Senior Director of Content and External Communications

Read 5 reasons why you shouldn’t wait to move forward on your open finance strategy and get ready for 1033.

Want to talk more? Our team is ready to engage with you at any stage of your open finance journey. Whether you are beginning to build your API or optimizing your strategy for 1033 compliance, Data Access is your solution. 

Read 5 reasons why you shouldn’t wait to move forward on your open finance strategy and get ready for 1033. 

How to Achieve 1033 Compliance and Gain a Competitive Advantage

We&rsquo;re now nearly 60 days out from the final <a href="https://www.mx.com/blog/cfpb-dodd-frank-section-1033/#what-is-1033">Section 1033</a> ruling from the Consumer Financial Protection Bureau (CFPB). Like most financial institutions who are considered data providers under the final rule &mdash; those who provide covered data under Regulation E or Regulation Z accounts, you&rsquo;re probably asking several key questions like:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">What does the final Section 1033 rule mean for me?</li>
<li style="font-weight: 400;" aria-level="1">Do we really need to worry about this now?</li>
<li style="font-weight: 400;" aria-level="1">Will everything change based on the recent election results?</li>
</ul>
<blockquote>
&ldquo;&hellip;the institutions that adopt Open Banking and compete to deliver the best experience will be more likely to earn consumer loyalty and engagement for the long term.&rdquo; -Jane Barratt, MX Chief Advocacy Officer
</blockquote>
<h2>Don&rsquo;t Wait to Move Forward</h2>
At MX, we hear these questions every day and we&rsquo;re here to help. Bottom line: Don&rsquo;t wait to move forward on your open finance strategy and get ready for 1033. Here&rsquo;s why:&nbsp;
<h3>1. Open Finance isn&rsquo;t about you &mdash; it&rsquo;s about the consumer. </h3>
The CFPB states the final rule is meant to enable consumers to &ldquo;more easily switch to providers with superior rates and services. By fueling competition and consumer choice, the rule will help lower prices on loans and improve customer service across payments, credit, and banking markets.&rdquo; Consumers have more choice &mdash; <a href="https://www.mx.com/research/consumer-research-digital-and-mobile-banking/">and more accounts</a> &mdash;&nbsp;across different financial providers&nbsp;than ever. This shift encourages everyone in the financial data ecosystem to innovate for consumers, helping attract and retain them as consumers. Offering the best third-party connectivity builds loyalty and helps institutions thrive in a competitive market.&nbsp;
<h3>2. Open Finance can create a clear competitive advantage. </h3>
<a href="https://www.openbankingexpo.com/features/feature-open-banking-in-the-us-a-new-era-of-consumer-centric-innovations/">Jane Barratt recently said</a>, &ldquo;Institutions of any size that think of Section 1033 as a regulatory stick instead of a competitive carrot are at risk of being left behind.&rdquo; Consumers want their providers to know them. They want personalized products, services, and offers. And, they want a good mobile and digital experience. But, most financial institutions are missing key details on where consumers share data. <a href="https://www.mx.com/blog/what-is-open-finance/">Open finance</a> data unlocks the door to gain better insights about competitor products your customers utilize and create precise targeting and compelling offers.&nbsp;
<blockquote>
Data providers who start now with Open Finance will be in a better position to deliver on consumer expectations and will have the advantage over those who choose to wait.
</blockquote>
<h3>3. Political climates may shift but Open Finance is here to stay.&nbsp; </h3>
In light of the results of the recent U.S. election, rumors are circling on what changes may affect the CFPB. Section 1033 has received broad bipartisan support from the start and we should expect to continue to execute against the final rule. And, regardless of regulation, Open Finance and consumer-permissioned data sharing are here to stay. Institutions should focus on how Open Finance can help drive competitive advantages for them and better outcomes for consumers.&nbsp;
<h3>4. API-based connectivity is the future. </h3>
Consumer-permissioned <a href="https://financialdataexchange.org/FDX/News/Press-Releases/Financial_Data_Exchange__FDX__Reports_76_Million_Consumers_Use_FDX_API.aspx">data sharing is already widely adopted</a> across the United States. And, it&rsquo;s clear that the industry is shifting away from screen scraping. This is the only path forward. And, it&rsquo;s what consumers are asking for from their providers. When asked what they would do if their bank or credit union didn&rsquo;t support connecting to their favorite fintech apps, <a href="https://www.mx.com/research/consumer-research-digital-and-mobile-banking/">72% said they would switch to one that does.</a> Data providers need to take seriously their responsibility to their consumers to provide secure and reliable connectivity.
<h3>5. Open Finance can lead to greater innovation and financial wellness. </h3>
The imperative of Open Finance is to connect the world&rsquo;s financial ecosystem to revolutionize financial wellness for consumers. This will continue to be the drumbeat to which MX marches &mdash; and it creates a win-win scenario for both consumers and financial institutions. It helps put the right financial solutions in the hands of the right consumers at the right time while also fueling higher deposits and income for financial providers so they can pour more energy into innovation that moves the industry forward.
<h2>Where to Get Started for Data Providers: Your Quick Guide to Key Requirements</h2>
We&rsquo;re making it as easy as possible for you to understand key requirements as a data provider under Section 1033. [<a href="https://www.mx.com/guides/1033-data-provider-quick-guide/" target="_blank" rel="noopener">Download our full quick guide</a>] and in the meantime, here&rsquo;s a quick overview of core responsibilities, what to consider for data partners, and where MX can help:&nbsp;
<h3>Core Data Provider Responsibilities&nbsp;</h3>
Under the final rule, data providers are responsible for enabling both consumers and third parties to access data, with key requirements related to:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1"><a href="https://files.consumerfinance.gov/f/documents/cfpb-1033-nprm-reg-text-with-1001_2023-10.pdf#page=8">Covered Data</a>: Covered Data: Ensure covered data is available in an accessible electronic format via a performant developer interface (API) for all qualifying third-party requests.</li>
<li style="font-weight: 400;" aria-level="1"><a href="https://files.consumerfinance.gov/f/documents/cfpb-1033-nprm-reg-text-with-1001_2023-10.pdf#page=10">API Management: </a>Maintain the developer interface at required performance standards, provide advance notice of downtime, and publish API documentation.</li>
<li style="font-weight: 400;" aria-level="1"><a href="https://files.consumerfinance.gov/f/documents/cfpb-1033-nprm-reg-text-with-1001_2023-10.pdf#page=10">Third-Party Management:</a> Respond to third-party requests with accurate data or a reason for denial, document denials, and provide guidelines for accessing the developer interface.</li>
<li style="font-weight: 400;" aria-level="1"><a href="https://files.consumerfinance.gov/f/documents/cfpb-1033-nprm-reg-text-with-1001_2023-10.pdf#page=17">Analytics and Reporting</a>: Publish monthly performance data for the developer interface and maintain compliance records.</li>
<li style="font-weight: 400;" aria-level="1">Consent Management: While data providers are not obligated to manage consumer consent or to provide consent revocation tools under Section 1033, data providers can choose to confirm consent and provide revocation tools, consistent with current industry best practices. If so, key requirements include developing a system to manage consumer consents, enabling easy revocation of third-party access, and ensuring reauthorization every 12 months.</li>
</ul>
<h3>Evaluating Data Partners </h3>
Choosing the right open banking partner is critical for delivering seamless financial experiences. Here are a few key criteria to consider when evaluating potential open banking data partners:
<ul>
<li aria-level="1">Interoperability: Choose partners committed to connecting with all data intermediaries and maintaining a robust, open network.</li>
<li aria-level="1">API Quality: Look for reliable, fast, and well-documented APIs using FDX standards that are easy to integrate. </li>
<li aria-level="1">Consent: Quality partners use clear, consent flows and, where appropriate, allow data providers to manage consent if they choose to do so. </li>
<li aria-level="1">Privacy: Choose a partner with strong encryption, compliance certifications, and clear data policies.</li>
<li aria-level="1">Innovation: Ensure partners can adapt quickly to regulatory changes and market trends.</li>
<li aria-level="1">Partnership: Find a collaborative partner, not just a vendor, that can offer strong support, customization, and a growth mindset.</li>
<li aria-level="1">Reputation: Assess a partner&rsquo;s credibility through client success stories, industry recognition, and reliable reviews.</li>
</ul>
<h3>How MX Can Help&nbsp;</h3>
For more than a decade, MX has been a leader in open finance and consumer-permissioned data sharing. Our <a href="http://mx.com/products/data-access">Data Access</a> solution combines an API platform that meets FDX standards with built-in analytics that can help you meet your 1033 compliance obligations and provide you with actionable intelligence at the same time.&nbsp;
Here&rsquo;s why you should consider MX as your data partner:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">MX partners with you to build your API. With Data Access, your APIs are translated to FDX standards. Our team guides you through creation, testing, and launch, while our self-serve tools empower you to unlock the full potential of open banking.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">MX is an intermediary. This allows us to actually test your API with you. We&rsquo;ve seen this significantly speed up the process to launch your API and reduce any potential errors.</li>
<li style="font-weight: 400;" aria-level="1">Data Access scales your APIs across multiple intermediaries. Data Access follows FDX standards which are designed to guarantee interoperability across the ecosystem. This allows data providers to scale APIs and manage all intermediaries effortlessly in a central portal.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Data Access delivers real-time analytics on data sharing. Data Access is the leading platform that surfaces real-time reports about all of the data your consumers share. You will better understand your customers&rsquo; needs, what products they are utilizing from your competitors, and have the ability to build precise targeting and segmentation for compelling offers.&nbsp;</li>
</ul>
<img src="https://cms.mx.com/assets/d5e3d8c3-5f03-4568-8fd6-73b5a4bbdfb6?width=3897&amp;height=2508" alt="Data Access Image" />
See our detailed <a href="https://www.mx.com/guides/1033-data-provider-quick-guide/" target="_blank" rel="noopener">Quick Guide to 1033 Requirements for Data Providers</a> to learn more about key responsibilities and how MX can help meet and go beyond compliance requirements.&nbsp;

How Data Providers Can Compete and Comply: Achieving 1033 Compliance and Gaining a Competitive Advantage

MX is excited to share that Founder Ryan Caldwell has returned to the company as Chief Executive Officer.

Caldwell founded MX in 2010 with a mission he and Co-Founder Brandon Dewitt established that continues today — empowering the world to be financially strong.

