The biggest challenge to secure data access is time: Xero president

Xero is making it easier for small businesses to manage their finances, one bank partner at a time.

The accounting technology firm on Thursday entered its fourth bank partnership with Capital One, which built an application programming interface that lets Xero retrieve customer data from the bank without compromising, through scraping, customers’ sensitive bank login credentials — the more common way of accessing customer data. Xero has made similar deals with Wells Fargo, Silicon Valley Bank and City National Bank.

“For a business owner to have their own customized financial web and sit at the center of it, we have to have the relationships all across the ecosystem,” said Keri Gohman, president of Xero Americas. “All the banks, accounting partners, ecosystem partners so the business owner can see its full tech stack and how to make it work together.”

Gohman joined Xero less than a year ago from Capital One. Tearsheet caught up with her to discuss the problems data poses for small businesses and the challenges for banks and third parties trying to serve them.

This is Xero’s fourth bank partnership. Is there a theme here?
These bank integrations are happening more and more and it’s a recognition that customers want control of their financials. This is just another continued reinforcement of that trend and the reality that banks really want to get ahead of customer demand.

How has demand from small businesses changed in the last five years?
As consumers, we’re able to log onto Google Maps and have it pull ratings and reviews from Yelp, Uber so I can schedule a car, Waze so I can see traffic. I don’t really know I’m in all those things but I expect them all to work together. In much the same way, business owners are starting to expect that. They’re using the cloud, realizing the benefits of collaboration, they want things to work that same way.

Can you explain the data access issue for small businesses?
Getting access to lending is about your financial history and performance over time. It’s the lifeblood of what a business lives on, and relies on how they get underlying data and how that data all works together. Third party integration is always tough because the data isn’t always reliable, and the feed can get interrupted. Having this data feed directly with the bank creates a tighter integration.

So what’s the problem Xero is trying to solve with Capital One?
Sharing customer data with third parties safely, securely and in a way that puts the customer in control. There’s been a proliferation of great fintech solutions for small businesses, but they don’t all work together. And financial companies are recognizing they want the world to work together. Everything financially should work together so if I’m a business owner I’m asking what’s my bank, what are all the business applications I need? I need all my data to flow through to my P&L. I need to be able to manage all of my business in one place.

What’s the biggest challenge?
Banks have higher fiduciary standards. I don’t tell Google to start feeding Yelp, Waze or Uber, but consumers don’t expect their financial data to just be shared everywhere. If it’s sitting in another system and your bank allowed it to go there, who do you blame? Not the other company. All the banks are wrestling with the right way to do this but also give customers flexibility. We have to go one by one by one to all the financial institutions to set up these partnerships, and they also need to go one by one by one. The challenge is really time.

Where do we go from here?
Everything will become interconnected over time. What this unlocks over time is the economy. It has the ability to transform the data we have access to, the ability to make the systems work together really have the potential to unlock productivity in ways we can’t consider today.

10 years on: Once a first mover, Mint must work to stay relevant

Mint was an instant hit when it launched 10 years ago. It came out of nowhere, making something boring but important like budgeting kind of fun. It was easy to use, and best of all, it was free.

It was so full of promise it exceeded its new user acquisition goal of 100,000 in the first six months — by 10 times that. Two years in, it hit 1.5 million and was sold to the data aggregator Intuit for $170 million. It hasn’t had much in the way of competition — until now.

Mint today is a mobile app working to stay relevant in a sea of similar personal financial management (PFM) apps, such as Moven, Clarity and Penny. The popularity of such apps has increased over the last two or three years and will probably continue to do so with the rise of digital assistants like Siri or Alexa, automated savings and investment apps and an overall financial services shift toward customer self-service and control over their money.

Mint still stands out from the crowd, but it hasn’t been able to attract new users like it used to, said Stephen Greer, an analyst in consulting firm Celent’s banking practice. People who like managing and tracking their money carefully tend to check their accounts more frequently today than they did 10 years ago which is running Mint into the same wall blocking all PFM apps: getting secure real time data feeds from the financial institution.

