Big tech players are moving into financial services & the consumer is up-for-grabs… but the shift isn’t playing out as predicted.

Fintech hasn’t replaced existing financial institutions, and strategic partnerships between the big tech platforms and a handful of the largest FIs haven’t triggered a wave of consolidation in the space. Why not?

The disruption of consumer-facing financial services is still coming, but it will look more like the mainstreaming of the Internet.

Big tech players like Google, Amazon and Facebook will become the “application layer” to consumers for financial services. Like ISPs and network infrastructure providers before them, traditional banks and credit unions will move “down the stack.”

20 years ago, the network was front and center to every Internet user— and consequently, a huge area of focus and investment. Today, though no less critical, the network layer is basically transparent to consumers.

Ultimately, traditional financial institutions will become transparent to the consumer, and transform themselves in the process:

  • Some financial institutions will focus on being the best network layer they can be. The most reliable, convenient and trusted. These will be the Cisco and Nortel of financial institutions in the future.
  • Some financial institutions will innovate on top of their traditional services to create new application layer user experiences that go above and beyond, combining their role of network and application layer in order to remain relevant with consumers. They will be competing with Google, Facebook, Amazon, and smaller FinTech startups. These banks will be the “Microsoft” of financial institutions.
  • Everyone else in the space will be classically disrupted as new winners emerge.

Post-disruption, consumer-facing financial services will be dominated by Google, Amazon, Facebook, Apple and FinTechs defining the application layer user experience for finance. Their reach will be global, and concentrate the collective financial power of billions of consumers — without needing to become regulated financial institutions in the process, just as Facebook and Google built their brands on top of the network layer provided by AOL, AT&T, Comcast and Cisco. Just as when consumers abandoned the captured portals and limited content of the early network providers.

Today however, we live in a world where even the largest tech companies find that achieving scale with one-off integrations or cloud-based data aggregation to financial institutions is intractable. It’s clear that a fundamentally different approach is needed. That’s why we developed the AppBrilliance platform.

Whether solving problems with blockchain, disrupting transaction attribution, or building the digital banking experience that will define FintTech for the next generation of consumers, the companies building these applications will build them on a network layer of secure, reliable, and high-performance of financial institutions. To do that, these companies will need a universal read/write interface to that network.

Like the transition with the Internet that came before, the overall opportunity in the space is unbounded. The shift is going to come quickly, unlocking tremendous value and opportunity in the process.

Are you ready?

Rethinking Data Aggregation: Security

If you’re using cloud-based data aggregation providers like Plaid, Yodelee, or MX to power your mobile apps or platforms, you need to look at these systems from the user’s perspective:

Aggregator: “So here’s the deal: give me the username and password to your most sensitive financial data. No, really. Trust me. I’ll store that in my secure cloud, and use it to access your financial history. I promise that I’ll keep your credentials secure, and I’ll encrypt your data.”

Consumer: “Uh, no.”

Aggregator: “Your just saying that because your bank warned you about giving out your username and password. Well, they meant OTHER companies. Not us.”

Consumer: “Isn’t keeping my banking credentials and all of my data in the cloud… risky?”

Aggregator: “You’re worried about a data breach? What happens if someone hacks us? Well, we’ve never been breached so far — and really, what could a hacker do with your financial records and access to your bank accounts, anyway?”

Tough Choice

I get it. Integrating with Financial Institutions is hard. It sucks. It has always been a huge challenge, and that’s why companies like Plaid, Yodelee, MX and others exist. Your platform or app needs financial data to function, but trusting a 3rd party with your user’s data and account credentials has always been a Faustian bargain; you extract the transaction, user verification and payment/ACH information your app needs, but it’s unreliable, and low-function. Above all, it’s a potential security nightmare for you and your users.

The better choice would be direct integrations with FIs, but let’s be real. That’s not going to happen.

A Better Option

The good news is there’s an alternative: Moving the data aggregation integration point from the cloud to the edge — directly in your app. This approach is win/win/win. Our SDK enables this today.

High Security

Face it — user credentials for financial institutions are radioactive. You don’t want them. Our patented technology leverages the proven platform security on iOS and Android to safely store user’s sensitive credentials in the Keychain. They’re kept local and encrypted. This protects both you and your user. Your app will not have direct access to them. Ever.

Our SDK connects your app directly to the user’s financial institution over an encrypted, user-specific channel from the smartphone. User accounts are directly accessed by the SDK in your application. No user data is ever stored or shared with us or any 3rd party. You have the freedom to innovate and leverage that data to build value for your users, not a 3rd party data aggregator.

High Reliability

Cloud-based data aggregation providers are notoriously unreliable. Banks and bank software providers don’t like them. And why should they? The connections coming in from the Data Aggregators aren’t real users. They’re bots. Because they’re coming from the cloud they’re easy to spot and block. This has huge downstream impact to your applications and users.

Connections from your app powered by our SDK are different. Each connection is direct from the user’s device, not aggregated. And the connections are fundamentally different — they’re attended sessions. This radically improves reliability for your applications and users.

Enhanced Functionality

Imagine what you could build if your apps had direct “on network” integration with any FI. Anything that users could do with their accounts, you could do with your apps. That’s not possible with cloud-based data aggregation.

Connecting apps from the edge of the network with our SDK gives you a virtual “on network” interface to the FI with full user-level access to any functionality and data available.

There’s no excuse for exposing your users and their data

There’s now a viable alternative to cloud-based data aggregation. Sleep better at night. Upgrade your integration and build better user experiences that capitalize on the trust your users place in your platform.