‘Data aggregation is used today in ways we wouldn’t have thought about five years ago’: Fiserv’s Kevin Hughes
- Fiserv enables banks, credit unions, and fintechs to aggregate data seamlessly and securely.
- Kevin Hughes, who manages the AllData products, talks to Tearsheet about changes in the aggregation field and where it's heading.
The following was produced by Tearsheet Studios. We worked with Fiserv, a financial services technology company, to create a four part podcast series on the role and changing nature of data aggregation in the financial industry.
Data is the foundation of the financial system, making the smooth aggregation of it an imperative task. It means streamlining the sum of an individual’s financial life into a single view, and creating a user experience that uplifts the data to benefit both the individual and the bank — while simplifying the complex, and keeping it all secure.
Kevin Hughes, Fiserv: I’m Kevin Hughes, and I am the senior product manager for the AllData product suite, which represents all of our aggregation services. At Fiserv, we’re part of an organization called Digital Payments. I’m responsible for product strategy, roadmap development, engineering priorities, and working with a lot of the data sources and industry organizations to make sure that we’re all aligned both from a tactical and a strategic standpoint.
I’ve been here for nearly six years. Before that, I’ve been involved in a number of different areas within the financial services industry: started my career as a product manager at a regional bank; managed back office operations for a large wealth management firm; and then other product management type roles, particularly in areas of emerging products, or looking at new ways to leverage existing product frameworks into new markets.
And that served me well because we’ve really seen quite an explosion in the number of different applications that use components of the engine that we provide, and we’ve been really focused on building that foundationally. I’ve been able to draw on a lot of the experiences that I’ve had in leveraging technology into new markets and new applications.
It was Hughes’ experience managing both money and people that led him to the role of senior product manager at Fiserv. It’s his understanding of customers that informs his role everyday.
Kevin Hughes: As we look at developing a roadmap and strategic direction, the key thing is understanding how customers are ultimately going to use what you’re doing, and how to structure things in a way that really adds the most value to that overall experience. Taking in that kind of perspective really prepares you well for this type of role.
Data aggregation can at times seem complex, and incoherent to anyone outside of it. But in fact, innovations in aggregation shape our financial lives and make them easier — more than we realize. What’s something that aggregation has made possible?
Kevin Hughes: Two or three years ago, if you were applying for a mortgage, even if you were applying online, you were gonna upload copies of your statements; you could do it electronically, but you’d still upload the statements in, and type in all the different stuff.
When you look at that process today, almost every mortgage lender has a link, and instead of uploading statements, you enter information into the application, where they use the technology behind the scenes to connect to that institution using aggregation and they pull in your account and transaction information as well as your balances and statements for the past two or three years. And they do it in session, so that you can get a response a lot quicker.
A couple years ago, we went through this process with Fannie Mae, in their Day 1 Certainty program. It was a fascinating process to hear where they wanted to be from a technology standpoint, and how organizations like Fiserv, and our aggregation product AllData, could help them with that.
There’s a lot of discussion in Washington about regulatory and legislative action on the horizon. The Data Protection Act enacted in 2018 set forth the ‘data protection principles’, which all personal data handlers must follow. That’s impacting Fiserv and other players in the financial data industry.
Kevin Hughes: One of the good things here is that the number of true aggregators in the space is relatively small — it’s not an easy industry to break into, per se. It takes certain expertise, certain resources and technologies. Fiserv has been in this business for almost 20 years, so we’ve built the framework, the process, and the methodologies.
What is really changing are a couple of dynamics. One is the growth in the number of ways this technology is used — data aggregation is used today in ways we wouldn’t have thought about five years ago. The other is the number of applications — and it’s growing. That’s caused issues for many of the data sources, particularly the larger institutions that have seen a big increase in traffic.
The technology has become more sophisticated. So there’s access to more sensitive data. There’s been a push around the security of that process, as well as the underlying security of what happens to the data when it gets to where it goes.
And, there is the focus on consumer orientation. There’s a recognition that consumers want to use this data — it provides a significant value to them to be able to connect data from one institution to another. There are so many different ways that it’s being used. There’s really a need for the financial institutions who are the core providers of this data to really make sure that that data is first, protected, and second, that it’s being used with the consumer’s consent so that it’s not being sold for other purposes.
The regulatory focus is about trying to create the balance between open access for consumers to this data, while at the same time protecting the consumer and protecting the sources of that data from different external threats.
The regulatory efforts in the market are about keeping data both open and secure: giving consumers open access to their valuable data, while also keeping it and its sources protected. And that means standardization.
