Member Spotlight: USAA

Posted on 1/11/2023

The best way to tell the FDX story is through the voice of our members. Welcome to the FDX Member Spotlight series, in which we sit down with some of the professionals from FDX member firms who juggle the responsibility of their day jobs with developing, integrating and implementing the FDX standard for the benefit of consumers and the entire financial services industry. We ask them about their experiences, goals and thoughts on the process.

This month's Spotlight features a conversation with Jean-Paul LaClair and Jason Paul Hendry with USAA.

1. Tell us a little bit about your background. How did each of you get into the world of open banking and finance?

Jason Paul Hendry (JPH): Currently, I'm a principal architect at USAA. I've been in banking my entire career, so I have over 20 years of experience in banking.

Around 2014, I saw the need to come up with an alternate way to allow consumers to consent to sharing access to their banking and finance data. At the time, the banking and finance ecosystem was in the midst of what we call screen-scraping, and we saw that as a security risk to our members and their financial information because screen-scraping pulls all data from a webpage, including info that they might not want shared. That’s because here at USAA, part of our mission is to secure the financial lives of our members and to help them secure their finances. So, it was apparent to us that there needed to be an alternate way for a member to consent and share their banking information.

Around that same time, I got involved with the Financial Services Information Sharing and Analysis Center (FS-ISAC) working group centered around creating a durable data API. It was an important step forward in securing members’ access and providing them with that level of consent. From there, we came together with the other founding members of FDX, and I’ve been working with the group since then.

Jean-Paul LaClair (JPL): It's a bit of an interesting story, but if I think backward about my career, helping others and driving impact has always been my underlying goal. I was naturally drawn to banking because I recognized the ability that I would have to impact people's lives. After being in banking for a couple of years, I started to realize that the impact I was having was always going to be limited by the number of people that I either had on my team or that I could physically reach. Open banking helps to broaden the number of people who can potentially be reached, especially those who are underbanked.

2. Could you tell us a little bit about your roles with USAA?

JPH: My responsibility at USAA is to design and direct banking systems to handle personal financial management, open banking, and open finance, as well as access to consumer data that’s displayed both internally and externally. I'm responsible for our accounts and the activity which is displayed on the customer’s screen for our banking products.

I'm also responsible for our personal finance management tools. That includes your budget spending and trends and then of course our open banking initiative – sharing consumer-consented data via API's.

JPL: As the director of Financial Wellness and Open Banking for USAA, I lead teams that are operating at the intersection of data, technology and value generation, and ultimately have responsibility for developing and executing a financial wellness strategy that is supported by open banking. All of that comes together to empower our members with intelligent and personalized insights that ultimately give them the ability to take control of their own data for a single, secure and unified experience across USAA and any other financial providers, products and platforms they engage with.

For me, leading financial wellness and open banking for USAA and empowering our members with intelligent, personalized insights and the ability to take control of their data, that's how I’ve been able to ultimately achieve my goal of helping others.

3. How does what you each do intersect with the larger discussion around consumer data sharing and open finance?

JPH: My architecture drives the ability of USAA to execute the capabilities needed to share data and perform open finance, grant mortgages and other embedded finance-related activities. I essentially enable the business capabilities for the consumers to perform these actions. I am involved in helping to develop the actual industry requirements and working with FDX to help design what the standards would be, so the ultimate goal is to create an architecture that is interoperable with multiple players. Ideally this allows consumers to interact across various institutions and fintechs and be represented with accurate data from their USAA accounts.

JPL: My role is also about looking for ways to provide access to underserved markets. Within the industry at large, there are broad segments where large players have traditionally focused a lot of their product delivery efforts. From a traditional banking viewpoint, a lot of how we support ourselves from a revenue generation perspective is by going after spaces where margins look good. Of course, that fails to recognize that we’re part of a community that's much larger than just those actions and market segments. When I started in banking, my belief around serving all was so important to me and continues to be. It helped me recognize that there are different ways for us to show up in all communities, especially those that are traditionally underbanked. That's a really important part of why I'm at USAA. I recognize that at the core of people's lives, money is hands down the strongest driver of anxiety and stress, and how that impacts people varies depending upon the segment.

Engaging with and expanding into open banking and finance, allowing customers a better way to permission and share their data, is a key part of opening those doors to underserved markets and allowing everyone to employ financial wellness.

4. USAA works with a very targeted audience – military members and their families – has that shaped how USAA is approaching open banking and technology? If so, how?

JPH: Our number one focus is ensuring that our current members are able to share their data and perform banking activities beyond USAA’s real estate. As part of that, we want to ensure that they understand with full transparency what data they're sharing while also being able to consent to what's being shared. It’s also important that what's being shared is accurate.  

While some might argue there’s an opportunity for us to use technology to potentially increase USAA membership, that's not something that we really focus on. Ultimately, we’re focused on supporting our current customers through open banking technology.

5. USAA has been in the digital and online banking space longer than some other banks- how has being an online bank before the major rise in online banking shaped USAA's approach to the tech and open banking? What insight has that provided?

JPL: At our core, USAA is one of the most trusted brands in the industry. The heritage of the USAA brand evokes trust, service and innovation. Historically, the channel of delivery has always been the how, but the why, our mission, is what's always driven our organization’s investment into products, capabilities and services.

