, systems, and processes change.&nbsp;
This leads to frustration and could potentially cost businesses customers in the long run. Screen scraping also puts consumers and businesses at increased risk since it requires consumers to provide usernames and passwords to a third party. And, consumers may be left wondering who has access to their data while businesses have little visibility into where data is shared.
An open banking or open finance application programming interface (API) allows consumers to access their transaction data without the need to share usernames and passwords, and eliminates the technical burden of screen scraping. Direct connections replace credentials with tokens, delivering higher levels of security, faster speeds, and higher connection success rates.&nbsp;
<h2 id="how-mx-can-help">How MX Can Help</h2>
MX is making it easier than ever for financial institutions of all sizes to accelerate open finance adoption and enhance the money experience for consumers through our <a href="https://www.mx.com/products/data-access/" target="_blank" rel="noopener">Data Access</a> solution.
Built to FDX standards, Data Access improves the data sharing experience with a secure, open finance API. It also enables financial institutions to better monitor and manage where data is shared, unlock actionable insights to drive growth and retention, and meet expected 1033 compliance obligations.&nbsp;
Financial providers can better monitor and manage what data is leaving their platform and where it goes, uncovering new opportunities to grow. Plus, automated notifications and reporting make it easy to detect anomalies, identify customer needs, and report on compliance requirements.
Let us help you get started with making sense of expected obligations &mdash; and opportunities &mdash; within your open banking journey. Talk to our experts today.
<h2 id="additional-resources">Additional Section 1033 Resources</h2>
Tap into our library of resources to learn more about Section 1033.
<ul>
<li><a href="https://www.mx.com/whitepapers/how-data-access-supports-1033/" target="_blank" rel="noopener">How MX&rsquo;s Data Access Can Help Financial Providers Get Ready for Section 1033</a></li>
<li><a href="https://mx.com/guides/where-financial-providers-may-fall-short-on-1033-reqs/" target="_blank" rel="noopener">Getting Ready for Section 1033 Obligations: Where Financial Providers May Fall Short</a></li>
<li><a href="https://www.youtube.com/watch?v=BLH5pIQrsxg&amp;t=15s" target="_blank" rel="noopener">CFPB Director Chopra Addresses FDX Spring Global Summit</a></li>
<li><a href="https://www.mx.com/whitepapers/secondary-use-cases/" target="_blank" rel="noopener">Why Enabling Secondary Use Cases for Consumer Benefit is Critical</a></li>
<li><a href="https://www.mx.com/whitepapers/mx-perspective-on-consumer-data-rights-rulemaking/" target="_blank" rel="noopener">MX Comments on the CFPB&rsquo;s Required Rulemaking on Personal Financial Data Rights</a></li>
</ul>

Understanding CFPB Section 1033 — Establishing Consumer Financial Data Rights in the United States

<h2>Permissioned, Secure Data is Key to Innovation and Intelligence for Consumers and Businesses</h2>
Today's data-driven economy provides enormous value for consumers and the businesses that serve them. However, data rights and privacy laws around the world have done little to stem the data exhaust generated by business models that may not be in the best interest of consumers. In the U.S., the financial services industry faces the first real test of the data economy as the Consumer Financial Protection Bureau (CFPB) considers industry comments to finalize its rulemaking to implement Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act). MX believes enabling secondary use cases in a way that balances consumer benefits with privacy and security is critical.
We agree with the Bureau on the importance of safeguarding how consumer data is collected, stored, and used by financial services providers and data intermediaries. We also support the idea that consumer financial data should only be used to ultimately benefit the consumer &mdash; and not used in ways that are purely value extraction or advantages to an organization to the detriment of the consumer.&nbsp;
However, while there are instances where consumer financial data has been improperly used that should be restricted, there is also a rich history of existing use cases that provide significant consumer and economic benefits. This includes enabling consumers to create a 360-view of their finances and leverage personalized digital money management tools to better understand, track, and manage their finances &mdash; saving consumers time, empowering them to make better financial decisions, and, ultimately, improving their financial strength. For financial institutions, it also includes informing product enhancements, improving credit models, and providing important data to inform policy changes and decisions.&nbsp;
Consumers have been sharing their data for these types of use cases for decades. Restricting these secondary use cases could inadvertently harm consumers, stifle innovation, and create a larger competitive gap between large institutions with access to broader sets of data and smaller institutions.&nbsp;
<blockquote>
It's impossible to provide valuable, personalized experiences that help improve people's financial outcomes without intelligent analytics and modeling of consumer-permissioned secondary data.
</blockquote>
The proposed rule as it stands today would likely prevent authorized third parties from using data in a manner that would benefit the consumer and support increased competition and innovation in the consumer financial marketplace. For example, most financial service companies use de-identified data to test their products (e.g., underwriting models) or develop new products. Allowing de-identified data in this instance also aligns with how de-identified data is used in other industries, including HIPAA and FTC data privacy guidance.
We believe enabling the benefits of secondary use cases do not need to come at the expense of consumer privacy.&nbsp;
MX supports the imposition of reasonable data use limitations on authorized third parties as a condition of obtaining data through a developer interface. For example, MX never sells consumer-permissioned data, and believes all authorized third parties should be required to abide by that limitation. Likewise, MX agrees that consumer-permissioned data should not be used in a manner that harms the privacy interests of the consumer. Finally, MX agrees that third parties&rsquo; use of consumer data must be disclosed to the consumer and consented to by the consumer.
The promulgation of this rule should augment and enhance the current benefits that consumers receive through data-driven technology today &mdash; and not reduce current access or scope. Complying with the new rule, while upholding existing functionality, will be critical to ensuring consistency &mdash; and reducing harm &mdash; for consumers.
Data is the fuel that drives value for people and the companies that serve them. If a consumer chooses to share their financial data in order to gain a better experience, we have a responsibility to use that data to drive the best results possible for them.&nbsp;
This can mean everything from simply translating raw transaction data into clear information about their transactions to leveraging that data to recommend additional products and services to support their needs. In fact, our own consumer research has found that most U.S. consumers (54%) want financial providers to leverage the data they have about them to personalize their experience. And, 48% of respondents to this 1,000+ survey of U.S. adults say they would give their financial provider access to more of their data if they knew it would result in a better experience.&nbsp;
<h3>Bringing Clarity through Data Enhancement</h3>
Data enhancement services, like those provided by MX, enable increased visibility, clarity, and transparency into a consumer's financial history. To illustrate, perhaps one of the most significant benefits to consumers that the proposed rule would facilitate is the use of consumer-permissioned data in lending decisions, such as a lenders&rsquo; ability to use rental receipts for thin file consumers in credit decisioning. Rental payments are typically reflected in a consumer&rsquo;s deposit account transaction history but may not be visible to a third-party underwriter without data enhancement that clearly identifies those payments as payments of rent. The data enhancement is therefore critical to the lender&rsquo;s underwriting decision and should therefore be considered &ldquo;reasonably necessary&rdquo; to the lender&rsquo;s product or service.
In addition, our research has shown that nearly 1 in 4 consumers see transactions on their account that they don&rsquo;t recognize at first glance at least sometimes or more frequently. This rises to nearly half for younger generations (43% for Gen Z). Indecipherable raw transaction data that comes across as a string of characters with no context can lead to frustration, confusion, and even false reports of fraud for consumers. Data enhancement services help bring clarity and deliver transaction data in simple, human-readable descriptions, making it easy for consumers to identify, organize, and act on financial data.
Finally, with the clarity and insights that data enhancement can deliver, we can also help combat the increasing amount of data exhaust for both organizations and consumers. While the trail of data exhaust that every transaction generates can contain valuable information, it requires cleansing, categorization, and context to ensure that the right data is surfaced to drive value for the consumer.&nbsp;
<h3>Leveraging De-Identified Data for Consumer Benefit</h3>
The CFPB should permit the use of de-identified data by authorized third parties, subject to the continuing prohibition on selling such data and the obligation to maintain adequate data security. MX agrees with the SBREFA Panel's recommendation that the CFPB should consider options that would permit uses of data (including de-identified or anonymized data) for product maintenance or improvement, with appropriate consumer protections in place.
Permitting the use of de-identified data will benefit consumers by enabling third parties to provide them with increased insights about their spending at a category level, budget visualizations, cash flow projections, debt reduction strategies, investment return visualization, and spending plan recommendations.
The CFPB should also permit the use of de-identified data to generate infographics, market research, and marketing materials, as well as improve product development and enhancements and platform stability. For example, financial institutions use de-identified data to enable insights for consumers for such things as cash flow projections, financial wellness trend analysis, engagement campaigns, cross-sell opportunities, and segmentation analyses.
<h3>Broadening Access and Awareness of Financial Products and Services</h3>
While MX does not market or cross-sell products to consumers, third parties should be permitted to use authorized data to market other products to their own consumers. Likewise, data providers that identify beneficial products for their customers through a combination of their own data about the customer and data obtained from third parties (with the consumers&rsquo; permission) should be permitted to market products to their own customers based on a complete understanding of the customer&rsquo;s financial well-being.&nbsp;
Many consumers may benefit if authorized third parties, with an understanding of the consumer, are able to offer products or services that compete favorably with products or services the consumer currently uses, or to offer new products or services that will advance the consumer&rsquo;s well-being. Concerns with unwanted cross-selling can be solved by ensuring authorized third parties provide an independent opt-out for such use.
<h3>Opt-In vs. Opt-Out Approach</h3>
We previously shared that there is significant market precedent showing an opt-out approach as sufficient for the majority of existing secondary use cases. And, there is also evidence that consumers will adapt to any opt-in regime to reduce friction (e.g., GDPR cookie compliance),
thereby defeating the purpose of informed consent. However, we noted that any opt-out functionality should be explicit and narrowly tailored to address specific concerns and subject to the overriding rule that data reasonably necessary for providing the product or service is always permissible to use.
<h3>CONCLUSION&nbsp;</h3>
Data-driven insights enable not only consumers to thrive but also competition and innovation. With better insights and personalized recommendations, consumers can better understand and take control of their finances to reach their goals. And, actionable financial data intelligence for data providers and data recipients fuels access to better products and services across the financial industry, ongoing technology innovation, and more.&nbsp;
However, in order to deliver on the insights that consumers want, expect, and need, financial services providers need to be able to leverage consumer-permissioned data for more than just providing transaction histories and account information.&nbsp;
Restricting well-established and beneficial use cases like the ones we&rsquo;ve outlined above will result in unintended consequences that are in direct conflict with the CFPB&rsquo;s core objective to create an open banking framework where consumer rights, innovation, and a competitive marketplace are hand in hand.&nbsp;

MX believes enabling secondary use cases as part of Dodd-Frank Section 1033 in a way that balances consumer benefits with privacy and security is critical.

Secondary Use Cases Critical for Beneficial Consumer Use Cases 

Why Enabling Secondary Use Cases for Consumer Benefit is Critical 

Learn how connectivity enables a single view of finances and the benefits for consumers and financial providers. 

MX wrote the book on how connectivity can help to win, retain, and engage financial consumers. Here are a few key takeaways on why connectivity matters.

Connectivity Matters: Insights from MX’s Connectivity eBook

See the whole board. In chess, this means being able to see what&rsquo;s in front of you, as well as all possible moves to come so you can plan accordingly. This same principle applies to financial providers and consumers. Consumers struggle to manage finances across multiple different accounts and institutions, while financial providers struggle to gain a comprehensive view into their consumers when they only see part of the board.&nbsp;
To see the whole board, consumers need to be able to seamlessly connect their various accounts together into one place. This connectivity is critical to enabling better financial decisions, products, and services.&nbsp;
For consumers, connectivity brings their whole financial world in sight. Through <a href="https://www.mx.com/products/account-aggregation/">account aggregation</a>, consumers can link together their various accounts to better understand their comprehensive financial situation and make fully informed decisions on how best to pursue their financial health. Seeing the whole board of their finances allows them to see the possible moves they can make &mdash;&nbsp;how to save more, adjust spending behaviors, consolidate duplicate subscriptions, reduce debt, etc.
For financial providers, connectivity can translate to greater intelligence about their consumer&rsquo;s behaviors and needs so that they can deliver better experiences that drive engagement, growth, and loyalty. Connectivity can create more engaged consumers, which translates to higher retention and <a href="https://www.mx.com/case-studies/cure-for-lost-deposits/">higher deposit balances. </a>For instance, MX&rsquo;s data shows consumers who connect at least one or more external financial accounts are <a href="https://www.mx.com/guides/building-long-term-digital-engagement/">48% more likely to be digitally active a year later</a> than those who don&rsquo;t.&nbsp;
Ultimately, it is all about data. Data drives outcomes. Connectivity can show consumers the bigger picture of their finances and support better financial outcomes. And, for financial providers, connectivity allows them to better engage and retain individual consumers and gain insight into larger holistic patterns and trends.&nbsp;
If you want to learn more about why connectivity matters, read the full eBook on <a href="https://www.mx.com/guides/everything-to-know-about-connectivity/">Everything You Need to Know about Connectivity</a>!

Winning the Connectivity Game: Why Connectivity Matters

The future of finance is open. Open Finances puts consumers in control of how they share and act on their financial data. And, it means financial services providers and other companies can build and offer solutions that help consumers understand and manage their financial lives better.&nbsp;
We see 5 critical stages along the journey to Open Finance for financial institutions and fintechs alike:&nbsp;
<ol>
<li style="font-weight: 400;" aria-level="1">Build: Modernizing infrastructure and APIs to enable data access and seamless connectivity.</li>
<li style="font-weight: 400;" aria-level="1">Advance: Prioritizing secure data access and data sharing with open finance APIs.</li>
<li style="font-weight: 400;" aria-level="1">Drive: Leveraging consumer-permissioned financial data to drive new innovation, revenue streams, and decision making.</li>
<li style="font-weight: 400;" aria-level="1">Lead: Building personalized, automated experiences and exploring embedded finance products and services.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Innovate: Fully embracing Open Finance and innovating the way forward to more beneficial ecosystems.&nbsp;</li>
</ol>
<img src="https://cms.mx.com/assets/3d5ff81e-78e4-4157-988a-38c967538fbd?width=1797&amp;height=368" alt="Open Finance Stages" />
<h2>STAGE 1: BUILD</h2>
Organizations in the Build stage know that modernizing their infrastructure and APIs is critical to enabling data access and seamless connectivity. They are building the foundation to better enable their business to meet consumer needs and make sure they don&rsquo;t lag behind others in the marketplace.&nbsp;
Characteristics:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Actively working to solve gaps in technology infrastructure that will hinder growth, compliance, and innovation.</li>
<li style="font-weight: 400;" aria-level="1">Committed to leveraging APIs and opening up infrastructure to drive innovation and partnership.</li>
<li style="font-weight: 400;" aria-level="1">Lack tools or resources needed to effectively access, monitor, or utilize consumer-permissioned financial data.</li>
<li style="font-weight: 400;" aria-level="1">Working to eliminate or minimize&nbsp; screen scraping within the organization, as well as mitigate other risks.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Don&rsquo;t have reliable connections to enable customers to easily share and control data with third parties.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Inconsistent connectivity performance monitoring and reporting mechanisms.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Little to no visibility into when consumers want or need additional products or services.&nbsp;</li>
</ul>
<h2>STAGE 2: ADVANCE</h2>
Those in the Advance stage are actively focused on enabling secure and reliable data sharing through open finance and open banking APIs. They seek to reduce consumer friction and increase connectivity wherever possible.&nbsp;
Characteristics:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Uses open finance APIs to reduce risk, as well as power seamless, secure data sharing for consumers.</li>
<li style="font-weight: 400;" aria-level="1">Leverages credential-free, tokenized API connections to securely access account data and verify accounts as both a data provider and recipient.</li>
<li style="font-weight: 400;" aria-level="1">Recognizes consumers own their financial data and leverages consumer-based permissions for data sharing.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Actively monitors and manages where customers are sharing their financial data.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Closely evaluating new regulatory requirements and making plans to ensure any new compliance obligations are met.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Has consistent consent management and authentication flows to ensure appropriate authorizations and reporting.&nbsp;</li>
</ul>
<h2>STAGE 3: DRIVE</h2>
Companies in the Drive stage have the infrastructure and APIs to access and act on consumer-permissioned financial data. They have the mechanisms in place to analyze data to identify opportunities for new innovation, revenue streams, and decision making.
Characteristics:
<ul>
<li style="font-weight: 400;" aria-level="1">Actively leverages data cleansing and enhancement to translate raw data into actionable intelligence for consumers and the business.</li>
<li style="font-weight: 400;" aria-level="1">Has a clear understanding of all data traffic in and out of the organization so that they can better monitor and manage consumer-permissioned data.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Invests in business intelligence and analytics tools to help them understand consumer preferences and behaviors.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Actively analyzes product performance to identify upsell and cross-sell opportunities.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Makes data easily accessible and actionable across all departments in the organization.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Makes data-driven decisions to mitigate risk, increase consumer retention, and deepen relationships.</li>
<li style="font-weight: 400;" aria-level="1">Has the ability to see a 360-view of consumers but is not yet acting on the data.&nbsp;</li>
</ul>
<h2>STAGE 4: LEAD</h2>
Leaders dedicate significant resources to enriching consumer experiences. They strive to build personalized, automated experiences and create embedded financial solutions to meet consumer needs. They anticipate consumer needs through machine learning and use data to improve financial wellness. They are pioneers in the market and lead by serving on forums and panels to set industry standards.&nbsp;
Characteristics:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Puts the consumer experience at the center of their business strategies.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Uses AI and machine learning to deliver personalized, automated experiences.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Leverages APIs to enable or create embedded financial products and services to meet unique consumer needs.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Uses consumer segmentation to provide relevant offers and messaging.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Recognizes that reducing friction points within the consumer experience is key to consumer engagement, retention, and acquisition.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Takes an active role in helping to shape potential rulemaking related to consumer data rights and Open Finance with industry associations and relevant government agencies and congressional representatives.&nbsp;</li>
</ul>
<h2>STAGE 5: INNOVATE</h2>
Companies in the Innovate stage have fully embraced Open Finance. They have a customer-first company strategy and are relentless in their pursuit of the best consumer experiences. They partner with vendors and third parties to build beneficial ecosystems. They constantly look for ways to optimize costs, improve consumer retention, and drive innovation for both themselves and the industry at large.&nbsp;
Characteristics:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Constantly seeks to add new connections with third parties to increase data accessibility.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Creates clear priorities that support a customer-first company strategy across all departments of the organization.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Supports a culture that enables teams to quickly iterate and ideate to deliver new innovation at speed and scale.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Partners with other fintech companies and third parties to deliver better value to consumers and reduce costs.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Proactively looks at data, including where it&rsquo;s being shared and used for, to identify product gaps and potential partnerships.</li>
<li style="font-weight: 400;" aria-level="1">Builds beneficial ecosystems to optimize costs, improve consumer retention, and drive innovation.</li>
<li style="font-weight: 400;" aria-level="1">Prioritizes use cases based on consumer-permissioned data that drive additional value for consumers, and understands the need to leverage data responsibly and ethically.&nbsp;</li>
</ul>

The future of Open Finance puts the consumer experience at the center — where transferring funds, applying for loans, or making a payment is instant and embedded. We see 5 critical stages along this open finance journey for financial institutions and fintechs alike.

We see 5 critical stages along this open finance journey for financial institutions and fintechs alike.

Understanding the Open Finance Journey

Understanding the Journey Stages of Open Finance

Here's a round up of consumer data and stats that support the case for Open Finance.


Check out consumer data and stats related to Open Finance and Open Banking, including account aggregation, connectivity, and use of consumer-permissioned data.  