Kevin Hughes: Our banks and credit unions look to Fiserv as an organization to provide them with updated technology, and with ways to do things that they can essentially buy off the shelf and implement pretty easily. We’ve looked at that in terms of developing products and services that we have. Our role as a service provider is really to translate that functionality, and that of those applications into something that’s consumable, while still offering value for these banks.
But the move to technology — specifically around banking and payment APIs — is not an obvious move for all financial institutions. While the major banks have allocated budgets to technology and transformation, this scaling up may be out of reach for the smaller and mid sized ones.
Kevin Hughes: Banks and credit unions as a whole operate in very different markets, and some of them have very different strategies. We have a lot of conversations on a broad level with many organizations around digital strategy, safety and security. If they could, some of them would implement that kind of standard API solution on their own. But at the same time, there are others that we have to convince about the value of having a solution like that in place.
Some banks or credit unions are very small, serve a very local market, their client base doesn’t have as complex of a financial portfolio as others, they may not be as engaged with digital solutions outside of their own organization — so they don’t necessarily see the impact or see the threat.
It’s for those banks and credit unions who are ready for the next step, but can’t go it alone, that Fiserv created AllData Connect. And fun fact — it even won the Innovation Award at Tearsheet’s 2021 DataDay Conference. How is it making an impact for those institutions?
Kevin Hughes: One of the key components of this standardization is around API connectivity. When it comes to reliability of data, it helps with managing traffic, and understanding and gaining insight. But at the same time, for a lot of organizations, it requires support and maintenance. So you can’t just plug in an API per se.
What AllData Connect essentially does is take the framework that’s built on the open authorization networks that these banks are using as their technology background, while using our core AllData technology to provide the front end for our banks and credit unions — and it’s very easily implemented.
When a client of ours signs up, we’ll host where the customer validates their account by providing their credentials — so the credentials no longer have to be shared with a third party application. We’ll get the same information as the big banks, then we’ll turn around and provide an API with that data back to the third party. But at the same time, we’ll capture that same level of insight and control that they would get if they developed their own open authorization framework.
The pipeline continues to grow at a pretty rapid pace, we’re seeing a lot of engagement — they understand the value, they really see how it really will assist them in a number of different ways.
In the changing treatment of financial data, standardization goes hand in hand with open API access. Both moves promote greater reliability, security, and connection. But screen scraping may never fully go away.
Kevin Hughes: I think screen scraping gets a worse reputation than it deserves, because there are some bad players who have taken advantage of that methodology and the lack of control around it to create issues for different banks.
Screen scraping as a term covers a really wide variety of different different ways of connectivity — there are a lot of ways that it’s done behind the scenes that are more than just data aggregation.
There are a lot of smaller organizations who look at the way that we do things, and can get beyond that kind of negative connotation around screen scraping, and realize that if the right partner is doing it and it’s done the right way, it really is as secure as any other methodology. We as Fiserv get a little bit more leeway there, because we’re a bank technology firm, and have those security processes and protocols around our data. Our clients understand what we do and why we do it, and in many cases they are happy with us continuing to do that.
We do want to see the industry migrate to more of an API based solution as a whole, but I do think we have to recognize that there is still a place for some of that third party directed connectivity. If it’s done correctly, safely, and securely, it can be done with very limited impact to the bank itself. And quite frankly, there are some banks that would prefer that that continue.
With six years of experience in managing data aggregation services under his belt, I asked Hughes: what’s the most challenging part of his job?
Kevin Hughes: The organizations that we’re seeing a real uptick in our engagement and sales with are really true fintech type organizations: they are very nimble and tuned to meet very specific needs of a customer segment. They require a partner who can essentially match their agility. We’ve been working on a lot of initiatives here to streamline some of the processes because we recognize that when an organization comes in, they don’t want to wait for development to occur or for enhancements to be made; they want to be able to take it, plug it in, and be in market in 30 days.
The biggest challenge is trying to be proactive, think ahead of the trends, and identify some of those things to say, ‘Hey, this is a way that we can do some optimization now that will prepare us for these types of clients coming in.’
For all players in the industry, the pace of change is faster than ever before, and formerly inconceivable use cases are becoming normal parts of reality. Where is this field heading?
Kevin Hughes: We’re seeing a lot now the need for immediate or real time account verification — to facilitate a transfer, payment, or point of sale purchase. We’re doing a lot of work right now utilizing this technology that we have to continue to have a customer engaged by giving them the capability to link an account immediately.
When we’re online, and we’re within an application that doesn’t do what we need it to do within 30 seconds to a minute, we’re on to the next thing If you can do something and deliver something in a very quick turnaround while the customer is in session, you’re more likely to keep that customer engaged. So it’s really about migrating more from informational to transactional, and that’s where we’ve seen a lot of growth, particularly in the last few months.