The benefits of early data access for fintech startups
- Early access to financial data can help fintechs to optimize their products and services before they reach the consumer.
- Working with early-stage fintechs can also spark innovation and reveal new use cases for data providers.
Fintech Sandbox is a nonprofit that helps early-stage fintechs by providing them with free access to financial data feeds and APIs from over 40 data providers including Plaid, Morningstar and Equifax. It was started by a group of Boston-based fintech entrepreneurs and investors who recognized that the high cost and inaccessibility of data posed a consistent challenge to startups in the industry.
“Most fintechs require constant access to financial data from day one, so that they can test and build their products and services before they reach the consumer. This financial data can cost up to hundreds of thousands of dollars,” said Kelly Fryer, executive director of Fintech Sandbox, at a session held during Tearsheet’s DataDay Conference 2021. “These data costs can put an early-stage company out of business before it even has a chance to launch. That’s why we offer these data sets free of cost – to make the prospect of launching a fintech more economically viable.”
One of the startups to benefit from the Fintech Sandbox network is Stardust, an up-and-coming money management platform that adds a social dimension to personal finance. By assigning a socially generated score to users’ spending and saving patterns, it lets them compare their financial strategies with those of their peers, and as a result, make better informed investment decisions.
By leveraging the network of data providers offered by Fintech Sandbox, Stardust was able to improve its user experience and the overall quality of its product at an early stage. “A massive benefit of early access to data is that it really changes the things you can do at the minimum viable product (MVP) stage, which is the very first touchpoint you have with your consumers,” said Adit Patel, co-founder and CEO of Stardust. “Thanks to this early access, we went from a product that was relatively clunky and didn’t have the best UX, to a more streamlined product that was much closer to the vision we ultimately wanted to get to.”
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