Open Finance Stats on Connectivity and Personalization | MX 

Making the Case for Open Finance: Consumer Statistics 

MX’s data shows a few common areas where data providers and recipients may be vulnerable to meeting Section 1033 obligations

Learn more about the basics of Section 1033 of the Dodd-Frank Act and view MX’s full list of common areas where financial services providers may be vulnerable. 

MX’s data shows a few common areas where data providers and recipients may be vulnerable to meeting Dodd-Frank Act's Section 1033 once a rule is final. 

Where Financial Providers May Fall Short of Expected 1033 Obligations

While specific details may change before the final rule under Section 1033 of the Dodd-Frank Act is published by the Consumer Financial Protection Bureau (CFPB), MX&rsquo;s data shows a few common areas where data providers and recipients may be vulnerable to meeting compliance obligations. Here&rsquo;s a quick recap of common areas to investigate now to make sure you&rsquo;re ready to tackle new obligations once the rule is finalized.&nbsp;
<blockquote>
Getting Ready for Section 1033 Obligations: 10 Common Areas to Investigate Ahead of Time. <a href="https://www.mx.com/guides/where-financial-providers-may-fall-short-on-1033-reqs/" target="_blank" rel="noopener">Read the full guide</a>
</blockquote>
<h2>Consent Management and Authorization</h2>
Data recipients need to ensure that consent management and authorization disclosures to the consumer meet all the obligations outlined in the proposed rule, including disclosing the names of the data recipient and data provider, categories of covered data that will be accessed, descriptions of products or services that the consumer has requested, how to revoke access, and certification that the data provider agrees to all obligations. In addition, data recipients need to determine how to capture, store, and present a copy of the Authorization Disclosure to the consumer after they have consented, ensuring it is accessible at any time for consumers to view.
<h2>Revoking Access</h2>
Data providers and recipients will both need to provide a method or mechanism for consumers to revoke authorization to access their covered data by a third party. In addition, data providers must be able to notify the authorized third party (data recipients and data access providers) of the request to revoke access. And, data recipients need to have a mechanism and process to receive &mdash;&nbsp;and execute on &mdash;&nbsp;revocation requests from a data provider. Finally, the data recipient must notify relevant data providers, aggregators, and other third parties of the request to revoke access.&nbsp;
<h2>Performance Metrics</h2>
Data providers will need to publish developer portal performance metrics on a monthly basis in a &ldquo;public and readily identifiable manner&rdquo;, as well as maintain a 99.5% response rate to meet a quantitative minimum performance specification.&nbsp;
<h2>Third Party Due Diligence</h2>
While due diligence is already typically conducted, the proposed rule could lead to an increased volume of requests for data providers that currently have developer interfaces, while other data providers will be establishing interfaces for the first time. This volume of requests from third parties to access data provider interfaces could, according to the CFPP, &ldquo;outstrip these data providers&rsquo; resources for vetting third parties.&rdquo;
<h2>Data Governance and Documentation</h2>
Data providers will need to ensure they disclose and maintain API documentation, including metadata describing all covered data and corresponding data fields, how third parties can get technical support and report issues, and other documentation sufficient for a third party to access and use the interface. And, for data recipients, they will need to ensure they have data governance tools and processes to make sure covered data is only collected, used, and retained for 12 months unless re-authorized by the consumer or there is a &ldquo;reasonably necessary justification for retention or use.&rdquo;&nbsp;

Where Financial Providers May Fall Short on Section 1033 Obligations

The Consumer Financial Protection Bureau&rsquo;s (CFPB) final rulemaking under <a href="https://www.consumerfinance.gov/personal-financial-data-rights/" target="_blank" rel="noopener">Section 1033 of the Dodd-Frank Act</a> is expected to be released in early Fall 2024. This rulemaking is one of the most substantive regulatory changes to happen in the financial industry in many years. It fundamentally changes, for the better, how consumers can access and share their financial data.&nbsp;
Once final, the clock starts for financial data providers and recipients to meet outlined compliance timelines and requirements. The compliance period will vary depending on the size of each institution. But, that doesn&rsquo;t mean wait. The time is now for financial institutions to begin getting ready to meet obligations under this new rule.&nbsp;
<blockquote>
Let us help you get started with making sense of expected obligations &mdash; and opportunities &mdash; within your open banking journey. <a href="https://www.mx.com/open-banking-made-easier/" target="_blank" rel="noopener">Talk to our experts today</a>.
</blockquote>
<h2>Common Areas Where Financial Services Providers are Vulnerable</h2>
While specific details may change before the final rule is published, MX&rsquo;s data shows a few common areas where data providers and recipients may be vulnerable to meeting Section 1033 compliance obligations. Here&rsquo;s 10 common areas to investigate now to <a href="https://www.mx.com/guides/where-financial-providers-may-fall-short-on-1033-reqs/" target="_blank" rel="noopener">make sure you&rsquo;re ready to tackle new obligations</a> once the rule is finalized: 
<h3>For Data Providers</h3>
<ol>
<li style="font-weight: 400;" aria-level="1">Provide a &ldquo;reasonable method&rdquo; for consumers to revoke any third party&rsquo;s authorization to access their covered data from the data provider. And, the data provider must notify the authorized third party (data recipients and data access providers) of the request to revoke access. </li>
<li style="font-weight: 400;" aria-level="1">Publish developer portal performance metrics on a monthly basis in a &ldquo;public and readily identifiable manner&rdquo;, as well as maintain a 99.5% response rate to meet a quantitative minimum performance specification.</li>
<li style="font-weight: 400;" aria-level="1">Provide reasonable notice of any scheduled downtime of the developer interface to all third parties. In addition, data providers must deliver a proper response that either fulfills the query or explains why a query was not fulfilled, remains consistent with written policies and procedures, and is delivered within a commercially reasonable amount of time (currently less than 3,500 milliseconds).</li>
<li style="font-weight: 400;" aria-level="1">Conduct due diligence on all third party apps and if access is denied, state and retain the non-discriminatory reason for that denial. While due diligence is already typically conducted, the proposed rule could lead to an increased volume of requests for data providers that currently have developer interfaces, while other data providers will be establishing interfaces for the first time. This volume of requests from third parties to access data provider interfaces could, according to the CFPP, &ldquo;outstrip these data providers&rsquo; resources for vetting third parties.</li>
<li style="font-weight: 400;" aria-level="1">Make covered data available in a machine-readable file that a consumer or authorized third party can retain and transfer into a separate information system. In addition, data providers will also need to make covered data available upon request in a readily printable or downloadable format through a consumer interface.</li>
<li style="font-weight: 400;" aria-level="1">Disclose and maintain API documentation, including metadata describing all covered data and corresponding data fields, how third parties can get technical support and report issues, and other documentation sufficient for a third party to access and use the interface.&nbsp;</li>
</ol>
<h3>For Data Recipients</h3>
<ol>
<li>Ensure that consent management and authorization disclosures to the consumer meet all the obligations outlined in the proposed rule, including disclosing the names of the data recipient and data provider, categories of covered data that will be accessed, descriptions of products or services that the consumer has requested, how to revoke access, and certification that the data provider agrees to all obligations. In addition, data recipients need to determine how to capture, store, and present a copy of the Authorization Disclosure to the consumer after they have consented, ensuring it is accessible at any time for consumers to view.</li>
<li>Evaluate data governance tools and processes to make sure covered data is only collected, used, and retained for 12 months unless re-authorized by the consumer or there is a &ldquo;reasonably necessary justification for retention or use.&rdquo; And, data recipients will need to provide a clear, easy way for consumers to re-authorize data sharing, ideally using proactive notifications prior to the end of 12 months to ensure no disruptions to the customer experience.&nbsp;</li>
<li>Provide a mechanism for consumers to revoke authorization to access their covered data by the data recipient that is &ldquo;as easy to access as the initial authorization.&rdquo; In addition, data recipients need to have a mechanism and process to receive &mdash; and execute on &mdash; revocation requests from a data provider. Finally, the data recipient must notify relevant data providers, aggregators, and other third parties of the request to revoke access.&nbsp;</li>
<li>Prepare for consent management, disclosures, and tracking related to potential secondary use cases. Currently, the proposed rule prohibits secondary use cases (i.e. targeted advertising, cross-sell of products and services, etc). However, the CFPB is actively seeking commentary on the possibility of an opt-in for secondary use cases. Data recipients will need to be mindful of how they will manage the final ruling around these use cases and how to manage additional processes to allow consumers to opt in.&nbsp;</li>
</ol>
<h2>How MX&rsquo;s Data Access Helps Get Ready for Section 1033&nbsp;</h2>
MX&rsquo;s mission is to empower the world to be financially strong. At the core of delivering on our mission is the ability for consumers to access, direct, and control their financial data to improve their financial outcomes. MX has been working with our clients, partners, and the wider ecosystem to accelerate Open Banking and secure data sharing for the past 5 years.&nbsp;
As a leading voice on Open Banking and strong advocate for consumer-permissioned data sharing, our solutions and products are already built with this in mind. We will continue to work closely with institutions to ensure they are prepared to comply with Section 1033 &ndash; and continue to enhance our products to meet any new requirements under this rulemaking.
Our platform was architected with privacy, security, and permissioning-first principles. We consider our long-standing commitment to data integrity as a distinguishing factor. We require consumer permission before we allow our services to be used to identify, access, and share financial data. We put the consumer first, prioritize privacy, and do not aggregate data into files about individual consumers across clients. And, we continually focus on delivering reliable, secure connections through our APIs and connectivity solutions.&nbsp;
MX&rsquo;s <a href="https://www.mx.com/products/data-access/" target="_blank" rel="noopener">Data Access solution</a> is an open API platform built on FDX standards that improves time-to-market and reduces costs to deliver secure data sharing &mdash; enabling you to get ahead of Section 1033 compliance deadlines and expected obligations. It gives financial providers the tools to implement and manage consumer-permissioned data sharing, monitor compliance status, and access insights on open banking data.&nbsp;
In addition, MX&rsquo;s Data Access platform can help create a competitive advantage for organizations on their open finance journey with real-time performance metrics, insights into data sharing activity, and support tools to easily manage and maintain connections. <a href="https://mx.com/whitepapers/how-data-access-supports-1033/" target="_blank" rel="noopener">Learn more about how MX Data Access helps financial institutions get ready for obligations under Section 1033</a>.
<blockquote>
MX is ready to help you evaluate where you sit in the compliance timeframe, API availability, and next steps. <a href="https://www.mx.com/open-banking-made-easier/" target="_blank" rel="noopener">Schedule a strategy session today</a>.
</blockquote>
<h2>Outlining the Basics</h2>
<h3>What&rsquo;s Currently Included in Section 1033&nbsp;</h3>
The CFPB&rsquo;s notice of proposed rulemaking calls out that the rule would cover Regulation E accounts and Regulation Z credit card accounts to start. This includes checking accounts, savings accounts, credit cards, prepaid cards, digital wallets, and other electronic payments. And, the CFPB has made it clear that more financial products, such as investments, loans, mortgages, etc., to be added over time.&nbsp;
<h3>When Compliance Will Be Required</h3>
Organizations that control or possess information concerning one of the covered products or services will have work to do to ensure they are meeting the stated compliance requirements within the final timeframe that the CFPB issues. Currently, the proposed rulemaking outlines four compliance timeframes based on the organization&rsquo;s asset size: 
<img src="https://cms.mx.com/assets/7f5e4112-4456-4f60-91d0-29f6fa912965?width=3416&amp;height=1763" alt="CFPB Proposed Compliance Timeline" />
<h3>Where to Start if Your Organization Doesn&rsquo;t Have an API&nbsp;</h3>
If you haven&rsquo;t yet started or finished building an API to enable data sharing from your organization, now is the time to prioritize this work. The CFPB agrees that establishing an API would meet many of the requirements outlined in its proposed rule. Credential-free API connections also provide a more secure and reliable way for consumers to share and manage their financial data.&nbsp;
The CFPB will also require that these APIs connections follow an approved standard and plans to designate Standard Setting Organizations (SSO). Across the industry, the Financial Data Exchange (FDX) has widespread adoption and aligns with many of the regulatory expectations, making it a likely contender as the first SSO.&nbsp;
MX can help you understand what data is necessary to include in the API &mdash;&nbsp;for which use cases and account types, as well as nuances around formatting, errors, etc. We can also share best practices like how to implement an interoperable API following industry standards such as FDX, testing strategies, and launch timelines.&nbsp;
In addition, MX makes it easier than ever for financial institutions of all sizes to accelerate open finance adoption and enhance the money experience for consumers through Data Access. The platform enables institutions to deliver a safe and secure connectivity experience for their customers. With consumer authorized and permissioned data sharing, customers gain visibility and control over which apps and institutions access their data &mdash; enabling them to grant, manage, and revoke access at any time.&nbsp;
<h3>Why Open Finance is a Strategic imperative</h3>
Open Finance isn&rsquo;t simply a check the box to meet forthcoming compliance and regulatory obligations. It provides significant benefits to consumers and financial services providers.&nbsp;
Consumers gain more choice and control over the data they share and how they engage with their finances with the freedom and flexibility that Open Finance enables. And, they gain unparalleled access to a broader range of products and services. It also allows consumers to more easily connect their various financial accounts and data together into a single view &mdash; enabling a more seamless money experience.&nbsp;
For financial services providers, Open Finance enables:
<ul>
<li style="font-weight: 400;" aria-level="1">Better Fraud and Risk Management: By leveraging an open finance API rather than screen scraping, consumers never have to share their username and password, and financial providers eliminate the risk of sharing credentials.</li>
<li style="font-weight: 400;" aria-level="1">More Accurate Customer Profiles: Financial providers can gain access to real-time consumer-permissioned financial data. This helps them better understand their customer needs and identify product and partnership opportunities.</li>
<li style="font-weight: 400;" aria-level="1">Enhanced Customer Experiences: By putting consumers in the driver&rsquo;s seat, financial providers can build trust and improve relationships, leading to greater customer satisfaction and loyalty. And, with better visibility into a consumer&rsquo;s financial life, financial providers can deliver more personalized, intuitive experiences to meet them where they are. </li>
</ul>

MX’s data shows a few common areas where data providers and recipients may be vulnerable to meeting Section 1033 compliance obligations.

10 Common Areas to Investigate Ahead of Section 1033 Obligations

Getting Ready for Section 1033 Obligations: Where Financial Providers May Fall Short

We&rsquo;re inching closer to a final rule from the Consumer Financial Protection Bureau (CFPB) under Section 1033 of the Dodd-Frank Act. This is a significant milestone in creating personal financial data rights for consumers &mdash; and creating a more standard and secure way for consumers to control, manage, and share their financial data.&nbsp;
Financial institutions, fintechs, and other data providers and recipients are looking ahead to how they will meet compliance requirements and deadlines ahead of the expected final rule this Fall 2024. While some details will evolve based on industry feedback, there are things that financial providers can do today to get ready. Here&rsquo;s how MX can help.&nbsp;
<blockquote>
We believe customer-first, permissioned, and ethical use of data should be the norm. This has always been at the core of what MX does.&nbsp;
</blockquote>
<h2>How MX&rsquo;s Data Access Supports Open Finance Standards</h2>
At MX, our solutions and products are built with <a href="https://www.mx.com/blog/what-is-consumer-permissioned-data/" target="_blank" rel="noopener">consumer-permissioned data</a> sharing at the forefront. And, we make it easy for financial institutions of all sizes to accelerate open finance adoption and enhance the money experience for consumers through our Data Access product.&nbsp;
MX&rsquo;s <a href="https://www.mx.com/products/data-access/" target="_blank" rel="noopener">Data Access platform</a> enables institutions to deliver a safe and secure connectivity experience for their customers &mdash; and helps financial providers get ready for potential requirements under the <a href="https://www.mx.com/blog/cfpb-nprm-dodd-frank-section-1033/#what-is-1033" target="_blank" rel="noopener">Dodd-Frank Act Section 1033</a> rulemaking in five key ways:&nbsp;
<h3>1. API Connectivity</h3>
Data Access enables financial institutions to more easily create or evolve their Open Banking APIs to ensure they meet FDX standards, deliver the required data elements, and follow authentication protocols, such as OAuth and OIDC. In addition, Data Access simplifies the process of transitioning intermediaries to APIs by standardizing templates, creating API documentation, and onboarding workflows.&nbsp;
<h3>2. Eliminating Screen Scraping</h3>
MX&rsquo;s Data Access is interoperable across all intermediaries, enabling financial providers to accelerate their path to eliminate screen scraping from their environment. In addition, the Data Access platform creates better visibility into the open finance journey by providing real-time performance metrics, insights into data sharing activity, and support tools to easily manage and maintain connections.&nbsp;
<blockquote>
MX&rsquo;s Data Access platform creates better visibility into the open finance journey by providing real-time performance metrics, insights into data sharing activity, and support tools to easily manage and maintain connections.&nbsp;
</blockquote>
<h3>3. Providing Covered Data</h3>
The API Overview and Test Users feature within Data Access takes the guesswork out of understanding what data needs to be included in Open Banking APIs. Financial providers can access &mdash;&nbsp;per use case and account type &mdash; which data fields are required and under what conditions. And with our Test Users feature, data providers and data recipients can test the APIs before they go live to ensure that all required data is there.&nbsp;
<h3>4. Consent Management</h3>
Financial providers can easily embed Data Access&rsquo; Consent Management Dashboard into their mobile and online banking portals so that consumers can see and manage where they have shared their financial data with a third party. Consumers can view when their data was last updated or revoke data sharing access with a third party.&nbsp;
Per proposed 1033 requirements, MX is working to add notifications to authorized third parties when a user revokes consent from the Consent Management Dashboard.&nbsp;
<h3>5. Performance Metrics</h3>
The CFPB currently proposes that data providers will need to publicly disclose API performance metrics on a monthly basis. MX is working to create a reporting user interface that simplifies disclosing metrics and provides financial institutions with real-time dashboards and proactive alerts about their API performance to address any issues before consumers experience connectivity issues.&nbsp;
<blockquote>
Let us help you get started with making sense of expected obligations &mdash; and opportunities &mdash; within your open banking journey. <a href="https://www.mx.com/open-banking-made-easier/" target="_blank" rel="noopener">Talk to our experts today</a>.
</blockquote>

Here’s 5 ways MX’s Data Access platform get ready for potential requirements under Section 1033 rulemaking. 

MX’s Data Access Helps Providers Prepare for Dodd-Frank 1033

How MX’s Data Access Can Help Financial Providers Get Ready for Section 1033

Last week, the Canadian government made a significant step forward in the implementation of its Consumer-Driven Banking Framework.

The Canadian government made a significant step forward in the implementation of its Consumer-Driven Banking Framework as part of its Budget 2024 address.