“For a while, Mint was the best on the market because it was the only one on the market,” he said. “It did a good job for a while but the biggest issue for Mint, and one reason it’s gone downhill, has always been the aggregation piece. If the site isn’t accurately reflecting your spending – if it’s not live, it’s not real time, you see discrepancies – you’re most likely not going to use that service.”

Mint now has more than 20 million customers, according to an April 2016 blog post. It hit 10 million users around Aug. 2012. Mint did not provide growth figures over the last 10 years by deadline.

That friction also creates a sort of set-it-and-forget-it mentality, said Tiffani Montez, a senior analyst with Aite Group.

“One of the challenges is [PFM] is like a shiny toy,” she said. “If you try to combat the set-it-and-forget-it mentality you have to be able to provide some additional value that deepens the relationship.”

That may require a smoother flow of customer data between the customer’s bank and PFM app, like the ones Intuit just won from Wells Fargo and JPMorgan Chase. Earlier this year it reached deals with both banks that should theoretically help reduce some of the friction around data sharing. According to the agreement, Chase customers can authorize the bank to share their data electronically with Intuit’s apps: Mint, TurboTax and QuickBooks. Before, customers would give third parties their online banking passwords so they could log in and import customer account information.

Many banks have claimed that common practice compromises cybersecurity and in 2015 several of them, including JPMorgan, temporarily suspended customer data access to third-party data aggregators like Intuit.

However, how much data gets shared is unclear, Greer noted. The banks can probably share basic transactional information like how much money a customer spent in a given period or the current account balance, but might not reveal how much interest a customer is being charged on a credit card or what kinds of fees he or she is paying.

Mint said while it’s always been good at tracking and insights, it is now focusing on moving into transacting on users’ behalf, beginning with its bill pay functionality.

“In the past you got that insight but you had to take action yourself,” said Kevin Kirn, head of product for Mint. “Bill pay is just the beginning of that journey from insight to action. All our teams are looking for ways to connect that action experience through Mint.”

Perhaps the data sharing agreements will help Mint in creating more and more action experiences, but Greer is skeptical.

“Opacity is in their best interest and withholding a lot of that data works in the financial institution’s best interest,” Greer said. “My curiosity is in how much information they’re actually getting through this ‘direct connection’ and what that entails. My skepticism is around how much value that provides. I’m willing to say its not as much as it could be.”

That’s because even with the agreement, Mint is a direct-to-consumer product. Today there are plenty of companies that sell their PFM solutions to the banks themselves, aggregators like Yodlee, MX and Plaid that provide more value to the bank than Mint does. Mint makes money off its consumer business. When it comes to advice, it makes recommendations in customers’ best interest – and not necessarily in the best interest of the banks.

About a year ago Intuit shut down its financial services aggregation services, probably so it could access a market of direct connections – like those with JPM and Wells – and direct links to feed its specific services, like Mint.

“There’s just more value they can provide,” Greer said of the MXs, Yodlees and other direct-access data aggregators and infrastructure providers. “Mint hasn’t provided a whole lot of value to institutions and banks don’t want to play that game. They’d rather cut off the aggregator from getting data on consumers so the service will buffer – that’s essentially what’s happened.”

Hi 5! The top five fintech stories we’re following today

top 5 weekly fintech stories

Digital wallets: lacking growth, getting creative

Accenture’s recent report that POS digital payments haven’t grown at all confirmed what we already knew — namely, the technology is ready, but users aren’t. Still, there’s some movement on the mobile payment horizon. Apple is making a conscious effort to get users comfortable using Apple Pay in ecommerce, and not just in retail. Meanwhile, Walmart’s isn’t twiddling its thumbs, and is now in talks to integrate other digital wallet options into its newly launched retail app.

Online lending’s blurred lines

We’re sometimes quick to draw distinctions between the incumbents and the upstarts. But in online lending, things are getting a bit blurred. A new partnership between Fannie Mae and SoFi shows how fintech partnerships can work. Partnering is starting to look more and more attractive, given that OnDeck is primarily using its own balance sheet to fund growing originations, while Lending Club investors continue to shrug off more losses.

