From Friction to Flow

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1033 Is Here: Quick Guide for Data Providers

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CFPB’s 1033 is Here | What It Means for You

The Consumer Financial Protection Bureau&rsquo;s new rule under Section 1033 of the Dodd-Frank Act has arrived. Are you ready for it?
Watch this recorded conversation with policy experts and MX product leaders to hear more about:
<ul>
<li>Key changes in the final rule and what they mean for you</li>
<li>Where to get started on your road to compliance, and how to go beyond compliance to tap into new opportunities</li>
<li>MX&rsquo;s Data Access &mdash; the only solution that combines an API platform that meets FDX standards with built-in analytics that deliver actionable intelligence.</li>
</ul>

MX Product Forum | Sharpening Focus, Enhancing Value

MXS Rewind 2024 | Video On-Demand

On-Demand Replay: The Road to 1033

We&rsquo;re now just weeks away from the anticipated final Section 1033 rulemaking from the Consumer Financial Protection Bureau. Is your organization ready to tackle both the new opportunities and new regulatory obligations ahead?
Watch this conversation with policy experts and MX product leaders to hear more about:
<ul>
<li>Moving beyond a compliance conversation to understanding how to improve outcomes for consumers and gain a competitive advantage</li>
<li>How MX&rsquo;s Data Access combines an API platform that meets FDX standards with built-in analytics that deliver actionable intelligence</li>
<li>Where you can start today with meeting expected compliance obligations and delivering the best experiences for your customers</li>
</ul>

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Taking Personalized Digital Banking to the Next Level: How to Drive Engagement and Value

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The majority of consumers expect their financial provider to know them. But that means more than just knowing their ZIP code, FICO score, or income. Unique individuals with unique needs want &mdash; and demand &mdash; a personalized money experience, not generic account updates and reminders.
Finastra partners with MX to provide engaging money management features as part of the Finastra Fusion digital banking platform, including MX Personal Financial Management (PFM) and Insights. These tools translate consumer financial data into actionable intelligence to deliver personalized experiences, drive consumer engagement, and support financial wellness.
&nbsp;
<h2>Watch this webinar and demo to learn how to:</h2>
<ul>
<li>Drive engagement and strengthen relationships with data-driven insights and money management experiences</li>
<li>Unlock financial data to create actionable and intuitive experiences that drive better outcomes</li>
<li>Leverage MX PFM and Insights to deliver timely, relevant guidance to help consumers reach their financial goals</li>
</ul>
</div>
</div>

MX Comments on the CFPB’s Required Rulemaking on Personal Financial Data Rights

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The Year of Financial Data Intelligence — How to Win and Retain Customers in 2024

<div>
What will be the difference for financial institutions and fintechs to win in 2024? Join us for a deep dive into whats on the horizon, including Open Banking growing pains, the next generation of financial wellness tools, and the future of AI and personalization &mdash; and a peek into how financial data intelligence can be a differentiator for your organization.
<h2>Watch this Webinar to Learn:</h2>
<ul>
<li>4 predictions for 2024 for the financial industry landscape</li>
<li>How to unlock new insights and opportunities with your financial data</li>
<li>Best practices for winning and retaining deposits &mdash; and engaging customers for the long term</li>
</ul>
</div>

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Consumers are more than just a zip code, FICO score, or income. We&rsquo;re unique people with unique stories that require a personalized experience to meet our needs. Today&rsquo;s digital banking experiences require the right balance of automation and personalization that meet consumers where they are.
MX partners with NCR to provide MX Insights &mdash; a personalized feed of real-time financial insights &mdash; which integrates seamlessly with the NCR digital banking platform and will be available to NCR customers early next year.
Join This Webinar and Demo to Learn How to:
<ul>
<li>Build trust and strengthen relationships with data-driven insights and experiences</li>
<li>Unlock financial data to create actionable intelligence and intuitive experiences that go beyond account balances and generic reminders</li>
<li>Leverage MX Insights to deliver timely, relevant guidance and insights to help consumers reach their financial goals</li>
</ul>

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What Consumers Really Want from their Financial Providers: A 2023 Roadmap

Fintech Functionality to Drive Customer Engagement and Loyalty

More than half of consumers say they would seek out a new financial provider if their current one couldn&rsquo;t deliver on their most wanted features. Are you focusing on the right mobile and digital features to keep consumers for the long term?
Consumers want &mdash; and need &mdash; more from fintechs to meet rising expectations and money worries. More personalized. More proactive. More connected. More data. Register to hear key insights from MX&rsquo;s latest research into what functionality matters most for consumers and how to drive higher customer engagement and loyalty in 2023 and beyond.
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<h3>Watch This Webinar, To Learn:</h3>
<ul>
<li>The features and functionality that consumers really want and expect from financial providers</li>
<li>Meeting rising demands for data sharing and ownership</li>
<li>Striking the balance of digital innovation and security</li>
</ul>

What Consumers Really Want from Financial Institutions: Your 2023 Roadmap to Success