MX Announces Return of CEO and Founder Ryan Caldwell

Today, MX is excited to share that Founder Ryan Caldwell has returned to the company as Chief Executive Officer, effective immediately. Ryan has been serving as the Executive Chair of the MX Board of Directors since stepping down as CEO in 2021.
In late 2021, Caldwell made the difficult decision to step aside as CEO to focus on his daughter&rsquo;s health. She is doing much better and getting stronger every day, making it the right time for Ryan to return as CEO. We are excited to welcome Ryan back to MX in a full-time capacity.&nbsp;
&ldquo;I am excited to return to MX at such a pivotal moment for both the company and the industry, as financial institutions and fintechs look to leverage consumer-permissioned financial data to grow deposits, increase innovation, and deliver new products and services that strengthen outcomes,&rdquo; said Caldwell. &ldquo;We have an incredible team and opportunity ahead of us to innovate faster and enable real, tangible benefits for consumers and the financial providers that serve them.&rdquo;&nbsp;
Caldwell founded MX in 2010 with a mission he and Co-Founder Brandon Dewitt established that continues today &mdash;&nbsp;empowering the world to be financially strong. MX does this by delivering the industry&rsquo;s most robust and reliable connectivity, data enhancement, and experience solutions to financial services providers.
Additionally, we are excited to share that Chief Technology Officer Wes Hummel will take on an expanded role leading both the MX product and technology teams.&nbsp;

MX Founder Ryan Caldwell Returns as Chief Executive Officer

Here’s 5 key insights from our survey of 1,000+ U.S. consumers that financial providers should consider to increase engagement.

Here’s 5 key insights from our latest survey of 1,000+ U.S. consumers that financial providers should consider to increase consumer engagement. 

Increase Consumer Engagement With Intuitive Money Management Tools

Our latest research shows 25% of U.S. consumers feel completely financially secure today. And, more than half (56%) of respondents say they will be financially secure someday.&nbsp;
But, while they may feel optimistic for the future, they are still worried about the everyday costs of groceries, housing, and more continue to rise due to inflation. And, they may be stuck in old ways when it comes to solving these feelings of financial insecurity.&nbsp;
<blockquote>
&ldquo;In today&rsquo;s increasingly challenging economic environment, it&rsquo;s interesting to see a majority of consumers still relying on manual processes &mdash; adding more burden and potentially stress to managing their finances,&rdquo; shares Jane Barratt, Chief Advocacy Officer and Head of Global Public Policy, MX.&nbsp;
</blockquote>
Financial institutions and fintechs have an opportunity to play a bigger role in helping consumers achieve financial security by relieving the mental burden with proactive, personalized notifications and intuitive money management tools that can do the heavy lifting for them.&nbsp;
Here&rsquo;s 5 key insights from our latest survey of 1,000+ U.S. consumers that financial providers should consider in meeting this opportunity head on:
<h2>1. Consumers still turn to manual bill pay methods over automation. </h2>
When asked what most closely aligns with how they pay bills on a monthly basis, 40% of all respondents say they prefer to manually view and pay each bill every month to keep track of their finances. An additional 24% say they manually pay each bill to make sure they have the funds available.&nbsp;
<h2>2. Incentives could drive consumers to change their payment habits. </h2>
While the majority of consumers (51%) prefer to keep their payment methods the same for convenience, more than one-third (36%) would consider switching if they received an incentive.
<h2>3. The keys to direct deposit switching are rates and rewards. </h2>
When asked if they have ever switched their direct deposit to a different financial institution, the majority (65%) say no. But, nearly half say the top factors that are most likely to make them switch are the ability to earn higher interest rates (22%) or receive cash back incentive or offer to earn rewards for switching (22%).&nbsp;
<h2>4. Personalization is critical. </h2>
Consumers are looking for a financial provider that knows them and puts that knowledge into practice through personalized insights and tools. Forty-nine percent of consumers expect their financial provider to know them. And, 47% of consumers expect greater levels of personalization in banking than ever before. 
<h2>5. Actionable intelligence drives higher engagement and even more data. </h2>
More than half expect their financial provider to leverage the data they have about them to personalize their experience (53%) and provide them with actionable and clear insights about their finances (56%). What&rsquo;s more &mdash;&nbsp;consumers will share even more data if it results in a better experiences.&nbsp;
To read the full report, please visit: <a href="https://www.mx.com/research/driving-engagement-for-consumers-research/">https://www.mx.com/research/driving-engagement-for-consumers-research/</a>

How to Encourage Consumers to Use New Money Management Approaches 

Financial data intelligence makes financial data actionable to increase engagement, improve results, and drive growth.

Financial data intelligence is the ability to make financial data actionable to increase engagement and loyalty, improve results, and drive growth. 

What is Financial Data Intelligence? Definitions and Benefits

In this post, we will cover: 
<ul>
<li><a href="#what-is-financial-data-intelligence">What is Financial Data Intelligence?</a></li>
<li><a href="#definitions">Financial Data Intelligence vs. Data Analytics, and Other Terms</a></li>
<li><a href="#how-financial-data-intelligence-works">How Financial Data Intelligence Works</a></li>
<li><a href="#benefits-financial-data-intelligence">Benefits of Financial Data Intelligence</a></li>
</ul>
<h2 id="what-is-financial-data-intelligence">What is Financial Data Intelligence?&nbsp;</h2>
Vast amounts of consumer financial data are generated daily by each and every consumer. One transaction alone can mean dozens of data points. As a result, banks, credit unions, fintechs, and other financial providers are sitting on mountains of financial data.&nbsp;
However, the majority of financial institutions and fintechs don&rsquo;t have a good way to unlock the value of this data to drive better business and consumer outcomes. But, data is just data. You need to <a href="https://www.mx.com/guides/2024-digital-banking-playbook/">create an actionable step</a> for your customers.
That&rsquo;s where financial data intelligence comes into the picture. Financial data intelligence is the ability to make financial data actionable to increase engagement and loyalty, improve results, and drive growth.&nbsp;
<h2 id="definitions">Financial Data Intelligence vs. Data Analytics, and Other Terms</h2>
Financial data intelligence is a term specific to how organizations leverage consumer financial data. It is a subset of a broader term &mdash;&nbsp;data intelligence, which is used across many industries such as retail, healthcare, manufacturing, etc., when talking about deriving actionable insights from data. Data intelligence is the tools and methods that organizations use to better understand the data they collect, store, and utilize to improve their products and/or services.&nbsp;
Other organizations may refer to similar terms including data analytics and business intelligence when referring to how they analyze data. However, we think data analytics misses a key component that is present with data intelligence: making it actionable. Analysis without action is simply interesting information. To create true data intelligence, the data and insights must be actionable.&nbsp;
<blockquote>
Analysis without action is simply interesting information. To create true data intelligence, the data and insights must be actionable.&nbsp;
</blockquote>
Another similar term that is worth mentioning is &ldquo;<a href="https://en.wikipedia.org/wiki/Financial_intelligence">financial intelligence</a>.&rdquo; What is financial intelligence? It&rsquo;s defined as gathering information about the &ldquo;financial affairs of entities of interest, to understand their nature and capabilities, and predict their intentions.&rdquo; It&rsquo;s often used in conjunction with an investigation of a specific entity by law enforcement or related agencies. In fact, the United States government has an <a href="https://en.wikipedia.org/wiki/Under_Secretary_of_the_Treasury_for_Terrorism_and_Financial_Intelligence">under secretary position within the Department of the Treasury</a> dedicated to terrorism and financial intelligence.&nbsp;
<h2 id="how-financial-data-intelligence-works">How Financial Data Intelligence Works</h2>
It starts with being able to effectively <a href="https://www.mx.com/products/connectivity/">connect</a> to, understand, and act on consumer financial data.&nbsp;
<h3>Connecting the Dots</h3>
Today&rsquo;s <a href="https://www.mx.com/research/what-consumers-want-from-financial-providers/">average consumer has 3 to 5 financial accounts</a> with various banks, credit unions, and other financial providers. It&rsquo;s messy for consumers to manage and makes it increasingly difficult for financial providers to get a full picture of consumers&rsquo; financial lives.&nbsp;
This disjointed <a href="https://www.mx.com/money-experience/">money experience</a> creates blindspots for organizations when it comes to delivering the right products and services to meet consumer needs, targeting consumers with the right messages, and accurately predicting and preventing churn.&nbsp;
By enabling consumers to easily connect and view all of their finances in one place with <a href="https://www.mx.com/products/account-aggregation/">financial account aggregation</a>, it not only helps consumers better manage their money but gives financial providers more visibility into consumer financial data.&nbsp;
<h3>Understanding the Data</h3>
As we stated earlier, data is just data. It requires context, cleansing, and categorization to ensure both consumers and organizations can leverage data to its fullest extent.&nbsp;
With cleansing and categorization, raw data becomes clear transaction information. And, with added context, transaction data becomes more insightful and actionable for consumers. <a href="https://www.mx.com/products/data/">Enhanced data</a> also makes it easier to unlock the value of financial data and enable better decisions, improve efficiency, and uncover new opportunities.
<h3>Creating Actionable Insights and Personalized Experiences</h3>
The last piece of the puzzle is how you leverage the data to <a href="https://www.mx.com/blog/personal-data-in-exchange-for-personalized-experiences/">create personalized experiences</a>, deliver proactive insights, and drive engagement and growth.&nbsp;
Financial data intelligence combines connected and enhanced data with the power of artificial intelligence, machine learning, and advanced analytics. It helps financial service providers to increase engagement with consumers by delivering insights and recommended actions to help them on their financial journey and surface new insights and areas of opportunity to drive growth.&nbsp;&nbsp;
<div style="padding: 56.25% 0 0 0; position: relative;"><iframe style="position: absolute; top: 0; left: 0; width: 100%; height: 100%;" title="Financial Data Intelligence Promo - Sachi - March 2024" src="https://player.vimeo.com/video/928032801?h=4c12f88c79&amp;badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479" frameborder="0"></iframe></div>
<h3>The Benefits of Financial Data Intelligence&nbsp;</h3>
Simply put: with actionable financial data intelligence, financial providers can increase engagement and loyalty, acquire more customers, and identify growth opportunities. And, financial providers can help their customers better understand and manage their finances.&nbsp;
Here&rsquo;s a look at our top 10 benefits of financial data intelligence:&nbsp;
<ol>
<li style="font-weight: 400;" aria-level="1">Acquire and retain more customers with <a href="https://www.mx.com/products/connectivity/">reliable connectivity solutions</a>, <a href="https://www.mx.com/products/data/">enhanced data</a>, and <a href="https://www.mx.com/products/experience/">personalized digital experiences</a>.</li>
<li style="font-weight: 400;" aria-level="1">Increase consumer engagement and adoption by delivering <a href="https://www.mx.com/products/financial-insights/">personalized financial insights</a> and recommended actions.</li>
<li style="font-weight: 400;" aria-level="1">Surface areas of opportunity to increase deposits, expand <a href="https://www.mx.com/use-cases/account-opening/">account openings</a>, and engage with your customers.</li>
<li style="font-weight: 400;" aria-level="1">Improve financial health by enabling consumers to better understand and manage their finances with <a href="https://www.mx.com/products/personal-financial-management/">Personal Financial Management (PFM) tools</a>.</li>
<li style="font-weight: 400;" aria-level="1">Deliver the right message, to the right person, at the right time to<a href="https://www.mx.com/products/customer-analytics/"> improve ROI and marketing campaign effectiveness</a>.</li>
<li style="font-weight: 400;" aria-level="1">Predict and prevent churn with a better understanding of trends and behaviors</li>
<li style="font-weight: 400;" aria-level="1">Increase customer satisfaction and loyalty with <a href="https://www.mx.com/products/experience/">personalized experiences</a> that meet consumers where they are.</li>
<li style="font-weight: 400;" aria-level="1">Optimize business processes by breaking down data silos and making it easier to unlock the value of financial data.</li>
<li style="font-weight: 400;" aria-level="1"><a href="https://www.mx.com/case-studies/becu/call-center/">Reduce call center volume</a> and customer frustration by making data easily understandable and actionable.</li>
<li style="font-weight: 400;" aria-level="1">Accelerate innovation and product enhancements based on actionable data about product adoption, usage, and behaviors.</li>
</ol>