A relatively well-known example of this was when we first created our IP around remote deposit capture with mobile check deposit. It wasn't just about creating new technology, but a strong recognition of who our members are – military members who are often deployed around the world. Providing them with the tech for mobile check deposit was about answering the question of how we could help, no matter where they are. It was a really strong recognition of our mission, and the financial security problems our members were having.

In this respect, I think USAA has led the way with innovations like early online banking tech and mobile check deposit.

6. Do you foresee any changes or new trends in the world of open finance in the next six to 12 months?  

JPH: As an industry we're in a growth phase. We’re seeing a lot of parties making the transition away from screen-scraping and moving towards API-based interactions.

Fraud and identity theft are some of the major initiatives that we're seeing in the industry right now. As a result, I think we’ll see more innovation around account and credential verification and more of those capabilities being available through the use of open banking.

Looking two-to-three years out, we're going to start to see product information being exposed via open banking APIs, and potentially even see marketing offers being made available via open banking APIs. I wouldn't be surprised to see product acquisition and servicing occurring through open banking APIs.

At USAA, we want to be there where our members are so we can provide them with the same products they need wherever they're interacting. Open banking is focused on data sharing. The industry is moving into open finance, embedded finance. There's going to be a pretty big shift in money movement, particularly payment initiation. The aggregation ecosystem is going to change to provide additional capabilities on top of the actual data gathering and the open interoperable API to make it easier for multiple parties to get involved. The concept of aggregation isn't as important, but the enrichment of that data or services or capabilities is where the benefit is. A lot of that will evolve in the next coming years.

JPL: There’s three key things I think we’ll see. The first is higher API adoption and automation. As an industry, we've been doing a lot of aggregation when it comes to adopting new use cases for open banking, but what are we doing to activate against it?  We're all trying to automate the basics, so I feel the first challenge is not only just driving data-sharing but actually using it the best we can and applying it well. The second one is shifting the mindset of industry stakeholders in a very specific way – to acknowledge that open access data sharing improves everyone's situation. It’s not only going to benefit the customer, but the bank provider and the fintech, the industry as a whole.

Lastly, the uncertainty around the current regulatory guidance is a challenge. It's somewhat inconsistent or limited and depends on location in jurisdictions and has created uncertainty within the industry around how to support and engage with the individual organizations, like FDX, that are helping to drive industry standardization.

7. What are some of the concerns and challenges USAA is seeing when it comes to the development of open finance and banking tech? What are some of the trends that are being commonly adopted or implemented?

JPH: Ultimately, the biggest challenge is adoption. As I mentioned earlier, we're starting to see the adoption of the API's increase but completely getting away from screen-scraping is a long journey. I started looking at this in 2014 and it probably wasn't until around 2020 that we started seeing the industry move towards open banking API adoption. Now we're seeing large organizations making the shift. Adoption of the API has definitely been a challenge, but we’re starting to see forward movement, especially with potential rulemaking on the horizon. That's going to outline consumers’ rights to access data and that's only going to push API adoption further.

I also think that we're going to see the need for expressed consumer consent and maybe we'll see a little bit more standardization around capturing, maintaining and tracking consumer consent. I could even see us getting into some situations where the consumer has the right to revoke access or the use of their data at any given point in time, as outlined by potential rulemaking. Instead of it being a best practice outlined by FDX, it may become an industry requirement.

JPL: There's almost a shift that has to occur amongst the key players and parties in the ecosystem around what use cases will arguably start to influence the development of open API.

There's a belief that for our ecosystem to be successful, all parties in financial services will need to embrace emerging technology but also remain flexible to adopt unfolding business models. The business models of the past will not be the only ones for the future.

Arguably, we have to put the end consumer at the center of every strategy. I believe that missions like USAA’s around financial security will begin to permeate the industry more. We all will have a role in building a world where everyone is financially strong. The unknown is how that happens.

My belief is that there are three elements underneath that. One is that it has to be consumer experience led. Second, we need to have collaborative networks that are designed to orchestrate data sharing across the entire financial ecosystem. Lastly, when it comes to the enterprises and ecosystem, we have to leverage a platform mentality and explore ways of how we monetize data to remain agile.

With those shifts in the industry, what we’ve already begun to see is that open API's will evolve to empower new and in existing use cases. What we hypothesize is that the data sets within systems like payroll, utilities and telecoms (to name only a few) is also financial transaction data that can be used to create a better picture of an individual's financial wellness, which will ultimately allow us to build the customer experience and shape the way in which we create new capabilities and technologies.

8. What role does USAA currently have with FDX? What are USAA’s goals and objectives as a member of FDX?

JPH: As I mentioned earlier, as founding members, we’ve been involved with FDX since the beginning. Independently, I currently serve on the Board of Directors and also as one of the co-chairs of the Technical Review Committee.

9. Lastly, we like to get to know our new members better outside their industry roles. What’s one hobby or activity you like to partake in on the weekends?

JPH: I enjoy fishing regularly. I also really enjoy playing golf. I try to spend my weekends playing a round of golf and then going fishing. Those are my two most active hobbies.

JPL: I live in Buffalo, New York, where it's snow country, but it’s also pretty historic. My husband and I have a cheerful Brittany Spaniel named Danny who definitely takes up a lot of our time. Outside of work, I'm usually rooting for the Buffalo Bills (the past year has been great), in a spin class or listening to the latest tech podcast.