One in 4 consumers feel that financial providers don&rsquo;t do enough to support their financial needs. Consumers want &mdash; and need &mdash; more from financial institutions to meet rising expectations and money worries. More personalized. More proactive. More connected. More data.
Now more than ever, financial institutions have an opportunity to take a bigger role in the lives of consumers. Register to hear key insights from MX&rsquo;s latest research on what consumers want and how to drive higher customer engagement and loyalty in 2023 and beyond. 
<h3>In This Webinar, You'll Learn:</h3>
<ul>
<li>How financial inclusion and literacy could help to unlock stronger engagement and build more loyal customers</li>
<li>What are the features and functionality that consumers really want and expect from financial institutions</li>
<li>How to meet consumer demand for data ownership, control, and sharing</li>
</ul>

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Every financial institution and fintech is looking to data aggregation to help them deliver on the promise of Open Banking, and more broadly, Open Finance. But there&rsquo;s no roadmap for how to pick the right data aggregator. Until now&hellip;&nbsp; This session dives into 5 critical questions in 25 minutes on data aggregation.

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Building an in-house <a href="https://www.mx.com/products/data-enhancement/" target="_blank" rel="noopener">data enhancement solution</a> 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 or data enhancement tools, it&rsquo;s essential to consider the following criteria to ensure your chosen partner delivers measurable value.
<h2>Security</h2>
Any data enhancement solution should operate on a secure platform with secure integrations to ingest, store, and return raw and enhanced data elements. This is foundational and should be your first requirement when reviewing data enhancement solutions.&nbsp;
<h2>Consumer-Permissioned Data Sharing</h2>
Consumers should own and have control over their financial data. And, new regulations are on the horizon that will ensure this is the case. Data enhancement providers should deploy modern user permissioning approaches, such as OAuth, that allow consumers to approve use cases and select the account(s) and data to be shared.
<h2>Coverage and Accuracy</h2>
Consider core key metrics to ensure you are choosing a quality data enhancement solution that delivers the coverage and accuracy you need. This includes:&nbsp;
<ul>
<li style="font-weight: 400;" aria-level="1">Accuracy: Are transactions being cleansed and categorized accurately? For data cleansing, this metric can assess how well the solution turns messy descriptions into clean, user-friendly transaction descriptions. For categorization, it assesses the quality of the categorization rate (e.g., MX has 21 top-level categories and 98 subcategories). Anything below 100% indicates some transactions are miscategorized (false positives).&nbsp;</li>
<li style="font-weight: 400;" aria-level="1">Coverage: Is the highest quantity of transactions being processed with high confidence? How many transactions does the data enhancement solution recognize and categorize? This could include merchant coverage &mdash; being able to accurately label and categorize different merchants &mdash;&nbsp;or other factors like geolocation &mdash; does the tool recognize an accurate location for where the transaction took place? For instance, MX&rsquo;s merchant coverage includes more than 620,000 merchants. And, MX has a physical location flag to ensure financial institutions know if transactions were processed in person instead of relying solely on location data from the business, which can sometimes be misleading as it shows a headquarters location versus where the transaction actually took place.&nbsp;</li>
</ul>
It is also important that you understand how performance numbers are calculated, how their sample-based estimates relate to their overall population, the additional data elements generated, and the value of each segment that is created.&nbsp;&nbsp;
<h2>Improvement and Learning</h2>
No system is perfect. It is important to understand the provider&rsquo;s approach to addressing issues and making improvements over time. Does the solution leverage machine learning or artificial intelligence to automatically cleanse transactions, reduce redundancies and drive improvements? Are you and your users able to submit feedback? How is that feedback assessed and used to improve the platform?&nbsp;
<h2>Solution Speed</h2>
The value created by processing data quickly will vary from use case to use case but faster is almost always better. A solution that can process data as it is ingested, and return the largest number of near real time responses, provides a smoother user experience and ensures that user interfaces are always providing fresh, accurate, and actionable data.&nbsp;
<h2>Data Volume and Experience</h2>
Enhanced data volume and big data experience are important considerations when choosing a partner. Most large data enhancement providers will meet the threshold of data volume and data diversity to scale with increasing data loads, and may be able to build meaningful statistics for modeling and identify behavioral insights. It&rsquo;s also important to consider what types of transaction or financial data the data enhancement solution can process, such as investment data.&nbsp;
<h2>Turning Data to Action</h2>
Data enhancement is the first step in being able to more effectively leverage data to meet customer and business needs. The right partner can help you take that enriched data to the next level with data-driven insights and personalized experiences to support consumers where they are in their financial journey &mdash; and help your business drive growth and engagement to reach your business goals.&nbsp;
Ready to get started? Request a demo to see how <a href="https://www.mx.com/products/data-enhancement/">MX Data Enhancement</a> can bring clarity and insight to your data.

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. 

Access this guide to view key criteria to consider when evaluating potential data enhancement solutions, including security, coverage, and accuracy.