What is Financial Data Intelligence? How it Works, Key Definitions & Benefits

Content Writer

Cornerstone Advisors predicted what is coming in the banking industry based on a survey of banking and credit union executives. 

Financial providers will need to earn consumers’ trust in 2025 to avoid creating a class of “under-data’ed” consumers.

Gaining Trust Can Help Consumers From Becoming “Under-Data’ed”

The latest edition of Cornerstone Advisors&rsquo; <a href="https://www.crnrstone.com/gritty-insights/research/whats-going-on-in-banking-2025">What&rsquo;s Going On in Banking</a> study leads with an overwhelming sense of optimism, highlighting that &ldquo;optimism among bankers for the coming year is as high as it&rsquo;s been in a decade.&ldquo;&nbsp;
Among the 308 C-suite and senior leaders from financial institutions, 83% are &ldquo;very&rdquo; or &ldquo;somewhat&rdquo; optimistic about 2025 &mdash; with just one survey respondent that said they were &ldquo;very&rdquo; pessimistic. This is a significant increase over last year (60%). But, it is not all clear skies. The survey results also highlight a fair share of concerns.&nbsp;
So what is going on in banking this year? And, how can financial providers set themselves up for success? Here are 3 key takeaways that stuck out to us.
<ol>
<li>
<h3> Open Banking Opinions Vary</h3>
</li>
</ol>
According to the study, financial institutions are divided about the impact of the Consumer Financial Protection Bureau&rsquo;s <a href="https://www.mx.com/blog/cfpb-dodd-frank-section-1033/">Section 1033 rule</a>. Forty-two percent of executives think the rule will benefit consumers but only half of these respondents (21%) think it will also benefit financial institutions. The rest of the respondents? Twenty-seven percent aren&rsquo;t sure what the impact will be &mdash; and 32% are skeptical, thinking it won&rsquo;t benefit consumers or financial institutions.&nbsp;
Cornerstone&rsquo;s report emphasizes concerns with Open Banking, stating it &ldquo;places an excessive burden on individuals to manage complex data-related responsibilities.&rdquo; Yes, the rule does put consumers in the driver seat. But, MX&rsquo;s <a href="https://www.mx.com/research/financial-apps-fall-short/">latest consumer research</a> found many consumers say they want to be in control.&nbsp;
Our survey of more than 1,000 consumers shows that 80% said it was important for them to know and control who has access to their financial data. And, according to the Financial Data Exchange, more than <a href="https://www.financialdataexchange.org/FDX/FDX/News/Announcements/FDX%20Hits%2094%20Million%20Accounts,%20CFPB%20Publishes%20FDX's%20Standard-Setting%20Application.aspx#:~:text=Standard%2DSetting%20Application-,FDX%20Hits%2094%20Million%20Accounts%2C%20CFPB%20Publishes%20FDX's%20Standard%2DSetting,our%20Fall%20Adoption%20Metrics%20Survey.">94 million consumer accounts</a> are now actively utilizing its FDX API for secure open finance data sharing.&nbsp;
While financial institutions may be unsure about the impact of Section 1033, the impact of Open Banking is already apparent. The future of <a href="https://www.mx.com/blog/what-cfpb-turbulence-means-for-open-banking/">Section 1033 may be in the air</a> under the current administration but that doesn&rsquo;t mean Open Banking should slow down.&nbsp;
<ol start="2">
<li>
<h3> Top Concerns Focus on Growth&nbsp;</h3>
</li>
</ol>
Last year, the top concern for both banks and credit unions was the cost of funds. Now, deposits (52% of bankers said &ldquo;deposit gathering&rdquo; is their top concern) and new member growth (62% of credit union executives) top the list. Increased competition from fintechs, rising rates, and shifting consumer behavior are contributing to higher customer attrition and making it harder than ever to grow deposits.&nbsp;
To attract and retain deposits, banks and credit unions are prioritizing a number of strategies. When asked what is important in 2025, respondents place these strategies at the top of their list:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Targeted pricing strategies to retain specific clients (73% banks; 56% credit unions)</li>
<li style="font-weight: 400;" aria-level="1">Revised deposit product tied to pricing (45% banks; 48% credit unions)</li>
<li style="font-weight: 400;" aria-level="1">New deposit products tied to pricing (37% banks; 45% credit unions)</li>
<li style="font-weight: 400;" aria-level="1">Create or enhance reward programs (26% banks; 46% credit unions)</li>
</ul>
There is no easy button for growing deposits or new members. And, the results show that banks and credit unions are looking across a number of tactics to incentivize and retain customers and members to take action.&nbsp;
<ol start="3">
<li>
<h3> Data Remains Key but Data Strategies Fall Short&nbsp;</h3>
</li>
</ol>
The report calls out that data will be critical to Gen AI initiatives, pointing back to statements in last year&rsquo;s report about the need to evaluate the &ldquo;quality, availability, and accessibility of specific types of data.&rdquo; In this year&rsquo;s report, Cornerstone asked respondents to evaluate the quality of their data strategy, governance, and use of data. Simply put: we have work to do.&nbsp;
Only 6% of banks and 11% of credit unions assessed their data strategy as very effective, while how effectively they are using data is even lower. Nearly half of bank leaders said their use of data to enhance the customer experience (48%) and operational efficiency (49%) is not effective. Among credit unions, 34% say their use of data to enhance the member experience is not effective and 42% say using data to enhance operational efficiency is not effective.&nbsp;&nbsp;
<a href="https://www.mx.com/whitepapers/2025-predictions/">Data will be the central piece</a> in every financial provider&rsquo;s strategy in 2025. And, those who get it right will be light years ahead of the competition when it comes to meeting customer needs and growing deposits.&nbsp;
These are just a few highlights from this year&rsquo;s 62-page What&rsquo;s Going On In Banking report from Cornerstone Advisors and Ron Shevlin. For a look at what MX believes 2025 will bring, be sure to also check out our recent <a href="https://www.mx.com/webinars/top-trends-grow-desposits-engagement-2025/">2025 Predictions Webinar</a>.

What’s Going On In Banking? Key Takeaways

Our Data Enhancement solution just got its own wave of enhancements to deliver even more value for you and your customers. 

Request a demo today to see how MX's Data Enhancement can deliver more value for you and your customers. 

New product updates to MX’s Data Enhancement deliver more insights and value to customers.

Data Enhancement Product Updates: Geolocation, Merchant Coverage, and More

Raw transaction data is often messy, vague, or convoluted &mdash;&nbsp;causing more confusion and concern for customers and leaving you to make business decisions based on incomplete or inaccurate information. That&rsquo;s why <a href="https://www.mx.com/blog/what-is-data-enhancement/">data enhancement</a> should be a critical part of any financial institution or fintech&rsquo;s data strategy.&nbsp;
MX&rsquo;s Data Enhancement leverages machine learning, multi-stage data cleansing, and additional rule-based logic to transform raw transaction data. We <a href="https://www.mx.com/blog/what-is-data-enhancement/">take data from messy and confusing to enriched</a>, easy-to-understand datasets. With Data Enhancement, you can open up new opportunities to improve experiences, deliver on customer needs, and drive growth.&nbsp;
And, our <a href="https://www.mx.com/products/data-enhancement/">Data Enhancement</a> solution just got its own wave of enhancements to deliver even more value for you and your customers. Over the last few months, MX has rolled out a number of improvements to expand the features, functionality, and experiences available.&nbsp;
These upgrades include machine learning for merchant identification, geolocation, and new repeating transactions:&nbsp;
<h2>Machine Learning: Geolocation</h2>
Increasing our geolocation coverage is one of the most foundational improvements made to Data Enhancement this year. With geolocation, financial institutions can access geographical insights into where their transactions occur &mdash; giving them new ways to segment audiences and deliver the right offers and messages to the right customers.&nbsp;
Although geolocation has been an aspect of Data Enhancement for years, machine learning has powered a dramatic increase in the number of transactions with physical location information. Being able to distinguish between in-person and online transactions helps drive more accurate spending analysis, fraud detection, and personalized financial insights.&nbsp;
<h2>Machine Learning: Merchant Coverage</h2>
Data Enhancement has delivered a dramatic uptick in merchant details coverage with artificial intelligence and machine learning. We now have access to more than 633,000 total merchants, with thousands more being added each day. This increased merchant coverage means nearly every transaction is clearly labeled and categorized for consumers, ensuring they understand every transaction in their history. The addition of new merchants also increases the geolocation coverage.
<h2>Repeating Transactions API</h2>
Financial institutions can now gain better visibility into consumers&rsquo; repeating transactions so they can help them plan ahead for expenses like recurring bills and subscriptions, as well income deposits. When combined with <a href="https://www.mx.com/products/personal-financial-management/">MX&rsquo;s Personal Financial Management</a> solution (coming later this year), consumers will also be able to access unparalleled insights into their transactions and finances as a whole. This is just scratching the surface. At MX, we are already thinking about new models to gain better (and more accurate) insights into other recurring transaction types.&nbsp;
These are just a few of the latest enhancements to Data Enhancement to deliver even better outcomes for financial providers and consumers. Data Enhancement can level up the customer experience and drive retention with more simplified, centralized, and transparent transaction management.

