We're in the midst of a revolution spurred by the boom in APIs and innovations such as Open Banking. APIs play a critical role in allowing third-party providers to access financial institutions' data. With this access, companies can enhance their services, access new revenue streams, and expand their markets.
An impressive 67% of companies report being heavily invested in API-first development. And if you look at the multibillion-dollar valuations of fintech startups in this area, it's easy to see the market values their importance. With Open Banking making its debut in Canada soon, more and more companies are discussing the ins and outs of financial data aggregation, how it works, and its importance.
So we thought we would help. First, let’s explain data aggregation.
Data aggregation involves taking information from many different sources and combining it into one source. At its most basic level, it involves compiling information from a range of prescribed databases and organizing it into a simpler, easy-to-use medium.
Big data has become a valuable resource that enables companies to learn more about consumers. Data aggregation can help businesses make strategic decisions when it comes to product or service development. And it is this ability that has completely changed the way companies do business.
With data aggregation (the process of collecting and analyzing data from multiple sources) covered, we now turn to financial data aggregation. This is still a relatively new approach in Canada. Financial data aggregation is the process of collecting financial data from clients and using that data to create a profile. Essentially consumers allow third parties to access their financial accounts and collect their data.
And the answer is simple. Garnering information from a variety of sources, such as bank accounts, credit cards, investments, or loans, all in one place can prove quite valuable for businesses and consumers alike.
An API is an interface that allows a program to interact with a database. It serves as a bridge between systems and guarantees the transmission of data safely without involving third parties. With the help of APIs, it removes the need for credential sharing helping to minimize data entry errors and delivering a comfortable, efficient customer experience.
“The ability to make payments directly from a bank account transfer is extremely valuable for many merchants, but especially for marketplaces and platforms. VoPay helps businesses increase processing velocity and reduce errors -- making payments faster, safer, and more accurate.”Lowell Putnam, Head of Partnerships at Plaid
Financial data accompanies every step of a client’s journey. Be it credit access and use, insurance, payments, or wealth management. When consumers and businesses have the option to share this financial data with a broader range of financial service providers, it can pay off.
According to Nam Research and insights, more than 7 in 10 business owners link financial accounts for the following tasks:
Businesses are increasingly turning to data to help manage the finances of their businesses, with 85% looking to customized financial recommendations as a result of utilizing their data.
VoPay + Plaid Integration delivers an unparalleled Open Finance payments service experience for businesses and their customers.
VoPay’s partnership with Plaid brings online bank account payments into the twenty-first century. We eliminate all today’s inefficiencies of current bank account payments by using data intelligence to instantly authenticate transactions. By validating and authenticating bank-account information at the time of the transaction, VoPay enables the ability to pay for goods and services online just as one would with credit cards but with a significantly lower transaction fee.