Fintech apps have proliferated over the last decade. It is now commonplace to use these services to track your spending and set your budget for the coming month, to help you apply for a loan, split a bill with friends, or manage your investments. According to a 2018 survey by the Clearing House, one in three U.S. banking consumers now uses at least one fintech app.
These apps rely on establishing connections with traditional financial institutions. Data aggregators, in particular, play a major role in this ecosystem. These companies access financial account data with consumers’ permission and facilitate the underlying service the consumer has requested.
Increasingly, this consumer-permissioned data sharing is enabled by APIs – short for “application programming interfaces.” APIs may allow financial data to flow between fintech companies and traditional financial institutions with improved accuracy, increased control over data, and enhanced data security. But when companies use APIs for these purposes, they also need to consider a wide range of legal issues.