• Allon Advocacy Why Banks Block Budgeting Apps

By Amanda Dixon

December 4, 2017

Have you found a financial management app you’re dying to download? Your bank might be withholding your account data from the app.

Kathy Haan wanted to use Trim, a bot that cancels unwanted subscriptions and slashes credit card costs. Too bad she couldn’t connect Trim to her Barclaycard account.

“It’s my data and I authorize it to be shared,” says Haan, a 31-year-old business coach and consultant based in Denver, Iowa. “I should be able to give that authorization without having to jump through all these hoops.”

If you can’t link your financial data to a fintech tool, consumer advocacy group Consumer Financial Data Rights has two suggestions: Speak out on social media or complain to the country’s top consumer watchdog, the Consumer Financial Protection Bureau (CFPB).

Banks cite security fears

Haan is one of many consumers using Twitter to complain about consumer data-sharing restrictions. Some of the companies they’re complaining about include Barclaycard, TD Bank and Capital One.

In a statement, TD Bank says it has no policy for keeping customers from connecting accounts with other parties. However, the “protection of our customers’ assets and data” is a key concern.

Access to tools is blocked if aggregators can’t accommodate recent security policy changes, a Barclaycard spokeswoman says. Next year, the company will introduce a secure system and provide access to additional third parties.

According to a statement from Capital One, it’s also open to sharing data with various fintech companies, as long as they meet security standards. App developers interested in accessing customer data can reach an agreement with the bank to use its application programming interface (API). With an API, you’re logging into an app through a portal that’s more secure, like logging into Spotify via Facebook.

Competitive concerns also in play

When it comes to security, many of the banks cite concerns about “screen scraping” or sharing account log in information directly with apps. Bank accounts and other sites can be compromised if usernames and passwords fall into the wrong hands. But some banks seem to limit access to consumer data to shield themselves from competition.

“You have fintechs coming in trying to sit between the bank and the consumer and offer them a different range of services, or at least a different range of tools for understanding whether they have the right mix of products,” says Schan Duff a senior fellow in the Aspen Institute’s Financial Security Program. “It’s sending their customers to other providers where historically they owned that entire relationship.”

Two years ago, banks like Chase and Wells Fargo came under fire for temporarily cutting off access to apps like Mint.

Some—like Trim’s co-founder and CEO Thomas Smyth—say that today it’s typically a blanket prohibition rather than app-specific block preventing some bank customers from sharing data with fintech tools. This happens despite Section 1033 in the Dodd-Frank Act, which requires financial firms to provide data consumers request.

“Section 1033 is not actually a regulation,” says Brian Peters, executive director of Financial Innovation Now, a coalition of five tech companies. “The CFPB would have to issue a regulation and have that on the books in order to mandate data sharing.”

Liberate your data

Complaining on social media could go a long way toward ensuring your financial data can be shared. Consumers helped drive the CFPB to develop data-sharing principles, says Steve Boms, president of Allon Advocacy.

Consumer financial data should be accessible, accurate and provided both securely and efficiently by banks and service providers, state the CFPB principles, released in October. And consumers should control what’s shared with third parties.

Others, like the Center for Financial Services Innovation (CFSI), have also called for changes to the way consumers’ information is shared. While some of the biggest banks have signed agreements with specific companies, that may not ensure that everyone has access to the tools they need.

Small banks and credit unions can’t negotiate terms with every aggregator or fintech company, says Beth Brockland, managing director at CFSI. “We’re really calling for additional industry-wide collaboration, coordination to really develop solutions or standardized protocols.”

Time to change banks?

In places like the United Kingdom, regulation will soon force banks to share customer data with third parties. That’s not the case in the United States. Ultimately, you may have to complain to the CFPB if your bank won’t cooperate.

Just note that there could be multiple reasons why you can’t link your data to a certain tool. “Was it because the internet was slow?” asks Peters from Financial Innovation Now. “Or was it because a bank was actually blocking access?”

See what the best banks and credit unions have to offer, especially if you’ve had the same account for years. An institution with fewer consumer data-sharing restrictions may have better rates on CDs and loans or a higher savings account yield. Make sure you take other factors, including fees, into account before switching.

Think twice before using a new app

Not every tool in the app store is safe to use. Don’t share your financial data with an app unless you’ve reviewed its terms and conditions and privacy policy. Get answers to these key questions:

Who will access your data and how will it be used?

How long will your data be stored and how will it be secured?

Will your data be shared with others?

Watch out for apps that claim to be hacker-proof or unbreakable, says Michel Chamberland, a practice lead at computer and network security firm Trustwave. And be wary of apps requiring you to enter your bank account username and password, says Rob Morgan, ‎vice president of emerging technologies at the American Bankers Association.

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