What will those incumbents think of next?

Incumbents partner up with fintechs, they acquire them, they launch innovation labs, and sometimes they do what Bank Leumi did — disrupt itself from within with its new digital bank, Pepper.

Industry leaders share insights on success and fintech trends

It’s rare that fintech CEOs get the chance to really open up about the challenges and delights of their jobs. Tradestreaming’s smooth-talking Josh Liggett got them to share their CEO highs and lows. Other industry experts spoke of the major trends they see impacting fintech and finance.

Software, APIs, and SDKs

If you want to see just how banks, with more open systems and established software connectors, can evolve, here are 7 examples showing the power of banking APIs. Citi is one of the more recent incumbents to join the API fray with its new global API developer hub. In payments, CardFlight chose not to reinvent the wheel. The company built its tech on top of existing payment infrastructure, rather than building out something new. And finally, WTF are SDKs, and why you should care.


4 charts on the state of banking APIs

The rapid speed of technological advances are forcing banks to partner with third parties to be able to keep up with customer demand. Many banks are opening up through private and public APIs to streamline operations and increase innovation. The trend, often referred to as “the platformification of banking” is gaining speed.

In Europe, PSD2 regulation, which goes into effect January 2018, will require banks to provide open access to customer, transaction and payment information via APIs. In the UK, the Open Banking Working Group has recommended the creation of an Open Banking Standard that will make it possible for banking data to be shared and used securely. Banks are getting their API strategies in order.


APIs can assist banks with comprehensive digital transformation of the entire organization. Forrester lists four types of APIs. Internal APIs help banks’ internal systems to “talk” to each other more easily. Partner APIs enable highly customized integrations with select business partners, usually for a specific business process. Public APIs give access to a larger community of developers to increase the speed of innovation. Lastly, Product APIs add value to products by incorporating them into wider ecosystems.

API adoption is gaining momentum, with many banks in the process of API implementation.


The rise of APIs can also be seen in API request data from Xignite, a financial API company.


APIs give companies agility and speed they might not otherwise have. By opening up to a bigger pool of developers, a company can innovate faster, cheaper and more aligned to the needs of its customer base than if developed in-house. By incorporating a product into an ecosystem, the product becomes stickier and loyalty increases.

Most major technology companies, like Facebook, Slack, Uber, Google, and Netflix, use APIs as a pillar of their strategies. generates 50 percent of its revenues through APIs. Ebay generates 60 percent of its revenues through APIs and Expedia generates 90 percent of its revenues through APIs, according to apigee, an API company.

Though banks are starting to explore the use of APIs, they are still far behind other industries. In apigee’s State of API’s 2016 report, financial services do not even make it to the legend.


If, to quote Chris Skinner, “a bank is just a technology company trying to keep up,” it looks like banks still have a long way to go.


How to build your own bank

banking apis

With technologies proliferating, many financial institutions see the writing on the wall. Finance has been characterized by the prominence of the institution. Bank brands, worth hundreds of billions of dollars, are powerful and institutions grew to own their value chains.

That’s changing — some financial institutions are taking the step of moving their brands to the background, exposing their underlying technologies to other firms in the financial system so they can build applications. Much like Amazon has done with Amazon Web Services, turning its e-commerce infrastructure inside-out for technology companies to use, a few banks are doing the same in a move some are calling the platformification of banking.

While it may be too early to fully build a bank by mashing up different types of financial services and products, this future isn’t too far away. Large financial institutions are opening up their application programming interfaces (APIs) so that fintech startups and other partners can connect directly to their financial guts. This allows firms to specialize, focusing on what their real value is, while piggybacking on top of existing technologies.

Banks with APIs

The Spanish bank with reach into the U.S. market has been active in adopting new technologies and embracing the fintech firms creating them. In fact, the firm has expressed a goal to become the AWS of banking, comfortable in providing the technology and transactional infrastructure for its competitors and partners. “Shamir Karkal, CFO and cofounder of Simple, has left to become our head of our global, open API platform,” recounted BBVA’s Scarlett Sieber, senior vice president, global business development, new digital business, on the Tradestreaming podcast. “In this case, we’re not directly investing in, acquiring or partnering with outside companies but we’re exposing our banking plumbing to the fintech community at large.”

