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News and research on financial software quality assurance and risk management

Capital One Restricts Third-Party Data Access

29 June 2018
Changes to data flows to outside apps upsets customers

Capital One Financial Corp. is limiting how account data flows to outside apps for managing finances, prompting a backlash from the bank’s customers who say they have been locked out of their own information.

A technology upgrade led to the disruption, people familiar with the situation said. Plaid Technologies, whose software is used to connect banks with third parties, is unable to link with some Capital One accounts, according to the people, who requested anonymity because they weren’t authorized to speak publicly.

Customers use apps for a range of services, including money transfers, investment tools and savings strategies. Capital One said third parties can use a platform known as an application programming interface, or API, to access its data.

“We welcome any third party that wants to provide services to our customers to work with us to access data through our publicly available customer transactions API,” McLean, Virginia-based Capital One said in an emailed statement.

Popular Apps

Plaid, which enables popular apps such as Acorns Advisers LLC, PayPal Holdings Inc.’s Venmo and Robinhood Financial LLC, hasn’t been able to access some data for Capital One customers for about a month, the people said. About a million consumers have been affected, the people said.

“Everyone should be able to use the fintech applications and tools that enable them to live a healthy financial life -- and this shouldn’t be limited to the services provided by your bank,” Plaid said in an emailed statement.

Plaid has encouraged consumers to contact Capital One or file a complaint with the Consumer Financial Protection Bureau. Some Capital One customers have taken to social media to protest the bank’s new policy, using the hashtag #protectdataaccess.

There’s growing discord between banks and the financial technology companies, or fintechs, that want to use their data. Banks want startups to use APIs, which give lenders more control over what data is distributed and how it is released. Fintechs say the restrictions can hinder them from performing services they promise consumers.

“We’re extremely disappointed to see Capital One blocking consumers from accessing their own data,” said Matt Haghighi, founder of MasonPay, an app that uses Plaid and helps users pay off their credit card debt faster. “The majority of our support tickets have been related to linking issues around Capital One.”

Bank’s Reach

Capital One is the third-largest credit-card issuer in the U.S., with roughly $98.5 billion in outstanding loans, according to data compiled by Bloomberg. The company serves 45 million customer accounts, according to its website.

Over the last year, Capital One has joined with technology companies to expand the use of its API, including a partnership with Intuit Inc. to share data for services like Mint, TurboTax and Quickbooks.

Quovo Inc., a startup that provides fintechs with connections to banks, hasn’t faced issues with Capital One in recent weeks, according to a statement from Niko Karvounis, chief product officer.

(Bloomberg)

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