Open Banking in Canada | Consumer-Driven Banking Framework Moves Forward

Last week, the Canadian government made a significant step forward in the implementation of its <a href="https://www.canada.ca/en/department-finance/programs/financial-sector-policy/open-banking-implementation/budget-2024-canadas-framework-for-consumer-driven-banking.html">Consumer-Driven Banking Framework</a>. As part of its <a href="https://budget.canada.ca/2024/home-accueil-en.html" target="_self">Budget 2024</a> address, the Canadian government shared that it will introduce the first of two pieces of legislation this spring that will outline governance, scope, and criteria, as well as a process for a technical standard for Open Banking in Canada.&nbsp;
Establishing this open banking framework will give Canadians more control over their financial data and enable a more inclusive financial ecosystem. It also lays the groundwork for increased innovation and competition across the financial industry &mdash; both in Canada and beyond.&nbsp;
As we&rsquo;ve said before, we believe that <a href="https://www.mx.com/blog/consumer-financial-data-rights/">financial data should be accessible and actionable for all consumers</a> to better enable decisions, experiences, and outcomes. We also believe that increased competition, a level playing field, and increased digital innovation can help improve financial outcomes for consumers.&nbsp;
Here&rsquo;s a few key things you should know about this framework for consumer-driven banking in Canada:&nbsp;
<h2>Scope of Data</h2>
In the initial phase, the scope of data that participants will be required to share at the request of a consumer will include data related to checking and savings accounts, investment products available through their online portals, and lending products, such as credit cards, lines of credit, and mortgages. This is a broader list than what the <a href="https://www.mx.com/whitepapers/mx-perspective-on-consumer-data-rights-rulemaking/">Consumer Financial Protection Bureau (CFPB) has proposed in the United States</a>. The government will conduct a review three years from now to assess whether to add additional account types.
<h2>Covered Entities</h2>
The Canadian government will mandate participation for banks that meet a specified threshold for retail volume, which will include Canada&rsquo;s largest retail banks. Smaller entities like credit unions will be able to opt-in to the framework. In addition, there will be clear requirements for how various entities such as fintechs can participate. It will require reciprocity &ndash; meaning data recipients must also allow consumers to share access to the data they hold about them &mdash; will be a requirement of participation in the system.
<h2>Oversight&nbsp;</h2>
The Financial Consumer Agency of Canada (FCAC) will oversee the system and will be responsible for accreditation of third parties, administration, oversight, and enforcement, and supervision of technical standards. The Budget 2024 outlines additional funding to the agency to support and creates a new senior role to manage this work: the Senior Deputy Commissioner for Consumer-Driven Banking.
<h2>Third-Party Accreditation</h2>
Third parties will be required to receive accreditation from the FCAC to participate in the system. While there is no tiering for accreditation standards in the initial phase, there is a pathway laid out for eventual tiering of accreditation standards. The FCAC will levy fees on all stakeholders in the system to fund its work.
<h2>Liability&nbsp;</h2>
The framework clearly articulates that a data provider should not be liable for a data breach for which it was not responsible. This liability structure is &ldquo;based on the principle that liability moves with the data and rests with the party at-fault if anything goes wrong.&rdquo;&nbsp;
<h2>Interoperable Standards</h2>
The framework calls for a single technical standard that will be supervised by the FCAC but does not overtly name a standard at this time. In addition, the Canadian government articulates it intends to build an open finance system that is interoperable with the CFPB&rsquo;s rulemaking in the United States under <a href="https://www.mx.com/blog/consumer-financial-data-rights/">Section 1033 of the Dodd-Frank Act</a>. However, neither framework is close to being finalized and this doesn&rsquo;t mean each country will implement the same technical standards.

Canada’s Consumer-Driven Banking Framework Takes a Step Forward

Here is a round-up of consumer data and statistics related to mobile banking from MX’s collection of consumer research reports.

Check out consumer data and stats related to mobile banking from MX on usage, generational attitudes, financial wellness, security, and open finance. 

Mobile Banking Stats on Usage, Adoption, Generations, and More | MX

The Ultimate List of Mobile Banking Trends and Statistics (2024)

MX applauds the Consumer Financial Protection Bureau (CFPB) for advancing the cause of financial empowerment by proposing a rule that would make enforceable the Congressional directive that consumers have access to data regarding their financial products and services. And to do so in a way that mitigates financial risks and reduces potential consumer harm. The NPRM under under <a href="https://www.mx.com/blog/cfpb-nprm-dodd-frank-section-1033/#what-is-1033" target="_blank" rel="noopener">Dodd-Frank Act Section 1033</a> is an important milestone in making sure consumers have the right to access and control their financial information.
<blockquote>
MX&rsquo;s mission is to empower the world to be financially strong. At the core of delivering on our mission is the ability for consumers to access, direct, and control their financial data to improve their financial outcomes. MX believes that financial data should be accessible and actionable for all consumers to better enable decisions, experiences, and outcomes. We also believe that increased competition, a level playing field, and increased digital innovation can help improve financial outcomes for consumers.
</blockquote>
We believe that the success of the financial industry, future innovation, and the financial health of Americans can all be greatly enhanced by increased clarity of data rights and the implementation of this rulemaking.&nbsp;
Following are MX&rsquo;s recommendations to enhance the <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rule-to-jumpstart-competition-and-accelerate-shift-to-open-banking/" target="_blank" rel="noopener">proposed rule</a> and what it means for our clients, partners, and the consumers we collectively serve.&nbsp;
<h2>A Narrow Scope Could Narrow Benefits</h2>
MX is concerned that the narrow scope of the proposed rule could &ldquo;lock in&rdquo; the market, by leading holders of consumer financial data that are not covered by the rule to block consumer data access for the long term. This could discourage further innovation and competition that depends on an enforceable right to data access, as well as prevent data from being used to benefit consumers to the fullest extent possible.&nbsp;
To address these concerns, MX recommends:
<ul>
<li>Expand the definition and scope of data providers to go beyond Regulation E &ldquo;financial institutions,&rdquo; Regulation Z &ldquo;card issuers,&rdquo; and payment facilitators. Institutions outside of these defined areas hold a significant amount of consumer financial data. We believe consumers should be able to access and share their financial data to enable product comparison services for credit and savings products, automatic coupons, public benefit accounts, tax preparation services, retirement accounts, loyalty programs, investment advisory, brokerage services, and payroll services.</li>
<li>Ensure that data necessary for beneficial use cases remains available &mdash;&nbsp;both now and in the future. For instance, additional information not currently defined as &ldquo;covered data&rdquo; by the proposed rule supports use cases that benefit consumers and reduce harm by providing higher fidelity data sets to be used in fraud models, enabling competitive offers for credit products, and demonstrating how deposits could generate higher returns by switching to higher yield savings or investment vehicles.</li>
<li>Expand permitted data uses to allow those that are pro-consumer and pro-competition. While MX supports data usage limitations that protect the consumer, the proposed rule would likely prevent authorized third parties from using permissioned data in a manner that would benefit the consumer and support increased competition and innovation. This can include data enhancement services that make transaction data more understandable for consumers, leveraging data for product improvements, and enabling insights for consumers such as cash flow projections, financial wellness trends, etc.&nbsp;</li>
</ul>
<h2>Vague Compliance Obligations Could Mean Varied Compliance&nbsp;</h2>
In some cases, the proposed rule provides high-level guidance on data provider and third-party obligations that could cause confusion and varied approaches to maintaining compliance with the final rule without clarification. This also could lead to consumer harm and hinder competition and innovation across the market.&nbsp;
Here are a few key areas that require additional clarity:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Non-discriminatory access. The industry currently works with a one-to-many model, with intermediaries providing the ability to scale to multiple data recipients. To be compliant with the rule, data providers must be able to demonstrate that they are enabling access to data recipients, including intermediaries, on a non-discriminatory basis.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Tokenized Account Numbers (TANs). While there are privacy and security advantages to the use of TANs, the technology is still at an early stage and lacks standardization, which creates risks for consumers, merchants, and financial services providers.&nbsp;&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Access caps. Data providers should not be permitted to restrict the total amount of covered data that third parties request over a given period of time, as each of these requests would be consumer-authorized and reasonably necessary to provide the product or service.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Third-party obligations. The CFPB can ensure that authorized third parties understand their obligations and what it takes to satisfy them. This clarity is especially important given a data provider&rsquo;s unilateral authority to decline requests for access to consumer data based on its assessment of whether the third party has followed the authorization procedures, such as consumer disclosures and consent, and the third party&rsquo;s data security.</li>
<li style="font-weight: 400;" aria-level="1">Consumer consent and authentication. Consumer consent needs to be clear, conspicuous, and specific in all cases to accelerate understanding of consumer actions while reducing friction. In addition, the CFPB should make it clear which party is responsible for capturing consent and ensure there are standards on how that consent is captured consistently.</li>
<li style="font-weight: 400;" aria-level="1">Technical and interface standards. The CFPB is looking to name a Standards Setting Body (SSO) to set and maintain technical and interface standards. We believe the current interoperable standard developed by FDX has been successful in accelerating the adoption of secure data sharing, and FDX is well-positioned to continue driving consensus among diverse stakeholders regarding emerging standards of Open Banking.</li>
</ul>
<h2>Implementation Takes Time</h2>
The compliance period needs to accommodate the operationalization of the API &mdash; and allow for existing agreements to continue while connections through a developer interface are being established. It takes time to code up to an API and register all data recipients. It may also take significant time to resolve data access disagreements or address risk management concerns. And, it will take additional time to implement and transition from scraped to API connections in a way that doesn&rsquo;t unduly interrupt consumer access.&nbsp;
<img src="https://cms.mx.com/assets/8eee5fd9-6cf1-42aa-9928-909f76d172db?width=1540&amp;height=548" alt="Proposed CFPB Compliance Rollout Timeline" />
<img src="https://cms.mx.com/assets/79991453-5cc8-4263-909b-73f90808c404?width=1020&amp;height=570" alt="Basic Open Banking API Implementation Timeline" />
<h2>What&rsquo;s Next</h2>
We believe this rule should augment and enhance the current benefits that consumers receive through data-driven technology today &mdash; and not reduce current access or scope. Complying with the new rule, while upholding existing functionality, will be critical to ensuring consistency &mdash; and reducing harm &mdash; for consumers.
The CFPB is currently reviewing the more than 11,000 responses providing comments on the proposed rule. We can expect more engagement and questions from the industry and members of Congress over the next 6 or more months as the CFPB evaluates comments and makes revisions ahead of a final rulemaking likely in late Fall 2024. During this interim, financial institutions and fintechs have an opportunity to join the conversation with industry groups like FDX and engage with the U.S. Senate Banking Committee or House Financial Services Committees.
In addition, here&rsquo;s 6 ways financial institutions and fintechs can prepare now for the implementation of the final rule:
<h3>1. Data Governance</h3>
Data flows across multiple departments and lines of business within an organization, making it important to have a clear picture of how data moves through the organization and where it sits. Map out who owns each data element that will be covered under new rulemaking and the processes involved within each line of business that could impact the ability to satisfy requirements.&nbsp;
<h3>2. Current Data Traffic</h3>
Do you have a clear picture of the data in and data out at your organization today, including consumer consent? Audit all current data traffic to understand the parties involved, types of data accessed, permissions, etc.&nbsp;
<h3>3. Partner Relationships</h3>
Review your third party agreements to ensure that current partners can satisfy new requirements related to data security, privacy, availability, and retention. 
<h3>4. Budget Allocation</h3>
Given the nature of budgeting cycles, if you don&rsquo;t begin talking about budget needs today, you&rsquo;ll be behind when <a href="https://www.mx.com/blog/cfpb-nprm-dodd-frank-section-1033/#what-is-1033" target="_blank" rel="noopener">Dodd-Frank Act Section 1033</a> goes into effect. Start talking with your finance, legal, and third party management partners internally today to prioritize budget spend necessary to meet new obligations.&nbsp; 
<h3>5. Additional Data Uses</h3>
Depending on where the final rule lands, how you manage secondary use cases may need to change. Research any impacts to your products or services based on secondary use cases of data and develop mitigation strategies.
<h3>6. Consumer Consent</h3>
Review and update disclosure statements and authorization processes for consumers to ensure disclosures are in plain English for consumers and that you can meet updated requirements.&nbsp;
<blockquote>
Want to learn more? <a href="https://www.regulations.gov/comment/CFPB-2023-0052-0966">Read MX&rsquo;s full comment letter to the CFPB</a>.
</blockquote>
<h2>11K+ Industry Comments, 10 Common Themes&nbsp;</h2>
A Summary of Key Themes based on Industry Responses to CFPB Requests for Comment
<h3>1. Scope of Data. Is it Enough? </h3>
The proposed rule contemplates applying to a small subset of covered entities, including those that provide asset accounts subject to Regulation E, credit cards subject to Regulation Z, and payment facilitators. This leaves out a majority of the financial ecosystem and significant amounts of consumer financial data, including loans, investments, retirement accounts, and more.
<h3>2. Restrictions on Secondary Use Cases. Will This Hamstring Consumer Benefits?</h3>
Proposed limitations on secondary use cases would prevent companies from using consumer-permissioned data in a manner that would benefit the consumer and support increased competition and innovation.&nbsp;
<h3>3. Risks and Liability. Who&rsquo;s on the Hook?&nbsp;</h3>
Ambiguity in liability definitions could create varying interpretations that lead to more confusion. Many comments call for more explicit statements related to third party risk management and liability for mishandling of data or data breaches.&nbsp;
<h3>4. Fees. Should Reasonable Fees Be Allowed?&nbsp;</h3>
The current proposed ruling does not allow for financial institutions to charge for data access, at this point in time. Comments from the industry are split amongst FIs who want to charge and industry groups who believe costs will negatively impact consumers.&nbsp;
<h3>5. Technical and Interface Standards. Does a Named SSO Need to Come Before the Final Rule?&nbsp;</h3>
Many responses agree with the premise of an industry standards-setting body (SSO) but worry about the practicalities and timing. For instance, several ask the CFPB to designate an SSO prior to the final rulemaking to ensure little disruption to the data sharing environment and avoid delays in the industry&rsquo;s ability to implement this rule.&nbsp;
<h3>6. Transitioning from Screen Scraping. How Do We Do This Most Effectively?&nbsp;&nbsp;</h3>
The proposed rule doesn&rsquo;t provide guidance on how to manage the transition from screen scraping to an API without disrupting operations or consumer access to data. Comments ask for clarity to ensure data providers don&rsquo;t simply shut off access to comply with the rule but find a way to keep data flowing during this transition.&nbsp;
<h3>7. Consent and Authentication. How Do We Keep it Safe and Easy for Consumers?&nbsp;</h3>
While there is universal support for strong authorization and authentication protocols to keep consumer data safe, comments encourage the CFPB to look for ways to streamline consumer consent to avoid creating added friction and placing additional undue burden on the individual and to clarify authentication processes to minimize risks.&nbsp;
<h3>8. Tokenized Account Numbers. Too Soon?&nbsp;</h3>
TANs can provide some security and privacy advantages. But, they lack standardization today, which creates increased risks for consumers, merchants, and financial services providers.&nbsp;
<h3>9. FCRA and Data Broker Rules. How Do We Manage the Overlap?&nbsp;</h3>
Many comments ask the CFPB to clarify how Section 1033 rules overlap with other rules like the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act. Several regulations overlap significantly, and the combined impact on financial providers is not yet fully understood.
<h3>10. Implementation Timeline. Is There Enough Time to Become Compliant?</h3>
Many are raising concerns about the proposed compliance timelines citing the need for more time to meet requirements and operationalize an API &mdash; without interrupting consumer access in the meantime.&nbsp;

Following are MX’s recommendations to enhance the proposed Section 1033 rule on consumer data rights and what it means for our clients, partners, and the consumers we collectively serve

MX Comments on CFPB Section 1033 Rulemaking

MX Comments on the CFPB’s Required Rulemaking on Personal Financial Data Rights

The CFPB's proposed rulemaking under Dodd-Frank Act Section 1033 generated 11K+ comments. Here's our summary of the top themes.

Learn more about MX's comments to the CFPB on consumer financial data rights

The CFPB's proposed rulemaking for consumer financial data rights under Dodd-Frank Act Section 1033 generated 11K+ comments. Here's our summary of the top 10 common themes.

Personal Financial Data Rights Rulemaking: 11K+ Comments, 10 Themes 

The Consumer Financial Protection Bureau&rsquo;s (CFPB) <a href="https://www.mx.com/blog/cfpb-nprm-dodd-frank-section-1033/#why-is-the-nprm-important" target="_blank" rel="noopener">notice of proposed rulemaking (NPRM)</a> for personal financial data rights under <a href="https://www.mx.com/blog/cfpb-nprm-dodd-frank-section-1033/#what-is-1033" target="_blank" rel="noopener">Dodd-Frank Act Section 1033</a> generated more than 11,000 comments from banks, credit unions, fintechs, industry groups, and other third parties.&nbsp;
As part of the comment period, MX also shared its perspective on the proposed rule. We applaud the CFPB for advancing the cause of financial empowerment by proposing a rule that would make enforceable the Congressional directive that consumers have access to data regarding their financial products and services, and to do so in a way that mitigates financial risks and reduces potential consumer harm.&nbsp;
<blockquote>
Learn more about MX&rsquo;s recommendations to enhance the proposed rule and what it means for our clients, partners, and the consumers we collectively serve. <a href="/whitepapers/mx-perspective-on-consumer-data-rights-rulemaking" target="_blank" rel="noopener">Read the whitepaper</a>.&nbsp;
</blockquote>
We believe that the success of the financial industry, future innovation, and the financial health of Americans can all be greatly enhanced by increased clarity of data rights and the implementation of this rulemaking. But there is still much work to be done. We can expect more engagement and questions over the next 6 or more months as the CFPB evaluates comments and makes revisions ahead of a final rulemaking likely in late Fall 2024.&nbsp;
Here&rsquo;s our summary of 10 key themes based on these industry responses:&nbsp;
<h2>Scope of Data. Is it Enough?&nbsp;</h2>
The proposed rule contemplates applying to a small subset of covered entities, including those that provide asset accounts subject to Regulation E, credit cards subject to Regulation Z, and payment facilitators. This leaves a majority of the financial ecosystem and significant amounts of consumer financial data outside the scope of the rule, including loans, investments, retirement accounts, and more.
<h2>Restrictions on Secondary Use Cases. Will This Hamstring Consumer Benefits?</h2>
Proposed limitations on secondary use cases would prevent companies from using consumer-permissioned data in a manner that would benefit the consumer and support increased competition and innovation.&nbsp;
<h2>Risks and Liability. Who&rsquo;s on the Hook?&nbsp;</h2>
Ambiguity in liability definitions could create varying interpretations that lead to more confusion. Many comments call for more explicit statements related to third party risk management and liability for mishandling of data or data breaches.&nbsp;
<h2>Fees. Should Reasonable Fees Be Allowed?&nbsp;</h2>
The current proposed ruling does not allow for financial institutions to charge for data access, at this point in time. Comments from the industry are split amongst FIs who want to charge and industry groups who believe costs will negatively impact consumers.&nbsp;
<h2>Technical and Interface Standards. Does a Named SSO Need to Come Before the Final Rule?&nbsp;</h2>
Many responses agree with the premise of an industry standards-setting body (SSO) but worry about the practicalities and timing. For instance, several ask the CFPB to designate an SSO prior to the final rulemaking to ensure little disruption to the data sharing environment and avoid delays in the industry&rsquo;s ability to implement this rule.&nbsp;
<h2>Transitioning from Screen Scraping. How Do We Do This Most Effectively?&nbsp;&nbsp;</h2>
The proposed rule doesn&rsquo;t provide guidance on how to manage the transition from screen scraping to an API without disrupting operations or consumer access to data. Comments ask for clarity to ensure data providers don&rsquo;t simply shut off access to comply with the rule but find a way to keep data flowing during this transition.&nbsp;
<h2>Consent and Authentication. How Do We Keep it Safe and Easy for Consumers?&nbsp;</h2>
While there is universal support for strong authorization and authentication protocols to keep consumer data safe, comments encourage the CFPB to look for ways to streamline consumer consent to avoid creating added friction and placing additional undue burden on the individual and to clarify authentication processes to minimize risks.&nbsp;
<h2>Tokenized Account Numbers. Too Soon?&nbsp;</h2>
TANs can provide some security and privacy advantages. But, they lack standardization today, which creates increased risks for consumers, merchants, and financial services providers.&nbsp;
<h2>FCRA and Data Broker Rules. How Do We Manage the Overlap?&nbsp;</h2>
Many comments ask the CFPB to clarify how Section 1033 rules overlap with other rules like the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act. Several regulations overlap significantly, and the combined impact on financial providers is not yet fully understood.
<h2>Implementation Timeline. Is There Enough Time to Become Compliant?</h2>
Many are raising concerns about the proposed compliance timelines citing the need for more time to meet requirements and operationalize an API &mdash; without interrupting consumer access in the meantime.&nbsp;

