1. Do you aggregate all of your data yourself or do you rely on other account aggregation providers for a portion of your data?
Not all account aggregation providers are created equal. In fact, you may be surprised to learn that only a minority of providers perform their aggregation themselves. Instead, many establish a handful of connections to institutions before subcontracting to other aggregators to fill the large gaps in their coverage. This approach to aggregation introduces a few downsides that are worth recognizing.
The most obvious drawback is that aggregation “resellers” are generally more expensive, due to the extra layer between you and your clients’ data. While sometimes this premium can be worthwhile, for example, the reseller purchases data from several aggregators to mitigate the risk of an important connection breaking; oftentimes resellers will white label a single aggregation provider and mark up the price.
Next, many financial institutions will not work with aggregators who subcontract, because of security concerns around a lack of transparency to where the work is actually being done. As the aggregation market matures, and more robust connections are established between account aggregators and financial institutions, subcontracting will likely become an increasingly problematic issue, especially for those seeking to work with large financial institutions.
2. On average, how far back does your transaction history go?
Account aggregation has been around for nearly two decades, and over that time institutional connections have significantly improved. In spite of this, many older account aggregation providers have not rebuilt their connections to leverage the improvement in data quality.
A quick way to test whether or not you’re accessing newer or older connections is to see if your transaction history is measured in months or years. Longer transaction histories are not only an indicator of connection quality, but also provide deeper insight into the consumer’s financial behavior: deeper history means longer performance records, more detailed budgets, and more accurate income and expense estimates. The best account aggregation providers can deliver transaction histories that go back 2+ years, while less sophisticated aggregators may only be able to go back 2 to 3 months.
3. What does your customer support model look like?
One of the first rules of account aggregation is that things break. Connections to financial institutions can require reworking for a variety of reasons, which puts a premium on customer support to get issues fixed and keep account data flowing. A responsive and knowledgeable support team is therefore a must-have for businesses that rely on aggregated account data.
As noted above, many aggregators resell services, which further compounds customer support issues. In this scenario, clients will go to their aggregation provider to fix the issue, however, they in turn will go to their aggregation provider. This “pass the buck” situation makes it difficult—or even impossible—for you to interact with the team that’s actually responsible for fixing the problem.
4. What value-added services can you provide with the aggregated data from your clients’ financial accounts?
As account aggregation grows in popularity, providing value-added services on top of the aggregated data is becoming increasingly important. For example, at Quovo, we’ve paired aggregation services with instant account verification, income estimation, and sophisticated investment portfolio calculations, making it easier to deliver insights to customers faster and more accurately.
Similar services are constantly being innovated, enabling account aggregation providers to add value beyond creating of a holistic view of a client’s financial accounts. While the industry is just scratching the surface of this potential, it is important to choose an account aggregation provider that is actively innovating new use cases for aggregated data.
5. Do you sell customer account data to hedge funds?
Investment firms, including hedge funds, often buy datasets from account aggregation providers to gain insight into consumer-purchasing patterns. While the data may be anonymized, it’s typically sold without the knowledge of the end consumer owning the account (or is buried in the fine print). Given the choice, it’s hard to believe that customers would permit their data to be sold in such an opaque way.
Furthermore, the unpermissioned sale of data to third parties breaks a number of the Consumer Financial Protection Bureau’s recently issued data-sharing principles, which were designed to protect American consumers. While this issue has been only lightly covered in the press, it’s important to consider how your clients would react to finding out that their data was being sold without their consent.
Lowell Putnam is the Co-founder/CEO of Quovo.