Choosing Data Enhancement Solutions | Full Guide

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Research shows connectivity gap, the price of bad mobile experiences, declining summer spending, and growing trust in artificial intelligence


Consumer Research Shows Where Banks May Be Failing Consumers 

There are several ways that financial institutions and fintechs can enable consumers to link their financial accounts today. But, as we shared before, not all connectivity experiences are created equal.&nbsp;
<h2>Understanding Connectivity Methods</h2>
<img src="https://cms.mx.com/assets/b88b8caf-f896-43ee-bdc3-68d785682257?width=1200&amp;height=245" alt="Connectivity Methods" />
Here&rsquo;s an overview of the primary connectivity methods used today for data sharing and account aggregation:&nbsp;
<h3>1. Screen Scraping</h3>
Screen scraping, or credential sharing, is the process of gathering data from one app by inputting user credentials (such as username and password) and displaying that data in another app. Screen scraping requires consumers to share their username and password with the data recipient to gain access to their data.&nbsp;
The biggest downside to screen scraping is that the process relies on the other institution&rsquo;s website structure, which becomes problematic when scraping happens without coordination with that financial institution. This means organizations are constantly fixing connectivity issues resulting from web updates, changes in login procedures, etc.&nbsp;
Connections also break every time a consumer updates their username or password. It also means that website downtime results in loss of connectivity. In addition, screen scraping results in slower connections compared to APIs.
On the other hand, the financial institutions who have data being scraped don&rsquo;t always know who is capturing their data and for what purpose. And, it creates added risk for both the institution and consumer as credentials are freely shared with third parties. Scraping can also make it really difficult to decipher the difference between permissioned activity and possible malicious activity.&nbsp;
<h3>2. Whitelisted IPs</h3>
Whitelisting IP addresses is still a form of screen scraping. However, instead of allowing any app to scrape data, this method allows a financial institution to &ldquo;whitelist&rdquo; known third parties and sanction data sharing with those specific IP addresses.&nbsp;
While the downsides of screen scraping remain, whitelisted IPs does eliminate some risk but ensuring only trusted sources can access data and preventing access from unknown scraping sources.
<h3>3. Banking APIs</h3>
Banking application programming interfaces (APIs) are the next evolution in enabling reliable connections for consumers to link their accounts from third parties. While banking APIs still rely on consumers to input their username and password to create the connection, data sharing is enabled via an API versus screen scraping.&nbsp;
This creates a more reliable connection because an API doesn&rsquo;t rely on the other institution&rsquo;s website structure. Connections no longer break any time the other institution makes a change to its login procedures or updates its system. However, connections will still need to be re-established any time a consumer changes their username or password. And, the risk of sharing credentials with a third party remains. 
<h3>4. OAuth APIs</h3>
OAuth APIs, sometimes referred to as an open banking or open finance API, allow consumers to access their transaction data without the need to share usernames and passwords. Instead of asking a consumer to input their username and password, the consumer is redirected to the other institution to log in directly to its system. Then, a token is created and passed back to the third party to establish a connection and enable data access.&nbsp;
This creates the most secure experience for consumers and institutions because it eliminates any credential sharing with third parties. In addition, it clears a more reliable connection as consumers will not need to re-authenticate every time they change their password or when system changes occur.&nbsp;
Finally, OAuth API connections also help financial institutions get ahead of upcoming compliance regulations related to the final rule from the Consumer Financial Protection Bureau (CFPB) under <a href="https://www.mx.com/whitepapers/mx-perspective-on-consumer-data-rights-rulemaking/">Section 1033 of the Dodd-Frank Act</a>. Currently, the CFPB&rsquo;s proposed rule would &ldquo;prevent data providers from relying on screen scraping to comply with the proposal because it is not a viable long-term method of access.&rdquo; Instead, the CFPB will require data providers to establish and maintain a developer interface that makes data available in a machine-readable, standardized format and doesn&rsquo;t allow a third party to access the system using consumer credentials.&nbsp;
