Dive Brief:

• Payment processor Fiserv said Monday in a news release that Lehi, Utah-based financial data fintech MX Technologies is the first partner to use its new data aggregation tool for secure information sharing and integration. The tie-up means MX can access tokenized consumer data through that Fiserv portal tool.
• The tool, called AllData Connect, gives Brookfield, Wisconsin-based Fiserv's financial institution clients a secure portal where consumers can consent to share their financial data with third-party apps. Once consumers who agree to share their data with specific third parties are authenticated, an identifying token is generated to take the place of the consumer’s username and password. The third party then presents that token to the financial institution to access that person’s data, per the release.
• "Direct connections that enable access to tokenized consumer data eliminate the need for consumers to share usernames and passwords with third parties and create a more secure way for them to manage their daily financial lives," Justin Jackson, Fiserv’s head of product for digital payments, said in the release.

Dive Insight:

As consumer use of third-party apps for finance management grows, the partnership aims to bolster data-sharing capabilities while maintaining security. Tokenization, or the concept of turning sensitive data into a token that’s worthless if stolen, has become increasingly common and continues to grow. 

"Consumers expect to be able to access their financial data when and how they see fit, while financial institutions seek insights into which third parties their customers are accessing," MX Executive Vice President Don Parker said in the release. "Direct connections to financial information via modern (application programming interfaces) make this possible without compromising security." 

Financial institutions that notice customers engaging with cryptocurrency services, for example, might be inspired to add crypto management capabilities to their offerings, Fiserv Vice President Jamie DelMedico said in a Fiserv web post.

When it comes to making payments and other finance-related moves, consumers have come to expect frictionless experiences. Many payments and fintech executives are eager to see open banking take off in the U.S. as it has in Europe and allow for enhanced data sharing.

At the same time, regulators are grappling with questions around data-sharing practices and the role that financial institutions play in securing data and monitoring where it’s going, Parker said in the web post.

"Many financial institutions will find it difficult to operate in this regulatory environment if they don’t create the infrastructure to facilitate it," DelMedico said in the web post.

MX, which counts Plaid as a rival, handles digital connectivity among financial accounts. Valued at $1.9 billion during a 2021 funding round, MX said it links about 16,000 financial institutions and fintech providers, and assists 85% of digital banking providers.

When MX was exploring an initial public offering last year, Fiserv was said to be a potential suitor if the company opted for a sale instead, Barron’s reported. MX was still said to be preparing for an IPO, or a sale, in January, per CNBC.