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Earnings Season Spotlights the Value of Data in Priming Open Banking

It’s mid-February, and the tone of earnings season — along with various partnership announcements — has underscored the value of data harnessed by all manner of providers to make open banking more of a reality in the U.S.

Permissioned data is arguably the most essential part of the equation, where consumers opt to share their banking information. The financial institutions (FIs) themselves have been fine tuning and embracing APIs to help share their bank data with an ever-growing roster of third-party providers.

A Spate of Announcements

As noted here, in an example of the partnerships taking place to get that account-level granularity flowing to third parties, FIS said earlier this month that it introduced a platform geared toward the sharing of banking data. And as part of the announcement, the company signed pacts with Akoya, Envestnet, Yodlee, MX and Plaid to integrate into the FIS Open Access platform as third-party FinTechs connect to power new use cases.

Separately, as reported, Trustly has integrated MX Technologies’ data enhancement services into its open banking product suite. The announcement noted that with consumer-permissioned transaction data that has been cleansed and categorized, Trustly merchants will be better able to make marketing offers, loyalty programs and risk decisions governed by individual consumer-level insights.

Fiserv, last fall, said that it had inked its own partnership with Plaid to offer the 3,000 bank and credit union Fiserv clients API-based connectivity to the 8,000 applications extant on Plaid’s network.

Fiserv said in its recent earnings report that it has been harnessing AI to deliver insights for its clients, including with AllData, which is its portal through which consumers verify financial account information for third party activity. The company has noted on its site that validation happens a secure, company-hosted “with a token sent to the third party for confirmation,” adding that no account credentials are shared.

As CEO Frank Bisignano said on the conference call with analysts earlier this month, the company “ already manages one of the most valuable information stores in the industry and we start from a position of strength based simply on the sheer amount of data that runs through our systems each year.”

That data, he said is underpinned by $4 trillion of payments volume globally across more than 6 million merchant locations, plus 1.6 billion card accounts on file and 20 million BillPay users tallied across nearly 10,000 financial institutions.  

There’s at least some indication that younger consumers — especially important to providers given the long-term value of the customers — are eyeing open banking as an avenue of promise. As PYMNTS Intelligence has reported, 50% of millennials report that the availability of open banking connectivity features highly influence their choice of merchant or provider.

The providers above join the recent earnings-season commentary offered by the payments networks such as Visa and Mastercard that point to new payment methods as key channels of growth, as pay-by-bank and new rails outpace more traditional, card-based payments.