Capital One Deal Aims to Streamline Data Sharing for Small Business

by Steve Murphy 0

This posting is another indicator of the rapidly-moving trend towards use of APIs to provide access to banks’ data on customer accounts for use by third-party financial services providers. In this particular case, Capital One is agreeing to allow Xero, a cloud accounting services provider, to utilize APIs to enhance the experience for small businesses, which has historically been an underserved segment for larger banks in terms of purpose-built product solutions.

Capital One Financial and Xero have announced a data-exchange agreement that is expected to simplify data sharing for small-business customers. Through the bank’s new application programming interface, small-business customers can feed their bank data into Xero’s cloud accounting technology.

Part of the direct sales appeal here is that APIs are more secure than the ‘screen-scrapping’ processes that have in effect become legacy arrangements in the new wave of tech during the past 5 years. But the underlying message is the ongoing softening of bank resistance to open sharing of customer data, a concession born of several merging factors including market realities, technology advancements, internet security concerns and inevitable pressure from regulators (see PSD2).

“As technology brings new waves of financial tools into the market, we believe that it’s important for all consumers and small businesses to have the ability to safely, securely and transparently share their transaction data with third parties that they trust,” Becky Heironimus, vice president of enterprise digital products and data connections at Capital One, said in a news release

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

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