The downside to OAuth APIs? Standing up an open finance API can be an expensive and time consuming process. For example, the <a href="https://files.consumerfinance.gov/f/documents/cfpb-1033-nprm-fr-notice_2023-10.pdf">CFPB estimates</a> a &ldquo;total upfront cost of $250,000 to $500,000 for small depository data providers that choose to build their developer interface in-house&rdquo; &mdash; with &ldquo;ongoing annual technology costs of $20,000, as well as ongoing staffing costs of $45,000 to $91,000.&rdquo;&nbsp;
Choosing to build or buy a solution will be a key decision point for financial institutions who don&rsquo;t yet have an open finance API. MX&rsquo;s Data Access platform can enable institutions to deliver a safe and secure connectivity experience for their customers &mdash; and helps financial providers get ready for potential requirements under Section 1033 rulemaking.
<h2>How MX&rsquo;s Data Access Solution Powers Open Finance</h2>
At MX, our solutions and products are built with consumer-permissioned data sharing at the forefront. And, we make it easy for financial institutions of all sizes to accelerate open finance adoption and enhance the money experience for consumers through our Data Access product.&nbsp;
Data Access enables financial institutions to more easily create or evolve their open finance APIs to ensure they meet FDX standards, deliver the required data elements, and follow authentication protocols, such as OAuth and OIDC. In addition, Data Access is interoperable across all intermediaries, enabling financial providers to accelerate their path to eliminate screen scraping from their environment.&nbsp;
Data Access also creates better visibility into the open finance journey by providing real-time performance metrics, insights into data sharing activity, and support tools to easily manage and maintain connections. For instance, Data Access&rsquo;s API Overview and Test Users feature takes the guesswork out of understanding what data needs to be included in open finance APIs. Financial providers can access &mdash; per use case and account type &mdash; which data fields are required and under what conditions. And with our Test Users feature, data providers and data recipients can test the APIs before they go live to ensure that all required data is there.&nbsp;
For consumers, Data Access&rsquo;s Consent Management Dashboard can be easily embedded into mobile and online banking portals so that consumers can see and manage where they have shared their financial data with a third party. Consumers can view when their data was last updated or revoke data sharing access with a third party.&nbsp;
<blockquote>
Want to learn more about how Data Access helps financial providers get ready for regulatory obligations? <a href="https://www.mx.com/whitepapers/how-data-access-supports-1033/" target="_blank" rel="noopener">Read our whitepaper</a>.
</blockquote>
<img src="https://cms.mx.com/assets/211e228a-1bdc-4382-b045-b329a36aea1c?width=1200&amp;height=1187" alt="Data Access" />
<h2>Setting the Standard &mdash; FDX</h2>
In June 2024, the <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-launches-process-to-recognize-open-banking-standards/">CFPB took the next step</a> toward recognizing industry standards-setting bodies as part of its Section 1033 rule making to establish consumer financial data rights in the United States. The CFPB&rsquo;s rule identifies the attributes that standard setting bodies must demonstrate in order to be recognized, as well as a step-by-step guide for how standard setters can apply for recognition.
Recognizing industry standards is crucial to moving the industry forward with Open Finance, and literally setting the standard for secure consumer-permissioned data sharing. Across the industry, the <a href="https://financialdataexchange.org/">Financial Data Exchange</a> (FDX) has already driven strong adoption of open finance with 76 million consumer accounts transitioned from sharing data via screen scraping to the FDX API as of April 2024.&nbsp;
<img src="https://cms.mx.com/assets/1225b519-9cb5-4b58-938e-6aaa28fe949a?width=600&amp;height=345" alt="Fdx" />
FDX is a non-profit, industry standards body dedicated to unifying the financial services ecosystem around common, interoperable, and royalty-free technical standards for user-permissioned financial data sharing. Any company within the financial industry can contribute to the development, growth, and adoption of the FDX API and other objectives. MX continues to be a driving force at FDX by chairing and collaborating in key task forces and representing fintechs on the FDX Board of Directors.&nbsp;
It&rsquo;s great to see the CFPB listening to industry feedback and moving forward on SSOs in advance of the final Section 1033 rule. This will help ensure little disruption to the data sharing environment and avoid delays in the industry&rsquo;s ability to implement this rule. We&rsquo;re excited to continue working with organizations like FDX on accelerating a truly open financial ecosystem.&nbsp;

