Financial institutions and vendors are pushing these services to verify account information. Speaking from my experience as a USA banking customer, banks used to verify accounts belong to you by placing micro-deposits into that account that you would manually confirm. It was a simple straight-forward process.
Now, more of them are partnering with these third-party account aggregation/verification services that require you to hand over your bank’s login credentials. In return, these services can maintain read access to your banking information which can include status, account information, as well as even potentially viewing your balances and transaction history.
Vendors and financial institutions are saying that these services are actually designed to improve privacy and fraud protection. I’m not quite sure how giving a third-party access to my most sensitive financial information makes my account more secure and privacy respecting…
Nevertheless, can this community provide tips for how to navigate this changing financial landscape?
For example:
- Is it better in fact to trust these services?
- Is it better to create an account with these services? They do say that creating an account can allow you to view and delete connected accounts - but I worry that just creating an account, which comes with additional terms, could be even more harmful. Deleting an account also gives little reassurance that they are deleting all the sensitive, unnecessary data they already collected.
- If you do create an account with them, are there privacy tips you suggest?
As I read often, applying privacy techniques (like aliasing) to official things such as government and banking tends to not work out well. But what about these fintech things that are not strictly banks, are not regulated to the same degree, are likely either selling/sharing your sensitive data or not keeping your sensitive data secure, but are still pushed and/or required by required official places.
As an example, Fidelity now requires customers use Finicity to connect external banks. People on social media are also talking about landlords requiring one of these services in their online portal to pay rent.