CFPB Rulemaking on Personal Financial Data Rights: 11K+ Industry Comments, 10 Common Themes 

For the financial services industry, 2023 will be a year to remember. Financial institutions and fintechs saw everything from bank failures and record-high interest rates to the rise of ChatGPT and new regulatory expectations. Coupled with increased competition, market consolidation, and increasingly demanding consumer expectations, financial providers face a myriad of challenges and opportunities this year. 2024 will show us how the challenges and innovations of 2023 will have a lasting impact and reshape the financial services industry forever.&nbsp;
Behind each of these lasting impacts, we see one common thread &mdash;&nbsp;financial data. Vast amounts of transaction and customer data are generated daily. And, it tells us everything we need to know about <a href="https://www.mx.com/guides/2024-digital-banking-playbook/" target="_blank" rel="noopener">how to win and retain customers</a>. Financial institutions and fintechs that are able to unlock this <a href="https://www.mx.com/blog/what-is-financial-data-intelligence/" target="_blank" rel="noopener">financial data intelligence</a>&nbsp;will see tremendous growth and success.&nbsp;
Here are our four predictions for 2024 &mdash; the year of financial data intelligence &mdash; including what the next generation of financial wellness tools looks like, the future of AI and personalization, the evolution of bank-fintech partnerships, and what&rsquo;s next for Open Banking.&nbsp;
<h2>1. Embedded Financial Wellness Takes Center Screen</h2>
Intuit&rsquo;s plan to shut down Mint beginning January 1 represents a milestone and an opportunity for the future of <a href="https://www.mx.com/products/personal-financial-management/">personal financial management (PFM) tools and apps</a>.&nbsp;
The reality is that it&rsquo;s difficult to drive engagement and revenue based on a standalone PFM app. <a href="https://www.forbes.com/sites/ronshevlin/2023/11/06/the-demise-of-intuit-mint-and-personal-financial-management/?sh=c1225b12080f">According to Forbes, the problem is two-fold</a>: 1) PFM tools have historically been focused on budgeting and expense categorization and 2) consumers don&rsquo;t want to pay for budgeting and expense categorization.&nbsp;
In fact, our research shows that <a href="https://www.mx.com/research/financial-wellness-and-todays-money-experience/">45% of consumers only check their finances through their financial accounts</a>. And, nearly 1 in 10 say they don&rsquo;t track their finances at all. The majority of consumers want to improve their finances and make better decisions with their money, but don't want to do the work &mdash; particularly if it means logging in and managing yet another app.&nbsp;
<a href="https://www.mx.com/blog/what-mint-shutdown-means-for-financial-institutions/">Mint and other standalone PFM solutions</a> are for the super users, not the average Joes. 2024 will be the year that banks, credit unions, and other financial providers rethink and retool <a href="https://www.mx.com/products/personal-financial-management/">PFM solutions</a> to reach more consumers.&nbsp;
In fact, Harvard Business Review points to employers as a key player in providing <a href="https://hbr.org/2024/01/its-time-to-prioritize-employees-financial-health">financial wellness tools to their employees</a>&nbsp;citing a 2023 report by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) which found that employees spend an average 8 hours a week dealing with financial issues &mdash; with four of those hours occurring at work.
And, even the <a href="https://home.treasury.gov/news/press-releases/jy2012">U.S. Treasury Department has begun work on a national strategy for financial inclusion</a> focused on advancing financial inclusion and broadening access to financial products and services among underserved communities.&nbsp;
By making financial wellness an embedded part of life for consumers &mdash; whether at work or in their community, we can drive better outcomes across the board.&nbsp;
According to Alex Johnson, author and creator of Fintech Takes, &ldquo;we make a mistake when we assume that PFM = budgeting and expense categorization. It&rsquo;s much broader than that. <a href="https://workweek.com/2023/11/10/pfm-fintech/">PFM is about meeting consumers where they are</a> and delivering them the best possible financial outcomes.&rdquo;
Financial institutions and fintechs should focus on integrated, <a href="https://www.mx.com/products/experience/">personalized experiences</a> that bring PFM into the everyday habits of consumers, rather than asking them to build a new habit. In 2024, we expect to see:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Financial institutions will focus on embedded finance experiences to bring PFM-like tools into the flow-of-life tasks consumers have already adopted.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1"><a href="https://www.mx.com/products/financial-insights/">Personalized insights</a> and actionable intelligence, powered by the consumer&rsquo;s financial data, will be integrated throughout the <a href="https://www.mx.com/use-cases/digital-banking/">digital banking experience</a> instead of buried within a separate screen or app.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">A smooth, secure account aggregation process will become critical as financial providers aim to become the hub for consumers looking to get a 360-view of their finances.</li>
</ul>
<h2>2. Personalization Finally Gets Personal</h2>
Financial providers sit on a mountain of data about their customers. However, translating that data into personalized experiences or targeted offerings remains difficult for the majority of organizations.&nbsp;
<a href="https://www.mx.com/research/how-to-keep-consumers-from-breaking-up-with-banks/" target="_blank" rel="noopener">New research from MX</a> found that 44% of U.S. consumers either said no or weren&rsquo;t sure when asked if they believe financial providers are leveraging the data they have about them to personalize their experience. This is telling as it becomes easier for consumers to open new accounts or switch financial providers if they aren&rsquo;t satisfied. Consumers are more likely to leave if the provider isn&rsquo;t leveraging what it knows about its consumers. And, simply saying &ldquo;Dear INSERT NAME&rdquo; in an email doesn&rsquo;t cut it.&nbsp;
Unlocking the value of financial data to better understand consumer needs and the explosive growth of generative AI over the past year will further enable financial institutions and fintechs to take personalization to the next level in 2024.&nbsp;
With enriched data and new tools powered by AI and machine learning, <a href="https://www.mx.com/blog/what-is-financial-data-intelligence/">financial data intelligence</a> gets a boost that will drive faster and better personalization at scale. But AI isn&rsquo;t a silver bullet on its own &mdash; it starts with clear, structured, and enhanced data. In 2024, we expect financial institutions and fintechs to leverage data to finally get personalization right, such as:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Marketers will go beyond factors like location and behaviors to create relevant offers and campaigns that meet consumers where they are in their financial lives and <a href="https://magazine.tfbinsights.com/view/894158076/36-37/?edigestM4&amp;utm_source=eDigest+Newsletter">reach them during key life events</a>.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Digital banking experiences and <a href="https://www.mx.com/products/mobile-banking/">mobile banking apps</a> will make personalized insights immediately actionable by tying them to actionable next steps consumers can take in the moment. For instance, rather than simply showing a duplicate subscription payment, the financial provider can embed the steps to cancel it, allowing the consumer to take immediate action.&nbsp;</li>
</ul>
Jim Marous, co-publisher of The Financial Brand, says &ldquo;banks adept at deriving actionable intelligence from customer insights and nimble enough to act quickly can foster much deeper consumer relationships through advanced engagement. The key to seizing these CX [customer experience] possibilities lies in <a href="https://thefinancialbrand.com/news/customer-experience-banking/improving-bank-cx-demands-data-driven-real-time-engagement-170221/">fully utilizing data, analytics and technology</a>&nbsp;to revolutionize how engagement is supported.&rdquo; 
<h2>3. Bank-Fintech Relationships Hit a New Stride&nbsp;</h2>
According to a 2023 Ernst &amp; Young survey, <a href="https://thefinancialbrand.com/news/fintech-banking/banks-assess-partnership-risks-with-fintechs-under-pressure-171399/#:~:text=A%202023%20Ernst%20%26%20Young%20survey,disappointment%20may%20become%20more%20widespread.">40% of bank-fintech partnerships &ldquo;fail to operationalize.&rdquo;</a> And, those that make it off the ground, tend to underwhelm. <a href="https://www.bain.com/insights/united-we-thrive-the-untapped-power-of-bank-fintech-partnerships/">Two-thirds of these partnerships fall below expectations</a>, according to a survey by Aite-Novarica.
Why do so many bank-fintech partnerships fail? Kate Drew at Forbes points to a <a href="https://www.forbes.com/sites/katedrew/2023/12/12/where-is-banking-as-a-service-headed-in-2024/?sh=41e66f6931d0">mismatch of priorities and approaches</a>. &ldquo;The reasons for these troubles are varied &mdash; they stem in part from overexcitement in the last few years that got knocked back in 2023 as fintech funding plummeted and the macroeconomic environment grew uncertain, but they&rsquo;re also likely the result of a fundamental mismatch between how traditional banks and fintechs think and operate.&nbsp;
Traditional institutions are very risk averse; even the most progressive ones generally think about one thing more than anything else, staying compliant. If you were to ask any fintech what they think about most, they&rsquo;re likely to tell you it&rsquo;s the customer experience. Now, imagine being in a relationship in which you and your partner have such different ideas about what matters to your future.&rdquo;&nbsp;
If 2023 was the year of reckoning for bank-fintech partnerships, 2024 will be the year of building sustainable relationships. Fintech partnerships are not going away &mdash; they are critical to help augment staffing and resources to implement and support technology, as well as bring in and fuel new innovation. But, how banks and other financial institutions partner with fintechs will change in 2024, including:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Technology investments will pick back up after slowing down throughout the pandemic. In fact, Gartner reports <a href="https://www.gartner.com/en/digital-markets/insights/2024-tech-trends-in-finance">72% of finance businesses will spend more on software next year than they did in 2023</a>.</li>
<li style="font-weight: 400;" aria-level="1">Financial institutions and fintechs will find a way to share responsibility for risk management and compliance, particularly ahead of new regulatory expectations on the horizon.</li>
<li style="font-weight: 400;" aria-level="1"><a href="https://www.forbes.com/sites/ronshevlin/2023/12/04/2024-the-beginning-of-the-end-of-bank-fintech-partnerships/?sh=6aef63321206">Fintech vendor selection criteria</a> used by financial institutions will shift from idealistic innovation to data-driven evidence to support business goals. The most important fintech partnerships in the future will create indisputable value for businesses and consumers. </li>
</ul>
<h2>4. Regulations Won&rsquo;t Immediately Fix Open Banking</h2>
It&rsquo;s no surprise to see Open Banking round out our list of 2024 predictions. The <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rule-to-jumpstart-competition-and-accelerate-shift-to-open-banking/">U.S. Consumer Financial Protection Bureau (CFPB) published its notice of proposed rulemaking</a> for personal financial data rights under Dodd-Frank Act Section 1033 in October 2023.&nbsp;
People and small businesses have been sharing their financial data for decades &mdash; to create budgets, track net worth, pay taxes and bills, etc. However, until recently, consumer financial data access and control has primarily been left up to the financial institutions, fintechs, and other third parties involved.&nbsp;
The CFPB shared, &ldquo;currently, <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rule-to-jumpstart-competition-and-accelerate-shift-to-open-banking/">people&rsquo;s access to their financial data is inconsistent</a> from one financial institution to another. Even among companies that do share data at a customer&rsquo;s request, the terms of the sharing vary greatly. This lack of norms in the market allows incumbents to play games to their own customers&rsquo; detriment &ndash; including hiding or obscuring important data points like prices.&rdquo;
The final rulemaking for Section 1033 is an important milestone in making sure <a href="https://www.mx.com/blog/consumer-financial-data-rights/">consumers have the right to access and control their financial information</a>. We also believe it will lay the groundwork for the United States to move into the next chapter of fintech innovation. But, this won&rsquo;t happen overnight.&nbsp;
We predict 2024 &mdash; and beyond... based on CFPB&rsquo;s proposed compliance dates &mdash; will be a year of open banking growing pains, including:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Data providers and data recipients will need to take steps, such as investing in new processes and tools, to ensure compliance with pending regulations.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">The collective financial industry will be faced with <a href="https://workweek.com/2023/10/06/8-questions-open-banking/">figuring out the &ldquo;how-to&rdquo; details</a> when it comes to industry standards, APIs, data-sharing agreements, and more. Every financial institution, fintech, and industry group should be getting involved now to help shape what this looks like. It will take a village to bring Open Banking into the next phase of compliance and innovation.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Consumers will start to see new disclosures and consent management screens that they may have never seen before &mdash; leading to new types of questions and concerns that organizations must be prepared to address.&nbsp;</li>
</ul>

Here are our four predictions for 2024 — the year of financial data intelligence — including what the next generation of financial wellness tools looks like, the future of AI and personalization, the evolution of bank-fintech partnerships, and what’s next for Open Banking. 

Here are MX's 4 predictions for 2024 — the year of financial data intelligence — on financial wellness, the future of AI and personalization, bank-fintech partnerships, and Open Banking. 


MX's 4 Predictions for 2024 - The Year of Financial Data Intelligence

4 Predictions for 2024: The Year of Financial Data Intelligence

The financial services industry has long been a trusted steward of consumer&rsquo;s money. Consumers turn to banks, credit unions, and other financial providers to keep their money safe and make sure their funds are accessible when they need them. But in today&rsquo;s data-driven world, being a trusted steward of money is just one piece of the equation. Now more than ever, financial providers must be a trusted steward of the consumer&rsquo;s personal data and also, a steward of trust itself.
&ldquo;Customers need to be able to trust financial institutions and fintechs to keep their money safe, to protect their personal data, and to deliver reliable services that help them manage and use their money responsibly. However, trust in financial services is hard won and fragile.&rdquo; &mdash; <a href="https://www.mx.com/guides/trust-and-the-consumer-money-experience/">A Time for Trust: The Consumer Money Experience.</a>
It&rsquo;s no surprise that security is at the core of building and maintaining trust. As our industry embraces open finance ecosystems, it&rsquo;s an opportunity to raise the bar on securing financial data.&nbsp;
<h2>The Need for Open Finance</h2>
At MX, Open Finance means secure and reliable access for consumers to share their data with the financial apps and tools they choose to use. It is based on the idea that consumers own their data and should have control over who has access to it.&nbsp;
And, of all the benefits that Open Finance provides, the most important is protecting consumer data while giving them control over which organizations they choose to share it with. Current data-sharing methods like screen scraping, for example, put a customer at higher risk unless careful security protocols are in place.&nbsp;
<a href="https://www.mx.com/blog/what-is-open-finance/" target="_self">Open Finance</a> helps alleviate security concerns and improves the experience for the consumer by offering:&nbsp;&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Safe and secure data connections through industry standards provided by FDX&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Future regulations that help protect consumers and ensure they have control over their data</li>
<li style="font-weight: 400;" aria-level="1">Reliable access to accurate financial data that is permissioned by the consumer</li>
</ul>
Simply put, Open Finance can be more secure as it eliminates the need for consumers to share their credentials in order to connect financial accounts into a single view. This is why leading organizations are on a journey to secure access to open data in a digital ecosystem. Moving from screen scraping to secure, reliable open finance APIs is the best way to protect open data.
<h2>A Call for Better Security</h2>
Data breaches, scams, and fraud have reached record levels. The Federal Trade Commission reports that <a href="https://www.ftc.gov/news-events/news/press-releases/2023/02/new-ftc-data-show-consumers-reported-losing-nearly-88-billion-scams-2022">consumers lost nearly $8.8 billion to scams in 2022</a> &mdash; an increase of more than 30% over the previous year. Among the types of scams where consumers fell victim, imposter scams top the list as the most prevalent form of fraud with losses of $2.6 billion.&nbsp;
For financial institutions, the story is the same. A recent study found that <a href="https://www.securitymagazine.com/articles/99185-credit-union-fraud-rates-increased-by-more-than-70-in-2022">credit union call centers saw over a 70% increase in fraud rates</a> last year. This same report also shows that more than 300 million people have been affected by data breaches since 2020 &mdash; and that data compromises are at an all-time high.&nbsp;
While better controls won&rsquo;t completely eliminate fraud, financial institutions and fintechs should look to not only strengthen, but promote their security practices to protect consumers and their business. And, they should consider how Open Finance can enhance their processes and systems throughout the consumer money experience to mitigate risk:&nbsp;
<ol>
<li>
<h3> Account Openings</h3>
</li>
</ol>
The touchpoint with one of the highest levels of associated risk along the customer journey is when they first open an account. In fact, new account fraud increased 109% in 2021 according to Javelin Strategy &amp; Research&rsquo;s <a href="https://javelinstrategy.com/press-release/identity-fraud-losses-total-52-billion-2021-impacting-42-million-us-adults">2022 ID Fraud Study</a>.&nbsp;
At the same time, consumers are quick to bail if the account opening process is too cumbersome. This makes the account opening process a critical touchpoint for both security and a business&rsquo;s bottom line.&nbsp;
Leveraging Instant Account Verification (IAV) and identity verification technologies can enable a smoother and more secure experience. Organizations can verify accounts in less than 5 seconds using direct OAuth connections that eliminate the reliance on microdeposits to verify an account. With microdeposits, the customer typically has to wait anywhere from one to three business days for these small deposits to show up on their account, and then they have to log in again to validate their account.&nbsp;
By contrast, IAV is faster, more cost-effective, and helps significantly decrease drop-off rates as customers aren&rsquo;t weighed down waiting to verify via microdeposits for several days. Additionally, IAV technology is able to determine whether or not the connected account is owned by the same person who is opening a new account, further safeguarding the account opening process.&nbsp;
<ol start="2">
<li>
<h3> Account Logins&nbsp;</h3>
</li>
</ol>
Previous MX research shows that consumers across all generations want more security and control of their financial accounts. And, when it comes to logging in, <a href="https://www.mx.com/research/what-consumers-want-from-financial-providers/">most consumers pointed to multi-factor authentication (MFA) and biometric login options as features they want in their money experience</a>.&nbsp;
That said, adding layers like MFA can make the login process longer for consumers who have little patience. Financial providers should consider how to strike the balance between a speedy login process and a secure one. Financial providers should consider how to keep pace with new authentication standards and experiences across other industries to ensure they are delivering a secure, seamless experience for their consumers.
<ol start="3">
<li>
<h3> Account Aggregation</h3>
</li>
</ol>
Account aggregation enables consumers to link together all of their financial accounts into a single view. This financial data sharing enables consumers to gain a 360-degree view of their finances, empowering them to make better financial decisions and get closer to reaching their financial goals.&nbsp;
However, the majority of financial data sharing is historically done through screen scraping, which requires consumers to share their usernames and passwords with a third party, putting both consumers and businesses at risk. Open Finance enables a better way.&nbsp;
By leveraging an open finance API, consumers never have to share their username and password. Instead, organizations leverage tokenized API and OAuth connections to enable consumers to connect to and share their financial data &mdash; on their terms. Only authorized third-party providers can connect to bank APIs. Consent management gives control to the end user, not allowing their data to be shared without their consent and knowledge. Connecting to financial institutions through secure connections also activates anti-fraud systems already in place.
<ol start="4">
<li>
<h3> Day-to-Day Financial Management</h3>
</li>
</ol>
The better financial providers understand their customers, the more risk can be curbed. Financial institutions have a wealth of data about their customers including where, when, and how they manage their money.&nbsp;
By tapping into this data to establish and monitor patterns, financial providers can better identify anomalies and proactively take action or alert the customer when something doesn&rsquo;t look right. Greater insights into the financial lives of consumers means it&rsquo;s easier to spot anomalies and potential fraud, reducing risk for both the organization and customer.
<h2>Conclusion</h2>
Open Finance not only enables organizations to reduce risk and mitigate fraud, but also improve the money experience for consumers. And, in today&rsquo;s economic landscape, delivering world-class experiences backed by secure, reliable systems are two ways companies can become a trusted partner for consumers.
<h2>Open Finance Security Check</h2>
Account Opening and Connection:
<ul>
<li style="font-weight: 400;" aria-level="1">Do you have the login capability to block devices that look like an anomaly or display risky characteristics? Is blocking manual or automated?</li>
<li style="font-weight: 400;" aria-level="1">How are you connecting funding accounts during account opening? Microdeposits, IAV, or via debit cards? If using IAV, have you paired it with account owner verification?</li>
<li style="font-weight: 400;" aria-level="1">What verification method(s) do you use when consumers connect their accounts?</li>
</ul>
Information Security:
<ul>
<li style="font-weight: 400;" aria-level="1">Have you seen a change in account takeover and fraud? An increase could mean your login security needs to be refreshed.</li>
<li style="font-weight: 400;" aria-level="1">Are you able to identify when a breach has occurred?</li>
<li style="font-weight: 400;" aria-level="1">In the event of a breach, do you have visibility into where it originated and what the hacker did while in your systems?</li>
</ul>
Open Finance:
<ul>
<li style="font-weight: 400;" aria-level="1">Are you able to differentiate between a consumer&rsquo;s actions and an aggregator they&rsquo;ve authorized?</li>
<li style="font-weight: 400;" aria-level="1">Does your aggregation require user login credentials? Is this inbound aggregation or outbound?</li>
<li style="font-weight: 400;" aria-level="1">Are you able to provision access to a third party?</li>
<li style="font-weight: 400;" aria-level="1">Are you able to tailor security measures based on the data involved?</li>
<li style="font-weight: 400;" aria-level="1">What is the customer&rsquo;s connection experience?</li>
<li style="font-weight: 400;" aria-level="1">Can you identify a user based on their device settings?</li>
</ul>

As the industry embraces open finance ecosystems, it’s an opportunity to raise the bar on securing financial data. 

