Capital One deal aims to streamline data sharing for small business

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The data deals are mounting as bankers seek alternatives to screen scraping.

Capital One Financial and Xero have announced a data-exchange agreement that is expected to simplify data sharing for small-business customers. Through the bank’s new application programming interface, small-business customers can feed their bank data into Xero’s cloud accounting technology.

Many bankers object to screen scraping as a security risk, so financial institutions have been forming fintech partnerships that employ other methods of data sharing. Silicon Valley Bank and City National Bank have similar deals with Xero. Wells Fargo has a data deal with Xero in addition to arrangements with Intuit and the data aggregator Finicity. JPMorgan Chase also has a data deal with Intuit.

The partnerships are forming as the Consumer Financial Protection Bureau continues to study the myriad policy issues posed by data aggregation.

Capital One's API uses oAuth capabilities to provide Xero with tokenized authorization to access account data that customers request — without the requirement that customers directly provide Xero with their login credentials (as required in screen scraping).

“As technology brings new waves of financial tools into the market, we believe that it’s important for all consumers and small businesses to have the ability to safely, securely and transparently share their transaction data with third parties that they trust,” Becky Heironimus, vice president of enterprise digital products and data connections at Capital One, said in a news release.

The Americas president of Xero, Keri Gohman, is a former executive vice president and general manager of Capital One’s small-business banking division.

"The growth of the financial Web, where a network of organizations connect and share financial data in order to drive their business, is transforming the way the economy operates," Gohman said in the release.

This is Capital One's third such partnership this year. In February it signed with Expensify, a platform that imports credit card transaction data directly to expense reports, as a service to small businesses and consumers. Last month it struck a similar data-sharing partnership with the expense reporting software firm Abacus.

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Data sharing APIs Capital One JPMorgan Chase Wells Fargo Xero Expensify Women in Banking