Check out our guide banking APIs, OAuth, and screen scraping connections and the competitive advantages between them. 

The Differences Between APIs, OAuth, and Screen Scraping

Check out these recommendations for what to keep in mind when standing up an open banking API.

See how MX’s Data Access solution can support your open banking future!

As <a href="https://www.mx.com/blog/what-is-open-banking/">Open Banking</a> adoption continues to accelerate, financial institutions of all sizes are exploring the right approach to standing up and maintaining open banking APIs.&nbsp;
MX has been a leader in <a href="https://www.mx.com/blog/what-is-open-finance/">Open Finance</a> and <a href="https://www.mx.com/blog/what-is-consumer-permissioned-data/">consumer-permissioned data</a> sharing for more than a decade, working with financial providers and fintechs to implement APIs that enable the permissioned flow of data. Here are three things to consider when standing up an open banking API:
<h3>1. Data is a Two-Way Street</h3>
Financial institutions have traditionally had an aversion to sharing their customers&rsquo; financial data, often seeing it as the loss of a competitive edge. But, that mindset is outdated as open banking adoption accelerates. The flow of data can &mdash; and should &mdash;&nbsp;be a tide that rises all boats.&nbsp;
By enabling the two-way flow of data, financial institutions are able to better understand customer needs, streamline processes, and deliver better products and services. This includes everything from empowering better and faster onboarding through instant account verification to generating relevant and actionable insights that can improve a consumer&rsquo;s financial life.&nbsp;
Financial institutions shouldn&rsquo;t be afraid of data leaving their institution. Instead, they should think about the value they gain as a data provider &mdash;&nbsp;better insights into where consumers are turning for their financial needs outside of their organization.
The flow of data along consumer-permissioned channels increases insights and intelligence that can be used by financial providers on both ends of the exchange.&nbsp;
<h3>2. Don&rsquo;t See Compliance as a Hassle</h3>
Compliance and third-party risk management teams at a financial institution are integral to effectively standing up an open banking API. However, these stakeholders are often brought into the process too late.&nbsp;
Compliance and risk management need to be considered from the beginning. This will facilitate alignment across departments, streamline due diligence processes by engaging early and often, and ensure that the end result is a more secure way for consumers to manage their data.&nbsp;
More broadly, as <a href="https://www.mx.com/blog/cfpb-dodd-frank-section-1033/">open banking regulations</a> take shape, it could be easy for financial institutions to view compliance obligations as a hassle or hindrance. However, there are opportunities for financial institutions that see compliance as more than checking a box. For example, consumers want their providers to know them but, most financial institutions are missing key details on where consumers share data. Open banking data gives you better insights about competitor products that your customers utilize and enables you to create precise targeting and compelling offers.&nbsp;
<h3>3. Keep Consumers at the Center</h3>
Consumers own their financial data and should have the ability to control who has access to it. <a href="https://www.mx.com/research/financial-apps-fall-short/">MX research</a> confirms this &mdash; 80% of consumers agree it is important for them to know and manage who has access to their financial data. Financial providers need to keep this perspective at the center of their API implementations.&nbsp;
Whether building or buying an API, financial institutions should focus on facilitating secure, seamless connections that allow consumers to connect to a broad range of banks and fintechs, dynamically revoke access to their data, and educate them on the values and risks associated with sharing their data with third parties.&nbsp;
Ultimately, standing up a successful open banking API means embracing the opportunities that Open Banking presents rather than merely meeting obligations.

