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Marketplace Morning Report

A new company is trying to get between your bank and your financial apps

Justin Ho May 16, 2019
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There are plenty of online tools out there that let people organize their financial lives. Some of them help people track spending, others help people set savings goals.

But these so-called aggregator apps are sometimes seen as a privacy risk. For one, consumers aren’t always aware of how their data’s being used, said Stuart Rubinstein, president of Fidelity Wealth Technologies.

“Some companies aggregate consumer data and sell it,” Rubinstein said. “Some companies use it to build new products. Some companies use it for research.”

Now Fidelity’s parent company is launching a new business aimed at letting customers control what data personal finance apps can get their hands on.

Aggregator apps and online tools generally work by asking users to enter their login information and answers to their security questions. The aggregators typically store that information so they can “scrape” additional data from the users’ financial accounts.

The new Fidelity business, called Akoya, will act as an intermediary: instead of handing over login information to an aggregator app, customers would use Akoya to connect their apps to their bank accounts. Rubinstein said Akoya will help users decide what data their apps can access.

“If you’re using a budgeting app, [the app] needs to look at your spending,” Rubinstein said. “When you’re doing financial planning, [it] might need to look at a whole financial picture.”

He said Akoya would eliminate the need for aggregator apps to store their user credentials, since users would authorize bank access through Akoya instead. Akoya will charge banks for the service, rather than customers or the aggregator apps themselves.

“It seems that this new Fidelity business is a good way for banks to not let the aggregator get more information than they need,” said Avivah Litan, an analyst with the research firm Gartner.

While the service is geared toward giving bank customers more control of their data, Litan said the target market is really the banks themselves.

“I really think this is much more bank driven since they’re keenly aware of the actual costs and capital costs to these kinds of problems,” said Mayra Rodriguez Valladares at MRV Associates, which advises banks on regulatory issues.

If an aggregator is breached and customer login information or data gets out, Valladares said banks know those problems will become theirs from the perspective of the bank regulator.

Aggregator apps have grown in popularity in recent years. Nate Pacer, founder of the research company Venture Scanner, said there are nearly 300 personal finance apps available, offering services that help users track credit card rewards, shop for insurance or set personal budgets.

Mint.com is a popular example of a personal finance aggregator app. Hillary Powers uses Mint to pull all of her financial accounts into one place — all 34 of them.

“It’s absurd because I have every credit card I’ve ever had and all of my accounts and all of my loans,” Powers said.

Powers understands the privacy concerns, but said the convenience of sites like Mint outweigh any security dangers. She regularly runs through her credit card transactions to see if Mint labeled them correctly, with categories like groceries or restaurants. She uses those labels to monitor her spending — a routine she finds cathartic.

“It makes me feel like I’m paying attention and being responsible by focusing on where my money is going,” Powers said.

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