Data Aggregation: Using APIs To Provide A Full Financial Picture

Posted on March 6, 2023

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.

What is 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.

data aggregation and APIs

Why is Data Aggregation Important?  

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.

Understanding APIs and Financial Data Aggregation

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.

The two big questions we get asked are:

  1. Why would clients choose to have their financial data accessed? 
  2. And what value is derived from this ability? 

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. 

The answers

  1. It allows for a concise and clear snapshot of a current financial position. 
  2. Clients can be provided with customized financial services and solutions that target exactly what they need at the right time. 
The role of APIs in Banking

The Role of APIs in Open Banking 

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

Why It Matters 

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:

1. Banking

2. Billing/invoicing

3. Paying bills

4. Accounting

5. Receiving payments

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.

APIs And Aggregation In Action – Faster Payments 

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.

Risk Intelligence To Help Mitigate Fraud

  • Mitigate and manage risk with KYC, data intelligence and encrypted tokenization
  • Simplify onboarding by accessing validated information directly from a customer’s bank account
  • Gain a complete understanding of customer behaviour and drive growth with enriched financial data

The Solution: VoPay's Intelligent EFT / ACH (iQ11)

  • North American-wide bank and credit union coverage
  • Quick and reliable data access for optimal user experience 
  • Full white-labelling capabilities for a flexible design
  • Consistent data security and integrity

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