Finicity, an open banking software provider, announced Friday that it has signed a direct data agreement with Charles Schwab.
By sharing data via an API, Finicity says it will enable consumers, through their Schwab accounts, to more securely connect and allow direct access to their financial account data via third-party apps.
The real-time financial data aggregation and insight provider’s self-described mission is to help individuals, families and organizations make smarter financial decisions through safe and secure access to “fast, high-quality data.”
Finicity launched its first financial product in 2000 and has since grown to provide financial data APIs, credit decisioning tools and financial wellness solutions. It partners with financial institutions and “disruptive” fintech providers alike with the goal of giving consumers “a leg up in a complicated financial world.” It has partnered with many of the most popular personal financial management tools, and many of the largest lenders and most innovative payment providers.
Its new partnership with Charles Schwab is significant considering that Charles Schwab is one of the largest wealth management firms in the nation. It signed a similar agreement with Fidelity in 2018.
In an email statement, Finicity CEO and co-founder Steve Smith said the company aims to allow people to connect their financial accounts to the apps and services they want to use. For example, if someone has a budgeting app, it is likely they’d want to connect their bank accounts and maybe credit card accounts so they could track and manage their income and expenses. Typically the budgeting app doesn’t have the technical ability to manage those connections across the thousands of financial institutions, so they’d work with a company like Finicity to provide that capability.
Ryan Christiansen, Finicity’s SVP of data access, said giving consumers a way to link several different accounts without having to share credentials is part of the company’s mission.
“We’re leaning into next-gen data access for secure and reliable access to financial records,” he told FinLedger.
Finicity and Charles Schwab both use the Financial Data Exchange (FDX) API specification leveraging Open Authorization (oAuth) technology.
“Our goal is to have the maximum number of consumers covered by these agreements as possible,” Christiansen told FinLedger. “We have worked with many of the large financial institutions so that we have broad coverage of the US financial markets covered under open banking agreements.”
In June, credit card giant Mastercard announced its plans to acquire Finicity for $825 million.
At the time, Mastercard said Finicity’s technology would strengthen its own open banking platform. Open banking, it says, gives people and businesses greater control over their financial data. Mastercard President Michael Miebach called open banking a “growing global trend” and said it was “a strategically important space” for the company.
Open banking allows for things such as determining how and where third parties – such as fintechs or other banks – can access account information to provide new services like money management programs or initiate payments on their behalf.
The news came just five months after rival Visa announced it was acquiring fintech unicorn Plaid for a staggering $5.3 billion. Both acquisitions are examples of credit card giants recognizing the value of acquiring tech companies rather than just trying to build out the technology themselves. Mastercard’s acquisition of Finicity has not yet closed.
Finicity is based in Salt Lake City, Utah, and has about 500 employees globally. Since its 1999 inception, it has raised a known nearly $80 million in venture funding, according to Crunchbase data. In December 2016, the company raised $42 million in a Series B financing led by Experian.