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.
George Anderson, Ninth Wave, Founder and Chief Executive Officer
John Vander Vennet, Ninth Wave, Head of Sales
Ninth Wave simplifies connections between financial institutions, apps, aggregators, and other external applications. The Ninth Wave platform is a single, secure point of connectivity through which financial institutions enable permissioned access to accountholder data. The company’s clients include some of the world’s largest financial institutions, including 3 of the top 5 U.S. banks and 9 of the top 10 wealth managers. Based in New York’s Financial District, Ninth Wave spun out from its former parent company, Enterprise Engineering, Inc. (EEI), in 2019, and recently closed on a significant minority investment from private equity firm SARORAS Private Capital.
George, why don’t you share some background on you and Ninth Wave, your latest entrepreneurial start-up.
GA: I’ve got a long history in financial services – more than 25 years working in some of the largest and most respected firms in the world. I’ve had the privilege of working with technologists across all divisions within major financial institutions – from capital markets, equities, swaps, derivatives, fixed income, foreign exchange, stock loan, and prime brokerage, to wealth management and retail and commercial banking. I learned a lot about building systems that are highly scalable and highly secure. In 1995, I took that experience and started Enterprise Engineering, and have since written several books focused on all aspects of data. Last year, we launched the Ninth Wave brand with the mission to continue EEI’s legacy as a trusted provider of secure data connectivity between financial institutions and third parties, including aggregators and fintechs. But now we’re a pure-play software firm rather than a software division within a consulting business. We want to be the single data gateway for all external channels seeking access to our financial institution clients and their customers’ permissioned data.
JVV: We’re seeing an explosion of third-party applications – fintechs, personal financial management and wellness tools, accounting software, and other business solutions. These apps need data from our financial institution clients. Our job is to help our clients manage that complexity and satisfy the needs of the both the financial institution and their end customer by enabling the transfer of accurate data in a secure, consistent manner. That’s really our goal.
What’s the difference between Ninth Wave and a classic aggregator?
GA: Ninth Wave and EEI have always viewed our role as a protector of financial institutions. The Ninth Wave platform allows our clients to manage a wide range of applications seeking data access – including aggregators. We aren’t an aggregator and we aren’t competing with the aggregators – we are giving our clients a better way to manage aggregators, and providing the aggregators with a more reliable, accurate, and secure alternative to screen scraping. This all makes us complimentary to the aggregators. The result is a better experience to end customers. A lot of classic aggregators acquire data through our platform today, and we expect that to continue increasing over time.
One of the things I’m quite passionate about – a passion I share with clients – is that even in times of extreme market volatility, we want our clients to avoid becoming a headline story on CNBC, or on the cover of The Wall Street Journal. We work with very prominent firms, and the work we do can significantly impact their brands. One client, a retirement services provider, has 65 percent of their traffic coming from aggregators. Most people don’t check their 401(k) on a daily basis – but once they hook these services up, their accounts are being polled on a frequent basis largely without the accountholder’s implicit knowledge. Our clients need to be able to securely, reliably, and transparently handle this type of traffic – and the Ninth Wave platform does just that.
JVV: We don’t consider ourselves a “nice-to-have” partner, we’re a “need-to-have” partner that helps our clients manage all external channels, aggregators included. As George said, we don’t compete with aggregators, who provide a valuable service. We help clients manage what those aggregators are doing, so clients and their customers are not negatively impacted. Our clients have their own end users who want access to their accounts when and where they demand – often in a third-party app. We want our clients and their customers to have control over the data they send, while keeping security concerns top of mind in every instance. Most clients are really serious about that, it’s in their interest as well as the interest of their customers. That dovetails nicely with what FDX is providing through the FDX API.
Great point. So, considering the explosion of different financial services apps, and where financial institutions are today, where is the industry heading in terms of customer expectations?
GA: I anticipate more consistency in the overall user experience across financial institutions, with more standardized processes for connecting accounts to a third-party tools, authentication, and consent/authorization. That will go a long way towards establishing best practices and much-needed transparency and accountability. Some banks have developed very interesting applications that are proving very useful to their customers, while reducing expenses and improving overall service. Bank of America has shown itself to be a leader in this area – especially with the success of their artificial intelligence-powered assistant Erica.
Building on that, what do you see as some key trends over the next 12 months versus the next five years. That might include personal assistants and artificial intelligence. What else should people keep their eyes on?
GA: Over the next 12 to 24 months, we’ll still see lots of confusion behind the scenes. I think there will be more regulatory oversight. We have the California Consumer Privacy Act, and when you consider what other states are discussing, there will likely be government definitions of standards around data sharing and data privacy. That may be an issue that both parties in Congress can collaborate on. A lot of the APIs that banks are creating may be loosely based on the FDX API, but there’s not a whole lot of consistency right now – that’s where FDX, the FDX API, and its central coordination are helping.
