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Financial Planning > Charitable Giving

Schwab Signs Data Deals With Envestnet, eMoney, Intuit

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Charles Schwab has signed data deals with Envestnet|Yodlee, eMoney and Intuit, a move that Schwab said Thursday “reinforces its commitment to customer data protection.”

As part of the deals, all three third-party fintech firms will use Schwab’s application programming interface connections, Schwab said: “The use of APIs are a best practice in the industry and take a token-based approach which enables clients to authorize third parties to download requested account information on their behalf in an encrypted form, without storing their usernames and passwords.”

Via Schwab’s API connection, Intuit, eMoney and Envestnet|Yodlee “will continue to have client-authorized access to account information in a protected environment specifically designed for such information sharing,” Schwab said, adding: “In turn, clients will have greater control over and better transparency into what data they share and with whom they share their data.”

Envestnet|Yodlee Partnerships

Over the past eight months, Envestnet|Yodlee has also signed data access deals with JPMorgan and Citigroup.

The financial data access deal Schwab signed with Envestnet|Yodlee will enable Schwab clients to “safely and more securely connect to and share their financial data for use with the more than 1,200 third-party financial service providers powered by” the Envestnet|Yodlee data aggregation and analytics platform, Envestnet|Yodlee said in its own separate announcement Thursday.

“These new partnerships underscore the continuing need to ensure our clients’ valuable financial data is protected,” according to Linda Albornoz, senior vice president of Digital Cross-Enterprise Platforms at Charles Schwab.

Since 2012, Schwab, Yodlee and other financial institutions and advisory firms have been in talks to address how to “build a cohesive ecosystem for consumer permission data sharing on top of the existing and highly successful commercial ecosystem,” Brian Costello, vice president of data strategy and strategic solutions at Envestnet|Yodlee, told ThinkAdvisor.

“For at least a year, Yodlee and Schwab have been collaborating on what a commercial tie-up [would] look like” for information sharing, he said. It then took “a number of months on hammering out the agreement to make sure that it was a win-win-win-win — for Yodlee, for Schwab, for our clients and for the shared customers,” he said. The deal, between the two companies, signed April 6, is a “legal tie-up” and “there is no money changing hands,” he added.

With the latest pact, Schwab clients who opt in can expect to experience faster and more reliable access to their personal financial information via the financial services company’s API, Envestnet|Yodlee said. Access will be based on client consent and “tokenization.”

Client Data Sharing

The application solution means users won’t have to enter and store usernames or passwords with any third-party company, Envestnet|Yodlee pointed out. With the agreement signed, teams from both companies plan to “move forward together to seamlessly implement these capabilities into the client experience,” according to the firm.

The deals move the financial services industry toward greater API connectivity in the U.S., giving consumers greater connection across their financial accounts, helping to provide the framework for Schwab clients to “more securely and effectively allow access to, and use their personal financial information, with selected services designed to manage their financial wellness,” Envestnet|Yodlee said.

“In the U.S., as we sign more of these agreements and migrate to consuming data from each of these [firm’s] APIs… once we get the top 12 to 15 banks and advisory firms in the country under similar data sharing agreements, that will represent certainly more than 80% of the data that we have been asked to collect” by customers who opt in, Costello explained. He predicted that will eventually grow to “close to 100%” after adding community financial institutions.

Now that Envestnet has three of the top 15 institutions, “we’re in conversations and/or negotiations with tens of institutions right now and … stay tuned — more announcements will be coming,” he said.

Schwab investors had some 12.7 million active brokerage accounts, 1.7 million corporate retirement plan participants, 1.4 million banking accounts and $3.5 trillion in client assets as of March 31, it said.

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