BBVA offers an API marketplace for its European and US business units. In the US, the bank’s Compass unity provides connectivity for pre-authorized users to access key account data. It also offers an open security hookup that application developers can integrate to have BBVA clients authorize access to BBVA account information in their name. In Europe, the APIs go further, providing data on card purchases, identify verification, and money transfers.

Silicon Valley Bank
In August 2015, technology industry bank SVB acquired a fintech startup, Standard Treasury. The startup had raised a couple of million dollars and was working on developing APIs for banking and that activity, the technology, and the team that developed it, was brought in-house at SVB.

“We view API banking services as a natural progression in how our tech-savvy clients want to work with their banking partners and service providers,” said Bruce Wallace, chief operations officer of Silicon Valley Bank. “API banking services are a key part of our product delivery and service platform strategy. The Standard Treasury team’s vision for the future of API banking services aligned perfectly with our vision, so it’s exciting that we are now joining forces to deliver that vision to the market.”

This makes a lot of sense for the bank’s technologically-savvy clientele. SVB plans on rolling out its API marketplace in the near future.

APIs for accelerators, partners

Some banks have created APIs for just a select group of partners. They’re not necessarily interested in opening them widely for general use. Instead, they’re a quick and easy way to get vetted entities on their platforms. Barclays’ Developer Network (BDN) is the UK bank’s offering for approved firms to build applications using bank data and infrastructure. Barclays uses BDN in conjunction with the 13-week accelerator it runs together with Techstars. Participating startups in 4 locations (London, New York, Cape Town and Tel Aviv) get access to BDN in addition to working with decision makers at the bank and a group of mentors.

RBS has taken a similar approach to Barclays. The RBS API was made available as part of the Open Bank Project, an open source API and app store for banks. RBS uses its API as part of hackathons the bank sponsors.

Startups in the banking API business

Startups are helping encourage the use of APIs and they’re doing it in different ways. Technology firms like Plaid, which has raised almost $60 million in venture capital, are developing banking APIs to power developers of financial services applications and help them connect with user bank accounts. Developers can integrate to banks using Plaid and get transactional and account data from various financial institution.

Solaris Bank out of Germany takes a different tack than Plaid. It has a German banking license and was built from the ground up with the idea that it would power an ecosystem of financial applications. Solaris developed its banking as a service (BaaS) platform to eventually provide a full range of traditional banking transactional services, from a licensed banking entity.

A proving ground for pilots with fintechs

Not all banks are comfortable exposing their data. This reluctance makes it hard for banks to partner with startups, slowing down the innovation cycle. It’s a catch-22: banks prioritize partnering with proven technology providers but they themselves can’t prove the technology until they’ve negotiated a partnership and created a dedicated testing environment for a pilot.

“Startups need to find a relevant financial institution, convince it that its solution works, and get it to build a dedicated testing environment,” said Toby Olshanetsky, co-founder and CEO of fintech startup, prooV. “In practice, this is extremely difficult and as a result holds back the entire global innovation rollout. “The end result is that in many financial firms, there’s a huge backlog of projects waiting to get off the ground.”

prooV is creating a vibrant, compliant testing ecosystem with its pilot-as-a-service, enabling incumbent financial institutions and financial technology providers to quickly launch pilots together. Using Amazon Web Services, the company runs a remote server to simulate a large firm’s data that technology firms can plug into and use to approximate actual pilot results. The technology comes with predictive analytics to determine how a new solution would perform in a production environment. It’s like a banking and fintech Petri dish.

While prooV is active in various sectors, the company is finding a sweet spot in financial services. IsraCard Group, Israel’s leading credit payment conglomerate, faced a conundrum: it wanted to better tap into the local fintech startup environment but was hesitant given the strain of running multiple compliant pilots. prooV ran one proof of concept project and the bank is now ramping up with more.