Even today, many of the individual members of FDX have their own APIs out of necessity. They do this because, for instance, a small business customer may need to interact with its account in real time – a use-case currently not supported by many financial institution APIs. So, they developed their own solution to meet that demand. I know FDX is addressing this, but they aren’t quite there yet. If you look at the early days of Open Financial Exchange (or OFX), which grew from the work of Microsoft and Intuit, the same kinds of situations lead to a call for a major standard to emerge. Five years from now, I think we’ll have much more clarity, clearer and more widely-adopted standards, and best practices.
So given your view that there will be confusion and lack of clarity in the next 12 to 24 months, what steps should the industry be taking today? What should banks, aggregators, fintechs be doing?
GA: Banks, aggregators, and fintechs need to have a clear plan to manage the increasing complexity around data connectivity and customer demands. We can’t just wait for regulations to be developed. That’s not how this fast-moving industry operates! Personally, I’m very excited about FDX and its mission, and am very proud to be a member that participates in many of its committees. One of the very positive attributes of OFX, when it was first introduced more than 20 years ago, is that it had very rigid processes. Before anything could go into the OFX specification, it had to pass a rigid certification process and software quality assurances. FDX is taking similar steps, which I realize isn’t easy and takes time. But those kinds of requirements will be important to fulfilling the mission of FDX for financial institutions, fintechs, and the customers they serve.
I agree that FDX is trying to move collaboratively in the direction you outline. But there are tons of use cases and different applications that haven’t even been built yet. That calls the question of why Ninth Wave decided to join FDX in the first place.
GA: Earlier I mentioned my passion for keeping financial institutions out of the headlines. At Ninth Wave, we’re tapping into that passion to serve our clients. We have a tremendous amount of knowledge that we can give back to our community. We’ve been involved in the creation of various standards for OFX, FpML, and we’re one of the original creators of the Durable Data API, which evolved into FDX. That’s a key reason we joined FDX – to share our knowledge and expertise to inform the discussion around standards that will help all constituencies. Much of what we do works across many financial products out there today. I have a great team, great clients, and great technology. Ninth Wave’s work with FDX is a wonderful opportunity to be part of a major transformational pivot point in our industry. We’re all in!
Do you consider Ninth Wave a fintech? If not, what sort of company are you?
GA: That’s a good question. We try not to get hung up on labels. We provide enterprise software to financial institutions. We developed a tight bond with Wall Street over the last 20+ years, working with the banks, so we have an all-star client list which I’m quite proud of. We see ourselves as a real enabler to banks and financial institutions, while acknowledging 100 percent that consumers are the owners of their own data. Recognizing that last fact is key.
Years ago, I created a solution with a major Wall Street bank. One of the functions of that solution was to aggregate consumer data with the consumer’s approval. The bank argued vociferously that the data didn’t belong to the end-user, it belonged to the bank. There is still a tug-of-war going on with aggregators about how they get data, what data it is they get, etc. But the fact that consumers own their own data is something we firmly believe in, and that recognition is crucial to the mission of FDX and the standardization of processes.
That’s a great example, George.
JVV: To your earlier question, it’s actually quite important for Ninth Wave to be part of FDX. To George’s point, we do have a tremendous amount of domain expertise and experience, and many of our clients are FDX members as well. There is, and will continue to be, a tremendous need for a solution like the Ninth Wave platform to help financial institutions, aggregators, and service providers do all the work required. There’s no magic bullet – we all have to collaborate and work hard to create a common standard that meets multiple needs.
Any final thoughts?
GA: Consumers have a right to secure and transparent access to, and control over, how and when their data gets shared. But that is very, very far from today’s reality. Today there are apps that will collect your salary, know your mortgage, create expense ratios compared to your neighbors that will leave you feeling good or bad about how you’re doing financially. But if you cancel that app – by, for example, deleting it from your phone – it may still be collecting and aggregating your data, unbeknownst to you. No matter how cool an app is, end users must have full transparency into where, how, and when their data is being collected. They need control over that entire process.
Furthermore, when we sign up for a service or an app, we reach a point where we can’t continue unless we agree to the terms and conditions. Nobody reads them before clicking and accepting. We have no idea what we just agreed to! That’s why we launched Ninth Wave and joined FDX. We all, together, need to advocate better on behalf of consumers. In the end, we are friends and family here, regardless of the space in the financial services ecosystem we occupy. We need to work together to deliver on the vision we share within FDX.