06 Sep Not Your Father’s Bank Aggregation Solution
By Adam DiVeroli
What if I told you that you are using bank aggregation inefficiently? As the technological landscape evolves and more data is readily available, having the access to data is not enough. You need to know your data, the technology that creates it, and how and when to use it to really harness the full power.
Bank Account Aggregation
Bank account aggregation is the process of gathering data from one or multiple bank accounts into a single place. Once the data has been aggregated, there are many uses for it, depending on the purpose of the aggregation. The majority of financial service providers have historically used bank aggregation technologies for KYC and the decisioning stage of a consumer application. The data is used by businesses to verify income, employment, creditworthiness and ownership. But should you really be using it to verify ownership? On the rare occasion, you might receive the name of the person who owns the bank account provided. Unfortunately, the name provided is rarely accurate, because these solutions were not designed for a bank account ownership verification but to simply extract the consumer’s bank account transactional history. While the consumer’s bank account transactional history is important to knowing your customer’s characteristics and traits, it cannot be used for verification and KYC purposes.
Introducing Bank Connect
Merchant Boost’s Bank Connect solution still uses bank aggregation technology, but it is specifically designed to improve and accurately perform the bank account ownership verification process. Bank Connect is not the bank verification solution that requires consumers to confirm micro-deposits in order to validate the accounts and it doesn’t necessitate a full bank account aggregation, which can cause fatigue or abandonment by the consumer. Rather, consumers enter their online banking credentials, and the name and account number associated with the bank account is returned. You can even use the quickly returned information to auto-populate forms. Bank Connect confirms the existence of an account and verifies ownership in seconds; returning the full account number, routing number, name of the account holder, and the account holders address, for over 1,500 financial institutions.
Bank Account Verification
How can this data be impactful for financial service providers? It’s the first layer in KYC and the use cases for accurate, verified, bank account information are numerous. It may sound overtly simple, but it is important to look at the various data attributes separately.
- The first data attribute that Bank Connect verifies, after the applicant connects their account, is that the bank account routing number and account number provided on the application match the banking account number returned. If the routing and account numbers do not match, this potentially indicates a case of application fraud.
- In the case that it is not fraud, Bank Connect ensures you do not fund or debit the incorrect account.
- Just because a user logs into a bank account does not mean that the bank account belongs to them. It is also important to compare the applicants name to the name of the bank account owner returned. If the applicant provides one name but a different name is returned, they may be utilizing someone else’s bank account in the attempt to fraudulently pass underwriting.
- Even if a bank account provided is valid, it is crucial to confirm that it is owned by the consumer applying for the financial service product.
Once the bank account has been verified and the consumer’s online banking credentials tokenized, Bank Connect, enables you to perform a full aggregation at any later point in the process. Many financial service providers use this feature as a second look of a consumer who would have normally been rejected, thus increasing approved applicants. Taking it another step further, the tokenized credentials can be used to provide visibility into the borrower’s bank account at the time of repayment, which is significant for ensuring that the funds are available while protecting the borrower from unnecessary overdrafts fees.
Bank Connect is not your father’s bank aggregation solution. Previous bank aggregation technology takes too long and does not return all the necessary information to perform accurate KYC and account ownership verification processes. Bank Connect is faster and packed with the right data to properly verify a bank account. With the enhanced functionality, bank aggregation is now more efficiently usable and can be waterfalled to best fit the needs of online financial service providers.
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