Finicity’s latest deals with TD Bank Group and Mastercard prove that open banking is becoming a hot item with traditional banking institutions.
Last week, TD Bank Group (TD) announced that they were entering a North American data-access agreement with Fintech data-aggregator Finicity.
Yet another large deal for Finicity in 2020, this move demonstrates a wider acceptance of open banking by traditional banking institutions. In June 2020, Mastercard brought Finicity to the global stage with an $825 million acquisition, a purchase that will strengthen Mastercard’s existing open banking platform. In general, open banking became a hot topic when Visa purchased competing data aggregator Plaid for $5.3billion. These developments came as consumers and businesses increased their use of digital banking and finance apps - a trend that TD is directly responding to as part of their commitment to digital innovation and investigating new ways for customers to manage their finances online.
Commenting on the agreement, Finicity CEO Steve Smith noted that “we are committed to delivering superior data access, quality and security through the Finicity Open Banking platform, transforming the way consumers interact with and benefit from their own financial data. Together with TD, we are helping customers to become more empowered with their financial data and utilize it in ways to help improve their financial lives.”
Under the North American agreement, the two companies will align their protocols so Finicity and TD customers can access their financial data and use financial services supported by the real-time financial data aggregation service. TD will be able to transfer its customers’ data upon their request using API (Application Programming Interface) technology. This frees the customers from having to share their login information in order to access third-party financial products and services. This API-based approach will raise the level of data security for customers who’ve previously had to share their banking credentials to access the products and services of various FinTechs.
“The Significant surge we have seen in the adoption of our own digital products and services has accelerated our work to leverage a market-developed technology solution to help increase the comfort level of customers looking to access digital services that are outside their bank,” stated Rizwan Khalfan, Chief Digital and Payments Officer of TD. “Our customers want digital solutions and we are focused on supporting their choices.”
Speaking on what these deals will mean to the banking sector, Smith shared that “The days of the walled garden approach to data sitting at a bank, only good for the bank and not so much good for the consumer, are over with the advent of open banking. For those that are looking through the lens of digital banking at its very best, and the embodiment of true solutions that are consumer focused, this can be very good because I think it’ll help actually move the adoption of digital banking up and move the adoption of open banking up and continue to accelerate it.”
Mastercard’s purchase of Finicity is expected to close by the end of the year.