Having financial data information online, or all compiled in one single place, can be risky if done without the help of data aggregators – normally companies that are ready to help organize your financial life. Financial data aggregation requires strong data quality, management and reporting, to certify that the data is accurate.
Even the most “basic” financial data aggregation will put all information about the company financial situation in the same place with a single dashboard view, sometimes called a hub or a portal, that will show all the parameters defined by the users and data analysts, like investments, savings, credit balances, bank accounts, credit card account and possible insurances.
Meanwhile, the most robust services will show all the financial and tax planning, credit monitoring, the estimated budgets, a complete analysis of the company’s portfolio and even give personalized advice based on the combination of information from the company and the market.
But as mentioned above, companies planning on adopting data aggregation for their financial data need to be mindful of its risks, and that’s what will be explored in this article.
What Is Data Aggregation?
Data aggregation is simply the process of gathering large amounts of data, sometimes from different sources and databases, and organizing it into a single summarized format that will make it easier to consume and comprehend. The process can be applied at any scale to summarize the information and help companies make decisions based on the data findings.
As the amount of information processed by companies grows, the need to personalize metrics made data aggregation extremely important and relevant. It’s a crucial step of dealing with data, as relevant results will be generated from it.
Data aggregation can be used to finance, business strategy, decisions on product, pricing, supply chain, operations, marketing, and anywhere else the company finds relevant to have this single summarized view of the metrics they monitor and apply to make decisions.
Why is Data Aggregation Important?
Data became one of the most valuable currencies companies can have, and as technology advances, data also advances with it, always adapting, expanding and becoming more complex. But without the tools to deal with this data, it becomes useless.
To extract key insights and analysis from the data and understand the information that it contains, data aggregation will be important to search, gather, present, summarize and organize the data and allow the company to achieve its objectives at any scale
What Is Financial Data Aggregation?
Financial data aggregation, as mentioned above, is the process of collecting the information and the data from different sources like bank accounts, credit cards, loans, and investments. All this information gets compiled in one single dashboard to be easily checked and analyzed.
But for finance and investment firms, data aggregation works as a base for their recommendations. Most of their data comes from the news, so a lot of different sources spread across hundreds of websites, and they compile everything for investors to stay up-to-date on the financial and market trends, as going through every website and each data source would be time-consuming and unreliable.
Any financial decision will be easier to be made as data aggregation will allow them to check all the information in one single place. Technology is here to stay, so the confidence on digital platforms for finance and banking.
Why is Financial Data Aggregation Important?
Investing in financial data aggregation helps not only finance firms but also their customers. With easy access to all information and accounts in one single hub, satisfaction will increase.
Also, centralized information to help in the decision-making is always a great advantage against competitors. It’s a unique offering that will make data more accurate, robust and complete.
Know The Data Aggregation Risks
Customers value how financial data aggregation makes data analysis easier, faster and less complicated – especially when dealing with multiple sources of information in large amounts. But having shared security credentials for financial accounts comes with a lot of risks that companies should be mindful of.
It’s not difficult to be exposed to security and privacy risks that can lead to vulnerability, unauthorized transactions and serious cyber frauds.
Something that companies need to be careful about is ensuring that the data aggregator is not storing all of their consumer financial information and security credentials in the same place, making it easier for security risks to happen. Many data aggregators operate with almost zero regulatory oversight and do not go through the same regulations as the financial institutions, especially in data privacy and security matters.
Most financial firms don’t give consumers a direct link to the data aggregation dashboard or hub, which makes sense given the privacy concerns, but as a result of that, data aggregators may need to robotically log into the consumer account to get the information. This process needs a computer program, a visit to the bank’s website, manual logging using the client’s information, and getting the code to extract the financial data.
But as this process happens multiple times during the day, with different aggregators and financial apps with active users going into the accounts, the servers can get overwhelmed and during peak periods, the bank’s system can face a slowdown, impacting on customers that need to conduct banking transactions.
Another risk, that needs to be solved directly between the data aggregators and the banks, is that some banks’ systems and security departments can have trouble distinguishing the data aggregators from hackers that break into the accounts to conduct fraudulent transactions. If those security systems wrongly identify the financial data aggregation with a hacking issue, the accounts get locked.
This issue made some large banks across different countries even ban data aggregators from accessing and getting information from their websites. Servers are programmed to block the IP address of data aggregators computers.
Meanwhile, companies get caught in the middle of this issue. If the bank blocks the IP address, the data aggregator won’t be able to have access to the data and information needed, and with that, the data displayed on the dashboard created by the data aggregator won’t be accurate, or they won’t be able to access the data at all.
Tips for the Data Aggregation Risks
Data aggregation involves risks, and the key to making it work and turning it into a successful process is to be mindful of the risks and work with them to avoid problems in the future. The tips below will help companies understand how to protect themselves when sharing their financial information with data aggregators.
- Weigh the benefits and the risks: The first step is to weigh the benefits the company will have with a financial data aggregator service and what would be the risks of sharing their security credentials with a third party.
- Read the user agreements: The user agreements of the contract between the company and the data aggregator need to be read carefully. Knowing the company’s rights and what piece of information they are allowed to access from the company’s account and what they are allowed to do with it is the first step into making sure that potential risks won’t be an issue.
- Check for API use: As mentioned above, banks can block any access they find suspect, so it’s important to check if the financial data provider delivers the data through an Application Programming Interface (API), which is a safer alternative.
- Give access to what is essential: The data aggregator provider only needs to have access to a certain amount of information to perform the job, any additional access can compromise the security.
- Understand the aggregator’s privacy measures: Being aware of the aggregator’s privacy and data security measures are a good way to understand how the company’s information and credentials are going to be used. Check to see if the aggregator shares the credentials with other data aggregators or other services providers. If yes, make sure that the shared information is something that the company agreed to. See if they use encryption to retrieve the data and log into the accounts, and then make sure that after the contract is ended, and the data aggregation service is not being done anymore, that the data and the credentials they had access will be rightfully disposed of.
The Best Data Aggregation Service
Emissary offers a powerful platform to make the time spent on data more strategic with reduced risks. With the use of artificial intelligence and machine learning, the platform will integrate all components of your data management systems. And when it comes to financing firms, Emissary will act as the main data management tool.
It’s a simple data integration tool to be implemented and will fit all your needs to deliver only the best results.