Opportunity over Obligation: Considerations for Standing Up an Open Banking API

Connect the Dots for Better Financial Outcomes

Here are 5 risks and 5 rewards for financial services to consider related to artificial intelligence. The biggest challenge — and opportunity — is leveraging data to deliver true value. 

Risks and Rewards of AI in Banking | Research

View this infographic for a quick summary of top risks and rewards for AI in banking based on our research. 

Infographic: AI in Banking | Risks and Rewards

Financial providers should leverage AI, while ensuring that they maintain human touch for better customer experiences.

While AI can be a powerful tool, financial institutions must ensure that they maintain human touch in their customer experience.

Striking a Balance Between Human and AI for Financial Institutions

Sixty-four percent of business owners said that they anticipate artificial intelligence (AI) will improve customer relationships and boost productivity across their business, <a href="https://www.forbes.com/advisor/business/software/ai-in-business/">according to Forbes</a>. And, this expectation has made AI the perceived answer to nearly any problem facing the financial services industry.
While AI and its impact will be incredible, financial institutions must be aware of how it affects customer relationships. AI has the power to make countless business processes more efficient &mdash; but efficiency does not always translate to an improved customer experience. Financial providers should take advantage of the efficiency boost that AI can provide, while still maintaining a high level of human touch for the customers.
<h2>Where AI Wins &mdash; and Where it Fails</h2>
Getting the most out of AI comes down to recognizing where AI wins &mdash; and where it fails. One of AI&rsquo;s greatest strengths is enabling businesses to automate highly repeatable processes. And, in the financial services industry, there are many opportunities for just that.&nbsp;
Certain customer interactions are filled with repeatable processes where AI can have a direct impact on consumers and how they manage their finances. For instance, AI can deliver proactive reminders about upcoming bills. Transactions can be <a href="https://www.mx.com/products/data-enhancement/">automatically categorized</a> for better visibility into where money is going. Institutions can generate <a href="https://www.mx.com/products/financial-insights/">personalized recommendations</a> based on spending habits to help consumers make better financial decisions.
However, money is personal and one of AI&rsquo;s biggest shortcomings is its inability to empathize with humans. When AI is the only touchpoint between consumers and their financial provider, customer experiences can lose the human touch that drives higher engagement, loyalty, and customer satisfaction.
<h2>Make Human Interactions Accessible</h2>
More than half of consumers (51%) say money is their main source of stress, <a href="https://www.mx.com/research/financial-apps-fall-short/">according to MX research</a>. And, they want their financial providers to help them navigate their money anxiety. In this light, financial providers need to assess whether their processes and solutions are alleviating or contributing to consumer stress.
In some ways, AI and machine learning can greatly reduce the burden on customer support teams. Providing checking account balances, learning the due date of an upcoming payment, or confirming transactions, and other informational tasks can all be automated and improved through AI and digital tools.
But sometimes, consumers just want to talk to a real person &mdash; and not have to jump through hoops to do so. For instance, too often consumers find themselves on a seemingly never-ending loop of automated voice messages that just add to frustration when a simple conversation with a representative could solve their problem. It is not that AI needs to be removed from customer interactions, but rather it needs to be able to recognize where it can help and where it needs to refer consumers more quickly to a human representative.&nbsp;
<h2>Finding Harmony in the Human and AI Experiences</h2>
<a href="https://www.pymnts.com/artificial-intelligence-2/2025/will-ai-eventually-replace-human-workers-or-augment-them/">David Autor</a>, MIT economics professor said, &ldquo;There are two competing visions of AI. One is [that] machines make us irrelevant. Another is [that] machines make us more useful.&rdquo;&nbsp;
In the early days of AI, financial institutions jumped on the possibility of AI making people in customer-facing positions irrelevant. Instead, we should see it as making us more useful. There is an ideal middle ground where AI and machine learning improve the impact and efficiency of human-led customer experiences. Luckily, financial institutions do not have to choose between AI and humans. They are not at odds with each other. The best financial services providers will use both.
AI empowers financial services teams to focus their human efforts on what they do best &mdash; providing care and understanding to those that need it. And, by finding a balance between human and machine, financial service providers can accomplish more than they ever could with manual processes.

How Financial Institutions Can Leverage AI While Maintaining the Human Touch

Understanding AI Opportunities and Obstacles

MX survey of 1,000+ U.S. consumers reveals on top factors when choosing a financial provider, why they close accounts, and more. 

