All you need to know about banking aggregation, the technology revolutionizing financial management
The last few years have seen the development of two phenomena: multi-banking and the arrival of new digital payment methods (such as PayPal).
In response, banking aggregation solutions have proliferated. Their objective? To harness banking data to offer new services to individuals and businesses alike. The benefits for end-users are numerous, from better visibility of their finances, to proof of solvency without having to submit supporting documents, to personalized offers.
How exactly does this technology work? What advantages can be gained? Which bank account aggregator should you choose?
Find all the answers to these questions in this article, with a bonus focus on security... because financial data is no laughing matter!
What is bank account aggregation?
Traditionally, bank aggregation defines a service, offered by a bank or FinTech company, consisting in accessing the banking data of a company or individual from its own interface to improve its services....
Thanks to this technology, there's no more time wasted logging in to your multiple accounts, and no more wasted information due to a lack of visibility over your finances!
This process was developed in response to the growing phenomenon of " multi-banking ". Indeed, more and more individuals and companies now hold several accounts with different banks, thanks to the emergence of new service providers (the famous neo-banks) and the introduction of the banking mobility assistance service.
According to the Square website, 42% of French banking customers are multi-banked.
💡 Worth knowing: there are also wealth aggregators. These go further than conventional bank account aggregators, by also including investments, real estate and other possessions.
What is open banking?
Banking aggregation works through open banking. This is a practice that enables banks and financial institutions to securely share their customers' banking data with third parties, via application programming interfaces (APIs). This is, of course, done with the prior authorization of the customers in question 😉.
⚖️ Open banking is regulated by the European Payment Services Directive (PSD). Coming into force in January 2018, it provides for various measures including:
- opening up banks' information systems via secure APIs;
- the introduction of strong authentication with the aim of protecting banking data.
💡 Good to know: thanks to open banking, professionals can now use even more advanced solutions to improve their knowledge of their customers, based on their banking information. For example, using gator x WIDMEE, you connect your sales routes to various French banks. You then synchronize customer data (with their consent) to obtain key information about them, or to optimize your processes: verification of an account holder's banking identity, solvency of a property applicant, bank reconciliation, etc. You'll also appreciate this service for detecting moments in consumers' lives, so you can understand their real needs!
The features of a banking aggregator
Behind the term "banking aggregator" lie many different realities. Some solutions offer basic services, while others go a step further, including, for example, the management of all your financial assets.
Finally, some platforms use the term more in reference to open banking services, and therefore synchronize customer data via a single API, to be integrated within web and mobile applications.
👉 Nevertheless, here are the functionalities expected of a good "classic" banking aggregator:
- ✅ Centralization of all bank accounts within a single interface, including current, savings, credit card and investment accounts.
- ✅ Transaction tracking, with a detailed, filterable view, and automatic categorization according to the nature of expenses.
- ✅ Budget management and monitoring, with an overrun alert system.
- ✅ Generate reports and analyses on spending habits, income and balances.
- ✅ Notification of unusual transactions, low balances and payment deadlines.
- ✅ Integration with other financial applications and services, such as accounting software or wealth management tools.
- ✅ Financial planning with target tracking and cash flow forecasting.
5 key benefits of a banking aggregation service
#1 Centralized banking information
This is, of course, the first advantage of bank aggregators: by centralizing all your financial information, you get an overview of your company's finances, at a glance and in real time.
What's more, this process eliminates the need to :
- connect to multiple bank accounts to check balances and transactions ;
- remember passwords for each application.
Ultimately, banking aggregation promises not only greater finesse in managing your accounts, but also precious time savings in these time-consuming operations.
#2 Optimized cash management
With this consolidated view of your finances, you're better able to manage your cash flow efficiently and forecast your liquidity needs.
Banking aggregators automate the collection of financial data. This simplifies account reconciliation and cash flow monitoring.
💡 For example, you can track customer payments without having to juggle multiple interfaces and statements.
#3 Analysis and financial planning
As a general rule, bank account aggregators provide reporting tools, handy for understanding :
- your spending trends (thanks in particular to categorization) ;
- your sources of revenue;
- your organization's overall financial performance.
In short, you know exactly where your money is going each month, and where it's coming from.
What's more, these detailed analyses are an invaluable aid to forecasting and preparing for future growth 🚀.
#4 Access to customers' and prospects' banking data
If we look at banking aggregation solutions that are more geared towards retrieving customer data, there are also many benefits.
