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US fintech firms join forces to push data sharing via APIs

19 January 2017  |  20214 views  |  4 Blurr Business People Walking

A host of US fintech firms - including Betterment, Kabbage and Ripple - have set up an industry group to push for consumers' rights to share their bank financial data with third parties.

Backed by Affirm, Envestnet | Yodlee, and Varo Money, the Consumer Financial Data Rights (CFDR) coalition says that Under Dodd-Frank, Americans now have the right to access their personal financial data through technology-powered third party platforms.

Banks have been reluctant to provide access to data to upstart competitors and say that the practice of customers giving third parties the ability to login to their accounts for this purpose poses a security risk.

The CFDR group is pushing for data access via a different route - application program interfaces (APIs). It is calling for the US to follow in the footsteps of the UK, which is moving to an Open Banking standard, and Singapore which is promising an open API.

The new lobbying group says it is committed to "improving dialogue" throughout the FS industry and working with banks.

Its first action is a joint comment letter in response to an advanced notice of proposed rulemaking on Enhanced Cyber Risk Management Standards issued by the Federal Reserve, OCC and FDIC. The letter calls on regulators to establish a hierarchy with regard to cybersecurity risk, "noting the importance of continuing to allow consumers to access tools that enable their financial well-being".

Says Rob Frohwein, co-Founder, Kabbage: "The ability to freely access financial data empowers customers to take actions to improve their financial lives, whether it's accessing capital to grow a business or better understanding their income streams. Access to financial data is not just vital for customers wanting to enjoy financial health, but it also allows companies to provide better user experiences."

Comments: (4)

A Finextra member
A Finextra member | 19 January, 2017, 15:55

And can I assume that the fintechs will share all of their data with banks... in the interest of consumers' rights?

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A Finextra member
A Finextra member | 20 January, 2017, 06:52 I didn't know that customers today don't have access to their financial data...
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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 20 January, 2017, 19:48

As a consumer, there's no way I'll want to be left holding the can if there's a breach. If Fintechs want banking data, they should be prepared to underwrite any losses from data breach. 

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Gerard Hergenroeder
Gerard Hergenroeder - Payments Shark - Millersvile | 24 January, 2017, 21:47

I am not buying the Fintech argument on this one. Why would anyone in their right mind want to give away consumer data. The data ia more valuable than the money in the vault. Remember the Dire Straits song with the lyrics, "Get your money for nothing and your chicks for.......". I remember when a company give away its operating system for pc's to a much smaller one. Now that smaller one is the bigger fish.

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