The Financial Data Exchange (FDX) is trying to create a standardized environment for banks, third-party fintechs and consumers to share financial data. Don Cardinal, managing director of FDX, said the nonprofit has helped about 12 million end consumers transition away from screen scraping since its public launch in 2018. 

“The best way to keep a secret is to not know it,” Cardinal said. “If you don’t have to share your password, there is no risk of losing it.” Screen scraping shares online banking login credentials with third parties, rather than connecting through an API. 

FDX’s members consist of banks and fintechs alike, including JPMorgan Chase, Bank of America, Citibank, Plaid, PayPal and Visa. The nonprofit promotes its own data-sharing API to banks so consumers don’t have to share their credentials to use third-party fintechs. Cardinal said about 100 million consumers in North America have shared their banking login credentials with one or more third parties. 

In the same way that online banking didn’t roll out overnight, adopting a standard data-sharing model will take time, Cardinal said. Anytime consumers share financial data, the involved parties must spell out the rights, duties and expectations, he added. For an industry that depends on trust, financial services companies can’t afford to mishandle sensitive information.  

“I forget who said, ‘Fail fast,’ but that is not an option in financial services,” Cardinal said.  

In addition to FDX’s API, The Clearing House’s model data-sharing legal agreement is a positive step away from credential-based access, according to Cardinal. TCH rolled out the model agreement in November to help banks and third parties quickly work out the legal kinks when forming a data-sharing partnership.  

The TCH model, however, faced criticism from some in the fintech community. In a Bank Innovation op-ed, Plaid policy lead John Pitts and Kabbage head of global policy Sam Taussig argued the agreement gave banks too much competitive control. “Banks could block customers from using applications that are more competitive or better designed for their needs,” the authors wrote. “The heart of the proposal reflects a vision where your bank must pre-approve any fintech apps before you use them — and the bank could terminate access at any time if the service ‘contradicts [the bank’s] business guidelines.’”  

Cardinal agrees the TCH agreement is not a one-size-fits-all solution, and banks and fintechs should tweak the agreement, depending on their unique situations.  

See also: With Plaid, Visa embeds itself deeper into the fintech ecosystem

According to Cardinal, the pandemic will create a long-term shift to digital channels as consumers who are forced to use them for the first time will be sold on their convenience and security. Data access companies have already made headlines this year, with Visa acquiring Plaid for $5.3 billion and Fidelity spinning out its data-sharing business Akoya. Cardinal believes financial services companies will continue to show interest in data and sees a shared focus on moving toward API-based data sharing as the key to getting more than 100 member institutions to collaborate. 

“That focus on the mission, common purpose and mutual respect really helps me herd all the cats,” Cardinal said.