Data Enhancement Product Updates: Maximizing Geolocation and Merchant Coverage

Senior Directory, Advocacy

We believe that consumer-permissioned data access is the right path forward despite uncertainty about the CFPB’s future. 

Open banking is the right path forward despite uncertainty about the CFPB’s future.

Turbulence at the CFPB — What It Means for Open Banking

Like many in the financial services industry, we have been following the rapid changes at the Consumer Financial Protection Bureau (CFPB). To recap:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">On Jan. 31, former CFPB Director Rohit Chopra was dismissed from his post and newly appointed Treasury Secretary Scott Bessent briefly took the reins as Acting Director.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">On Friday, Feb. 7, Russell Vought became Acting Director of the CFPB.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Over the weekend, CFPB staff received a series of emails instructing them to cease performing all supervision and examination work tasks.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">In addition, the CFPB staff were informed that the CFPB&rsquo;s headquarters is closed this week (Feb. 10-14) and all employees and contractors in Washington should &ldquo;work remotely unless instructed otherwise from our Acting Director or his designee.&rdquo;</li>
</ul>
Understandably, this is creating an environment of confusion and uncertainty for participants in the financial data ecosystem. As long-time advocates of Open Banking, MX is focused on how these changes could affect the future of regulations related to Open Banking such as <a href="https://www.mx.com/blog/cfpb-dodd-frank-section-1033/">Section 1033 of the Dodd-Frank Act</a>.&nbsp;
Section 1033 became effective on Jan. 17, 2025. As a result of this effective date, it presently still stands, and its tiered compliance deadlines remain in place, with the first deadline in April 2026.&nbsp;
However, with this rapid pace of change under the current administration, anything could happen in the coming weeks and months. We will continue to keep ourselves updated on these shifts and share insights with our clients and the broader ecosystem. And, our focus on ensuring our products and services comply with Section 1033 will continue.&nbsp;
For more than a decade, MX has been a leader in Open Banking and consumer-permissioned data sharing. Our <a href="https://www.mx.com/products/data-access/">Data Access</a> solution combines an API platform that meets FDX standards with built-in analytics to create actionable intelligence.&nbsp;
But, we aren&rsquo;t champions of Open Banking because of regulatory compliance requirements. We truly believe that Open Banking creates a competitive advantage for financial institutions, an engine of innovation and growth for fintechs, and helps enable financial strength for consumers.&nbsp;
<h2>A Competitive Advantage for Financial Institutions</h2>
Consumers want personalized products, services, and offers across mobile and digital experiences. However, most financial institutions are missing key details on where consumers share data &mdash; details they can gain from Open Banking. What&rsquo;s more, <a href="https://www.mx.com/research/financial-apps-fall-short/">consumers are willing to share even more data</a> if they know it will result in a better experience.&nbsp;
<h2>An Engine for Fintech Innovation and Growth&nbsp;</h2>
For fintechs, interoperable open banking platforms and connections can deliver significant benefits to drive innovation and growth forward. It can help increase market reach, lead to faster integrations and reduce time to market for product launches, generate partnership opportunities, improve scalability, and lead to cost savings.&nbsp;
<h2>An Enabler of Financial Strength for Consumers</h2>
Open Banking puts consumers in control of their data, as well as creates a more secure ecosystem by eliminating the need to share credentials to access data or link accounts. And, with the freedom and flexibility that Open Finance enables, consumers have more choice and control over the data they share and how they engage with their finances. And, they gain unparalleled access to a broader range of products and services.&nbsp;
Open Banking (and Open Finance) helps put the right financial solutions in the hands of the right consumers at the right time while also fueling higher deposits and income for financial providers so they can pour more energy into innovation that moves the industry forward. Regardless of regulatory churn, this doesn&rsquo;t change. Open Banking is here and already well adopted across the globe.
We believe that consumer-permissioned data access is the right path forward despite uncertainty about the CFPB&rsquo;s future. We are committed to supporting our clients through this time of dynamic shift in technology, consumer expectations, and politics.&nbsp;

The Promise of Open Banking Persists in the Face of Turbulence at CFPB

To succeed with AI, financial providers need to prioritize getting their data strategy right first.

Successful AI Use Cases Begin with a Strong Data Strategy

&ldquo;What we&rsquo;re seeing around AI&hellip; it&rsquo;s still a large and very expensive, maybe even the largest and most expensive science project that we&rsquo;ve ever endeavored on in humanity. There&rsquo;s still a lot to be proven,&rdquo; <a href="https://www.mx.com/webinars/top-trends-grow-desposits-engagement-2025/">said James Dotter</a>, MX&rsquo;s Chief Business Officer.&nbsp;
There is a lot of opportunity and investments &mdash;&nbsp;and hope &mdash; being put into artificial intelligence. <a href="https://www.cio.com/article/3601606/cios-to-spend-ambitiously-on-ai-in-2025-and-beyond.html#:~:text=Research%20firm%20IDC%20projects%20worldwide,to%20%24749%20billion%20by%202028.">IDC estimates</a> worldwide spending on technology to support AI strategies will reach $337 billion in 2025 &mdash; and more than double to $749 billion by 2028.
But can AI live up to these expectations and investments? Or is it just an expensive science project? <a href="https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai">McKinsey&rsquo;s latest global survey on AI</a> shows that while adoption has increased significantly across organizations and industries, the breadth of adoption remains low and many organizations are still in the experimental phase.&nbsp;
While AI can help create personalized customer experiences,streamline inefficient processes, and uncover new growth opportunities, it&rsquo;s <a href="https://www.mx.com/guides/risks-rewards-ai/">only as good as the data that fuels it</a>. To succeed with AI, financial providers need to prioritize getting their data strategy right first.
<h2>Starting off with the Right Data</h2>
Too often, AI users find themselves hung up on the outcomes of AI and neglect the starting point. At <a href="https://www.mx.com/summit/2024/know-your-customers/">Money Experience Summit 2024</a>, Dr. Leda Glyptis said, &ldquo;I care about the organizational hang ups that will always forever make the job an uphill struggle no matter how intelligent you get about AI.&rdquo;
Using AI for the sake of AI will not solve operational efficiency problems until teams can assess their starting point. That starting point is data.
Here are two areas where financial institutions and fintechs can focus first to ensure quality data to fuel their AI use cases:&nbsp;
<h3>1. Break Down Data Siloes</h3>
The average consumer has at least 5 or more financial accounts with various banks, credit unions, and other financial providers. This disjointed money experience leaves consumers &mdash; and the financial providers who serve them &mdash; with only part of the picture.&nbsp;
Without <a href="https://www.mx.com/guides/why-connectivity-is-critical/">connecting those various accounts and sources of financial data together</a>, organizations face significant blindspots when it comes to delivering the right products and services to meet consumer needs, targeting consumers with the right messages, and accurately predicting and preventing churn.&nbsp;
This means AI systems will face the same blindspots, leading to inaccurate data and even the potential for AI hallucinations. In fact, popular AI models like ChatGPT and Google&rsquo;s PaLM <a href="https://fortune.com/2024/01/17/ai-hallucination-aporia-survey/">make up facts anywhere from 3% to 27% of the time</a>, depending on the tool. And, <a href="https://www.fastcompany.com/91016960/ai-skills-potential-employers">89% of machine learning (ML) engineers</a> who work with generative AI say their models show signs of hallucination.&nbsp;
<h3>2. Transform Raw Data into Clear Insights</h3>
Poor data quality can be costly for businesses. <a href="https://www.fivetran.com/blog/new-ai-survey-poor-data-quality-leads-to-406-million-in-losses">Vanson Bourne and Fivetran</a> found that models trained on inaccurate, incomplete, and low-quality data caused misinformed business decisions that impacted an organization's global annual revenue by 6%, or $406 million on average.
In the financial industry, the stakes are even higher &mdash; unclear, raw data doesn&rsquo;t just impact businesses. It can negatively affect customers. For AI, it means garbage in, garbage out.&nbsp;
Raw transaction data is messy and confusing &mdash; so outputs from AI tools based on this data will likely also be messy and confusing. No one can take action based on random strings of characters. Enter <a href="https://www.mx.com/blog/what-is-data-enhancement/">data enhancement</a>, which transforms raw, chaotic transaction data into enriched, structured, and actionable insights.
MX&rsquo;s Chief Advocacy Officer Jane Barratt said, &ldquo;You can&rsquo;t jump over a lack of data strategy and go straight to AI.&rdquo; Businesses that want to excel in their AI adoption and stand out from the competition must rethink their data strategy &mdash; from data collection through implementation.&nbsp;
Want to read more about our take on AI in 2025 and other top trends? <a href="https://www.mx.com/whitepapers/2025-predictions/">Access our 2025 predictions report</a>.&nbsp;

Artificial Intelligence: How to Move from Science Project to Value Add for Banks 

Senior Director, Advocacy

Fraud prevention is a constantly evolving challenge that requires ongoing collaboration and innovation.

Fraud prevention is a constantly evolving challenge that requires collaboration and innovation to build a safer, more secure financial ecosystem for everyone.

