Finicity’s open banking platform connects customer financial data to applications

Steve Smith and Nick Thomas are best described as fintech pioneers, two Utahns who started out Finicity in 2000, a fintech company recently acquired by Mastercard, a Fortune 500 company doing business in 200 countries, not to mention one of Utah’s largest acquirers.

When I asked Smith about the inspiration behind Finicity, he described it as a collision between the “old world” and the “new world”. Smith started her career in technology and quickly realized how powerful it can be when applied to everyday challenges. At the same time, he was looking for an opportunity to do something that would benefit individuals and families. This is where the old world comes in, he explains.

Early in life, Smith’s grandparents embraced the “envelope” budgeting model. This simple model had a powerful impact on her family. “In short, a person takes the family’s income and allocates it among a set of dedicated family expense envelopes,” says Smith.

For example, you can have an envelope dedicated to food, one to clothes and one to bills, etc. Steve loved this model and saw how it can help people stay on track financially. To bring the concept to life, Smith teamed up with Thomas, whom he worked with at another tech company. Thomas had recently co-founded the Bluetooth Special Interest Group and started a new wireless division in his business. “Nick has a great spirit of technical innovation and a shared vision of making a positive contribution to the world.”

In 2000, Mvelopes, a personal financial management application was born. Smith and Thomas then created integrations allowing individuals to share their financial data from their bank account directly to the mobile app, which revolutionized the way consumers access, use, and authorize access to their personal financial information.

In order to launch Mvelopes, Smith and Thomas needed access to all the financial data to empower consumers. They started out by connecting to about 1,200 financial institutions in the United States and over the years they’ve gotten pretty good at that “connectivity”. Soon they had one of the very few fully connected open banking platforms in the world, and by 2015 they had integrated over 10,000 banks.

Today, they have integrations covering 95% of direct deposit accounts in the United States, which took a tremendous amount of work to connect and maintain all of those connections.

There has been a period in the industry that has seen friction between “aggregators” of data access platforms and financial institutions, Smith explains. However, Finicity has been very deliberate in working closely with the ecosystem to ensure that the concerns of all parties are best addressed while always taking a consumer-centric approach to accessing and protecting data. data.

As a result, they have good relationships with everyone in the ecosystem and are able to provide the data needed to power the apps and services being built, Smith explains. “One of the best results of our Pivot is that through open banking, we can still deliver on our original vision to have a positive impact on the world and to help individuals, families and businesses achieve their goals. financial health and achieve better financial health. “

What Finicity does for open banking

We now know that Finicity is a financial technology company associated with open banking, but how does it work? “If you’ve ever split your restaurant tab using an app or accessed a bank loan without paperwork, chances are you’ve benefited from an open bank,” says Smith.

Finicity empowers people to access, control and share their banking data with banks, lenders or fintechs that create next-generation financial experiences and extend financial opportunities to more people. Brands like Experian Boost, Rocket Mortgage, Stripe, and Venmo are examples of next-gen financial apps, he says.

According to Smith, open banking enables a wide range of financial products and services that are transforming the way consumers manage their money, prepare their taxes, apply for loans, make real-time payments, and better understand and improve their credit. All of this leads to more choices for consumers and better experiences, as well as increased financial literacy, financial inclusion and better financial health. And “Fineness has been at the center of many of these empowering experiences.”

Finicity enabled consumers to contribute more data to their credit scores through Experian Boost and UltraFICO Score. These solutions use cash flow data explicitly authorized by users to help them build or improve their credit and meet their financial goals. If you’ve applied for a mortgage and haven’t provided hard copies, chances are you’ve worked with one of Finicity’s clients in the area of ​​mortgages such as guaranteed rate. , the loan deposit or the Rocket mortgage, explains Smith.

Smith and Thomas are not only pioneers in fintech, they brought together several factions of the financial industry as the founders of the Financial Data Exchange (FDX), a dedicated non-profit organization operating in the United States and Canada. to “unify the ecosystem of financial services around a common and interoperable system. and a royalty-free technical standard for secure and convenient access to authorized consumer and business financial data ”, according to the to place.

Looking back, Smith and Thomas attribute Finicity’s success to building a great team, having a great product, and creating a great culture. Their efforts not only revolutionized fintech, but also managed to grab Mastercard’s attention, ultimately leading to the acquisition of Finicity in November 2020.

Finicity, Mastercard’s open banking unit, is based in Murray, Utah, and currently has nearly 900 employees worldwide. Having added nearly 300 people to the team since the first of the year, and there remains a significant number of open positions as part of the global banking effort open at Mastercard, including the continued growth of the team here in Utah.

With the commitment to continue to grow the open banking team in Utah, Mastercard’s overall mission is to connect and nurture an inclusive digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and secure. accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential.

“With the growth of technology and its long history as a center of innovation for financial services, Utah has become a hub of fintech activity and success. Increasing levels of venture capital and growth capital funding along with innovative educational programs like those pursued at the University of Utah will create an even richer environment and future for Utah Fintechs ” , said Smith.

Utah has always been a hub of innovation, says Thomas. It is also a service hub. Most new innovations are sold at an early stage to larger companies because the interests of stakeholders have been to create enough wealth to turn around and focus on their families and give back.

“As service continues to be at the heart of Utah culture, I think we’ll start to see more multi-generational businesses start, grow and go public in Utah. Finicity has created dozens of new millionaires in Utah and that capital will continue to be recycled within the state to fund new businesses and continue the cycle. Utah “really blossoms like a rose,” says Thomas.

If you’re starting a tech company, Thomas says always prioritize relationships with yourself, your partner, kids, extended family, and friendships over your startup and work relationships. “When you are at home, be present at home. When you are at work, be present at work. Remember: Most successful start-ups fail in their personal lives due to a lack of prioritization and an active investment of time and focus. ”

Smith’s advice to tech startups is to find an opportunity to create an innovation that reduces friction or costs or to create innovative products or solutions that have the potential to increase access to capital and / or financial services. high quality for masses, small or medium. companies or large groups deprived of their rights. “With that as a goal, be passionate and focused on the laser, while building a great team and culture that people want to be a part of. “

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