Everything you need to know about banking aggregation, the technology that is revolutionising 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 aim? To harness banking data to offer new services to individuals and businesses alike. Whether it's getting a clearer picture of your finances, proving your solvency without having to send in supporting documents, or taking advantage of personalised offers, there are numerous benefits for end users.
How exactly does this technology work? What are the benefits? Which bank account aggregator should you choose?
Find all the answers to these questions in this article, plus a 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 of accessing the banking data of a company or individual from its own interface in order to improve its services...
Thanks to this technology, no more time is wasted logging into your multiple accounts and no more information is lost due to a lack of visibility over your finances!
This process was developed in response to the growing phenomenon of " multi-banking ". More and more individuals and businesses now have 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 traditional bank account aggregators, by also including investments, property and other possessions.
What is open banking?
Banking aggregation works through open banking. This is a practice that allows 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 permission 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.
💡 Worth knowing: 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, by using gator x WIDMEE, you connect your sales routes to the various French banks. You then synchronise customer data (with their consent) to obtain key information about them or to optimise your processes: verification of an account holder's banking identity, solvency of a candidate for a property, bank reconciliation, and so on. 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 expression "banking aggregator" lie many different realities. Some solutions offer basic services, while others go a step further, by including, for example, the management of all your financial assets.
Finally, some platforms use this term more in reference to open banking services, and therefore to the synchronisation of customer data via a single API, to be integrated within web and mobile applications.
👉 Nevertheless, here are the expected functionalities of a good 'classic' banking aggregator:
- ✅ Centralisation of all bank accounts within a single interface, including current, savings, credit card and investment accounts.
- ✅ Tracking of transactions, using a detailed, filterable view, and automatic categorisation according to the nature of expenses.
- ✅ Budget management and monitoring, with an overrun alert system.
- ✅ Generate reports and analyses on spending patterns, income and balances.
- ✅ Notification of unusual transactions, low balances and payment deadlines.
- ✅ Integration with other financial applications and services, such as accounting software or asset management tools.
- ✅ Financial planning with target monitoring and cash flow forecasting.
The 5 key benefits of a banking aggregation service
#1 Centralisation of banking information
This is, of course, the first advantage of bank aggregators: by centralising 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 several bank accounts to check balances and transactions ;
- remember passwords for each application.
All in all, banking aggregation promises not only greater finesse in managing your accounts, but also precious time savings in these time-consuming operations.
#2 Optimising cash management
With this consolidated view of your finances, you're in a better position to manage your cash effectively and forecast your liquidity needs.
Banking aggregators automate the collection of financial data. This makes it easier to reconcile accounts and monitor cash flows.
💡 For example, you can track your customers' payments without having to juggle several interfaces and statements.
#3 Financial analysis and planning
As a general rule, bank account aggregators provide reporting tools, which are handy for understanding :
- your spending trends (thanks in particular to categorisation) ;
- your sources of revenue
- your organisation's overall financial performance.
Basically, you know exactly where the money is going each month, but also where it's coming from.
What's more, these detailed analyses are invaluable when it comes 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 journeys 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 optimising operational efficiency.
#5 Improved customer knowledge
By accessing consolidated information on consumers' spending habits, income and financial behaviour, it is possible to create more accurate profiles. This enables :
- finely-tuned personalisation 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 main 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 (opening and managing accounts, processing transactions, 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 player can be found in two main sectors:
Banking
Banks are the first organisations 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 together start-ups and innovative companies operating in the financial sector. They often develop software and applications for businesses or individuals.
💰 Companies in this category include Widmee, Tink and Powens.
Banking aggregation and security
How can you be sure that a bank aggregator is authorised?
At this stage, if we've convinced you of the usefulness of a bank account aggregator, perhaps you're wondering about the security of your company's data or that of your customers?
To begin with, you should know that you can check the legitimacy of a bank aggregation company by checking whether it has been declared to the ACPR via the following website: REGAFI.
☝️ This site lists all the companies and organisations authorised 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 name you want in the search bar!
What about data security?
Over and above the simple authorisation to operate, many professionals are concerned about the protection and confidentiality of the data that passes through these types of tools.
The good news is that banking aggregators are designed to provide maximum protection for your information. And with good reason: regulations require them to meet high security standards, such as :
- data encryption (people working in these services cannot read it!) ;
- double authentication, which requires two separate ways of checking a user's identity before granting them access to a system.
In addition, bank account aggregators are supervised 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 a number of rights in respect of their personal data, in accordance with the RGPD: right of access, right of rectification, right to be forgotten, right to portability, and so on. And of course, their consent must be obtained before any use is made of their information.
What's the best bank account aggregator?
The answer is very simple: the one that really suits your needs 😉.
As you will have realised, 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 be able to consult your accounts more easily? Or do you need to go further, with more advanced analytical or customer knowledge functions?
At the same time, pay particular attention to the security protocols applied (are they sufficient?) and, of course, the declaration to the ACPR.
Other criteria may then tip your balance towards a particular tool:
- compatibility with :
- all the banks and financial institutions with which your company works ;
- your accounting software and other relevant business solutions;
- price 👉 Look 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;
- user-friendliness, to ensure that the application runs smoothly;
- the ease with which APIs can be integrated into your web and mobile applications;
- quality customer support, responsive and available if you have any problems or questions;
- scalability, to ensure that the aggregator can grow with your business and adapt to an increase in the volume of transactions;
- customisation, to meet the specific needs of your organisation.
Banking aggregation at a glance
At a time when business structures and commercial 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 all this through processes that are perfectly secure, since they are under 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 features for viewing your various accounts... or even more, like these software packages specialising in open banking.
And this technology is not about to stop there. The market foreshadows interesting future developments, such as bank card aggregation or the possibility of access to all financial and insurance data (FIDA).
Article translated from French