How to Choose an Open Banking Data Partner

Choosing a data partner to support open banking or open finance efforts can be a daunting task. Ron Shevlin, Chief Research Officer at Cornerstone Research, wrote in a recent report (Selecting an Open Banking Data Aggregation Vendor):

Making these choices [which partners or vendors they use to meet their data acquisition, utilization, and analytical needs] will require financial institutions and fintechs to make tough decisions about their: 

1. strategy in a changing industry, 

2. the role they need to and want to play in a highly interconnected network of providers, and 

3. the business and technical capabilities they need to build to operate in the ecosystems in which they participate.

The report shares insights from conversations with bank and fintech executives who have gone through the process of evaluating open banking data aggregation vendors. The recommendations boil down to 6 key areas: 

• Capabilities: Start by understanding what product or service experience you are trying to build and what role open banking or data aggregation plays in that experience. Then, evaluate partners based on what capabilities (Connectivity, Insights, Experiences) they provide to support.
• Buyer/Seller Relationships: The success of a data aggregator depends on its relationships and trust within its network. If an aggregator has a hard time building trust or is too aggressive, this could lead to problems down the road. 
• Customer Support: Nothing goes right 100% of the time. Make sure your partner has a good customer support model for those instances. For instance, when consumers can’t connect their account, they don’t call the data partner. They call their financial institution. So you need a way to work with your data partner to solve those issues. 
• API Quality: Make sure you understand the aggregator’s API quality and how the API will fit into your existing infrastructure. 
• Pricing Model: There are multiple pricing models that could be used, including per transaction, per user, and per login. Evaluate how the pricing model will work for you in the long-term, not just the initial price. 
• Vendor Lock-In: Look for data aggregators that will work with, not against, financial institutions and other aggregators, avoid agreeing to vendor exclusivity or preferred vendor status in their contracts (most aggregators will ask for these), and sign shorter-term contracts, even if it requires agreeing to higher pricing.

These 6 recommendations can help financial institutions and fintechs make a more informed and better decision when selecting a data aggregation provider. Now, MX is taking it a step further by building the industry’s first-ever Request for Information starter kit for other financial institutions and fintechs about to embark on a search for an open banking data partner.  

Be sure to watch the full replay of our recent discussion with Cornerstone Research for more insights.