Sixteen million consumers in the United States and Canada are using the Financial Data Exchange’s (FDX) open banking and finance API, according to data reported by the nonprofit financial sector standards organization Wednesday.

Open banking allows third-party vendors to access data collected by banks and financial institutions using software gateways, or APIs, and FDX works to create industry standards for the secure sharing of data. Put simply, FDX’s aim is to standardize pipelines for data so that customers and vendors alike can access that information in a uniformly permissioned way.

The recent adoption metrics released by FDX denote a growth of 8 million consumers since March 2020, and indicate consumers are being transitioned from credential-based data sharing and screen scraping to the API standards formulated by the organization.

FDX’s board is open to membership from banks, fintechs, data aggregators and other players in the financial services sector, and includes representatives from Bank of America, Citi, Capital One, Envestnet Yodlee, Experian, Fannie Mae and JPMorgan Chase, among others.

While there was a partial slowdown in 2020, the adoption of open banking appears to be accelerating again as banks and financial service providers switch bigger chunks of their workflows toward digital channels, Don Cardinal, managing director at FDX, told Bank Automation News. “Net onboarding waves always get larger and larger,” Cardinal added.

FDX’s data pipeline standards define more than 500 individual financial data elements, extracted from a variety of sources, including federal tax forms, account summaries, transaction data, and investment products like 401(k) and pension plans. The organization also actively monitors consumer demands emerging in the financial technology sector and actively steers its API to align with data requirements necessary to fulfill emerging customer expectations.

New use cases, limits on data collection

Some of the new use cases for open banking and finance data include account opening, wealth management, interbank money movement, lending and marketing activities, Cardinal said.

But while use cases for data in the financial services space is growing, companies are also maturing to utilize data in a judicious manner giving rise to “data minimization,” the idea that businesses should not hold data they don’t need, Tom Carpenter, director of public affairs at FDX, told BAN.

FDX’s approach toward customer control over their own data relies on a thoughtful provisioning approach that requires businesses to lay out what data will be used and to what end. Although regulations often take time to catch up to innovation, Carpenter said FDX has taken a tech-centric approach that aims to get the information flowing in a standardized way, while ensuring that consumers retain control over their own data.

Noting that private companies are often considered giant data vacuums that take and store data indefinitely, Carpenter said the reality is that data comes with its own liabilities in terms of risk and management costs.

“If you don’t need it, it’s a net liability,” Cardinal said.