Is Data Aggregation The Key To Banking’s Future?

The pandemic is spurring new opportunities for financial institutions (FIs) of all sizes to improve the range of services they deliver to end users amid the continuing shift to digital.

To that end, in an interview with PYMNTS, Kevin Hughes, aggregation product manager at Fiserv, said that data — specifically data aggregation tied to open banking — remains key to adding new solutions to banking platforms.

Those integrated solutions, in turn, allow users to conduct their financial lives with speed, ease and security.

As Hughes noted, several broader trends mark the financial services landscape.

Customers are engaging more actively with their FIs across digital channels as a matter of necessity, as bank branches have largely been shuttered or are operating with reduced hours.

On the provider side of the equation, FIs have been looking to bring new services to their users, while at the same time launching offerings that had been in development or in the initial stages of deployment.

“They’re looking to accelerate those offerings — to ‘button up’ the options they had available or were planning to make available,” Hughes said.

He added that there remains heightened sensitivity around security as fraudsters have trained their sights on card-not-present (CNP) fraud, although security concerns have not derailed any projects.

Data aggregation, which pulls together information from a range of sources (sometimes thousands of them), coupled with consumers’ permission for banks and other service providers to tap that information, can help improve and automate previously cumbersome processes.

In one example, Hughes pointed to mortgage refinancing applications, which are likely to see a tailwind from low interest rates. He noted that agencies like Fannie Mae are “striving to automate as many of their processes as possible.”

And in applying for a mortgage online, he said, if consumers are able to sit down with apps in hand (via tablets, laptops or even mobile phones), and accomplish everything from scanning documents to paying deposit fees and locking in rates, and then get a decision in minutes, “they’re more likely to close that loan.”

Hughes added that “for banks, where mortgages are an important part of the balance sheet, being able to deliver this immediate gratification to customers is critical.”

To do this, he said, aggregators such as AllData Aggregation from Fiserv can help FIs streamline their processes, as the platform offers access to a suite of application programming interfaces (APIs).

“Aggregation fits into the application process,” said Hughes. “Instead of a customer typing in their account number and other details, they can just click a link that allows us to connect electronically to their account and pull in that information without having to find three months of statements.”

Expediting such formerly time-consuming and paper-based processes can help banks compete more effectively with online mortgage lenders, contended Hughes.

The Importance Of Data

Data, of course, is critical in making sure such online activity runs smoothly. Hughes said it’s critical that aggregated data isn’t just reliable but is also available in real time and returned quickly.

“The broader the coverage of the data, the better because that all factors into the value of the user experience,” he said.

That might prove to be a challenge, even in the age of open banking. And some banks may not have the transparency or technologies in place to understand what is being shared with whom.

“There are organizations that, for lack of a better term, will block aggregation activity,” Hughes pointed out. “One of the challenges in the current environment is to help those organizations understand what their customers’ data is being used for — and, more importantly, how it’s being secured.”

Looking Ahead

As we reach toward some semblance of normalcy in everyday life, Hughes said, we’re unlikely to see a pivot “back” to financial services as they were done before the pandemic.

Speed and convenience will be key, he said. FIs will have to continue embracing banking-as-a-service, building new applications that are flexible and configurable, and getting them up and running as quickly as possible.

“There will certainly be an increase in competition for customers,” said Hughes, adding that the urgency of today’s environment will continue, providing new opportunities for FIs.

“Consumers will continue embracing online and digital solutions,” he predicted, noting that “they’re pivoting to these solutions out of necessity, and will stay with them because they like them.”