“Within less than 3 months Isracard embraced the prooV platform so enthusiastically that it’s now running 32 simultaneous RFPs and is set to achieve in months what could have taken 3 years,” Olshanetsky explained.

APIs and other new technologies have set off an increasingly collaborative partnership environment that enables banks and upstarts each to do what they do best.

Photo credit: SomeDriftwood via Visualhunt / CC BY

How Qapital uses IFTTT to integrate its savings app into hundreds of apps

sofi interview digiday podcast

If millennials aren’t saving money, Qapital wants to change that. The Sweden-based technology company has an app that makes it super easy to begin saving more. After connecting to a US bank account, Qapital enables its users to set financial goals and begin working towards meeting those goals by automating the savings process. For example, as more millennials begin their careers by taking on multiple gigs, Qapital helps these freelancers automatically set aside a percentage of their income for taxes (something freelancers find hard to do with lumpy income).

Qapital app
Qapital app

From a behavioral economics point of view, getting users to set aside money can be used as a punishment or reward for certain activities. If automation of the savings process helps overcome individual reluctance to save, Qapital sought a way to embed itself more deeply in its users’ daily lives and in the apps that they use. But integrating Qapital’s saving mechanism into individual apps like Facebook or Fitbit is an endless, thankless process. Instead, Qapital turned to IFTTT to roll out its savings capabilities into hundreds of apps.

At its core, IFTTT enables individual users to get their various apps talking to one another (some have referred to the technology as digital duct tape). To begin using this API marketplace, users sign up for IFTTT and link up their various applications. From there, individuals create what IFTTT calls recipes. Recipes all follow a particular format: if X, then Y (IFTTT actually stands for if this, then that). Here’s a basic use case: every time you take a picture with Instagram, you’d like to save that same image to your Dropbox account. IFTTT can do automate that, even if the two apps in question don’t have a direct integration.

Qapital was designed to make saving money easy and encourages users by offering various ways to save — its integration with IFTTT gives it thousands of permutations how to do that. One of the most popular recipes on IFTTT’s Qapital channel involves a trigger when it snows. The idea is that when the weather turns white, we may want to finally begin saving for a new pair of skis or a tropical vacation that’s been in the works. If a user has this recipe enabled, money will automatically get swept into a savings bucket when the white stuff starts falling from the sky in the user’s city.

Qapital and IFTTT
Qapital recipes on IFTTT

Another popular recipe for Qapital on IFTTT involves the popular UP fitness tracker made by Jawbone. Users motivated to get in shape can reward themselves when they break a sweat. This recipe swipes $3 to savings toward a spa day, a session with a personal trainer, or new shoes if a user hits his or her daily walking/running goals. Given that IFTTT has more than 200 popular apps available on its platform, Qapital users can create recipes for saving more money connected to how much they exercise, attendance at certain events (IFTTT can use your GPS location as a trigger, so better get to the gym), and how much they read.

Just a couple of years ago, to get this level of interconnectivity, app developers would have to code for each individual integration into 3rd party apps. That means specific integrations would have to be coded within a greater development cycle, often resulting in re-prioritizations, pushouts, and delays. With IFTTT, app developers like Qapital have to make a single integration to the IFTTT platform and IFTTT provides the connective tissue to all the other apps on its marketplace. App developers can also seed the recipe database by creating their own recipes alongside those recipes created by other IFTTT users.

In the consumer space, IFTTT is the largest and most recognized API integrator. Zapier, another platform that interconnects apps, has emerged as a leader for apps targeting business users (think connecting a lead generation form directly to a CRM). Plaid is working in the financial space to create its own APIs for bank data to give tools to developers to connect with existing bank infrastructure (think a turnkey solution to access and authorize new customer bank accounts). In fact, Qapital has partnered with Plaid for its own data access pipelines to US banks.

“Introducing a new banking product is a huge hurdle in terms of trust and putting yourself out there, but millennials are just way more open to new services, and they’re not really expecting banks to pull this off for them,” Qapital founder, George Friedman told FastCompany. “Millennials trust different things. They trust design and they trust the message, which are very different factors than the older generation.”

