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Essential resources for banking executives:Enter ‘Banking Reinvented’

Why account aggregation is key to financial intelligence

Most banks and credit unions don’t know their customers well enough. And that’s a problem, especially today.

by Backbase


In times of economic uncertainty, having a strong knowledge base for financial intelligence is vital for both FIs and their clients. In fact, digital fraud attempts against financial service providers increased 150% worldwide.

What’s the solution? Internal financial intelligence teams, improved data analytics, customer monitoring systems, with all of them facilitated by account aggregation, an approach to data that utilizes platform technology and open banking APIs.

What is account aggregation?

Account aggregation is the process of collecting data from multiple accounts into one central location.

In the banking industry, account aggregation is a service born out of the rise in popularity of open banking. With the consent of the client, open banking enables banks to share financial data with other financial institutions, as well as third parties like fintechs.

As a result of account aggregation, clients gain a unified and complete view of their financial health.

On the business side of banking, account aggregation can be used to understand customers and members on a much deeper basis. Having access to their financial preferences, spending behaviors, and other key data points can greatly enhance transactional information, helping improve the detection and prevention of financial crimes.

3 key benefits of account aggregation

Account aggregation has many potential benefits to offer your bank or credit union:

1. Personalized marketing

Data analytics have quickly become a key activity within the banking industry. According to a recent Market Research report, the global banking data analytics industry is expected to grow from $4.93 billion in 2021 to $28.11 billion in 2031.

With account aggregation, you can take your bank or credit unions marketing to the next level, by enabling a much deeper view of the user. This highly improved data enables you to gain more actionable insights, which can then be used to personalize marketing offers for each user, helping you cross-sell and up-sell at exactly the right moment.

2. Smaller banks can compete with larger banks

With account aggregation and open banking, smaller banks have access to the same types of data larger banks have. Account aggregation can supply the insights that would make engagement banking more powerful - by helping smaller banks access the data larger banks use, and also the technologies and systems they are able to offer their customers, helping level the playing field.

This means smaller banks, community banks, and credit unions can all be empowered to identify and assess any suspicious or criminal financial transactions, helping them build stronger financial intelligence teams. This can also enable smaller banks to achieve the level of personalization only larger banks have traditionally been able to activate, helping smaller banks attract and retain new users with greater ease. Furthermore, with the right platform, account aggregation, and engagement banking, smaller banks wouldn’t necessarily need a big budget to be able to deliver on improved fraud prevention and personalization.

3. Reducing fraud

Account aggregation can help your bank prevent fraud, make informed decisions on suspicious financial transactions, uncover tax evasion or money laundering, and predict the intentions of your users.

One type of fraud account aggregation is particularly effective against is friendly fraud. Friendly fraud is a type of fraud that occurs when a customer reports an instance of fraud that is, in reality, a legitimate transaction.

This type of fraud can be committed both on purpose and by accident and is a serious issue for many businesses. In fact, according to Kount’s article on Friendly Fraud: “Chargeback risk statistics revealed that over half of businesses say their chargeback rates have increased since March 2020. 18% said friendly fraud is their business’s top chargeback source. A similar survey of online gamers in 2022 revealed over half of respondents cited instances of friendly fraud as the reason they disputed an online purchase.”

A major hurdle for banks to overcome is differentiating instances of purposeful versus accidental friendly fraud and finding solutions to reduce accidental occurrences.

By having a centralized platform where clients can easily view all of their accounts, tracing the source of a transaction and verifying its validity is far simpler.

Partner with backbase for account aggregation

You need the right platform partner to help you get the most out of account aggregation.

Backbase offers account aggregation and data enrichment as part of the Backbase Engagement Banking Platform. And, our integration with Yodlee deepens the data collected, which in turn gives customers the ability to dramatically enhance the customer experience and make transaction information richer. Additionally, the power of the platform is that data is further aggregated and shared across products. Backbase Digital Engage further allows banks and credit unions to use that data to personalize their marketing and surface offers and products for each individual, helping increase share of wallet and attract and retain more customers.

To learn more about Backbase’s account aggregation and platform solutions, contact our team today.