Fighting Fraud with Open Finance, Data Literacy, and More

Financial fraud is a huge problem in this country, and it&rsquo;s not going away any time soon. In fact, its continued rise is one of our <a href="https://www.mx.com/webinars/top-trends-grow-desposits-engagement-2025/">key predictions for 2025</a>. Fraudsters are often the early adopters of every advancement in technology &mdash; so financial institutions and fintech alike need to keep investing to protect their customers from fraud. And, it&rsquo;s just because it&rsquo;s the right thing to do. It is essential for customer retention.&nbsp;
<h2>Fraud is Now Part of American Daily Life</h2>
The statistics are staggering, and getting worse each year. According to the Federal Trade Commission (FTC), consumers reported losing more than <a href="https://www.ftc.gov/news-events/news/press-releases/2024/02/nationwide-fraud-losses-top-10-billion-2023-ftc-steps-efforts-protect-public">$10 billion to fraud in 2023</a>. This was a 14% increase from 2022.
When I was in the process of purchasing a house in Utah, I almost became part of this statistic. Fraudsters hacked into the email system of the title company we worked with, and spoofed its email with one letter changed in the email address. They sent us wire transfer instructions including the exact, correct amount of money for our down payment. They even had links in the email to a fake version of the title company&rsquo;s website, with fake phone numbers and emails to contact if we had questions.&nbsp;
This fraud attempt was so convincing that we hit send and almost lost an unthinkable amount of money to the scammers. Thankfully, our friends at USAA had systems in place to detect abnormalities in the transaction, and put a hold on the transaction until we called them. Let me tell you &ndash; nothing inspires institutional loyalty more than an experience like this with a bank. We&rsquo;ll be USAA customers for life.&nbsp;&nbsp;
Unfortunately, many Americans aren&rsquo;t as lucky. A recent study revealed that <a href="https://www.ipx1031.com/fraud-and-identity-theft-in-america/">30% of Americans have been scammed</a> in the last 12 months, and 40% receive suspicious emails, messages, or phone calls every day.&nbsp;
While the increased digitization of the financial world makes our lives exponentially easier every year, it also leads to an increase in certain types of fraud. Technology makes it challenging for even the most vigilant consumers and financial institutions to detect and prevent fraud.&nbsp;
<h2>Technology is the Problem&hellip;</h2>
<h3>Traditional Technologies</h3>
Phone calls, text messages, and emails are a key access point to consumers that scammers use to illegally gain access to financial data through impersonation, fake email links (phishing), and fraudulent requests for personal information &ndash; often tricking individuals into revealing sensitive details such as passwords, account numbers, or Social Security numbers. The ubiquity of these technologies makes them attractive to scammers, who can make hundreds of attempts per day, and only need one hit with an unsuspecting consumer to succeed.&nbsp;
<h3>Generative Artificial Intelligence</h3>
Fraudsters now have access to powerful tools like generative AI to make deepfake videos, fictitious voices and fake documents easily and cheaply. A bad actor can mock up a fake image of a government-issued ID in seconds, making traditional methods of identity verification less secure. Generative AI can be used to craft more sophisticated phishing emails, malware, and social engineering attacks, targeting financial institutions and their customers with highly personalized and believable content.&nbsp;
<h3>Quantum Computing</h3>
Currently, bank transactions are protected by cryptographic algorithms, better known as encryption technology, which currently ensures the private, safe and secure transfer of your financial data. But according to experts, quantum computers will soon be able to break traditional encryption algorithms &mdash; threatening standard security protocols that banks and fintech currently rely on to keep their customers safe. That would also upend security in the cryptocurrency space, requiring Bitcoin and other popular cryptocurrencies to update their protocols to use post-quantum encryption.&nbsp;
<h2>&hellip; And Technology (and Awareness!) Is the Solution</h2>
So, what chance do banks and fintechs have against these rapidly evolving technologies and emboldened scammers? There is a lot that financial institutions and fintechs can do to protect themselves and their customers from fraudulent transactions.
<h3>Continually Educate Your Customers</h3>
One of the most important things you can do to support your customers in the fight against fraud is to educate them about it. There are a number of things you can do to develop a robust fraud prevention education campaign:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Engage in proactive customer communications that share examples of recent scams</li>
<li style="font-weight: 400;" aria-level="1">Conduct fraud awareness campaigns through email and social media, as well as provider educational workshops and seminars&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Educate your customers on tools they can use to protect themselves like multi-factor authentication and spending alerts</li>
<li style="font-weight: 400;" aria-level="1">Educate your customers on common scams and typical entry points (phishing, romance scams, card skimming)</li>
<li style="font-weight: 400;" aria-level="1">Partner with government agencies and advocacy groups to expand the reach of your anti-fraud resources&nbsp;</li>
</ul>
<h3>Modernize Your Systems</h3>
Banks must take a proactive, forward-looking approach to counter the growing threats posed by generative AI, advanced email and phone scams, and the emerging risks of quantum computing. These technologies threaten many of the traditional methods of security that we&rsquo;ve come to rely upon as a society &mdash; and all businesses, especially financial institutions, will need to step up their game to meet the new reality.
The adoption of <a href="https://www.mx.com/blog/what-is-open-banking/">open banking</a> APIs can help <a href="https://www.mx.com/use-cases/fraud-risk-management/">mitigate fraud</a>. Secure APIs for financial data sharing provide a <a href="https://www.mx.com/whitepapers/how-open-finance-improves-security/">significant opportunity</a> to alleviate security concerns and improve the experience for the consumer by offering:&nbsp;&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Tokenized data connections that take consumer credentials out of the ecosystem where they can land in the wrong hands&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Reliable access to accurate financial data that is permissioned by the consumer</li>
<li style="font-weight: 400;" aria-level="1">Compliance with new regulations that establish industry standards, help protect consumers and ensure consumers have control over their data</li>
</ul>
Businesses can also leverage AI and machine learning to enhance fraud detection by establishing behavioral baselines for customers, flagging anomalies like unusual spending patterns or login locations.&nbsp;
Another useful tool is to employ risk-based authentication that can dynamically adjust security protocols based on the context of a transaction (e.g., applying stricter controls for high-value transactions or risky geolocations).
<h3>Don&rsquo;t Go It Alone</h3>
Meeting the future needs of fraud detection and prevention will take collaboration across the financial data ecosystem to keep consumers&rsquo; data safe. MX provides support in building secure APIs connections, and end solutions like <a href="https://www.mx.com/products/instant-account-verifications/">account verification</a>, behavior analytics, and proactive alerts all work in concert to keep a customer&rsquo;s data safe. Innovative companies like Sardine.ai are providing AI technology to detect fraud are joining the market to help fintech and banks use AI to detect and prevent fraud in cutting edge ways.&nbsp;
And, public-private partnerships that drive awareness and collaborative execution to fight fraud are gaining traction around the country, including here in Utah. At MX, we&rsquo;reworking with the Utah Bankers Association to participate in the newly-formed Utah Fraud Prevention Coalition because we know how important this issue is for financial institutions and consumers alike. Partnership across the industry is a key ingredient to effectively fight against fraud and scams.&nbsp;
<h2>Policy Recommendations</h2>
There are many ways that the U.S. Congress and federal agencies can help combat fraud and scams. Some key areas of focus should be:&nbsp;
<h3>Consumer Control Over Data Sharing</h3>
Americans deserve clarification and enforcement of their data rights as consumers. The final <a href="https://www.mx.com/blog/cfpb-dodd-frank-section-1033/">Section 1033</a> rule is a great starting point for this, but consumers deserve clarity across all their online data. Federal privacy legislation that codifies a consumer&rsquo;s data rights should be a priority for this session of Congress. Strong privacy protections would not only enhance trust in financial institutions but also empower consumers to take charge of their financial security in an increasingly interconnected world.
<h3>Account Verification Requirements</h3>
Secure account verification is such a useful tool in verifying that money is going where it&rsquo;s supposed to go. Implementing robust verification measures reduces the risk of fraud, ensures accountability, and builds confidence in financial transactions. By mandating secure account verification processes for large transfers, financial institutions can prevent fraudsters from exploiting system vulnerabilities and protect consumers from devastating financial losses.
<h3>Financial and Data Literacy&nbsp;</h3>
The next generation of Americans would benefit enormously from strong financial literacy programs in schools to educate students about how to manage their money effectively and avoid financial scams. We support legislation like H.R.2943, the Student Empowerment and Financial Literacy Act, which was introduced in the last Congress to establish a competitive grant program to increase financial literacy instruction in elementary schools and secondary schools. But, we also believe that we should consider data literacy the next educational frontier for consumers.&nbsp;
This will set up the next generation of Americans to understand how to manage their digital data AND make informed financial decisions to build wealth and safeguard their financial futures.
Fraud prevention is a constantly evolving challenge, but with collaboration, education, and innovation, financial institutions, policymakers, and consumers can work together to build a safer, more secure financial ecosystem for everyone. We look forward to playing our part.

Fraud (and Fighting It) is the Future

In 2025, consumers will consider which finance-related apps add value and consolidate or move away from those that don’t. 

Consumers will begin consolidating finance-related apps they use in 2025 — creating opportunities for financial providers to win loyalty and engagement. 

Consumers Move to Consolidate Number of Financial Apps in 2025

&ldquo;People do not want to bank. They want to buy, they want to be with their families, they want to have things they want to take care of their families and their children. They don&rsquo;t want to bank.&rdquo; &mdash;&nbsp;Lea Sims, Digital Product Leader, at <a href="https://www.mx.com/summit/2024/engagement-and-loyalty/">MXS 2024</a>
This mindset is now translating into which finance-related apps and tools that consumers use to track and manage their finances. Most consumers have 3+ finance-related apps &mdash; and some have upwards of 10 or more. But do consumers like having this many apps? Probably not. <a href="https://media.chase.com/news/consumers-are-using-banking-apps-for-more-than-transactions-new-chase-study-finds">Chase&rsquo;s Digital Banking Attitudes Survey</a> found 86% of consumers said they prefer to use one app for all their banking.&nbsp;
In 2025, we predict consumers will start to truly consider which finance-related apps add value and consolidate or move away from those that don&rsquo;t. And, MX&rsquo;s consumer research already shows this consolidation in action. In less than six months, the percentage of U.S. consumers who have 3 or more finance-related mobile apps on their phone has dropped 7 points to just 40%. (Learn more in a few weeks when our new research drops!)&nbsp;
As consumers move towards a more streamlined mobile finance experience, how can financial providers ensure their app makes the cut in 2025? Here are 3 considerations for financial providers to deliver on consumer needs for more guided financial tools that meet them where they are &mdash; i.e., the app they use most often:&nbsp;
<ol>
<li> Personalize the Experience</li>
</ol>
Consumers want their financial providers to know them. Period. Generic, impersonal experiences and advice won&rsquo;t fit the bill moving forward. Financial providers need to leverage the data consumers are willingly sharing with them to offer personalized financial experiences, products, and messages.&nbsp;
<ol start="2">
<li> Enable Seamless Connectivity</li>
</ol>
For many consumers, consolidating their apps won&rsquo;t necessarily mean closing financial accounts. Rather, they want to be able to <a href="https://www.mx.com/products/account-aggregation/">link together their external accounts</a> to see and manage all of their finances in a single view. Winning these customers as they look to consolidate their mobile financial experience means having fast, durable, and reliable connectivity options for them.&nbsp;
<ol start="3">
<li> Take the Work Out of It</li>
</ol>
Consumers are already overwhelmed by their finances. Our research shows that <a href="https://www.mx.com/research/how-to-keep-consumers-from-breaking-up-with-banks/">52% of consumers agree</a> thinking about money makes them anxious. So, financial providers should look for ways to make managing money easier, not harder. This can include providing automatic savings options so consumers don&rsquo;t have to remember to save, creating automated insights to help them better understand where money is going, or even just using data enhancement to make it easier for them to understand their transaction data.&nbsp;
To read more about our prediction for app consolidation and other top 2025 predications and trends, <a href="https://www.mx.com/webinars/top-trends-grow-desposits-engagement-2025/">watch our on-demand webinar</a> today.

