What Is Account Aggregation?

If you’re like many business owners, you probably have separate login details for your investment accounts, credit cards, and bank accounts. Wouldn’t it be nice to access all your accounts from a single platform for greater visibility over your finances? Account aggregators pull all this financial information together into one handy place. So, what is account aggregation, how does it work, and could it be useful to your business? In this guide, we’ll discuss how these types of services work. 

What does aggregate mean in accounting and finance?

Account aggregation refers to the process of collecting data from multiple financial accounts and compiling – or aggregating – them into a single place. You may already be familiar with account aggregation if you have more than one business account with a single bank. When account holders log into their online banking service or mobile app, they can see information from checking, savings, and brokerage accounts in a single place.

The type of service mentioned above pulls together data from a single bank. Today’s account aggregation has been taken to the next level with the power of open banking, compiling data from different financial apps, banks, and platforms into a single service. Rather than opening multiple tabs on your computer screen or logging into multiple apps to view your finances, account aggregators like Revolut and Mint pull this information together into a single app.

How does account aggregation work?

Account aggregation services work as third-party providers, or TPPs, consolidating data from multiple sources in one place. To do this, they use open banking technology which unlocks user data with the user’s consent. TPPs use account information services to retrieve bank data including balances, transaction histories, and identifying details. Some account aggregators simply retrieve and showcase this data for the user, while others will use it to offer more customised financial services.

Open banking has already taken off in the UK, Europe, and worldwide, but is still a relatively new technology within the United States. Until recently, banks could withhold a user’s financial data. Open banking unlocks the data with user consent, allowing account holders to specify who can gain access to data and what they can do with it. This works using application programming interfaces, or APIs, which request the user data from banks and pass it along to the third-party provider.

What are the benefits of account aggregation services for users?

Clearly, convenience is one of the primary benefits of account aggregation services from the end user’s standpoint. Account holders benefit from seeing all their investments, checking, and savings accounts in a single place. This helps with budgeting, savings, and setting financial goals because the user gets a complete overview of their assets. Some account aggregators pull all household accounts together rather than individual accounts, which is useful for married couples or partners.

In addition to offering an overview of financial data, companies can also use aggregated account data to provide tailored financial products to customers. For example, Revolut not only displays a user’s accounts, but also uses the data to suggest the best loans and credit cards. For users with limited credit history, companies can access aggregated accounts to make a faster lending decision.

What are the benefits of account aggregation services for businesses?

Account aggregation services are also useful for businesses. If you offer financial products, fintech services or credit, you benefit from giving your customers a more individualised experience. Build brand loyalty by offering carefully tailored products to your clients that best suit their individual financial needs. Account aggregators and open banking can also be used to verify identity, streamlining the onboarding process.

For example, GoCardless offers a Verified Mandates feature powered by Plaid, a popular account aggregator and TPP. It helps with onboarding new customers by automatically verifying payments during the checkout process. Users are taken directly to their online banking login for quick and easy verification with instant confirmation. Services like this help improve conversion rates with a faster, more convenient checkout process.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.