Fidelity spun off its data-aggregation business, Akoya, into its own company last week, giving financial institutions another tool to securely share customer data with third-party financial apps.
Akoya collects data from banks on its network and provides a single entry point for third-party apps and data aggregators, such as Plaid and Yodlee. Akoya will be owned and operated by Fidelity, 11 major banks and The Clearing House.
“The old way was giving credentials, [consumers’] ID and their password, to the fintech app, who would give it to the aggregator,” said Stuart Rubinstein, CEO of Akoya. “Now what’s happening is, they’re passing through the network and giving explicit direction and instruction to their financial institution to grant third-party access to their data.”
Akoya seeks to reduce reliance on “screen scraping,” which occurs when consumers give their banking login credentials to third parties that log in on their behalf to connect to their account data. By contrast, Akoya is enabling API-based secure data access, moves that banks like Wells Fargo and JPMorgan Chase have been pursuing through agreements with aggregators. Much like Wells Fargo’s Control Tower, Akoya will enable consumers to approve and deny data access directly from their financial institutions’ online banking, Rubinstein said.
Fidelity’s decision to spin off its data-aggregation business comes on the heels of Plaid’s Visa acquisition for $5.3 billion and speculation that wealth management tech firm Envestnet is exploring options to sell Yodlee, which it acquired for $590 million in 2015. Last week, a report from investment bank Piper Sandler reviewed by Bank Innovation suggested recent deals, including Fidelity’s Akoya spinoff, are contributing to discussions around Envestnet’s plans for Yodlee.
See also: Envestnet executives mum on Yodlee sale, despite revenue pressure
According to Rubinstein, Akoya will tokenize data between banks and third parties, and the company will delete all consumer data after the transaction. The 11 banks that now own Akoya are: Bank of America, Capital One, Citi, Huntington Bank, JPMorgan Chase, KeyBank, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo. Akoya will be available to any financial institution and will generate revenue from volume-based fees banks pay to funnel data through Akoya.
Some industry groups view the spin-off as a threat to competition because the new arrangement gives banks too much control of consumer data.
“If the new entity is allowed to consolidate and control consumer financial data, it will potentially prevent other third parties from accessing that data even if individuals and small businesses permission that access, by giving their consent for their data to be shared,” Steve Boms, executive director of the Financial Data and Technology Association, said in a statement. FDATA, an open banking advocacy group, has members that include Plaid, Envestnet Yodlee, Betterment and Kabbage.
As for integrating Akoya into banks’ online platforms, Rubinstein said the banks themselves will determine the user experience. He said Fidelity is already connected to Akoya, but didn’t give a specific time frame as to when other financial institutions will join the network.
“We’re now working with financial institutions across all sectors and data recipients to get them plugged in,” Rubinstein said. “We’re ready to go.”
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