Photo credit: CarbonNYC [in SF!] via Visual Hunt / CC BY

Barron’s gets Tradestreaming’s evolution of the investing app store (but doesn’t admit to knowing me)

I’m a pretty easy going guy.  I never wanted to use this platform to vent or say anything hurtful about anyone or anything.  It’s just not my style — Tradestreaming is a resource to help investors, journalists, and industry professionals make better informed decisions.

So, it’s got me a little ticked off that the venerable Barron’s has been taking some of my ideas and repurposing them — without referencing this site.  I’m all for using my ideas and expanding on them.  I don’t have a monopoly on ideas.  Just tell your readers the source of your thoughts.  I do it.  C’mon.

This week’s Electronic Investor article entitled “Here Come the Third-Party Apps” is a direct reference to my July 6th piece, “Inching towards an investing app store“.

For most of us, this “open” collection of obscure programming utensils and standards—including, for example, a programmers’ tool kit with the memorable name SDK, or files tagged with the extension .XML—will be close to meaningless. But you may already be using some kind of trading app or plug-in that customizes your connection to E*Trade, and there’s no question that, with the proliferation of gadgets and third-party Websites, more such customizing and control programs are on the way. Like other online investment outfits, E*Trade doesn’t want to restrict its customers’ interface and functionality options to its in-house offerings.

The theme of brokerage platforms morphing into exchanges where 3rd party application developers can reach investors has been a common there here and on my other blog, New Rules of Investing.

Starting in July 2008 (on New Rules of Investing) and continuing a year later (with E*Trade further blurs the line between full-service and DIY investing), I’ve been writing about this trend– no one else really has. I’ve even included a section on it in the last chapter, Future of Finance, in my new book, Tradestream your Way to Profits.

Again, I have no problem riffing off my ideas.  That’s why I write: to engender some thinking and discussion.  Just link back.  Listening, Barron’s?

Inching towards an investing app store

Service and product providers in the financial field have always lamented how hard it was to reach investors.

Sure, we could market to the investing public in a large, splashy way but it would be so awesome if we could just do a deal with the online brokers and offer our services through an investment account login…

I know this sentiment well.  When I was running business development at Seeking Alpha a few years back, it was so clear that the best/easiest/cheapest way to reach investors with our content was directly through the likes of E*Trade ($ETFC), Schwab ($SCHW), and TDAmeritrade ($AMTD).

This hasn’t been completely lost on the incumbent online brokers (but boy, do they move slowly!).  I’ve riffed previously on how everything is moving towards the creation of investment app stores.  Much like Apple’s famed AppStore, 3rd party service providers would be able to develop their services and products for delivery through the brokerage platform.  TDAmeritrade has a short, but growing  list of providers who are currently doing this here.

The investment app store concept is huge and extremely valuable for everyone in the value chain:

  • Investors: Online brokerage clients no longer have to wait for the walled-garden brokers to develop their own tools and services.  Brokerages are notoriously slow in rolling out new functionality or they typically acquire it (a-la TDAmeritrade’s purchase of ThinkorSwim).
  • Brokers: No need to swell the ranks of the product dev teams.  Now, they just have to manage the API and partnerships and they get a new revenue stream.  Sweet.
  • 3rd party solutions: Wham, investment newsletters, black box trading strategies, content aggregators and others have just been invited to the party.  You can know actually technically reach the end user investor.  Don’t expect the brokerages to promote you though 🙂

So, just like the tit-for-tat we’ve witnessed for years, we shouldn’t be surprised to see that E*Trade just announced the introduction of its API and partnerships with three external firms.

“Open API presents a world of opportunity to customers looking for a more customized investing experience and to software developers looking to create the next great investing app,” said Michael Curcio, President, E*TRADE Securities. “Our main objective is to facilitate innovation and ideas that empower customers — ultimately creating a richer investing experience.”

Source: E*Trade Bolsters Trading Innovation with Open Application Programming Interface (MarketWatch)

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