Account aggregation: how to get the best of PSD2 ?
Simplification of tasks, automation of data collection or consolidation of custodian accounts in 3 clicks, asset managers are delighted with the opening of the banking aggregation market thanks to PSD2. However, beyond the obvious benefits, limitations and flaws exist in the Account Information Service Providers (AISP) model. What are they and how to get the best of PSD2?
Every morning, it’s the same scenario. Turn on the PC, open the login page of the e-banking terminal of the custodian bank, enter the access codes, retrieve the bank details. The operation is repeated with the e-banking terminal of each custodian bank. And this for as many customers and bank accounts. A simple input work, without added value, and extremely time-consuming. A morning routine shared by a majority of independent asset managers until the arrival of PSD2 on January 1st, 2018.
Bank aggregation: asset managers “freed up” of banking data collection
Among the provisions provided by PSD2, the deregulation of the activity of aggregation of bank accounts is welcomed as a breath of fresh air by the independent managers. Indeed, in an industry subject to an increased number of administrative actions, any time saving opens up an opportunity to develop added value elsewhere, especially in service, advice and client communication.
The tangible benefits of aggregating bank accounts are twofold. First, the collection of banking data is centralized in a single interface. The manager therefore no longer connects to the e-banking terminal of each depository bank but to a single interface connected to each of the terminals. Instead of repeating the manipulation x times, all updated bank data is retrieved at one time. A great time saver.
In addition, the centralisation of data within a single interface allows them to be reprocessed and consolidated in a few clicks. The consolidation work is optimized and facilitated, simplifying here a hitherto time-consuming and complex task. In terms of productivity, performance and “comfort”, the opening of the market for automation and aggregation of bank accounts is a major breakthrough in the wealth management industry.
Beyond the technologies, it is a new method of work which is introduced massively. So far limited to a small number of pioneering managers who have equipped themselves with innovative solutions to centralise and automate the collection of bank data, this practice will soon be widely adopted by the majority of managers and family offices.
On paper, the aggregation of bank accounts brings the promise of a better life for independent asset managers. However, before taking the plunge, it is necessary to have a good knowledge of the operation and technology of banking aggregators to understand the issues and risks.
Data, Security and Flexibility: Understanding the Functioning of Bank Aggregators
Dazzled by the brilliant promise of an easy and simplified daily life, vigilance is necessary to avoid regrets.
The bank account aggregator is based on a standard financial intermediary model, directly positioned between the client and its custodian banks. The client configures the aggregator to connect to the e-banking terminals of its custodian banks. Specifically, he must provide all the confidential access codes of these accounts to the bank account aggregation company. Once the connection is established, the aggregator imports the bank data directly from the e-banking terminals and consolidates them. This model poses a clear confidentiality risk, as independent managers must provide their client’s secret codes to a third party.
In addition, the question of data storage must also be taken into consideration. Once imported, bank data is stored in highly secure data centers that comply with current standards. However, the risk of cyberattack exists especially with cybercriminals now favor high-potential targets, such as financial intermediaries.
Last point: the banking consolidation. As a real added value for banking aggregators, this service could disappoint many wealth managers with high expectations. Indeed, if personalisation is possible, it remains limited to the information available on the e-banking terminal. It will be difficult to capitalise on this to differentiate from competitors.
Aggregation + consolidation + security = performance: the impossible equation?
By observing the model of aggregators of bank accounts, this question is posed legitimately. If asset managers have everything to gain from aggregating and consolidating their accounts, it seems difficult if not impossible for this to be done at the expense of confidentiality and security of their clients’ data.
At KeeSystem, this is a problem that we have understood and integrated from the start. We solved the equation several years ago with our KeeSense solution.
Every day, KeeSense users have their financial data updated in real time with one click. Without having ever provided us with the confidential access codes of their customers. Without KeeSystem never processing, storing or even approaching this highly confidential data. Security has been thought from the start, to minimize any risk. For this, we rely on an innovative model. Basically, KeeSense is interfaced with more than 120 custodian banks worldwide but does not receive any live data. The updated bank data is encrypted with a highly secure protocol. The files are transferred via a Secure File Transfer Protocol (SFTP), a practice of securing an FTP transfer through an SSH tunnel, and then backed up to a secure server. KeeSense users then (automatically) import the file with the updated data on their network using the same ultra-secure transfer protocol. At no time did the data pass through one of our servers. No KeeSystem employee has access to our clients’ data. A guarantee of confidentiality and maximum security.
Finally, banking consolidation is at the center of KeeSystem’s innovation. With and for our clients, we have developed extremely advanced settings and customization possibilities. Each KeeSense user can create tailor-made reports, differentiating them from their competitors. Unparalleled added value for their customers.
What about you ? Are you satisfied with your banking consolidation management?
If you have any questions, our team is at your disposal. Do not hesitate to contact us.