As advisers begin to collect personal financial data in an automated fashion, some banks may want to stop playing along.
J.P. Morgan Chase & Co. and
Wells Fargo & Co. might begin to restrict their data to personal finance platforms and data aggregators, according to a story written by the Wall Street Journal on Thursday. Advisers use such information to pull in held-away asset information and create a full financial plan for their clients.
According to the
article, security was a major issue for these banks.
"In our continuous effort to enhance the security of our digital banking services, we often add additional layers of authentication to protect our customers' information," said Jason Menke, a spokesman for Wells Fargo. "These efforts may inadvertently impact the ability of financial aggregators to gather customer information."
He said the company is looking to find a better means of sharing information with financial service and technology companies.
Chase did not respond for comment.
"Advisers want to learn more about clients," said Lowell Putnam, chief executive of Quovo, a data aggregator in the financial services industry. "How is that bad for anybody?"
The data aggregating process, though increasingly popular through automation, is also heavy on banks' technology. Mr. Putnam said that's a legitimate concern, but aggregators and banks need to work together.
"As data aggregation grows in popularity, we have to partner with institutions we are taking data from," he said. "If we become serious IT burdens, that forces large banks to have to increase traffic, and we become a problem, not a solution."
But this restriction also could be an indication that banks are seeing data aggregators, personal financial platforms and digital advice sites as competition.
John Prendergast, chief executive of Blueleaf, a software provider that helps advisers build relationships using aggregated data, said a policy to pull back on providing aggregators and websites with client information isn't just hurting these third parties.
"If you make it hard for data aggregators, you are making it hard for your clients," Mr. Prendergast said. "It's a very tricky business."
Of course, advisers will still be able to get information on held-away assets, because they or their clients can manually find and input the information. But it is less efficient and a regression in the overall progress this market has seen, he said.
"It's as backwards of a policy as there can be," Mr. Prendergast said. "I expect as a younger person to be able to get my data in whatever way I deem fit."
David Benskin, chief executive of Wealth Access, a personal financial management platform that pulls data from various aggregators, said data aggregation is an integral part of wealth management, which is why firms shouldn't rely on a single place to get their client information. His company takes data from numerous sources, he said.
Neither is Quovo, Mr. Putnam said. He added that if these channels were to close, it could work around it by working with other third parties and maintaining strong relationships with other institutions.
"We have to be able to bridge the gap effectively, so flexibility makes a good aggregator," Mr. Putnam said. "That should never be a concern. It doesn't mean data is lost or it won't keep going. It's just a hiccup."