The industry shift to Open Finance is an opportunity to raise financial data sharing standards.

How Open Finance Improves Security

From Money to Data to Trust: How Open Finance Improves Security

Today&rsquo;s money experience is inherently messy both for consumers and financial providers seeking to meet increasingly complex consumer needs. Consumers must look across a multitude of financial accounts to try to manage their financial life. On the other side, financial providers only glimpse a fragment of a consumer&rsquo;s financial picture and lack visibility into where consumers are sharing data from their systems with others.
Most financial data sharing still relies on less reliable and less secure methods that require consumers to share credentials with a third party. Connections frequently break and consumers are left wondering who has access to their data while businesses have little visibility into where data is shared. This leads to frustration and could potentially cost businesses customers in the long run. In fact, research shows <a href="https://www.mx.com/research/consumer-trends-digital-and-mobile-banking/">72% of consumers would switch financial providers if they were unable to connect to their preferred financial app</a>. The financial industry can do better.&nbsp;
<h2>A Disjointed Money Experience for Consumers</h2>
Consumers maintain relationships with an average of 5 to 10 different financial services organizations, from their primary bank to PayPal and Venmo to various credit cards, investment accounts, and loans.&nbsp;
Our latest survey of 1,000+ American consumers found that most consumers do not have a good way to track and manage their finances. Nearly half (45%) only check finances through their financial accounts &mdash; meaning they must look across multiple providers to try to get a full picture. This is even higher among older generations. What&rsquo;s more, nearly 1 in 5 are using a budgeting tool or app to track their finances (19%) or a spreadsheet or other manual process to track their finances (18%). And, nearly 1 in 10 respondents stated that they do not track their finances at all.
We&rsquo;ve all heard the expression that knowledge is power. Without a complete 360-degree view of their finances, consumers do not have the data they need to truly manage their finances or reach their financial goals. Engaging with their finances on multiple platforms means they don&rsquo;t have a consolidated view of their financial data or who may be accessing it.&nbsp;
If they choose to share their financial data with a financial provider, they are most likely opening themselves up to increased risk by sharing credentials with third parties and giving them access to systems that are not meant to be shared.
<h2>A Fuzzy View for Financial Providers</h2>
On the other side, data providers like financial institutions and fintechs don&rsquo;t have visibility into where their consumers are sharing their data or what tools and services they are using. Without this view, financial providers can&rsquo;t deliver the secure, personalized experiences their consumers want and need.&nbsp;
Today&rsquo;s fragmented money experience isn&rsquo;t just a nuisance for consumers. It is a challenge that financial providers must solve to ensure they can protect and safeguard consumer data, truly understand their consumers, deliver personalized offers and experiences to engage and retain customers, and drive better decision making to grow their business.&nbsp;
The majority of financial data sharing is still done through screen scraping, which is less secure, limits the visibility of financial institutions to see where their customers share data, and requires consumers to share their usernames and passwords with a third party.&nbsp;
<h2>Enter Open Finance</h2>
<a href="https://www.mx.com/blog/what-is-open-finance/">Open Finance puts the consumer in control of their data</a>. It means that companies, financial and otherwise, can build and offer solutions that help consumers understand and manage their financial lives better. In addition, it provides a foundation that gives consumers and financial providers better access, visibility, and control into who has access to financial data. Financial providers can gain a better understanding of their customers and needs in order to improve their customer analytics and targeting for marketing programs.&nbsp;
However, the United States is still a long way from a truly open finance ecosystem. Consumers overwhelmingly agree (89%) that <a href="https://www.mx.com/research/what-consumers-want-from-financial-providers/">they own their financial data and should be able to control who has access to it</a>. While this is the case, more than half of consumers (55%) also agree that they aren&rsquo;t sure what companies or providers have access to their financial data.&nbsp;
Open finance and open banking regulations are taking hold in the U.S. and Canada, from market-driven to government mandates, but there is still much to be done. As the U.S. Consumer Financial Protection Bureau (CFPB) prepares to formalize rulemaking under Dodd-Frank Act&rsquo;s Section 1033 this year and with the implementation of consumer-directed finance in Canada underway, understanding and laying the groundwork for consumer data rights and sharing should be top of mind for financial institutions and fintechs.&nbsp;
<h2>Why Open Data Access Matters</h2>
Open Finance can enable a financial institution to extend its core systems directly to customers and partners to create a more open data sharing environment. With open access to data, financial institutions, fintechs, and their consumers can better understand and do more with financial data. It enables:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Better Fraud and Risk Management: By leveraging an open finance API rather than screen scraping, consumers never have to share their username and password, and financial providers eliminate the risk of sharing credentials.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">More Accurate Customer Profiles: Financial providers can gain access to real-time financial data from their consumers. They can easily see where consumers are sharing their data and why it is being used. This helps identify product and partnership opportunities</li>
<li style="font-weight: 400;" aria-level="1">Enhanced Customer Experiences: Consumers have greater control over their financial data with the ability to connect and share their data on their terms. They can also more easily manage and revoke access to their data at any time. By putting consumers in the driver&rsquo;s seat, financial providers can build trust and improve relationships, leading to greater customer satisfaction and loyalty.</li>
<li style="font-weight: 400;" aria-level="1">Personalized Services: By analyzing their financial data, businesses can identify specific customer needs or preferences and tailor their offerings accordingly. For example, a bank may offer investment opportunities to customers who have a higher disposable income, or provide budgeting tools to those who struggle to manage their finances. By offering more personalized services, businesses can create a stronger connection with their customers, leading to increased loyalty and retention.</li>
<li style="font-weight: 400;" aria-level="1">Data-Driven Decision Making: Businesses can gain insight into trends and patterns that may not have been apparent before. This can help businesses identify new opportunities, optimize their operations, and make more informed decisions about product development and marketing strategies.</li>
</ul>
<h2>Introducing MX Data Access</h2>
MX is making it easier than ever for financial institutions of all sizes to accelerate open finance adoption and enhance the money experience for consumers through Data Access. The platform enables institutions to deliver a safe and secure connectivity experience for their customers. With <a href="https://www.mx.com/blog/what-is-consumer-permissioned-data/" target="_blank" rel="noopener">consumer authorized and permissioned data sharing</a>, customers gain visibility and control over which apps and institutions access their data &mdash; enabling them to grant, manage, and revoke access at any time.&nbsp;
Data Access is an open API platform built on FDX standards that improves time-to-market and reduces costs to deliver secure data sharing, as well as provide the groundwork for greater insights about customer behaviors, trends, and needs. It provides financial institutions with the ability to monitor and manage where consumers are sharing their financial data and the tools to implement a more secure data-sharing experience with token-based connectivity.

Most financial data sharing still relies on less reliable and less secure methods that require consumers to share credentials with a third party. Connections frequently break and consumers are left wondering who has access to their data while businesses have little visibility into where data is shared. The financial industry can do better. 

Today’s money experience is inherently messy both for consumers and financial providers seeking to meet increasingly complex consumer needs. With open access to data, financial institutions, fintechs, and their consumers can better understand and do more with financial data. 

How Open Finance Creates a Better Money Experience | MX Data Access

How Open Finance Creates a Better Money Experience

For the financial services industry, trust is essential. A consumer&rsquo;s money experience can have a profound impact on everything from their livelihood and safety net to their groceries and how many gallons of gas they put in their car. But managing money is messy and stressful.&nbsp;
Money remains the No. 1 source of stress for consumers. It is among the top causes for divorce in America, second only to infidelity. And, money stress can make people up to 20 times more likely to attempt suicide. According to MX&rsquo;s own research, <a href="https://www.mx.com/research/consumer-money-matters-debt-on-the-rise-savings-on-the-decline/">50% of 1,000 U.S. adults agree that thinking about money makes them anxious</a>. And, nearly half (47%) agree that money is their primary source of stress.&nbsp;
In The Power of Trust, the authors write: &ldquo;Today, the need for business to focus on trust is clearer than ever before &hellip; the conditions that now shape the landscape have brought trust directly to the forefront of conducting good business.&rdquo;&nbsp;
Customers need to be able to trust financial institutions and fintechs to keep their money safe, to protect their personal data, and to deliver reliable services that help them manage and use their money responsibly. However, trust in financial services is hard won and fragile.&nbsp;
<h2>The State of Trust in Financial Services</h2>
According to the <a href="https://www.edelman.com/trust/2023/trust-barometer">2023 Edelman Trust Barometer</a>, financial services is one of the least trusted industry sectors in the world.&nbsp;
<img src="https://cms.mx.com/assets/fc1b032f-35d8-4e96-855b-8c9fe45aec06?width=3562&amp;height=1633" alt="Global State of Trust" />
Fifty-nine percent of the 32,000 global respondents to the firm&rsquo;s 23rd annual trust and credibility survey trust financial services to do what is right, compared to 75% who trust technology and 71% who trust education and food &amp; beverage companies &mdash; the top 3 most trusted industries. In the United States, 57% of consumers trust financial services, an increase of 9 percentage points over 2022 findings.&nbsp;
These numbers show a huge opportunity for financial institutions and fintechs &mdash; who bridge the most trusted industry sector to financial services &mdash; to build greater trust.&nbsp;
The opportunity is even more pronounced for lower income households. Only 47% of low income respondents trust financial services compared to 73% of high income respondents and 57% of those who are middle income. Edelman&rsquo;s findings also show a stark comparison between high income and low income respondents across all subsectors for financial services:&nbsp;
<img src="https://cms.mx.com/assets/f58324fe-4d2b-40c3-a6fc-069300e0c0e8?width=2809&amp;height=1469" alt="Double-Digit Trust Inequality for Most Financial Services Subsectors" />
Looking deeper at the types of financial providers, <a href="https://www.mx.com/research/genz-millennial-banking-perspectives/">MX&rsquo;s previous research reveals national banks and credit unions were most trusted with their personal data</a>. However, as technology advances and market dynamics change, there is rich opportunity for community banks, fintechs, and other technology providers:&nbsp;
<img src="https://cms.mx.com/assets/c99a0671-6218-40d5-9ad6-b413d29d28b6?width=1881&amp;height=2015" alt="Financial Organizations that Consumers Trust Most" />
While there is room to grow trust, consumers inherently believe financial services companies have some of the key elements that make them trustworthy: good at what they do, honest, keep their promises, and trying hard to have a positive impact on society.
<img src="https://cms.mx.com/assets/621eecef-81c2-4fbd-aebe-d47470d864d9?width=2176&amp;height=1528" alt="Dimensions of Trust" />
<blockquote>
&ldquo;&hellip; Trust is what earns you the customers who keep coming back to you, the employees that put in their best work for you, and the public&rsquo;s tolerance of your ability to operate.&rdquo; &mdash;The Power of Trust
</blockquote>
<h2>A Broken Money Experience</h2>
Today&rsquo;s money experience is inherently broken. Technology advancements over the last 2 decades have made the money experience for the average person harder. Consumers can program their entire house to respond at the click of a button or simple voice command. So why hasn&rsquo;t technology made managing money easier?&nbsp;
The average consumer has multiple accounts across numerous financial institutions and fintechs. This requires remembering several usernames and passwords, reviewing multiple statements, and planning budgets and savings across various accounts. And, for many, this means still using a spreadsheet to keep track of multiple financial accounts and budgets.&nbsp;
And, this problem will only get worse, unless we do something about it. Consumers &mdash; and businesses &mdash; need a trusted partner to help them on their financial journey. The good news is that consumers believe in financial providers. According to MX&rsquo;s consumer research, <a href="https://www.mx.com/research/consumer-money-matters-debt-on-the-rise-savings-on-the-decline/">44% of Americans believe their financial providers have their best interest at heart</a>.&nbsp;
We can do better. One in 4 Americans feel their <a href="https://www.mx.com/research/what-consumers-want-from-financial-providers/">financial providers aren&rsquo;t doing enough to support their financial needs</a>, according to our research. And, 54% of consumers are likely to seek out a new financial provider if their current provider couldn&rsquo;t deliver on their most wanted features.&nbsp;
<h2>Core Trust Factors&nbsp;</h2>
There are a myriad of factors&nbsp;that play into why a company or service may or may not be trusted. In the Power of Trust, the authors break down trust into four components &mdash; competence, motives, means, and impact. For the financial services and fintech industry, we translate these to the following core questions:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Are we delivering the functionality and experiences consumers want and expect?&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Are we transparent in how we leverage consumers&rsquo; financial data to meet their needs?&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Are we safeguarding financial data and implementing secure processes to support?&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Are we driving positive outcomes for consumers to help them reach their financial goals?&nbsp;</li>
</ul>
<h3>Experiences</h3>
Consumers aren&rsquo;t satisfied with just basic financial functions like viewing balances, transaction history, and monthly statements. MX&rsquo;s research into <a href="https://www.mx.com/research/what-consumers-want-from-financial-providers/">What Consumers Want from Financial Providers</a> shows consumers want more personalized, proactive, and connected experiences.&nbsp;
This means delivering personalized insights and notifications to support their financial needs and leveraging actionable data to enable them to better understand their finances.&nbsp;
A 2020 survey from Salesforce found that <a href="https://www.salesforce.com/resources/research-reports/state-of-the-connected-customer/">66% of consumers expect their bank or credit union to know, understand, and reward them</a>, but only 34% feel that their provider treats them as an individual. With greater access to financial data than ever before, financial institutions and fintechs have no excuse for generic experiences.&nbsp;
Consider something simple &mdash;&nbsp;one of the top 5 features across every generation that consumers most want is the ability to order a personalized card, according to MX&rsquo;s latest research. Are financial providers delivering? Building trust starts with truly understanding consumers and meeting their expectations for personalized experiences.&nbsp;
<h3>Transparency</h3>
Consumers need to be able to trust that the company is honest and open about its operations. Financial and fintech companies must be transparent about fees, policies, customer service, and any other aspects of their businesses. You build trust by doing what you say you&rsquo;ll do. Looking back at the 2023 Edelman Trust Barometer, 56% of consumers agree that Financial services companies in general are honest. We can do better.&nbsp;
As Open Finance and Open Banking increasingly take hold, transparency also means reliable and secure data access. Without it, consumers have little transparency or insight into what is going on in their financial lives. By having secure access to their own financial data, they'll be able to make more informed decisions about their own finances.
In fact, <a href="https://www.mx.com/research/what-consumers-want-from-financial-providers/">consumers overwhelmingly agree (89%) that they own their financial data and should be able to control who has access to it</a>. While this is the case, more than half of consumers (55%) also agree that they aren&rsquo;t sure what companies or providers have access to their financial data. You can build trust today by ensuring consumers have visibility and control over who has access to their financial data and how it is being used.
<h3>Security&nbsp;</h3>
Above all, customers must trust that their financial data is safe and secure and that their money is being handled responsibly. This means that the company must have robust security measures in place to protect its customers&rsquo; data.&nbsp;
<a href="https://www.mx.com/research/consumer-money-matters-debt-on-the-rise-savings-on-the-decline/">Sixty-nine percent of respondents who have a primary financial provider say they trust them with their personal data</a>. However, 1 in 10 consumers say they do not trust their primary financial provider with their personal data, and 22% remain neutral on the topic. We can do better.&nbsp;
Financial providers have a greater opportunity to provide more support, security, and context around their finances. For example, two-thirds (67%) say they trust their financial providers to protect them from fraud and other security risks. That said, 26% of respondents say they have been victims of fraudulent transactions on a financial account in the past two years.&nbsp;
Context also matters when it comes to security. When asked about how often consumers see transactions on their account that they don&rsquo;t recognize at first glance, nearly 1 in 4 report this happens at least sometimes or more frequently. We also asked what action they typically take when they see a transaction they don&rsquo;t recognize. Overall, <a href="https://www.mx.com/research/what-consumers-want-from-financial-providers/">Gen Z is most likely to report an unrecognized transaction as fraud at 24%</a>, compared to just 7% of Baby Boomers. And, they are just as likely to report as fraud vs. look at their receipts to figure it out. This is an important insight as financial institutions and fintechs deal with an increase in reported fraud. How many of those fraud reports are legitimate transactions made unclear by indecipherable transaction data?
<h3>Outcomes</h3>
In order to retain customer trust for the long term, it&rsquo;s important to take steps to enhance customer engagement and drive positive outcomes. According to our data, stronger financial wellness tools and insights could become a key differentiator in 2023 and beyond. <a href="https://www.mx.com/research/what-consumers-want-from-financial-providers/">Thirty-nine percent of consumers believe financial providers have a responsibility to teach them to be financially strong</a>. Among Gen Z and Millennials, this jumps to 58% and 56% respectively, compared to 47% of Gen X and only 29% of Baby Boomers.&nbsp;
The authors of the Power of Trust said it best: &ldquo;We can often fool ourselves into thinking good intentions &mdash;&nbsp;taking actions we believe are for the good of others &mdash; are all that matter&hellip; What people actually care about, and what history will remember you for, is the impact you create.&rdquo;
For financial services, there is no greater impact than how we help consumers reach their financial goals and empower them to be financially strong. Together, we can fix the broken money experience and drive lasting trust with consumers.&nbsp;
<blockquote>
&ldquo;Trust is like a kaleidoscope. Each twist and turn creates new and unimagined possibilities. But the red and green and silver and gold parts all have to be aligned to be in the kaleidoscope. We have more power together than apart, and wondrous things happen when we leave ourselves open to twisting and turning with others.&rdquo; -The Power of Trust
</blockquote>

For the financial services industry, trust is essential. A consumer’s money experience can have a profound impact on everything from their livelihood and safety net to their groceries and how many gallons of gas they put in their car. But managing money is messy and stressful. 

For the financial services industry, trust is essential. A consumer’s money experience has a profound impact on their lives. What is the state of trust today and how do we make it stronger? 

Trust in Financial Services and the Consumer Money Experience

A Time for Trust: The Consumer Money Experience 

This year’s Money Experience Summit 2022 brought together more than 500 leaders, innovators, and experts across finance and fintech to discuss the challenges and opportunities ahead for the industry. 

Open Finance will shape the path forward in 2023 and beyond, driving new innovation and outcomes for financial institutions, fintechs, and consumers.

Key Insights from MXS 2022 | The Future for Finance and Fintech

What Does the Future Hold for Finance and Fintech?

This MX Ultimate Guide dives into top use cases and benefits of open banking and modern API data connections.