For example, you can improve your sales paths to automate your processes, limit risk and speed up decision-making:
- no more collection of paper documents ;
- reduce fraud and the risk of error;
- saving time and optimizing operational efficiency.
#5 Improved customer knowledge
By accessing consolidated information on consumers' spending habits, income and financial behavior, it is possible to create more precise profiles. This enables :
- finely-tuned personalization of offers;
- better market segmentation.
👉 By way of illustration, you can find out which contracts have been taken out by an individual in order to offer more tailored products or services.
💡 Good to know: improved customer knowledge also has a positive influence on your business decision-making. Should you, for example, continue the deal with that customer who appears to be in financial difficulty?
Who are the leading bank account aggregators?
To become a bank account aggregator in France, you need to receive DSP2 approval and operate :
- either as a payment service provider (PSP): an entity providing all the traditional services of a bank (account opening and management, transaction processing, etc.) ;
- or as an account information service provider (AISP): an entity that simply offers account aggregation services;
- or as a payment initiation service provider (PSIP): an entity providing online merchants with payment solutions.
👉 These different types of players can be found in two main sectors:
Banking
Banks are the first organizations we think of when we talk about banking aggregation. It has to be said that they can't escape this trend if they want to improve their customers' experience and stand out from the crowd!
💰 This category includes:
- traditional banks, such as Crédit Agricole and Société Générale;
- neo-banks, such as Boursorama or Fortuneo.
FinTech
The neologism FinTech, a contraction of "Financial Technology", refers to a sector grouping startups and innovative companies operating in the finance sector. They often develop software and applications for businesses or individuals.
💰 Players in this category include Widmee, Tink and Powens.
Banking aggregation and security
How can I be sure that a banking aggregator is authorized?
At this point, if we've convinced you of the usefulness of a bank account aggregator, perhaps you're wondering about the security of your company's or your customers' data?
For starters, you can check the legitimacy of a bank aggregation company by verifying whether it has been declared to the ACPR via the following site: REGAFI.
☝️ This site lists all companies and organizations authorized to carry out regulated banking, financial, electronic money or payment services activities in accordance with the French Monetary and Financial Code. All you have to do is enter the desired name in the search bar!
What about data security?
Beyond the simple authorization to operate, many professionals are concerned about the protection and confidentiality of data transiting via this type of tool.
The good news is that banking aggregators are designed to provide maximum protection for your data. And with good reason: regulations require them to meet high security standards, such as :
- data encryption (people working in these services can't read it!) ;
- double authentication, which requires two distinct forms of verification of a user's identity before granting him or her access to a system.
In addition, bank account aggregators are subject to supervision by the ACPR (Autorité de Contrôle Prudentiel et de Résolution) and the CNIL (Commission Nationale de l'Informatique et des Libertés).
Finally, users of these services have numerous rights with regard to their personal data, in accordance with the RGPD: right of access, right of rectification, right to be forgotten, right to portability, etc. And of course, obtaining their consent is necessary before any use of their information.
What's the best bank account aggregator?
The answer is very simple: the one that really suits your needs 😉.
As you can see, there are many different devices behind the term "bank account aggregator". So it's important to assess exactly which features you need. Do you just want to consult your accounts more easily? Or do you need to go further, with more advanced analytical or customer insight functions?
At the same time, pay particular attention to the security protocols applied (are they sufficient?) and, of course, to the ACPR declaration.
Other criteria may then tip your balance towards a particular tool:
- compatibility with :
- all banks and financial institutions with which your company works ;
- your accounting software and other relevant business solutions;
- price 👉 Look out for any hidden costs, and make sure that the price you pay matches your budget. Note that it is possible to find a free account aggregator, but this type of platform is often not suitable for business needs;
- Ergonomics, to ensure that the application runs smoothly;
- easy integration of APIs into your web and mobile applications;
- quality customer support, responsive and available in the event of problems or questions;
- scalability, to ensure that the aggregator can grow with your business and adapt to increased transaction volumes;
- customization, to meet the specific needs of your organization.
Banking aggregation at a glance
At a time when corporate structures and business relationships are becoming increasingly complex, banking aggregators are still the talk of the town. They provide an appropriate response to the problems arising from multi-banking. And they do so through processes that are perfectly secure, since they are subject to the strict control of European regulations.
All that's left is to find your banking aggregation solution, the one that will offer you the best functionalities for visualizing your various accounts... or even more, following the example of these software packages specialized in open banking.
In fact, this technology has a long way to go. The market foreshadows interesting future developments, such as bank card aggregation and access to all financial and insurance data (FIDA).
Article translated from French