A Call to Consolidate: Consumers May Simplify Their Mobile Finances Apps

Data enhancement transforms raw, chaotic transaction data into enriched, structured, and actionable insights.

Data enhancement, or data enrichment, is a game-changer. At its core, it transforms raw, chaotic transaction data into enriched, structured, and actionable insights. 

Understanding What is Data Enhancement, Key Benefits, and How it Works

Poor data quality can cost businesses an average of $12.9 million per year, <a href="https://www.gartner.com/smarterwithgartner/how-to-improve-your-data-quality">according to Gartner</a>. In the financial industry, the stakes are even higher &mdash; unclear, raw data doesn&rsquo;t just impact businesses. It can negatively affect customers.&nbsp;
Raw transaction data is messy, confusing, and can cause unintended poor decisions &mdash; for both financial providers and their customers. With raw transaction data, consumers have a hard time understanding their finances, potentially even confusing legitimate transactions for fraud. And, financial providers are unable to analyze this data and take action based on random strings of characters.&nbsp;
That&rsquo;s why <a href="https://www.mx.com/products/data-enhancement/">data enhancement</a>, sometimes called data enrichment, is a game-changer and essential. At its core, data enhancement transforms raw, chaotic transaction data into enriched, structured, and actionable insights.&nbsp;
In this post, we will cover:
<ul>
<li><a href="#what">What is Data Enhancement?</a></li>
<li><a href="#how">How Does Data Enhancement Work?</a></li>
<li><a href="#difference">What is the Difference Between Data Enhancement and Data Enrichment?</a></li>
<li><a href="#metrics">What Metrics Matter for Data Enhancement?</a></li>
<li><a href="#benefits">What Are the Benefits of Data Enhancement?</a></li>
<li><a href="#data-enhancement">MX Data Enhancement</a></li>
</ul>
<h2 id="what">What is Data Enhancement?</h2>
Data enhancement is the process of improving data quality by cleansing existing data and adding additional information or context to the data. For financial services, it involves taking incomprehensible transaction strings &mdash; like "WLMRT0001234 UT" &mdash; and converting them into user-friendly descriptors, such as "Walmart Supercenter, Salt Lake City, UT."&nbsp;
Enhanced data also includes metadata, like merchant logos, geolocation, recurring payment classification, and spending categories. This practice converts billions of raw transaction data from incomprehensible strings of letters and numbers, into clear and easily understandable transactions.
<img src="https://cms.mx.com/assets/0c32264a-c852-49aa-af3d-e4576c190a87?width=980&amp;height=988" alt="Image 20250122 160120" />
<h2 id="how">How Does Data Enhancement Work?</h2>
At MX, we have processed hundreds of billions of transactions &mdash; applying an ever-growing and ever-improving set of rules, machine-learning models, and feedback loops to continuously refine data quality.&nbsp;
Here's how the process works: 
1. Cleansed Data: Raw transaction descriptions often contain noise, such as special characters or incomplete merchant names. MX&rsquo;s cleansing process applies different methodologies to remove unnecessary elements and standardize descriptions. For example, "AMZ*12345 Prime" becomes "Amazon Prime."
What is a consumer supposed to do with that mess? In many cases, all they can do is call customer support and ask about the transaction in question. In fact, our research shows nearly <a href="https://www.mx.com/research/what-consumers-want-from-financial-providers/">1 in 4 consumers</a> see transactions on their account they don&rsquo;t recognize at first glance at least sometimes. And, at least 22% of those consumers immediately call their financial provider for help while 14% just report it as fraud.&nbsp;
Ideally, the transaction feed should be cleansed to its simplest, clearest, and enriched form. That string of characters now becomes a clearly identifiable transaction, like a business name, transaction description, or both. That&rsquo;s it. Something as simple as financial data cleansing will help drive engagement and loyalty &mdash; and minimize unnecessary calls from consumers wondering about those weird transactions.&nbsp;
Offering clean transaction data is the first step to creating a <a href="https://www.mx.com/use-cases/digital-banking/">digital banking experience</a> that will delight consumers.
2. Categorized Data. Categorization organizes transactions into meaningful groups like "groceries," "entertainment," or "utilities." MX has more than 119 granular categories, giving both customers and businesses a clear picture of spending behaviors. In addition to making the transaction data more readable for consumers, transaction categorization takes it a step further by automatically categorizing data based on descriptions, merchants, and other classifiers.&nbsp;
Now, consumers have a clear view into how much they spend on entertainment versus groceries without manually adding together various transactions. This also makes it easier for the financial provider to understand how consumers are spending their money so they can create better products and experiences to meet their needs.&nbsp;
3. Enriched Data with Context. The final step is to add metadata to help better identify when, where, and how consumers are engaging with their finances. For instance, it can include:
<ul>
<li style="font-weight: 400;" aria-level="1">Merchant logos and URLs</li>
<li style="font-weight: 400;" aria-level="1">Transaction geolocation (state, city, zip)</li>
<li style="font-weight: 400;" aria-level="1">Recurring transaction detection (subscriptions, bills, income)</li>
</ul>
With the additional metadata on transaction data, financial providers can uncover&nbsp; insights for their consumers, like opportunities for underwriting (i.e. cashflow) and creating more personalized customer experiences.
<img src="https://cms.mx.com/assets/e01043a0-d460-4e98-9a5b-a84cbcccf05b?width=5000&amp;height=5564" alt="Data Enhancement Infographic Charts" />
<h2 id="difference">What is the Difference Between Data Enhancement and Data Enrichment?</h2>
Data enhancement and data enrichment both involve improving data quality to make it usable for consumers. The main difference is the name that providers assign to their product. In some cases, data enrichment is also defined as adding additional metadata to a dataset while data enhancement is correcting errors and filling in missing information within a dataset.&nbsp;
Deciding between data enrichment tools or data enhancement tools is less important than the decision to optimize your data quality for your consumers.&nbsp;
At MX, we call our solution &ldquo;data enhancement&rdquo; because it includes multiple aspects of enhancing and enriching data, so we use the broadest term in the industry. MX&rsquo;s <a href="https://www.mx.com/products/data-enhancement/">Data Enhancement</a> not only transforms raw transaction data into human-readable descriptions, but adds missing information and additional metadata so that the financial data can be used to enhance customer experiences and analytics.&nbsp;
<h2 id="metrics">What Metrics Matter for Data Enhancement?</h2>
At MX, we measure data quality through two critical metrics: coverage and accuracy, evaluated across multiple variables. But how can you ensure your data enhancement solution meets the highest standards of quality?&nbsp;
The key lies in assessing its performance against these metrics. Accuracy determines how effectively data is cleansed, categorized, and transformed into actionable insights, while coverage evaluates the breadth of transactions processed with high confidence. Together, these metrics define the gold standard for quality in data enhancement.
<ul>
<li style="font-weight: 400;" aria-level="1">Coverage: Coverage evaluates the breadth of transactions processed with high confidence. It assesses how many transactions the data enhancement solution can effectively recognize and categorize. This includes merchant coverage &mdash; accurately identifying and classifying a wide range of merchants &mdash; and geolocation data, ensuring the solution pinpoints where transactions occurred with precision. High coverage ensures a broader, more comprehensive dataset for actionable insights.</li>
<li style="font-weight: 400;" aria-level="1">Accuracy: While strong coverage is important, accuracy truly defines the reliability of a data enhancement solution. At MX, we rigorously evaluate accuracy across multiple dimensions, including merchant name identification, transaction categorization, and cleansing transaction descriptions. Accuracy in data cleansing measures how effectively messy, confusing descriptions are transformed into clean, user-friendly ones. For transaction categorization, it reflects how accurately transactions are assigned to the right categories.</li>
</ul>
<h2 id="benefits">What Are the Benefits of Data Enhancement?</h2>
When transactions are cleansed, categorized, and enriched with contextual insights, the impact extends beyond operational efficiency &mdash; it transforms how financial providers and consumers engage with financial data.
<h3>Empowering Financial Providers</h3>
Data enhancement empowers financial providers to:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Uncover Competitive Insights: Enhanced transaction data enables financial institutions to discover external accounts their customers hold with competitors. This visibility allows providers to analyze customer behavior, identify gaps, and develop strategies to position themselves as the preferred primary account.</li>
<li style="font-weight: 400;" aria-level="1">Make Better Data-Driven Decisions: By analyzing granular spending trends and audience segments, providers gain deeper consumer insights. This strategic intelligence helps refine product offerings, personalize marketing efforts, and prioritize resource allocation to meet customer needs more effectively.</li>
<li style="font-weight: 400;" aria-level="1">Mitigate Fraud and Manage Risk: Enriched data simplifies anomaly detection, allowing financial institutions to identify and mitigate fraud risks quickly. This proactive approach strengthens security and builds trust with customers.</li>
<li style="font-weight: 400;" aria-level="1">Improve Operational Efficiency: Enhanced data reduces confusion in transaction descriptions, lowering call center volumes and improving the overall customer experience. Clear data not only drives satisfaction but also minimizes operational costs.</li>
</ul>
<h3>Empowering Consumers</h3>
For consumers, data enhancement helps to:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Create Financial Clarity and Control: Enriched transaction data provides consumers with an accurate, organized view of their finances. Precise categorization helps them track spending, understand trends, and make informed decisions.</li>
<li style="font-weight: 400;" aria-level="1">Prevent Fraud and Gain Confidence: Simplified and accurate transaction descriptions reduce false alarms, making it easier for consumers to distinguish between legitimate and fraudulent activities.</li>
<li style="font-weight: 400;" aria-level="1">Unlock Hidden Costs: By identifying recurring transactions, such as subscriptions, consumers can pinpoint overlooked expenses and take control of ongoing costs, potentially saving significant amounts each month.</li>
</ul>
For all stakeholders, data enhancement bridges the gap between raw data and actionable insights, enabling providers to foster loyalty, innovate offerings, and reduce risks, while empowering consumers to achieve their financial goals. This holistic approach not only strengthens relationships but also drives sustainable growth and competitive differentiation.
<h2>How To Choose a Data Enhancement Provider</h2>
Building an in-house data enhancement solution demands significant time, resources, and expertise. By partnering with an established provider like MX, businesses can bypass these challenges and gain access to innovative capabilities from the beginning.&nbsp;
When evaluating potential data enrichment tools or data enhancement solutions, it&rsquo;s essential to consider the following criteria to ensure your chosen partner delivers measurable value:
<ul>
<li style="font-weight: 400;" aria-level="1">Security</li>
<li style="font-weight: 400;" aria-level="1">Consumer-Permissioned Data Sharing</li>
<li style="font-weight: 400;" aria-level="1">Coverage and Accuracy Metrics</li>
<li style="font-weight: 400;" aria-level="1">Improvement and Learning</li>
<li style="font-weight: 400;" aria-level="1">Solution Speed</li>
<li style="font-weight: 400;" aria-level="1">Data Volume and Experience</li>
<li style="font-weight: 400;" aria-level="1">Turning Data into Action</li>
</ul>
Want to dive into more detail? View the full guide on <a href="https://www.mx.com/guides/choosing-a-data-enhancement-partner/" target="_blank" rel="noopener">how to choose a data enhancement partner</a>.&nbsp;
<h2 id="data-enhancement">MX Data Enhancement: Unlocking the Power of Financial Data</h2>
MX Data Enhancement transforms raw transaction data into actionable insights, empowering organizations to achieve their goals &mdash; whether it&rsquo;s increasing deposits, boosting loan originations, understanding customer behavior, or delivering financial wellness tools. By cleansing, categorizing, classifying, and enriching data, MX enables businesses and their users to make informed decisions with precision. Key features include:
<ul>
<li style="font-weight: 400;" aria-level="1">Merchant Details: Provide users with detailed merchant information for every transaction, making it easier to organize finances and reducing dispute calls over unrecognized transactions.</li>
<li style="font-weight: 400;" aria-level="1">Geo Location: Add geographical insights to transactions, helping users visualize their financial journeys and deepening your understanding of where and how spending occurs.</li>
<li style="font-weight: 400;" aria-level="1">Cleansed Descriptions: Deliver clear, user-friendly transaction descriptions, eliminating the need for manual interpretation and fostering greater financial clarity.</li>
<li style="font-weight: 400;" aria-level="1">Investments: Seamlessly manage increasing volumes of holdings and transactions data with automated cleansing and classification, ensuring you can adapt to changing market dynamics effortlessly.</li>
</ul>
MX Data Enhancement provides the foundation for building personalized, data-driven financial experiences that delight users and drive business growth.