The Ultimate Guide to Open Banking | MX

How Open Banking Works

Record-breaking inflation rates. A slowing economy with predictions of a recession to come. Everyday necessities like milk and gas at <a href="https://www.mx.com/blog/enabling-financial-success-during-crisis-with-open-finance/">sky-high prices</a>. Skyrocketing <a href="https://www.cnbc.com/2022/08/02/household-debt-tops-16-trillion-as-inflation-surges-and-rates-rise.html">household debt</a>. This is the reality for American adults today. And, according to new research from MX, consumers are less confident in their financial futures due to rising costs.&nbsp;&nbsp;
The latest research of 1,000 U.S. consumers from MX shows that 40% of consumers surveyed believe their current financial situation has changed for the worse due to rising costs compared to last year. Half of the respondents also say they are saving less money today, while 32% say the amount of debt they owe has increased. Across generations, Gen Z may be most optimistic in the face of these economic challenges, while the majority of Baby Boomers are less confident.
<img src="https://cms.mx.com/assets/cd406b1b-18be-404a-b212-f5741f7530c8?width=1651&amp;height=1001" alt="Screen Shot 2022 08 16 at 9.23.01 Am" />
This new report highlights consumer money habits and behaviors, including financial stress, spending and saving, and how they leverage mobile banking apps.
<h2>Money Anxiety and Stress</h2>
The reality of financial stress is sobering. Fifty percent of respondents agree that thinking about money makes them anxious. And, nearly half (47%) agree that money is their primary source of stress. Interestingly, Gen X (58%) and Millennial (56%) respondents were more likely to say money is their primary source of stress compared to Baby Boomers (36%) and Gen Z (45%).&nbsp;
In the face of this stress and today&rsquo;s financial situation, it&rsquo;s no surprise that less than half of respondents (46%)&nbsp; agree that they feel confident about their financial future. That said, younger generations still may be more optimistic &mdash; 50% of Gen Z and 49% of Millennials agree that they feel confident about their financial future, compared to 38% of Gen X and 44% of Baby Boomers. According to the survey, men (51%) are also more likely to feel confident about their financial future than women (41%).&nbsp;
As we look further into the causes of financial stress, the survey reveals a potentially alarming view into savings and retirement among consumers:&nbsp;
<h3>Unprepared for Unexpected Expenses?</h3>
 When asked if they have any emergency savings, only 60% of respondents say yes. That means 40% don&rsquo;t. Additionally, only 40% of respondents agree that they are confident they can cover any unexpected expenses.&nbsp;
The good news? Of those who do have emergency savings, more than one-third (36%) say they have more than $5,000 set aside. However, among Gen Z, this drops to just 17%, and more than half say they only have $1,000 or less (53%).
<h3>Ready for Retirement?</h3>
 Only 38% of respondents agree that they are confident they will be able to retire comfortably. Most alarmingly, this includes just 40% of Baby Boomers &mdash; those closest to retirement age. At the same time, less than half of those who work full-time (49%) agree they are confident they will be able to retire comfortably.&nbsp;
Why do consumers feel unprepared for retirement? Forty-six percent of respondents say they regularly save for retirement, with 26% also saying they take full advantage of the employer match on their 401(k). However, 37% say they do not have retirement savings. This is consistent across all generations.
Further, when asked about 401(k) accounts, only 1 in 4 respondents said they have one. This is even lower among Gen Z &mdash; only 13% indicated they have a 401(k) account.
<img style="max-width: 400px; margin: auto; display: block; width: 100%;" src="https://cms.mx.com/assets/9afc3499-f588-48be-8bbe-6e099b2922b0?width=300&amp;height=1000" alt="null" />
These findings showcase just a few areas that may be the source of financial stress. Coupled with those who say the amount of debt they owe has increased in the past year, financial institutions and fintechs have an opportunity to provide more personalized, proactive support to help consumers reach their financial goals. In fact, our <a href="https://www.mx.com/whitepapers/consumer-trends-digital-and-mobile-banking/">previous research showed that 70% of respondents expect their financial services providers to give them personalized notifications and insights</a>. At the same time, 63% want their financial services providers to proactively help them better manage their finances.&nbsp;
Empowering financial wellness could not only help alleviate the stress and anxiety many consumers feel about money, but it can increase customer satisfaction and loyalty &mdash; creating positive outcomes for both consumers and businesses.
<h2>Building Trust through Support, Security, and Context</h2>
While many articles and reports have talked about the decline of a primary financial institution, the majority of respondents (85%) indicate that they have one they would consider their primary financial provider. And, the good news is that trust is high.&nbsp;&nbsp;
Sixty-nine percent of those who have a primary financial provider say they trust them with their personal data.&nbsp; However, 1 in 10 consumers say they do not trust their primary financial provider with their personal data, and 22% remain neutral on the topic.&nbsp; More broadly, only 44% of all respondents agree they believe financial providers have their best interest at heart.&nbsp;
The research also shows there is an opportunity to become a trusted advisor to consumers and provide more support, security, and context around their finances:&nbsp;&nbsp;
<h3>Support</h3>
For instance, when asked where they would go to get help with a question about their finances, only 29% of respondents said they would turn to their primary financial provider. Unsurprisingly, Gen Z (42%) and Millennials (31%) turn to their parents more often than any other resource.&nbsp;
<h3>Security</h3>
Two-thirds (67%) say they trust their financial providers to protect them from fraud and other security risks. That said, 26% of respondents say they have been victims of fraudulent transactions on a financial account in the past two years.&nbsp;
<h3>Context</h3>
When asked if they have seen a transaction on their financial accounts that they didn't recognize at first glance in the past two years, more than a quarter (27%) of respondents said it happens sometimes or more frequently. This rises to 40% among Gen Z respondents. An unrecognized transaction on your account can be a source of anxiety for consumers &mdash; whether it means not recognizing the purchase or wondering if someone has unauthorized access to your account. This highlights the importance of data cleansing and categorization to translate unclear strings of transaction data into clear information.
<h2>Gen Z Money Habits</h2>
Among Gen Z consumers, our research shows financial institutions and fintechs may need to shift their focus even more to delivering personalized customer experiences and not just offer traditional financial products.
<h3>The Decline of the Credit Card?</h3>
Credit card usage among Gen Z respondents is much lower than their older counterparts. Less than half of Gen Z respondents have a credit card (49%) &mdash; the only generation to drop below a majority.&nbsp; By comparison, 61% of Millennials, 65% of Gen X, and 81% of Baby Boomers have a credit card.
And, for those Gen Z respondents who do have a credit card, most avoid carrying a balance. Fifty-three percent say they pay off the total balance every month while another 15% say they only have it for emergencies and do not regularly use it.&nbsp;
This attitude towards credit cards extends to shopping both online and in store. When asked what payment method they prefer when shopping at a physical store, credit cards fell behind debit and cash. For online, debit and mobile pay methods also beat out credit cards as the most preferred payment method &mdash; with debit cards preferred 2:1 over credit cards (50% vs. 22%).&nbsp;
And, when asked in which cases they would be likely to add a personal checking account (Pay by Bank) as a payment method for online shopping, 45% of Gen Z said they would add it for online retailers where they shop frequently, compared to 41% of Millennials, 27% of Gen X, and 22% of Baby Boomers. Eleven percent of Gen Z also said they would add a personal checking account for an online retailer that provided the option while 30% would add one if there was a promotion or added benefit to do so. Only 28% say they would never add a personal checking account as an online payment method. On the other side, 64% of Baby Boomers and 50% of Gen X said never.
That said, credit card usage is also lower than debit card among other generations when it comes to in-person shopping. And, only Baby Boomers chose credit cards as their most preferred payment method for online shopping. While our survey didn&rsquo;t get into the reasons why respondents prefer debit or other payment methods, this may be an indicator for the future of payments.
Online Payment Preference
<img src="https://cms.mx.com/assets/b9d1fb52-d721-49f8-951c-47a7575f85d9?width=2244&amp;height=1156" alt="Online Payment Preference" />
In-Person Payment Preference
<img src="https://cms.mx.com/assets/c23c17a0-d52a-40d9-92fa-60c7ad2ec9fa?width=2204&amp;height=870" alt="In Person Payment Preference" />
<h3>Financial Wellness over Financial Products?&nbsp;</h3>
When it comes to the needs of Gen Z for specific financial products, our research also delved into the support Gen Z receives from their parents today. It&rsquo;s no surprise based on the results that Gen Z may have lower debt in some areas than other generations. For instance,&nbsp; nearly one-third of Gen Z respondents (31%) say they live with their parents or another relative and do not pay rent.&nbsp;
And, parents are playing a role in helping their adult Gen Z children on everything from car insurance to groceries. In most categories, Gen Z respondents received full support from their parents twice as often as Millennials:
<img src="https://cms.mx.com/assets/786316a3-2864-44c9-86ea-1ed8a1b9ba84?width=1275&amp;height=1125" alt="Financial Support" />
Understanding Gen Z money habits can guide financial institutions and fintechs on where they should focus their efforts to support them with digital experiences that can evolve as their habits and preferred financial products change.
<h2>The Expectation for Digital Experiences and Mobile Apps&nbsp;</h2>
The majority of respondents (73%) say they have connected money-related apps to their financial accounts, with Gen Z (78%) and Millennials (84%) being most likely to have done this. However, one roadblock that may stand in the way of an excellent mobile app experience is the ability to connect financial accounts securely and easily.&nbsp;
Nearly 1 in 10 respondents (8%) said no when asked if connecting an app to a financial account went smoothly the first time they attempted it. For Gen Z, this jumps slightly to 12%. Additionally, 27% of respondents said that they have had to reconnect an account because the connection broke. Forty-five percent of those who have been disconnected also say that their connected financial accounts and money-related apps regularly get disconnected.
<img style="max-width: 400px; margin: auto; display: block; width: 100%;" src="https://cms.mx.com/assets/f803aa1f-cdef-428f-8da3-d85a7b0df99c?width=751&amp;height=1367" alt="Screen Shot 2022 08 16 at 9.41.25 Am" />
The organizations that solve this connectivity pain point will garner stronger customer satisfaction and loyalty, especially among Gen Z, by providing better consumer experiences when interacting with a mobile or digital banking experience.&nbsp;
MX sees Open Finance as the key driver to enabling consumers to access and act on their financial data more reliably and securely. Open Finance connects the dots &mdash; both by enabling seamless account aggregation and a more complete picture of a consumer&rsquo;s finances &mdash; to allow financial institutions, fintechs, and other third parties to build personalized experiences, increase the pace of innovation, and drive industry collaboration.
<h2>Survey Methodology</h2>
This survey of 1,000 American adults was conducted by MX in June 2022 using the online survey platform. Results included responses across each generation, with 25% of respondents identifying as Baby Boomers, 21% as Gen X, 21% as Millennials, and 33% as Gen Z. The respondents were evenly split between male (49%) and female (51%).

A recent survey from MX highlights data points between consumers and their money, including attitudes towards saving, debt, financial trust, and mobile apps.

Consumer Research Shows Rising Debt and Falling Savings

Consumer Money Matters: Debt on the Rise, Savings on the Decline

To better understand how to make a smart open banking data partner decision, Cornerstone Advisors spoke with bank and fintech executives who have gone through the process of evaluating open banking data aggregation vendors, distilling the insights into six recommendations:
<img src="https://cms.mx.com/assets/fef2471b-8027-4116-be66-07014bdd87bb?width=2098&amp;height=695" alt="Screen Shot 2022 09 23 at 1.12.56 Pm" />
Following are the critical questions you should ask to ensure you are selecting a data partner to support your open banking strategies.
<h3>Company and Strategy</h3>
<ul>
<li>What is your organization&rsquo;s mission and strategy?</li>
<li>Explain how your short- and long-term strategies advance Open</li>
<li>What are the greatest challenges the industry needs to overcome over the next 3-5 years? How do you plan to help overcome these challenges?</li>
<li>How do you differentiate from other data partners?</li>
<li>Who do you consider your top 2-3 competitors?</li>
<li>Why should we partner with you?</li>
</ul>
<h3>Capabilities</h3>
<h4>Connectivity</h4>
<ul>
<li>
<h5>Coverage:</h5>
<ul>
<li>How many connections do you have with financial institutions and fintechs to access and aggregate their data?</li>
<li>What kinds of connections do you offer (i.e., OAuth, direct API connections, sanctioned/whitelisted scrapes, screen scraping, )?</li>
<li>What is the percentage of each connection type?</li>
</ul>
</li>
<li>Quality:&nbsp;
<ul>
<li>How reliable are your connections with these providers for both first-time account connections and recurring connections? (i.e., percent of successful connections and the length of time it takes to connect)</li>
<li>What kind of data is accessed and how often?</li>
<li>How is data stored and protected?</li>
<li>What are your security and privacy policies?</li>
<li>What is the connection experience for the end customer?</li>
</ul>
</li>
<li>Permission Management 
<ul>
<li>How do you collect and manage the end customer&rsquo;s permission to access and use their data?</li>
<li>Do you provide a consent dashboard or other management tools to the end customer?</li>
<li>Are we able to monitor and manage connections to third parties from our system?</li>
</ul>
</li>
</ul>
<h4>Insights</h4>
<ul>
<li>How do you cleanse and categorize data once it is gathered?</li>
<li>What attributes do you provide to enrich the data (i.e., merchant information, etc.)?</li>
<li>What is your percentage of accuracy for data categorization and cleansing?</li>
<li>Do you add any additional context to enrich the data? If so, please provide examples.</li>
<li>Do you provide any capabilities that can look across data providers to deliver new insights?</li>
</ul>
<h4>Experiences</h4>
<ul>
<li>What are the primary use cases you believe you excel at with data? Please provide concrete examples with measurable results.</li>
<li>What types of experiences do you enable through your solutions (i.e., personal finance management, mobile banking, etc.)?</li>
<li>What types of pre-built widgets or SDKs (software development kits) do you offer?</li>
<li>What capabilities are you building for the future of Open Finance?</li>
</ul>
<h3>Buyer and Supplier Relationships</h3>
<ul>
<li>What is your process for onboarding new connections with additional financial institutions and fintechs?</li>
<li>How do you ensure connections with various providers remain stable? Please provide examples.</li>
<li>Please provide three referenceable clients.</li>
</ul>
<h3>Customer Service and Support</h3>
<ul>
<li>What is your process when there is a service issue or broken connection?</li>
<li>How do you manage incoming calls we receive from our end customers related to connecting accounts? Do you offer a support line for us to redirect them to you?</li>
<li>Do you provide proactive notices when there is expected downtime or anticipated connectivity failures?</li>
<li>What SLAs or response times do you guarantee to resolve issues quickly?</li>
<li>Who will be my primary contact for customer service and support?</li>
<li>What is your approach to notifying end customers when connections are unavailable or broken?</li>
</ul>
<h3>API Roadmap and Interoperability</h3>
<ul>
<li>Please provide details on any APIs that you build or maintain and how they interoperate with other</li>
<li>What is your roadmap for your APIs?</li>
<li>What services or support do you offer to collaborate with our internal IT teams on any additional needs?</li>
<li>How are your clients using your APIs to create unique digital experiences? Please provide a minimum of three</li>
<li>How do you typically work with or integrate with other data aggregators?</li>
</ul>
<h3>Contracting / Pricing Model</h3>
<ul>
<li>What is your pricing model?</li>
<li>What price breaks do you offer for larger volumes?</li>
<li>Do you offer pricing flexibility as usage grows over time?</li>
<li>What is your minimum contract price or length of time?</li>
<li>Do you have a vendor exclusivity clause in your contracts? (If yes, please provide.)</li>
<li>Do you have a preferred vendor status in your contracts? (If yes, please provide.)</li>
</ul>

To better understand how to make a smart open banking data partner decision, here are the critical questions you should ask to ensure you are selecting a data partner to support your open banking strategies.

To better understand how to make a smart open banking data partner decision, here are the critical questions to ask.

