Data aggregation continues to gain importance in the
financial services world. But what value does it offer?

PaymentsJournal sat down with Paul Diegelman, VP of digital
payments and data aggregation at Fiserv, and Sarah Grotta, director of the Debit
and Alternative Products Advisory Service at Mercator Advisory Group, to delve
deeper into the topic.

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Defining data aggregation

Data aggregation, or what Diegelman referred to as “consumer
permission financial data aggregation,” can be broken down into two parts:
consumer permission and financial data aggregation.

The consumer
permission component of the definition refers to the fact that in data
aggregation, consumers should consent to the process and provide the necessary
credentials for their bank. In return, consumers expect security, privacy,
transparency in the use of their data, and some form of benefit.

The second component, financial
data aggregation, consists of the financial data that is pulled—or
aggregated— from thousands of sources, including banks, credit unions, credit
card platforms, investments, mortgage companies and other payment providers.
Aggregators like Fiserv have built what Diegelman referred to as an “underlying
set of pipes,” allowing these parties to connect together in a faster process
and deliver something of value to consumers.

Visa’s $5.3 billion
Plaid acquisition

Visa’s January 2020 announcement of its $5.3 billion
acquisition of third party data aggregator Plaid caused major players in the
payments world to focus more of their attention on data aggregation.

Though open banking is not mandated in the U.S., there is a
growing interest on the part of consumers and small businesses to connect their
bank and credit union accounts to a third party app or platform. Data
aggregators such as Plaid, MX, Fiserv and others are needed to facilitate this
connection and the sharing of information, making it available not only through
P2P payment apps like Venmo or Zelle, but also through private label debit
cards like GasBuddy and Cumberland Farms, mortgage originators, and some
digital-only banks.

Visa’s acquisition underscores how important data
aggregation has become and reveals the direction it is heading. According to
Grotta, Visa’s decision to buy Plaid gives it “a jump start in what is becoming
the private sector approach to open banking in the ...