What is Data Enhancement? What to Look for and Key Benefits

Open Banking is a driving force behind this data-driven personalization and is key to success for financial institutions.

Open banking adoption will speed up as those who implement it now will gain the competitive advantage.

Open Banking Creates a Competitive Advantage for Financial Providers

According to new MX research, 55% of U.S. consumers agreed they would give their financial provider access to more of their data if they knew it would result in a better experience. This is a significant jump from <a href="https://www.mx.com/news/manual-methods-consumer-research/">May 2024</a> &mdash; when 46% agreed with the same statement.&nbsp;
<a href="https://www.mx.com/blog/what-is-open-banking/">Open Banking</a> is a driving force behind this data-driven personalization and is key to success for financial institutions. It enables consumers to seamlessly connect their financial accounts into one view, providing them with a comprehensive look at their finances and arming financial providers with greater insights to deliver the right solutions, tools, and insights to meet their financial needs.
In 2025, we predict Open Banking adoption will speed up as those who lead from the front seek to gain the competitive advantage.
<blockquote>
MX sees 5 key trends shaping success for financial providers in 2025, from AI to fraud to app consolidation to Open Banking. Learn more about our top predictions in our <a href="https://www.mx.com/whitepapers/2025-predictions/">whitepaper</a> or <a href="https://www.mx.com/webinars/top-trends-grow-desposits-engagement-2025/">watch the webinar</a> with expert insights.
</blockquote>
<h2>New Open Banking Regulations</h2>
Today, there is no open banking conversation without first touching on regulations. It was a big year for new industry-wide regulations on consumer data sharing rights in 2024. Both the <a href="https://www.mx.com/blog/1033-is-here-whats-next/">Section 1033 ruling of the Dodd-Frank Act</a> from the Consumer Financial Protection Bureau (CFPB) and Canada's <a href="https://www.mx.com/blog/canada-open-banking/">2024 Fall Economic Statement</a> have unveiled consumer-driven banking frameworks across North America. These new regulations solidified key aspects of Open Banking:
<ul>
<li style="font-weight: 400;" aria-level="1">Consumers own their data and should have control over how it is accessed and shared</li>
<li style="font-weight: 400;" aria-level="1">Privacy should be an integral part of data sharing</li>
<li style="font-weight: 400;" aria-level="1">Financial institutions should have to continue to compete for their consumers&rsquo; deposits by offering the best service possible</li>
</ul>
<h2>Open Banking as a Competitive Differentiator</h2>
Even though Open Banking is not new, many financial institutions are not harnessing its full power. With new regulations top of mind, Open Banking will continue to speed up. Those that fully invest in Open Banking will lead from the front.
A good open banking strategy will help businesses better mold their products and services to meet the needs of consumers and create personalized offers. Financial providers who start now will be able to better deliver on consumer expectations and stand out from the competition.
With compliance deadlines still over a year away and a new presidential administration taking shape in the United States, some institutions may opt to wait to take action. But waiting to see how things play out will stop businesses from capitalizing on the opportunity that Open Banking presents.&nbsp;
Businesses who fail to adopt Open Banking will be at a vulnerable place and will find it more difficult to catch up with those that were early adopters. In today&rsquo;s age of competition, financial institutions that are proactive in their open banking approach will be better positioned to win in 2025.

Gaining a Competitive Advantage with Open Banking

Consumers are asking for help with financial wellness, check out these features FIs can use to help consumers reach their goals. 

Consumers want financial providers to help them reach their financial wellness goals. See five ways you can support customers and drive deposits and engagement. 

Financial Wellness is a Win-Win

Financial wellness can mean different things for different people &mdash;&nbsp;whether it&rsquo;s being able to cover expenses in the present, planning for a successful future, or both.&nbsp;
In our newest <a href="https://www.mx.com/research/financial-apps-fall-short/" target="_self">consumer research</a> of more than 1,000 U.S. consumers, 30% of consumers said it means being able to pay all of their bills each month. Another 29% said it is not having to worry about how to cover unexpected expenses. And, 20% defined financial wellness as being able to save for the future, such as retirement.
However consumers define it, our research shows consumers want help to achieve their financial wellness goals. In recognition of Financial Wellness Month this January, here&rsquo;s a breakdown of some of the top <a href="https://www.mx.com/use-cases/financial-wellness/">financial wellness</a> features financial providers should focus on:&nbsp;
<ol>
<li style="font-weight: 400;" aria-level="1">Bring Finances Together into One View: Managing money is more complicated than ever as consumers have to look across multiple different providers and accounts to see where their money is going. Financial providers can help them create a 360-degree view of their finances using <a href="https://www.mx.com/blog/what-is-account-aggregation/">account aggregation</a> and Open Finance. This makes it easier for consumers to see the full picture of their finances, and it arms financial providers with more insight into customer behaviors so they can deliver better products and services.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Deliver Proactive Reminders: No one wants to miss a payment or savings goal &mdash; and consumers want all the help they can to remember to hit those due dates or goals . Financial providers can help consumers stay on top of their finances by providing proactive reminders to pay bills, make payments, save money, etc. By providing a safety net for consumers with proactive reminders, financial providers can build trust with their customers, which can also translate to long-term loyalty and drive greater deposits.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Enable Seamless Savings: What&rsquo;s better than reminding consumers to save? Doing it for them. At the 2024 Money Experience Summit, Digital Product Leader Lea Sims said, &ldquo;<a href="https://www.mx.com/blog/growing-engagement-and-loyalty/">People do not want to bank</a>. They want to buy, they want to be with their families, they want to have things they want to take care of their families and their children. They don&rsquo;t want to bank.&rdquo; So, make it even easier for consumers to save by offering automatic savings options like rounding up to the nearest dollar on purchases and depositing in savings.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Help Them Get Smart on Spending: While bringing finances into one view is something consumers want, that doesn&rsquo;t mean they will instantly know exactly where their money is going. Consumers also want help <a href="https://www.mx.com/products/personal-financial-management/">categorizing and breaking down their spending</a> so they can see a comprehensive breakdown. This can have a huge impact on helping them achieve their financial wellness goals.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Guide Them on What to Do Next: In addition to understanding their current finances, consumers want help looking ahead. Generic experiences and impersonal financial advice is no longer enough to meet rising customer expectations. In fact, <a href="https://www.mx.com/whitepapers/key-takeaways-forrester-opportunity-snapshot/">54% of U.S. consumers</a> want financial providers to leverage their financial data to personalize their experience. Are you delivering <a href="https://www.mx.com/products/financial-insights/">personalized recommendations</a> on where they can make changes to improve finances?&nbsp;</li>
</ol>
There is no definitive measure for financial wellness, but our research shows that consumers want help in pursuing their version of it. And, by helping consumers reach their goals, financial providers can drive higher engagement, deposits, and lasting relationships with customers.&nbsp;

Financial Wellness is a Win-Win for Financial Providers and Consumers

The speed of adoption and the benefits of Open Banking hinge heavily on one key concept: interoperability. 

Interoperability is the key to unlocking innovation in financial services. Explore the capabilities of MX's Data Access tool with a personalized demo.

Ready to Unlock your Open Finance Strategy?

For Open Banking to reach its full potential, the financial ecosystem must prioritize interoperability in designs, collaborations, and future innovations.