Data Partner RFI Starter Kit | Open Banking

Open Banking Data Partner Request for Information Starter Kit

<h2>A Roadmap for Fintechs and Financial Institutions</h2>
<h3>THE NEW DATA REALITIES IN BANKING</h3>
Scott Harkey, chief strategy officer and head of payments at payments consultancy Levvel, wrote recently in Forbes:
&ldquo;It has been stated many times that data is the key to unlocking the next wave in financial services. In the last decade, we&rsquo;ve seen this play out in countries across the globe to various degrees; some have legislated openness of financial services data between different institutions and service providers, while others, like the U.S., have approached things more cautiously. Regardless of the method, the financial services ecosystem is evolving in a way that encourages the opening up of data sources previously locked down inside large organizations.&rdquo;
The discussion about open banking and open finance in the United States typically revolves around statements like, &ldquo;We need to enable consumers to move their data wherever they want.&rdquo; Much of the conversation, however, ignores how data is shared and for what purposes. The most common use case is account verification, and data is typically shared one of three ways:
<ol>
<li>Tokenized APIs. Industry associations like FDX are working to standardize application programming interfaces (APIs), while data platforms from companies like MX and Plaid are developing libraries of open-source API documentation that matches FDX guidelines to help financial institutions connect without having to develop their own APIs.</li>
<li>Screen scraping. This is fast becoming an unacceptable approach because regulations in some countries prohibit it, there is a lack of traceability, data quality isn&rsquo;t very strong, and there are security concerns, particularly around sharing login credentials.</li>
<li>Manual data entry and verification through microdeposits. Speed of the process is the biggest drawback here as it can typically take one to three days to verify an account.</li>
</ol>
What&rsquo;s a bank to do? Scarlett Sieber, chief strategy and growth officer for Money 20/20, wrote in Forbes:
&ldquo;For many U.S. financial institutions, the starting point to open banking and API enablement will be their core provider. Currently, the three leading providers in the U.S.&mdash;FIS, Fiserv, and Jack Henry&mdash;are creating API gateways that expose the data and functionality inside of their core systems, allowing banks to easily work with third parties.&rdquo;
Jim Marous, CEO of the Digital Banking Report, isn&rsquo;t so sure about that. According to Marous:
&ldquo;Research of financial institutions indicates that core providers are not regarded as ready to support the technical or innovation needs for the development of open banking solutions.&rdquo;
Digital Banking Report found that most financial institutions see open banking as an important contributor to a wide range of business objectives including customer experience improvement, new customer generation, new revenue generation, and new product development (Figure 1).
<img src="https://cms.mx.com/assets/e3eea664-fa64-404f-951d-5b5cb1de1b19?width=1380&amp;height=752" alt="Objective Important to Open Banking Initiatives" />
While the term may be overused and misused, banking industry constituents&mdash;which include financial institutions, fintechs, and end customers (whether they be consumers or businesses)&mdash;have three underlying needs regarding open banking: the need to 1) acquire, 2) use, and 3) analyze data.
The common thread that runs through those three needs is the reliance on third-party partners or vendors (sometimes referred to as data aggregators) to meet those needs. No single financial institution or fintech&mdash;even the largest banks in the United States&mdash;can create and manage the connections necessary to accomplish the promise of open banking.
The goal of this report is not to preach the need for open banking, however. The goal is to help financial institution and fintech executives make smart choices about which partners or vendors they use to meet their data acquisition, utilization, and analytical needs.
Making these choices will require financial institutions and fintechs to make tough decisions about their 1) strategy in a changing industry, 2) the role they need to and want to play in a highly interconnected network of providers, and 3) the business and technical capabilities they need to build to operate in the ecosystems in which they participate.&nbsp;
<h3>THE OPEN BANKING IMPERATIVE</h3>
Conventional wisdom holds that open banking in the United States is lagging. According to an American Banker article titled &ldquo;U.S. way behind the curve on open banking&rdquo;:
&ldquo;Policymakers, fintech companies, and financial services firms are finally beginning an earnest dialogue about open banking. It&rsquo;s good because the U.S. has a lot of catching up to do. In the U.S., there&rsquo;s no legal requirement stipulating a financial institution must make a consumer&rsquo;s financial data available to a third party if a consumer provides affirmative consent.&rdquo;
The rationale for that view is often supported with meaningless consumer survey statistics like this one from the American Banker article:
&ldquo;Consumers have demonstrated their desire for open banking. 87% of individuals prefer to adopt a fintech app rather than use a product or service offered by a traditional financial services provider.&rdquo;
How does that data point demonstrate a desire for &ldquo;open banking?&rdquo; If consumers prefer a fintech app to a traditional provider&rsquo;s products and services, then why would traditional firms need to share data? In addition, fewer than 87% of consumers do their banking on a mobile device today, so it&rsquo;s hard to believe that that many consumers would prefer a fintech app to their traditional bank account.
Instead of embracing the benefits of open banking, U.S. banks have fought against it and the data aggregation providers that have worked to enable it. As the CEO of a North American bank recently expressed:
&ldquo;I truly believe it is my data and I don&rsquo;t have to share it, and I don&rsquo;t have to give it to my customers if I don&rsquo;t want to.&rdquo;
However, this anti-competitive attitude is increasingly at odds with the sentiments of consumer advocates who preach that consumers should own and be in control of their own data, and with regulators like the Consumer Financial Protection Bureau (CFPB), which views open banking as a critical tool for leveling the competitive playing field:
&ldquo;We can only accrue the benefits of competition if customers can vote with their feet. Unfortunately, switching bank accounts isn&rsquo;t easy. It involves new account numbers, new debit cards, updating direct deposit, updating auto-debits, and much more. If America can shift to an open banking infrastructure, it will be harder for banks to trap customers into an account for the purpose of fee harvesting.&rdquo;
<h4>CONSUMERS&rsquo; INCREASINGLY COMPLEX FINANCIAL LIVES</h4>
But consumers aren&rsquo;t &ldquo;voting with their feet.&rdquo; The new reality is that fintechs co-exist with&mdash;not replace&mdash;traditional providers. It&rsquo;s not uncommon for a young couple to do business with 30 to 40 financial providers (Figure 2).
<img src="https://cms.mx.com/assets/1f8f0fd9-3c30-40c4-8b7b-a7cf2afcea64?width=1372&amp;height=862" alt="Consumers' Shadow Financial Lives" />
This picture doesn&rsquo;t even include consumers&rsquo; insurance relationships or the borrowing side of the coin, where many consumers have student loans, car loans, mortgages, and other personal loans. And you can bet that they don&rsquo;t have all those loans with one provider.
The result: consumers&rsquo; financial lives have become more complex. What are the implications of consumers&rsquo; new, complex financial lives?
<ul>
<li>Financial products&mdash;not the banks&mdash;have been unbundled. There was a graphic from CB Insights that became popular a few years ago (you don&rsquo;t really want to see it again, do you?) titled, &ldquo;The unbundling of a bank.&rdquo; Pithy, but it missed the point&mdash;it&rsquo;s the product that&rsquo;s been unbundled, not the institution.&nbsp;</li>
<li>Financial advice and guidance have been compromised. As personal financial management (PFM) and credit management tools have been unbundled from checking account and credit cards, consumers&mdash;and their providers&mdash;get an incomplete view of their finances. This means consumers are making financial decisions based on incomplete data, but just as damaging is the fact that financial institutions&rsquo; advice and guidance are also based on incomplete data, making it wrong and potentially harmful.</li>
<li>Primary status is meaningless. Ask a Gen Zer or Millennial who their primary financial institution is and you&rsquo;re likely to get a blank stare. They may have a primary checking account or primary investment account, but that doesn&rsquo;t guarantee any wallet share for the provider of that account. Likewise, &ldquo;top of wallet card&rdquo; status is no longer a valid concept. Point-of-transaction convenience and value drive choice of payment mechanism.</li>
<li>Managing money is more important than moving money. Of &ldquo;buy now, pay later&rdquo; (BNPL) users who have been late with a payment, 66% were late because they lost track of the bill due date. Among the 45% of Millennials with more than one checking account, about half overdrew on those accounts in 2020. For most of them, it was because they failed to keep track of their account balance or didn&rsquo;t transfer funds from other accounts in time&mdash;not because they didn&rsquo;t have the money. Conclusion: today&rsquo;s consumers need more help managing their money&mdash;and they need the ability to manage and view their entire financial life in one place.</li>
</ul>
A Morning Consult study found that just 45% of Americans said they&rsquo;ve heard of open banking and 63% are worried that increased data sharing will lead to more fraud. The study was conducted before President Biden&rsquo;s July 2021 executive order about which Bloomberg Law wrote:
&ldquo;[Biden] gave a boost to Consumer Financial Protection Bureau&rsquo;s decade-long effort to kickstart open banking in the U.S. when he signed an executive order last week aimed at boosting competition in the economy. The president&rsquo;s executive order includes a provision that strongly encourages the CFPB to issue Dodd-Frank Act regulations that would make it easier for consumers to access their bank data and transfer it to other banks and outside apps, such as Venmo or Robinhood.&rdquo;
The real impact of the executive order is likely to be more contractual than technological. It will enable data sharing constituents to rely on data standards instead of the one-off developed contracts and agreements that dominate the industry today.
This fragmentation of consumers&rsquo; financial lives increases the urgency for financial institutions to create&mdash;either by building or buying&mdash;open banking data aggregation capabilities. Without these capabilities, they&rsquo;re left with an increasingly narrow view into their customers&rsquo; financial lives, which makes it more difficult to provide those customers with financial advice and relevant cross-sell offers.
The imperative for open banking is growing. As the financial services industry embraces open banking and works with third-party data aggregators to create new capabilities and offerings, it will need to address an important question: How should financial institutions select an open banking data aggregation vendor?&nbsp;
<h3>SELECTING AN OPEN BANKING VENDOR</h3>
Selecting a technology vendor is as much art as it is science.
This is especially true in the open banking data aggregation market because the market itself is relatively immature. It&rsquo;s only existed for a couple of years. There are no RFP templates for selecting a data aggregation vendor and few (if any) contract negotiation services specializing in open banking or open finance.
Compared to decisions regarding established technology vendors&mdash;like a core apps provider or credit bureau&mdash; deciding which data aggregator to use can feel a lot like stumbling around in a dark room without a flashlight.
To better understand how to make a smart open banking data aggregation vendor decision, Cornerstone Advisors spoke with bank and fintech executives who have gone through the process of evaluating open banking data aggregation vendors.
We&rsquo;ve distilled the hard-earned wisdom of these executives &mdash; which was shared with us candidly and anonymously &mdash; into six recommendations for banks and fintechs to follow when embarking on this selection decision (Figure 3).
<img src="https://cms.mx.com/assets/7983e66b-e1db-4d77-8a4a-ba920352567f?width=1366&amp;height=918" alt="Open Banking Data Aggregator Selection Recommendations" />
Download the full report to read more about these six recommendations.&nbsp;

The goal of this report is to help financial institution and fintech executives make smart choices about which partners or vendors they use to meet their data acquisition, utilization, and analytical needs.

Helping financial institutions and fintechs make smart choices about the partners they use to meet data acquisition, utilization, and analytical needs.

Selecting an Open Banking Data Aggregator | Cornerstone + MX

Selecting an Open Banking Data Aggregation Vendor

Data is everywhere. Consumer data and the unique qualities contained within hold exponential value. Why? Because consumers&rsquo; data attributes &ndash; everything from age, location, interests, financial position, and more &ndash; represent an ocean of opportunities for businesses.
The power of consumer data isn&rsquo;t something to take lightly. As with any power dynamic, the application, management, and governance of consumer data are critical. Technological advancements continue to outpace the established regulatory infrastructure, resulting in a new global, wild-west frontier, where the explorers and pioneers of data application are defining the landscape by leading the way and taking advantage of being first in the market.
MX is leading the industry with secure data access, setting the bar for the industry and consumers, through agreements with the largest financial institutions and collaborations with key fintech partners. An MX blog post said, &ldquo;We believe it is imperative that all Americans &ndash; regardless of where they choose to bank, make payments, or borrow money &ndash; have access to modern connectivity that safeguards their data and their deposits. This means secure access to all of their financial data, and the ability to share it with providers of their choice, ensuring the best solutions for them and their families.&rdquo;
Ensuring consumers are able to safeguard their financial data is critical for their financial wellbeing. Personal data is valuable, both to financial institutions and fraudsters. The massive amount of personal and financial data shared and used in all industries makes it a tempting and lucrative target for fraudsters. Adopting and following proper data protection procedures helps prevent predatory businesses and/or individuals from accessing consumer data for fraudulent purposes.
<h2>Blazing New Data Application Trails</h2>
In addition to leading and encouraging the industry on secure data access and connectivity, MX is blazing new trails on the frontier of financial data applications. Data applications are used frequently by consumers and businesses, often without much thought given to the complexities that the user interface is built upon.&nbsp;
David King, CEO of Exaptive, discussed the complexity of a data application on the Software Engineering Daily podcast stating:
&ldquo;I think the best way to think about a data application is to just think about some of the software that we use today and we don&rsquo;t necessarily think of it as a data application. For example, everybody I know who buys plane tickets pretty much buys them through Orbitz or KAYAK. My mom will buy plane tickets through Orbitz.
When she does so, she doesn&rsquo;t feel like she&rsquo;s consuming some miracle of data visualization or data science, even though what&rsquo;s happening behind the scenes &hellip; is actually pretty sophisticated, right?&rdquo;
King went on to say, &ldquo;There&rsquo;s a whole bunch of data mining that it&rsquo;s doing from different sources &hellip; It is dealing with a lot of data, it&rsquo;s a pretty sophisticated application, but my mom doesn&rsquo;t think of it that way, because, ultimately, she can just click on a flight and book a ticket. When I talk about data application, that&rsquo;s what I&rsquo;m talking about... moving from an environment where we&rsquo;re used to looking at data and reporting on it, to an environment where we&rsquo;re just doing our work with data as part of the backbone.&ldquo;
<h2 class="p2">Having Data vs. Using Data</h2>
Having data is one thing. Using data effectively &ndash; to reach a specific goal, create a world-class customer experience, or grow a business &ndash; is challenging at best. In the online article, &ldquo;How Will Financial Data Shape the Future?&rdquo; by Refinitv, it states,&ldquo;The amount of data generated annually worldwide is expected to grow from 33 zettabytes in 2018 to 175 zettabytes in 2025.&rdquo; The article continued with, &ldquo;it is now more important than ever for companies to harness the proliferation of data&hellip; That shift in both the quantity and type of data is reshaping the financial services industry.&rdquo;
The criticality of financial services in understanding and leveraging data cannot be overstated. Sven Balnojan, Ph.D., product manager, development operations, and author of &ldquo;Three Data Point Thursday&rdquo; wrote, &ldquo;In six years, a single company will face four times the data it had available today. It will be able to get predictions on the data it has today eight times faster/cheaper. If the company analyzes the data of today in six years, it will take them half the time it took them today.&rdquo;
In the financial industry, having access to and utilizing your customers&rsquo; data is an extremely difficult challenge. Gaining the appropriate access to your first-party data can be an overwhelming hurdle in itself. Many institutions have adapted poorly to the influx of information as dated technology is outpaced by innovation and more importantly, consumer expectations.
Due to the patchwork architecture of many financial core technologies, key customer data may be spread out across multiple systems and business lines that were not designed to work together. This results in information silos and complicates how the data contained within each system or business line is accessed. Without access to the key data points across these all systems, it is difficult to create a holistic view of your customers.
<h2 class="p2">Using Data to Drive Strategy</h2>
After you are able to access customer data, the next step should be using the insights you derive from the data to drive and inform your customer experience strategy, as well as business growth objectives. This however, is a new way of doing business for many organizations, so it is unfamiliar and can feel risky. Despite the trepidation, using data effectively is necessary to retain market share and customer loyalty.
There are a large number of competitors entering the financial industry who are already harnessing the power of financial data to gain market share. It is critical for financial institutions to find alignment across their organization and answer these questions regarding their use of data.
<ol class="ol1">
<li class="li3">What are the larger objectives of the organization and how can customer data support these goals?</li>
<li class="li3">What data do you need to access (i.e., current trends and data points on your customers&rsquo; deposits) to reach a business goal (i.e., growing deposits)?</li>
<li class="li4">How can you attribute the success of effective data use to your goals?</li>
</ol>
Answering these questions can help you begin to understand where data and insights can be best leveraged to drive strategy and determine your business objectives, instead of relying on past experience or gut feelings.
<h2 class="p2">Getting to Know Your Customers Through Data</h2>
Financial institutions have relied heavily upon antiquated approaches to grow their business, focusing on cost reduction and revenue generation rather than the customer experience. As technology continues to improve and the world becomes more digitally connected, customers&rsquo; expectations of their financial service providers are rapidly changing.
Financial institutions must consider how they can improve their customers&rsquo; experiences to remain competitive and relevant in this evolving marketplace. Every day new financial apps and fintechs are successfully gaining small pieces of your customers&rsquo; wallets, without you even realizing. With the cost of retaining customers significantly lower than obtaining new ones, maintaining customer loyalty will only come when you focus your strategy and execution on how to improve their experience.
Improving the customer experience is not something that happens automatically when you provide a digital solution. The power of financial data is the ultimate game changer. When you understand how to access and analyze data to understand your customers, you can create personalized content, products, and services that meet your customers&rsquo; individual needs.
Personalized experiences improve customer satisfaction, build trust, and demonstrate a deeper understanding of their financial and life needs. When you use data to understand your customers and improve their experiences, their loyalty to your business increases. This ultimately influences your wallet share with each customer and increases your revenue generation.
<h2 class="p2">Making Financial Data Actionable</h2>
Accessing data and understanding how it can be used to drive business strategies and improve the customer experience is a lot to unpack. The good news? You don&rsquo;t have to unpack it by yourself.
Regardless of where you are in your data transformation journey, the MX team is uniquely positioned to meet you where you are and help you fill the gaps, large or small, between having data and using data to drive value. As we have discussed, consuming and utilizing the wealth of customer data isn&rsquo;t as simple as we would like it to be. To effectively analyze, segment, and use the data available requires clean data inputs, strategic aggregation, and sophisticated data analysis.

Data is everywhere. Consumer data and the unique qualities contained within hold exponential value. Why? Because consumers’ data attributes – everything from age, location, interests, financial position, and more – represent an ocean of opportunities for businesses.

MX is leading the industry with secure data access with the largest financial institutions and key fintech partners.

Harnessing the Power of Financial Data | MX

Harnessing the Power of Financial Data

This MX Ultimate Guide dives into top use cases and benefits of open finance and modern API data connections.