What Financial Providers Need to Meet Customer Needs in 2024 | MX Research

<h2>Why the First 30 Days of a Banking Relationship Matter</h2>
Today&rsquo;s consumers have more choice than ever before when it comes to where they store and manage their money. And, it&rsquo;s not uncommon for the <a href="https://www.mx.com/research/what-consumers-want-from-financial-providers/">average consumer to have more than 5 accounts</a> with various financial providers as a result. In fact, our research of more than 1,000 U.S. adults found that <a href="https://www.mx.com/research/how-to-keep-consumers-from-breaking-up-with-banks/">nearly 1 in 4 consumers (23%) are opening new financial accounts at least once per year or more often</a>. Among Gen Z, this jumps to 36% of respondents who say they are opening new accounts at least once per year.
Consumers have little patience for financial providers who cannot meet their needs with fast, secure, and <a href="https://www.mx.com/products/experience/">personalized digital experiences</a>. While they may not always take steps to close an account that dissatisfies, you&rsquo;ll be able to tell which accounts simply exist but remain unused. So how do you make sure your financial institution or fintech is the one they turn to most often?&nbsp;
MX took a deep dive into the data from more than 10 million consumers over the past 12 months to identify how to drive the right experiences and touchpoints to create lasting engagement and relationships &mdash;&nbsp;and ultimately, <a href="https://www.mx.com/case-studies/cure-for-lost-deposits/">grow and maintain deposits</a>.&nbsp;
It all comes down to the first 30 days.&nbsp;
<blockquote>
&ldquo;By focusing on customer outcomes and creating personalized, intuitive experiences from Day 1 of the relationship, financial institutions can not only maintain deposits but grow them &mdash; even in an increasingly challenging market.&rdquo; &mdash;Clint Johnson, Director of Professional Services at MX.&nbsp;
</blockquote>
Here are 5 actionable steps that banks, credit unions, fintechs, and other financial providers can take during the first 30 days of a new consumer account to build a long-term relationship and create lasting engagement. 
<h3>1.&nbsp; Activate with Account Aggregation</h3>
With multiple disparate financial accounts across various banks, credit unions, and other providers, it&rsquo;s easy for consumers to lose sight of their full financial picture. As a result, 44% of U.S. adults say they have used digital tools to bring different financial accounts into one view. This account aggregation allows them to consolidate their finances into a single view rather than needing to login to multiple accounts to see what&rsquo;s going on with their finances.&nbsp;
And, wherever that single view lives is where they will engage most often. Our data shows consumers who connect at least one or more external financial accounts are <a href="https://www.mx.com/case-studies/cure-for-lost-deposits/">48% more likely to be digitally active a year later</a> than those who don&rsquo;t.
Financial providers should educate consumers early on how they can connect their external accounts and make it easy for them to do so. For instance, consider the flip side of our consumer research &mdash;&nbsp;56% of consumers have NOT used a tool to bring different accounts into one view. This is an opportunity to drive engagement by being the first financial institution to help them not only understand the value of <a href="https://www.mx.com/products/account-aggregation/">account aggregation</a> but also how to securely and seamlessly add their accounts.&nbsp;&nbsp;
<h3>2. Drive for Direct Deposit</h3>
Direct deposits create an immediate attachment for consumers to the bank where this direct deposit lives. That said &mdash;&nbsp;having a direct deposit with a particular institution doesn&rsquo;t guarantee that institution will be the consumer&rsquo;s primary go-to account. In fact, our data shows very few U.S. consumers (5%) defined a primary financial relationship as <a href="https://www.mx.com/research/how-to-keep-consumers-from-breaking-up-with-banks/">where they deposit most of their money</a>.&nbsp;
That said, establishing a direct deposit with a new financial account in the first 30 days can create higher engagement for the long-term. Our data shows consumers who do this are <a href="https://www.mx.com/case-studies/cure-for-lost-deposits/">76% more likely to be digitally engaged a year later</a> than those without direct deposit.&nbsp;
So, how do you get them to do this? The reality is most consumers likely don&rsquo;t want to go through the hassle of changing their direct deposit very often. To encourage taking action, financial providers should look at incentives that would make consumers want to switch &mdash; and they have to make the process easy and secure.&nbsp;
<h3>3. Encourage Frequent Logins</h3>
Consumers who log in at least once during their first month are 26% more likely to be digitally engaged after a year. Those who log in on at least four separate days during their first month are <a href="https://www.mx.com/case-studies/cure-for-lost-deposits/">550% more likely to still be active a year later</a>. The trick is to ensure your digital or mobile banking experience provides instant and repeated value for consumers. This means providing <a href="https://www.mx.com/products/financial-insights/">personalized financial insights</a> and easy-to-use <a href="https://www.mx.com/products/personal-financial-management/">personal financial management (PFM) tools</a> that help consumers meet their financial needs.
<a href="https://www.mx.com/whitepapers/financial-wellness-for-the-masses/">Consumers have less patience than ever for sub-par experiences</a> and overly complicated processes. Minimizing the steps &mdash; or searching &mdash; required to find information or take action is essential to driving high adoption and engagement. The longer it takes for customers to find what they need, the more likely they are to abandon the experience &mdash; and not come back. Institutions with the highest adoption rates place the most sought-after information and common actions in multiple prominent locations within the digital user experience.&nbsp;
<h3>4. Make Mobile Transfers Easy</h3>
Finally, consumers who make at least one mobile transfer during their first month are <a href="https://www.mx.com/case-studies/cure-for-lost-deposits/">195% more likely to be digitally engaged a year later</a> than those who don&rsquo;t. To encourage consumers to use your mobile transfer options, focus on delivering a safe, easy, and fast option for transfers.
<h3>5. Enable Embedded Personal Financial Management Tools</h3>
The more consumers know about their finances, the better they can manage them. Our research continually shows the majority of consumers agree they <a href="https://www.mx.com/research/what-influences-where-consumers-choose-to-bank/">want their financial provider to help them better manage their finances</a> (57%) and believe financial providers have a responsibility to teach them to be financially strong (54%).&nbsp;
And, our data shows those who deliver on these consumer expectations with PFM tools that meet their needs can drive higher engagement and success. In fact, consumers who interact with PFM tools at least one day during their first month are <a href="https://www.mx.com/case-studies/cure-for-lost-deposits/">176% more likely to be digitally engaged after one year</a> than those who don&rsquo;t.
<h2>Conclusion: Building Lasting Relationships from the Beginning</h2>
In today&rsquo;s financial landscape, consumers have countless options at their fingertips and aren&rsquo;t afraid to switch to a new provider if their needs aren&rsquo;t being met. Our data makes it clear that the first days of a new banking relationship can have lasting impacts on consumer engagement.&nbsp;
Banks and credit unions who are able to create a valuable onboarding experience that emphasizes connectivity, personalization, ease, and convenience will reap the benefits. But it&rsquo;s not enough to simply offer the tools. These five areas of opportunity need to be fully integrated into the customer onboarding process. How often does a consumer open a new bank account, get their login details, and simply have to figure it out on their own?&nbsp;
To be most effective, the account opening process needs to include education and training from the moment they receive their new account credentials to ensure they can get the most value from their experience. This should include training from in-branch employees to showcase key features to customers in person, and provide proactive emails, texts, and direct mail to remind them of features they can leverage to make managing their finances easier.&nbsp;
With a proactive approach to educating consumers on how to get the most out of their banking experience, coupled with personalized, easy-to-use tools that enable them to take these five actions within the first 30 days, financial providers can drive higher engagement from the beginning that results in increased customer loyalty, retention, and ultimately, deposits.&nbsp;
<blockquote>
&ldquo;To win and keep customers in 2024, the money experience needs to connect customers to their data in a way that enhances their financial lives. It needs to be personalized. It needs to be intelligent. And, it needs to be actionable.&rdquo; &mdash;<a href="https://www.mx.com/research/how-to-keep-consumers-from-breaking-up-with-banks/">How to Keep Consumers from Breaking Up with Banks</a>
</blockquote>