Why Interoperability Matters in Open Banking and Key Strategies

It&rsquo;s no secret that MX is a huge proponent of Open Banking and the benefits it delivers for consumers and the financial services industry as adoption accelerates. The financial service industry&rsquo;s move towards more privacy-first, efficient, and reliable connections through open banking APIs is an undeniable win for consumers, financial institutions, and fintechs.&nbsp;
When the financial data sharing ecosystem kicked off roughly 20 years ago, financial institutions and fintechs relied almost entirely on the practice of <a href="https://www.mx.com/guides/banking-apis-oauth-sceenscraping/">screen scraping</a> to pull data from other financial providers into their own systems. This practice, while useful at the time, is far less secure, less reliable, and less standardized than <a href="https://www.mx.com/guides/bank-apis/">open banking APIs</a>.&nbsp;
Screen scraping also places a much heavier burden on developers and organizations to manage the technical complexity and cost of maintaining tens of thousands of data endpoints. By contrast, APIs streamline the process significantly by standardizing data sharing with one portal that manages data providers&rsquo; systems. Helpfully, standard-setting organizations like the <a href="https://www.mx.com/blog/why-fdx-matters/">Financial Data Exchange</a> (FDX) drive consistency and efficiencies across the ecosystem by establishing clear technical standards that keep data flowing effectively and securely for consumers and businesses.&nbsp;
The speed of adoption and the level of benefits that financial data ecosystem participants can reap from <a href="https://www.mx.com/blog/what-is-open-banking/">Open Banking</a> hinge heavily on one key concept: interoperability. This is a fundamental principle that drives the potential of Open Finance, enabling greater access, efficiency, and innovation within the financial ecosystem.&nbsp;
At MX, we believe building for interoperability and openly engaging with the broader ecosystem is the right thing to do to stay competitive and provide consumers with the best experience. It also meaningfully levels the playing field by making it easier for companies of all sizes to fully participate in the financial data ecosystem.&nbsp;
In this post, we&rsquo;ll tackle key questions including:&nbsp;
<ul>
<li><a href="#what">What is Interoperability in Open Banking?</a></li>
<li><a href="#why">Why is Interoperability Important in Open Banking?</a></li>
<li><a href="#competition">How does Interoperability Promote Competition and Innovation?</a></li>
<li><a href="#build">How Can Financial Institutions and Fintechs Build for Interoperability?</a></li>
<li><a href="#future">What Does the Future Hold for Interoperability in Open Finance?</a></li>
</ul>
<h2 id="what">What is Interoperability in Open Banking?</h2>
Within Open Banking, Interoperability ensures that data flows easily and securely between data providers &ndash; often banks and credit unions &ndash; and third-party data recipients (i.e., fintechs and other providers of financial products and services). In practice, this means building products and collaborating with the ecosystem in a way that leads to seamless consumer experiences when connecting accounts from one bank or fintech to another, even if the other entity is your competitor.&nbsp;
This means consumers can share their financial information with authorized parties, such as budgeting apps or payment processors, without compromising privacy or security, and without being locked out depending on which financial provider they choose to use. By promoting a standardized approach to data sharing, interoperability removes the barriers that traditionally exist between different financial entities, fostering innovation and enhancing the customer experience.
This becomes incredibly important at high-impact moments in consumers&rsquo; lives. For example, quick, accurate, and secure identity and account verification is crucial when a consumer is getting their first mortgage. Similarly, the ability to easily send funds to a foreign bank account is essential for a bank customer whose child is studying abroad. Interoperability makes these processes much easier for both the consumers engaging in these transactions and the banks and fintechs that initiate them.&nbsp;
On the flip side, connection roadblocks can drive consumers crazy. An MX colleague recently tried moving money from a crypto exchange to her bank, only to find the connection wasn't available. She had to jump through hoops &mdash; getting account and routing numbers, using an intermediary platform &mdash; just to complete the transfer. This terrible experience will push customers to switch banks.&nbsp;
For Open Banking to reach its full potential, interoperability is essential. It enables consumers to access a broader range of services, facilitates competition among providers and recipients, and, ultimately, leads to better, more tailored financial products.&nbsp;
<blockquote>
Without interoperability, the promise of Open Banking &mdash; creating a more inclusive, transparent, and efficient financial ecosystem &mdash; would be limited.
</blockquote>
<h2 id="why">Why is Interoperability Important in Open Banking?</h2>
Before Open Banking became a formal concept, the financial services industry was traditionally closed. Banks and financial institutions controlled access to customer data, limiting how third parties could gain valuable insights to innovate and offer more compelling consumer products. Over time, however, the growth of digital banking, fintech start-ups, and mobile payment solutions led to a need for greater openness in financial services.&nbsp;
On the regulatory front, interoperability and data portability mandates have become increasingly prevalent in the healthcare and consumer technology industries around the world, and the financial services industry is no exception.
And, it&rsquo;s with good reason. Interoperability and data portability put the consumer in control of their data destiny, and remove market power from would-be gatekeepers. Pressure from consumers and governments have incentivized data holders, processors, and recipients to retain customers by providing optimal services &mdash;&nbsp;instead of trapping consumers and their data for their own gain.&nbsp;
<h2 id="competition">How does Interoperability Promote Competition and Innovation?</h2>
Interoperability delivers competitive benefits and new opportunities for innovation to both large and smaller players in the financial ecosystem.&nbsp;
It can make it easier for small- and medium-sized financial institutions to offer the same level of secure, high-performing consumer experiences as large financial institutions by connecting seamlessly to add-on services and insights that larger institutions are capable of providing in-house.&nbsp;
For larger financial institutions, interoperability allows them to position themselves as leaders in data sharing and Open Banking initiatives. This can grow their business by attracting tech-savvy consumers who value transparency and ease of access. Embracing interoperability can also establish them as trusted providers with consumers, increasing trust and customer loyalty.
For fintechs, interoperable platforms and connections can increase market reach, lead to faster integrations and reduced time to market for product launches, generate partnership opportunities, improve scalability, and lead to cost savings.&nbsp;
While competition and innovation are beneficial to businesses and the overall economy, they should always prioritize the consumer. Financial data is extremely sensitive. We must ensure that it is used responsibly and ethically to benefit both consumers and businesses. If consumer data is exploited, trust in Open Banking will erode, and people may reject data sharing and its benefits.
<h2 id="build">How Can Financial Institutions and Fintechs Build for Interoperability?&nbsp;</h2>
To achieve interoperability across the financial sector, several key strategies should be adopted:&nbsp;
<ol>
<li style="font-weight: 400;" aria-level="1">Adopt open standards, such as FDX and OAuth standards, for Open Banking, to ensure compatibility and consistency across various platforms. Embracing these standards streamlines the exchange of data and communication, enabling seamless integration and interoperability between different financial institutions and third-party providers.&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Build APIs with a clear focus on documentation, versioning, and scalability. Well-documented APIs with clear versioning guidelines make it easier for developers to understand and integrate with existing systems. Additionally, ensuring that APIs are scalable allows them to handle growing traffic and evolving data requirements, supporting future growth and innovation within the financial services industry.</li>
<li style="font-weight: 400;" aria-level="1">Collaborate and actively participate within the ecosystem to ensure alignment on standards and smooth interactions between different systems. By working together and sharing knowledge, fintechs, financial institutions, regulators, and other stakeholders can create a more cohesive and interconnected financial landscape. This collaborative approach fosters trust and transparency, while also driving innovation and improving the overall customer experience.</li>
<li style="font-weight: 400;" aria-level="1">Implement robust data security and privacy measures, including encryption, authentication protocols, and compliance with global data privacy regulations like GDPR and CCPA. <a href="https://www.mx.com/whitepapers/security-how-mx-protects-your-data/">Protecting sensitive customer data</a> is paramount in the financial services industry to safeguard customer information and maintain trust in the digital financial ecosystem.</li>
<li style="font-weight: 400;" aria-level="1">Prioritize continuous testing and monitoring to maintain integrations as new services and systems emerge. The financial services landscape is constantly evolving, with new technologies and services emerging regularly. Continuous testing and monitoring ensure that systems remain compatible and integrated &mdash; preventing disruptions and ensuring a seamless experience for customers as the industry evolves.</li>
</ol>
<h2 id="future">What Does the Future Hold for Interoperability in Open Finance?</h2>
Advancements in technology, such as <a href="https://www.mx.com/guides/risks-rewards-ai/">artificial intelligence</a> (AI), blockchain, and quantum computing, will likely play a significant role in enhancing interoperability in the open finance space. These emerging technologies have the potential to further streamline processes, improve data sharing, and facilitate smoother interactions between financial institutions.&nbsp;
Alongside these, the evolving regulatory landscape will also shape the future of <a href="https://www.mx.com/blog/what-is-open-finance/">Open Finance</a>. Regulators across the globe are pushing for interoperability standards that support cross-border collaboration and ensure a unified framework for financial services. Moreover, Open Finance has become a key driver of financial inclusion, with global economic development organizations and nonprofits such as CGAP, BIS, IMF, UNSGSA, and the World Bank collaborating to create guidelines that help countries build open banking frameworks that promote economic inclusion.&nbsp;
Finally, evolving consumer expectations are accelerating the shift toward interoperable financial services. As consumers become more tech-savvy, they increasingly <a href="https://www.mx.com/research/the-missing-link/">demand seamless, integrated experiences</a>, pushing the financial industry to adopt more collaborative models that meet these expectations and foster greater efficiency in service delivery.
<h2>Conclusion</h2>
Interoperability is a cornerstone of Open Finance. Without it, consumers would face fragmented systems that limit their access to a full range of financial tools and opportunities to meet their financial goals.&nbsp;
For Open Finance to truly flourish, stakeholders must prioritize interoperability in their designs, collaborations, and future innovations. Open Finance has tremendous potential to transform the global financial landscape. With interoperable systems, we can unlock new opportunities for individuals, businesses, and entire economies &mdash; driving better outcomes for businesses, better tools for consumers, and greater financial inclusion.&nbsp;

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Artificial Intelligence: How to Move from Science Project to Value Add for Banks

Fraud (and Fighting It) is the Future

A Call to Consolidate: Consumers May Simplify Their Mobile Finances Apps

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Why Interoperability Matters in Open Banking

Blog

Featured

How Data Providers Can Compete and Comply: Achieving 1033 Compliance and Gaining a Competitive Advantage

MX Founder Ryan Caldwell Returns as Chief Executive Officer

How to Encourage Consumers to Use New Money Management Approaches

What is Financial Data Intelligence? How it Works, Key Definitions & Benefits

Topic

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What’s Going On In Banking? Key Takeaways

Data Enhancement Product Updates: Maximizing Geolocation and Merchant Coverage

The Promise of Open Banking Persists in the Face of Turbulence at CFPB

Artificial Intelligence: How to Move from Science Project to Value Add for Banks

Fraud (and Fighting It) is the Future

A Call to Consolidate: Consumers May Simplify Their Mobile Finances Apps

What is Data Enhancement? What to Look for and Key Benefits

Gaining a Competitive Advantage with Open Banking

Financial Wellness is a Win-Win for Financial Providers and Consumers

Why Interoperability Matters in Open Banking