Open Finance, Open Banking, Open Data | MX Ultimate Guide

The Ultimate Guide to Open Finance

In 2009, former Federal Reserve Chairman Paul Volcker famously quipped that the Automated Teller Machine was the only useful innovation in banking for the last 20 years. To be fair, the ATM revolutionized the banking industry in a profound way. It changed the consumer experience, represented a tangible link between money and technology and laid the groundwork for other breakthroughs to come.
Yet, another invention may ultimately claim its place in the history books: application programming interfaces, or APIs.
APIs are the building blocks of open banking and finance &mdash; a new paradigm that gives customers better insight and control of their financial data and represents a new era of innovation for the financial services industry. They make it possible for financial institutions, fintechs and other entities to connect their applications, such as for account authentication, payment processing and data sharing. When tokenized, APIs create modern connectivity, providing customers with a seamless and secure way to grant, manage and revoke access to their accounts.
<blockquote>
Open finance is the structured sharing of data via APIs between financial service providers, based on the needs of and consent by their mutual customers.
</blockquote>
<h2>A New Era in Financial Services</h2>
While the move to democratize financial data has been building momentum for decades, the concept of open banking &mdash; which is increasingly referred to as open finance &mdash; reached a new milestone with directives in Europe and the United Kingdom, which require banks to share customer data with authorized third parties. Open finance is not mandated in the United States and most other developed markets, but customer demand and industry innovation are driving the need for better connectivity and better money experiences.
Until recently, banks only had a one-dimensional view of customers, solely based on relationships with their own products. Open finance represents the opportunity to paint a more detailed picture of customer preferences, needs and behavior &mdash; ultimately allowing banks to provide more tailored products and services. It represents a sea change in how startups and established institutions alike do business.
<blockquote>
&ldquo;We believe that modern connectivity to financial data is the foundation for increased innovation in the financial industry and long-term financial health for consumers. Without reliable and secure data access, consumers have little transparency or insight into what is going on in their financial lives. By having secure access to their own financial data, they&rsquo;ll be able to make more informed decisions about their own finances.&rdquo; JANE BARRATT, Chief Advocacy Officer at MX
</blockquote>
<h2>Bringing Customers Closer to their Data</h2>
Just as the ATM removed barriers between customers and their money, open finance brings customers closer to their own financial data &mdash; paving the way for more convenience, visibility, customization and inclusion.
Anyone who has applied for a mortgage, analyzed their spending or tried to quickly transfer funds between institutions understands that there are still many barriers for seamlessly sharing financial data. The practice of screen scraping &mdash; gathering data from one app and displaying it in another &mdash; has been used for decades. Still, screen scraping is to financial connectivity what dial-up was to the early days of the internet. It not only raises issues of security and transparency, it can also present incomplete data and is prone to glitches, such as broken links.
<h3>Convenience and Control</h3>
With modern connectivity, customers don&rsquo;t need to hunt down account and routing numbers or download and upload bank statements. They can use tokenized API connections to share and access that data quickly. This links customers to the right products and services, grants a more complete view of their financial lives and gives them better control over their data.
That control is critical now that a growing number of consumers have multiple connections between their primary financial institution and other applications, such as peer-to-peer payments, budgeting tools or saving and investment accounts.
&ldquo;On average consumers have relationships with five to 10 different financial institutions,&rdquo; says Shayli Lones, Director of Product Marketing at MX, a leading data platform that helps organizations deliver modern, personalized money experiences. &ldquo;Consumers often link their accounts, stop using a service and forget about it, but those connections may still be live, and their credentials may be sitting out there.&rdquo;
Modern connectivity also gives consumers better visibility and control over their accounts. Whether through their financial institution or a data platform, they can see and manage all their connections on a single dashboard. This allows customers to track, manage and revoke access at any time. If they have multiple accounts with the same service provider, they can also specify the accounts or categories for which they grant access.
&ldquo;Tokenized API access is a net new channel that allows for very customized experiences, done very securely and transparently,&rdquo; says Don Cardinal, Managing Director at Financial Data Exchange, a nonprofit financial industry organization, which is dedicated to promoting a common interoperable standard for sharing consumer financial data.
&ldquo;This is going to manifest itself in a variety of ways, including taking the friction out of new account opening and onboarding, and providing a highly structured way to make data available in real time so consumers can apply for loans, do their taxes, manage their finances and get on with the business of life.&rdquo;
<blockquote>
WHY TOKENIZED APIS HOLD THE KEY TO MODERN CONNECTIVITY: Put simply, tokenization is the process of turning sensitive data, such as account credentials, into non-sensitive data, or tokens. These tokens are not only more secure, they provide more specific information on what entity is accessing an account and why.
</blockquote>
<h3>Customization</h3>
Convenience goes a long way, to be sure, but it&rsquo;s only the beginning. Modern connectivity opens doors for new money experiences that make it possible for banks, fintechs and other entities to get a more complete view of their customers, allowing for more personalized products and services.
While it&rsquo;s still early days, the customization that comes with better connectivity can help customers make better spending, saving and investing decisions. Data sharing makes it easier for customers to consent to being matched with institutions seeking specific credit or risk profiles &mdash; and that can lead to savings on everything from interest rates to insurance premiums. The potential goes beyond financial products to possibly include big-ticket purchases and everyday expenditures.
<h3>Financial Inclusion</h3>
Better connectivity not only helps existing customers, it also makes financial services more widely available to new customers &mdash; including individuals who have not had access to traditional banking services or don&rsquo;t have robust credit histories.
&ldquo;There are widows, divorced spouses, military personnel, immigrants and other people who, for whatever reason, have a very thin or no credit history, but they have managed their cash flow and paid their bills on time,&rdquo; Cardinal says.
With open finance and common interoperable standards, he says, institutions can get a more complete picture of relevant financial histories, at scale, and expand opportunities to people who don&rsquo;t have traditional credit histories.
<blockquote>
MODERN CONNECTIVITY HELPS CONSUMERS: Improve spending analysis and budgeting Automate cash management Minimize overdraft and late fees Simplify insurance claim settlements Receive faster credit decisions Optimize investment portfolios Save time on product search and applications.&nbsp;
</blockquote>
Meanwhile, for the nearly two billion &ldquo;unbanked&rdquo; individuals around the world, open finance represents an opportunity for better financial inclusion. While many of these individuals have access to a smartphone, they are often unable to conduct basic financial transactions because they don&rsquo;t have a relationship with a bank.
Open Finance further accelerates financial inclusion by fostering innovation to help underserved populations access accounts and payment apps, build credit capacity, finance small businesses and improve their overall financial wellbeing. &ldquo;From the perspective of new fintech providers looking to offer creative solutions to niche markets, having a common, interoperable standard makes it possible to access key data without significant technology resources,&rdquo; says Cardinal. &ldquo;We see this as force multiplier smaller fintechs, including those founded by minorities, women and other underrepresented groups.&rdquo;
<blockquote>
WHAT OPEN FINANCE MEANS FOR BUSINESS Consumers aren&rsquo;t the only beneficiaries of open finance. Modern connectivity makes it easier for smaller organizations to see the full picture of their businesses, recognize patterns in spending and billing, reduce their cost of capital, improve cash management, and automate more back-office functions.
</blockquote>
<h2>Paving the Way for Industry Innovation</h2>
Account aggregation isn&rsquo;t a new practice. It&rsquo;s a process that has been used for more than two decades by mortgage underwriters, tax advisors and personal finance services, among others. What has changed, however, is the technology used to share this data. In the past, data sharing was done primarily through screen scraping. Within the last decade, account aggregation has evolved considerably as the industry has embraced APIs &mdash; and now tokenized APIs &mdash; as a better way to access and share customer-authorized data in a way that is safer and more comprehensive.
The move to API connections has the potential to greatly benefit financial institutions, fintech companies and consumers for many reasons. Because customer-permissioned data sharing is bi-directional, it allows all parties to use data in more secure and productive ways.
&ldquo;With token-based APIs, banks and their customers have more visibility into where that data is going and why, which opens opportunities for banks to provide customers with more of the products and services they want,&rdquo; says David Whitcomb, Head of Connectivity at MX.&nbsp;
<h3>Connectivity Begins and Ends with Account Verification</h3>
In the world of ecommerce, the success of a business often hinges on the checkout experience. All things being equal, customers who find the checkout experience too cumbersome or too lax in security are more likely to abandon their carts and never come back.
In an open finance landscape, however, customer experience often begins and ends with account verification. Customers want to connect accounts quickly and conveniently, but they also want reassurance that their data is safe.
Better connectivity raises the bar on account verification. At the same time, it opens doors for new technology, including artificial intelligence, biometrics and blockchain, letting fintechs and financial institutions &ldquo;know your customer&rdquo; without adding unnecessary friction. It provides a more unified approach to digital identity management and gives customers more control over who sees their data and under what circumstances.
<h3>Building Better Connections</h3>
To understand why token-based APIs play a central role in open finance, consider how data has been shared until recently, with customer routing and account numbers (verified with micro deposits) and screen scraping. The process begins by having users share their login credentials so a financial services company can gather data from a third-party platform to display it on its own.
Although hundreds of millions of account connections rely on screen scraping, it has limitations when it comes to supporting open finance in the truest sense. Those limitations include: regulatory rules (which vary by country), lack of traceability and transparency, lower quality data and security concerns, particularly around sharing login credentials.
It&rsquo;s a popular narrative that incumbent financial services firms are loath to support open finance, but the reality is that industry leaders recognize the growing role of APIs. Some of the world&rsquo;s largest banks have committed to replacing all screen scraping with sanctioned API channels. While European and UK banks are now required to use APIs for data sharing, U.S. banks have been proactively taking steps to share their data.
Meanwhile, industry associations, such as FDX, are working to standardize APIs, while data platforms, such as MX, are developing libraries of open-source API documentation that matches FDX guidelines to help smaller institutions participate in modern connectivity without the cost of developing their own APIs. This creates a virtuous circle. As more institutions add APIs, it improves connectivity and functionality, prompting more institutions to support better data sharing.
&ldquo;A common misconception among smaller banks and credit unions is that creating APIs is a cost to them without a lot of benefit,&rdquo; says Lones. &ldquo;In reality, they can access and implement APIs at little or no cost through open sourcing, and in exchange, they get a system that is less taxing on their servers and provides more security, visibility and opportunity to monetize these relationships.
<h3>Better Connectivity, Better Security</h3>
Everyone in the financial services industry &mdash; from regulators to fintechs &mdash; rightly worries about the potential for customer data to be shared without the customer&rsquo;s direct permission. By implementing API connections, financial services companies make it easier for customers to give consent. These permissions can be set on a case-by-case basis, so each customer is empowered to choose what they want people to see and what they don&rsquo;t want people to see. For example, if a customer sets up a budgeting app, they can grant permission for a particular set of data that allows a financial advisor to view their progress toward their financial goals instead of sharing all their account balances.
In addition, API connections bring a higher level of security because the process replaces sharing credentials with anonymized, single-use digital tokens. This means that bad actors can&rsquo;t access the personal information of end users during a transaction. Tokens de-identify user data, greatly increasing the chances that personal data will not be subject to risk.
&ldquo;In the world of screen scraping there is zero visibility into who, what, when, where and how data is used,&rdquo; says Whitcomb. &ldquo;Tokenized APIs provide that.&rdquo;
It may seem counter intuitive, but with better security comes better connectivity. By improving security through tokenized APIs, financial services companies remove friction of data sharing while keeping it secure.
<blockquote>
OAUTH CONNECTIONS OAuth API connections are ultra-secure, tokenbased connections ensure a dependable and fast connection &mdash; accelerating the onboarding process and increasing engagement. Among other benefits, they ensure that customers are able to control their login from beginning to end and never pass their credentials to an aggregator.&nbsp;
</blockquote>
<h3>Opening Doors for More Innovation</h3>
Data sharing is a two-way street, which is to say that banks and other financial institutions don&rsquo;t just share customer data, they can also receive data by connecting via APIs. Within institutions, data sharing provides banks with a more complete view of their customers, by aggregating both internal and held-away accounts.
Further, token-based APIs provide visibility into what entities are accessing their customer accounts, and for what purposes. Such insight can be invaluable for making target offers to customers or identifying opportunities for strategic partnerships with other vendors.
The long-term benefit is more secure connections and data loss protection, as well as the direct benefit of more visibility into customer needs. For example, if a customer is getting pinged by a mortgage provider, a bank may use that information to provide a mortgage offer. If a bank sees that many customers are working with the same fintech, it might open doors for a strategic partnership.
While Open Finance allows broader access to data, with added transparency and security, it also makes it possible for organizations to better segment would-be customers to build more detailed competitive roadmaps.
&ldquo;In the early days of the internet, no one envisioned a world where you could do quality academic research, in real time, across the planet, or access medical records from your mobile phone,&rdquo; Cardinal says. &ldquo;Now we&rsquo;re building a foundation for open finance &mdash; and it&rsquo;s the things we haven&rsquo;t thought of that I&rsquo;m the most excited about when I think of the future.&rdquo;
<blockquote>
MODERN CONNECTIVITY HELPS FINANCIAL INSTITUTIONS Reduce risk with better security and privacy Provide more targeted advice and offers Make better and more timely credit decisions Amplify value-add services to engage and retain customers Develop new products with non-personally identifiable data Identify opportunities for strategic partnerships.
</blockquote>
<h2>Choosing Secure Open Banking Partners</h2>
The right security and the right technology are paramount to open finance, but so is working with partners who do the right thing. In a world where change happens quickly, it&rsquo;s important to consider not just the policies of a banking partner, but what&rsquo;s behind them.
Leading open finance partners understand that personal data is personal, and that personally identifiable information should not be shared with third or fourth parties. They put systems in place to delete or revoke access and make transparency a top priority. For open finance to succeed at democratizing data, customers and institutions alike must have a clear window into who is seeing their data and why.
<h2>Conclusion</h2>
Modern connectivity is paving the way for a new era in financial services where customers can not only access financial products and services more conveniently, but they can also use their own data to make better decisions about spending, saving and investing.
While this offers myriad benefits to customers, it also represents the potential for financial services companies to have a more complete view of customer preferences, needs and behavior. Modern connectivity makes it easier for new providers to launch new products or cater to new markets, but it isn&rsquo;t one-directional. It also gives established institutions an opportunity to provide more targeted products and services, reach a larger customer base, make more informed credit decisions and develop new partnerships along the way.
When taken together, the financial system as a whole is more resilient and less prone to financial shocks. Better credit decisions don&rsquo;t just benefit individual lenders and customers, they benefit entire financial systems.

Open finance represents the opportunity to paint a more detailed picture of customer preferences, needs and behavior — ultimately allowing banks to provide more tailored products and services.

The Data Sharing Economy: Open finance represents the opportunity to paint a more detailed picture of customer preferences, needs and behavior — ultimately allowing banks to provide more tailored products and services.

Shaping Open Finance with Modern Connectivity

How Modern Connectivity is Shaping Open Finance

As the financial industry evolves, it will continue to move away from legacy screen scraping-based aggregation in favor of safer, faster, more reliable direct connections. With emerging technologies and non-traditional competitors entering the space, financial companies are being pushed to innovate quickly and optimize user experiences while ensuring their customers&rsquo; financial data remains safe.
Simply put, your products are only as good as the connections that fuel them. If your connections aren&rsquo;t reliable, fast, and secure, your products will suffer, leaving your customers with a lack-luster experience. Today, people expect seamless digital experiences across all their apps and devices. Not surprisingly, fintechs have been the first to recognize the importance of creating seamless, connected digital experiences and they&rsquo;re making it their focus as they grow and scale. In a recent survey of 250+ employees at fintech companies, we found that 40% of respondents said product performance (ongoing reliability) had the greatest impact to their user retention, followed by 33% who said onboarding success was the second most impactful factor.&nbsp;
<img src="https://cms.mx.com/assets/40c642ee-0cf0-4a63-b497-269a109858c9?width=1226&amp;height=740" alt="Greatest Impact on User Retention" />
<img src="https://cms.mx.com/assets/4853a811-5709-4731-936a-eb12a9b81376?width=1226&amp;height=740" alt="Matters Most When Connecting Financial Data " />
When it comes to data connectivity, 29% of respondents said access to data would be their biggest focus area in the next 1-5 years. Furthermore, when asked what matters most in connecting financial data, 55% said security and data privacy were the most important, followed closely by 49% of respondents who believe modern, high-performance, credential-free connections were the second biggest priority. Finally, when asked which aspects of data connections are most important, 30% said accuracy of data and 28% said connection coverage.
<h2>Modern Connectivity: From antiquated to advanced</h2>
The survey makes it clear that secure and reliable direct connections along with onboarding success are critical for fintechs. As data sharing and open finance continue to push the industry forward, screen scraping will no longer be a preferable connection method as it&rsquo;s too risky, forcing customers to share sensitive information that can be compromised, such as their credentials, in order to access apps. To address the need for higher security standards and safer connections, we&rsquo;ve created modern connectivity &mdash; offering a first line of connections that are tokenized, credential-free connections that give users the ability to approve, manage, and revoke access to their financial data without ever sharing their personal or financial information.
Modern connectivity is a concept that we developed to solve for the limiting and antiquated methods of legacy aggregation processes in the financial industry. It not only provides a fast, secure, and reliable way of connecting accounts, it also has the highest coverage, and redundancy in the market, meaning your customers can connect their accounts quickly and experience uninterrupted service when interacting with your app or products.
<h2>Fintech Use Case for Modern Connectivity</h2>
From lending and payments to digital banking and financial wellness &mdash; there are countless use cases for how fintechs can use modern connectivity. Below, we&rsquo;ve outlined 4 main areas where modern connectivity applies to specific use cases.
<h3>Connectivity in Lending</h3>
If you&rsquo;re in lending, you know how critical accurate and real-time insights are in making informed decisions. You want to ensure that you have the most up to date information when assessing a borrower&rsquo;s credit risk, so you&rsquo;re confident in their ability to repay a loan. Additional financial behavior data may even open up new borrower pools and allow you to reach underserved communities, depending on your loan type.
At MX we can help you quickly gain a holistic picture of your borrowers&rsquo; finances. The truth is, the credit score is oftentimes only part of the story. With modern connectivity, your applicants will be able to quickly connect their accounts to your products so you can focus on real-time financial behavior based targeting with loan offers that are informed by competitive insights into other lenders borrowers are using. With more data, you minimize risk of default on a loan and also increase the likelihood of loan applications.&nbsp;
However, getting more borrower data is only part of the picture. If you&rsquo;re in the lending space, you&rsquo;re also likely concerned with creating a quick and easy loan application process. Consumers now expect a frictionless, reliable, and fast digital end-to-end loan application process. Our Instant Account Verification helps you streamline the loan experience, lowering application abandonment while giving borrowers access to the funds they need instantly. We can help you securely connect borrowers to their financial data, from infrastructure to the end customer experience, so you can easily make accurate, low-risk decisions, while creating a quick and easy customer experience.
<h3>Connectivity in Payments</h3>
The payments space is growing rapidly. A recent report from Business Insider states that &ldquo;surging e-commerce will continue to eat away at in-store payments&rsquo; share of overall retail. Online retail sales surged to $794.50 billion, a record-breaking 14.4% of total US retail in 2020, thanks to increased spending on smartphones in particular.&rdquo;
As the payments industry grows, so does the competition. Relying on credit card solutions to initiate or receive payments is costly, but the alternative process of getting customers to connect accounts for direct transfer options is high-friction. To compete successfully, you need to create a quick and easy way for consumers to make payments without risk, fees, or hassle.
MX&rsquo;s modern connectivity solution gives your customers a quick and easy way to connect a wide variety of accounts from almost any financial institution. Our solution instantly connects to 90% of domestic bank accounts, auto-routing to microdeposits for the 10% of the industry where instant verification isn&rsquo;t yet available. With the ability to verify balances before initiating a transfer and receive payments with direct bank transfers, you&rsquo;ll be able to reduce NSF fees, leading to higher cost savings.
With our Instant Account Verification solution, your customers can quickly authenticate the account information needed to initiate an RTP or ACH payment in a matter of seconds. This means MX can power your payments solutions in the time your customers expect.
Furthermore, our partnership with many of the top financial institutions in the US means that we can provide you with fast, reliable, and secure direct banking API connections so you can securely and reliably collect information needed to initiate payments in seconds.
<h3>Connectivity in Financial Wellness&nbsp;</h3>
The financial industry has seen an influx of financial wellness tools and technologies that help people understand and manage their finances more effectively. However, many of these financial tools still require too much time and effort for most people to proactively stay on top of it all. What&rsquo;s more, oftentimes these tools are built on incomplete or inaccurate data, requiring a heavy lift from customers to make them useful. If your customers&rsquo; aren&rsquo;t able to connect their accounts for a full financial picture, their experience becomes fragmented and leads to frustration.
With modern connectivity, MX can help you power your products with more complete, accurate, and reliable data. Your customers can instantly connect a large number of financial institutions to your apps and products through tokenized, credential-free connections, meaning they never have to share personal information, and their data will continue to flow uninterrupted for years. The more accounts they&rsquo;re able to connect, and the longer those accounts stay connected, the more holistic view your customers will have into their financial lives, and the more insights you&rsquo;ll have into how you can market to them more effectively. After all, it&rsquo;s hard to make accurate predictions if you&rsquo;re missing critical information about certain accounts.
Another way you can use modern connectivity to help your customers stay on top of their finances is with relevant and timely insights. The truth is, a lot of times people miss things by accident. To alleviate this frustration, we&rsquo;ve built a feed-style UI that serves up real-time and proactive insights customized to each users&rsquo; financial situation. With the highest coverage of direct connections to the largest financial institutions, your customers will be able to connect all of their financial accounts in one place in a matter of seconds. This will give you a clear and reliable picture of their financial lives, enabling you to quickly alert them about things such as overdrafts, subscription changes, duplicate charges, and much more. This will help your customers build good financial habits that can ultimately help you grow your share of wallet.&nbsp;
<h3>Connectivity in Digital Banking</h3>
Digital banking is here to stay &mdash; and in many cases is replacing the traditional banking structure. With more tech-savvy alternatives for customers and less friction to switch financial providers, offering a seamless online and mobile experience is critical for neo banks and digital banking providers.
There&rsquo;s no &ldquo;faking digital.&rdquo; The truth is, simply taking the in-branch or in-person experience and adding a few digital components isn&rsquo;t enough. To succeed in the digital space, your ability to connect accounts is foundational to creating digital-first experiences. With modern connectivity, you can give your customers a simple, fast, and secure way to connect to nearly any financial institutions in the country. Essentially, enabling your customers to quickly connect accounts can streamline the account opening process and decrease dropoff. Not only that, but the more external accounts your customers connect to your products, the more complete picture you&rsquo;ll have of their financial lives, so you can see where else they bank and what types of accounts they have with your competitors. These insights can help you discover new opportunities to grow market share and expand your offers. Lastly, with quick and reliable connectivity, you&rsquo;ll be able to power truly intelligent financial wellness tools that can quickly alert your customers of any updates to their accounts, so they can proactively manage their finances.
With modern connectivity, MX can help you create a simple yet comprehensive digital banking experience &mdash; from frictionless onboarding and tools that make financial management effortless to new technologies that keep you ahead of the competition.
<h2>Staying connected in a digital world</h2>
In a digital-first world, technological advancements and emerging innovations will continue to redefine the financial industry. As new entrants and tech companies push beyond boundaries and the status quo, modern connectivity will lay the foundation for the future.&nbsp;

See how modern connectivity helps fintechs power their products from lending and payments to digital banking and financial wellness tools.

The Future of Fintech is Modern Connectivity 

Modern Connectivity is the Future of Fintech

The true power of the money experience is behind the scenes — built on a foundation of stable connectivity and enhanced data. 

Make the leap from money management to money experiences with this MX Ultimate Guide. Optimize your open banking strategy to exceed customer expectations.

MX Ultimate Guide to Money Experiences

Ultimate Guide to Money Experience

This MX Ultimate Guide introduces APIs and dives into the benefits of modern web APIs and open banking.

The Future is Open Finance

What is Open Finance?

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An Open, Data-Centric Ecosystem that Benefits All

The Future of Open Finance

What is Open Finance?

U.S. Consumer Financial Data Rights are Almost Here

How Open Finance Creates a Better Experience

Explore Our Library of Open Finance Resources

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The Future is Open Finance

What is Open Finance?

FeaturedAn Open, Data-Centric Ecosystem that Benefits All

The Future of Open Finance

What is Open Finance?

U.S. Consumer Financial Data Rights are Almost Here

How Open Finance Creates a Better Experience

Explore Our Library of Open Finance Resources

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Explore MX Products

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An Open, Data-Centric Ecosystem that Benefits All