MX took a deep dive into data from more than 10 million consumers over the past 12 months to identify how to drive the right experiences and touchpoints to create lasting engagement and relationships.

Building Long-Term Digital Engagement in the First 30 Days

A 101 dive into what customer segmentation is and how if applies to banking and financial services.  

Customer segmentation is the process of dividing a customer base into smaller groups to better understand the trends, habits, and needs of each group.

What Is Customer Segmentation in Banking?

Consumers have grown to expect personalized and tailored experiences from their financial providers. And, they are ready to share their data in exchange for more relevant experiences.
In fact, MX research found that <a href="https://www.mx.com/research/financial-apps-fall-short/">55% of U.S. consumers</a> agreed they would give their financial provider access to more of their data if they knew it would result in a better experience. But, if they share their data, they expect financial providers to actually use it.&nbsp;&nbsp;
<blockquote>
65% of U.S. consumers agree they expect their financial institutions to use the data they have on them to provide them with actionable and clear insights about their finances.
</blockquote>
One-size-fits-all approaches don&rsquo;t meet this expectation. Financial providers need to leverage the data that consumers share to create effective customer segmentation to meet their unique needs.&nbsp;
In this post, we&rsquo;ll cover:
<ul>
<li><a href="#what-is-customer-segmentation">What Is Customer Segmentation?</a></li>
<li><a href="#why-is-customer-segmentation-important">Why Is Customer Segmentation Important in Banking?</a></li>
<li><a href="#benefits">Benefits of Customer Segmentation</a></li>
<li><a href="#mx-support">How Does MX Support Customer Segmentation?</a></li>
</ul>
<h2 id="what-is-customer-segmentation">What Is Customer Segmentation in Banking?</h2>
Customer segmentation is the process of dividing a customer base into smaller groups using a variety of shared characteristics. It helps businesses better understand the trends, habits, and needs of each group.&nbsp;
With customer segmentation, businesses can target and message their customers based on demographic, geographic, psychographic, and/or behavioral characteristics. By segmenting customers according to specific needs, preferences, and behaviors, businesses can more effectively tailor their marketing, products, and services. It helps companies know and reach the right customer base with the right message, product, or service at the right time. Consumers can occupy multiple segments and segments change and evolve over time as consumer behavior and needs change.&nbsp;
Within banking, <a href="https://www.mx.com/blog/what-is-consumer-permissioned-data/">customer-permissioned financial data</a> enables financial institutions and fintechs to segment customers based on characteristics such as spending affinities, risk tolerance, credit history, income, spending and savings habits, investments, financial management behaviors, etc.&nbsp;
<h2 id="why-is-customer-segmentation-important">Why Is Customer Segmentation Important in Banking?</h2>
Customer segmentation is a valuable tool for any industry, but none more so than financial services. The <a href="https://www.mx.com/money-experience/">money experience</a> is deeply personal. Each consumer has a different set of circumstances, goals, and life moments that influence the financial products and services they want and need.&nbsp;&nbsp;
Customer segmentation allows financial providers to deliver more personalized messages, offers, and experiences at scale for consumers. And, with the rise of <a href="https://www.mx.com/blog/what-is-open-banking/">Open Banking</a>, financial providers have access to more consumer-permissioned data than ever to understand customers on a deeper level and segment accordingly.&nbsp;&nbsp;&nbsp;
<h2 id="benefits">Benefits of Customer Segmentation in Banking</h2>
Customer segmentation improves financial products and services in a variety of ways that benefit both the consumer and business.&nbsp;
<h3>Benefits for Consumers</h3>
Some examples of benefits customer segmentation provides consumers are:
1. More Personalized Products and Services
Segmentation ensures that financial institutions offer products that suit the specific needs and goals of different consumer groups. For instance, consider the needs of different generations: Gen Z customers who&rsquo;ve recently graduated may benefit from an offer to refinance their student loans while Baby Boomers who have been out of school for some time would likely not benefit from this same offer.
The more data a financial provider has, the more they can use customer segmentation to tailor products and services to meet specific needs. This means consumers get exactly what they need, instead of being overwhelmed with options that don&rsquo;t apply to them.
2. Increased Customer Satisfaction
When financial institutions understand a customer&rsquo;s needs, behavior, and preferences, they can provide more relevant experiences, which improves customer satisfaction and loyalty. Consumers may receive tailored financial advice, faster and more informed responses to questions, and better services that support a consumer&rsquo;s financial goals.&nbsp;
3. Improved Financial Advice
Navigating finances is challenging and many consumers struggle to do so on their own. <a href="https://www.mx.com/research/financial-apps-fall-short/">MX research</a> found 50% of consumers see money as their main source of stress and 44% say they struggle to make ends meet. Whether in boom or bust, consumers want their financial providers to offer personalized advice on next steps. Customer segmentation helps financial providers offer more relevant advice to a wide range of customers.&nbsp;&nbsp;
4. More Relevant Offers and Promotions
Instead of receiving generic marketing offers, consumers benefit from receiving deals and promotions that actually make sense for them. If you&rsquo;re a recent college graduate, for example, you might get offers for first-time homebuyer loans or low-fee credit cards, rather than irrelevant offers targeted at different groups.
<h3>Benefits for Financial Providers</h3>
Examples of the benefits of customer segmentation for financial institutions are:
1. More Effective Marketing and Communications&nbsp;
Even a financial provider with the best products and services will still struggle if they fail to put them in the hands of the consumers at the opportune moment. By marketing specific and tailored campaigns based on customer segmentation data, financial providers get relevant and actionable insights into the hands of their customers when they need it.&nbsp;
2. Boost Cross-Selling Opportunities
Segmentation allows financial institutions to identify opportunities for cross-selling relevant products to their customers. As customers progress in their lives and financial journeys, they move through different segments and their needs change. By understanding how individuals progress through segments, financial providers can meet consumers where they are and provide actionable insights for their customers&rsquo; next steps.&nbsp;
3. Improved Engagement, Retention, and Loyalty
Personalized services, relevant product offerings, and proactive customer support help build stronger relationships, which in turn increases customer loyalty. Satisfied customers are more likely to engage and remain with the institution for the long term, increasing satisfaction and reducing churn.
4. Optimized Product Development
By analyzing customer segments, financial institutions can identify gaps in the market and develop new products tailored to specific groups. By actively assessing customer segmentation data and looking for trends and changes, financial institutions can have a head start on where the industry is headed and be the first to market with new products and services that will serve customers in the future.&nbsp;
<h2 id="mx-support">How Does MX Support Financial Institutions with Customer Segmentation?</h2>
At MX, we believe that by leveraging consumer-permissioned data, we can help empower the world to be financially strong. This belief is reflected in the products and tools we create to help financial providers deliver better money experiences to consumers.&nbsp;
For instance, our <a href="https://www.mx.com/products/customer-analytics/">Customer Analytics</a> solution enables financial institutions to surface deeper insights about their customers with world-class data, clear segmentation, and unified data sets. It combines consumer-permissioned and enhanced transaction data into a centralized, comprehensive set of intelligent models, dashboards, and analytics tools all of which can be easily embedded into marketing automation platforms and CRMs. Our approach enables a new way to retrieve data and break analytics down to a set of actionable attributes.
<blockquote>
"...Having the data is just the beginning &mdash; you have to do something with it. Those who can effectively drive that next action will see tremendous results." &mdash;<a href="https://thefinancialbrand.com/news/deposits/most-financial-institutions-have-a-data-problem-not-a-deposit-problem-187874?mx-content-portal">&nbsp;Billy Gast</a>, Senior Director of Mobile and Experiences Products at MX
</blockquote>
MX also helps financial providers transform that data into action &mdash; with personalized insights, proactive recommendations, and more.

What Is Customer Segmentation? Benefits, Examples in Banking

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