An increase in partnerships between banks and fintech providers in February is allowing for more streamlined data sharing for small-business owners.
Silicon Valley Bank partnered with online accounting platform Xero earlier this month, allowing the two to share mutual customers’ data through an application programming interface (API). Xero has already partnered with Wells Fargo and City National Bank. Wells Fargo and Intuit entered into a similar agreement this month, enhancing the efficiency of its data-sharing procedures and lowering the cyber-security risks for customers. J.P. Morgan Chase & Co. also recently partnered with Intuit.
Small businesses now have a more automated banking experience through these APIs, with daily banking and cash flow data available in real time in one centralized dashboard.
“For a long time, many financial institutions have leveraged third-party aggregators to provide access to bank feed data, a methodology which is not always a beautiful experience. Today’s alignment is evolving how technology companies and banks can collaborate so the customer wins,” Xero America President Keri Gohman said.
In addition to expediting data sharing, these partnerships also pave the way for a more secure, standardized way of providing customer data to third-party software providers, like Intuit. The old process known as screen scraping, requires customers to provide online banking usernames and passwords to third parties to allow access to their bank account information.
Data aggregators have accused banks in the past of blocking screen scraping, while some banks argue the method is insecure and a strain on their servers. Consumer advocates say the industry needs to align more closely and allow customers to control their data.