By Justin Baer
Fidelity Investments' parent company is spinning out its software startup that gives consumers more control over how their bank-account information is shared with tax, budget and other online financial applications.
FMR LLC founded the startup, a wholly owned unit of the firm called Akoya, two years ago. But in a bid to help jump-start the use of Akoya's platform, FMR sold stakes in the company to a dozen other financial firms. Among those new investors are many of the banks FMR hopes will be Akoya customers, including JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co.
Financial terms weren't disclosed.
Akoya expects its platform to go live later this year, the company said. It sits between the financial-services firms that manage consumers' accounts and the many apps that aggregate information to help clients manage their personal finances.
Akoya lets customers choose which apps can access data from their bank, mutual-fund and brokerage accounts and how much information those apps can grab. When a customer links a new app to their bank or brokerage account, instead of giving it their username and password they are sent a dashboard that governs access through their financial firm.
Customers can later use that dashboard to limit or revoke apps' access to their account data.
The platform aims to put an end to "screen scraping," the process where the app company's software obtains the customer's sign-in information, logs in as that individual and extracts their data. Many banks have grown uncomfortable with this approach, in which apps essentially impersonate their customers, said Peter Wannemacher, principal analyst at Forrester Research Inc.
Akoya executives say banks and other financial firms will pay for the platform so they don't have to build one themselves or negotiate data-sharing agreements with each of the apps its clients want to use.
"It's a two-sided network," said Stuart Rubinstein, Akoya's chief executive.
To be effective, though, Akoya needs many participants to plug into its network.
By separating from FMR, Akoya seeks to address any discomfort other institutions might have with a platform housed inside a fellow financial-services heavyweight. Fidelity has more than 30 million customers and $8.3 trillion in assets under administration. By bringing in many of the biggest banks as investors, Akoya believes it has locked up enough users on one side of the network to lure app developers on the other.
"When we envisioned building a utility, we realized we might need to spin it out," Mr. Rubinstein said.
Akoya's success will hinge on whether it emerges as a primary network for sharing financial data, Mr. Wannemacher said. Other early-stage startups are pursuing a similar idea, he said, and some banks may offer similar services themselves.
"It's not a slam dunk that financial institutions will be willing to pay for this," Mr. Wannemacher said. "Not every company needs to get big and achieve those network effects early on, but some do."
Akoya executives said their discussions with banks and other financial firms led them to Clearing House Payments Co., whose network settles trillions of dollars in electronic payments. Clearing House, which had been developing its own data-management platform, signed on as an investor along with 11 of its member banks.
In addition to JPMorgan, Bank of America and Wells Fargo, Citigroup Inc., Huntington Bancshares, KeyCorp, PNC Financial Services Group Inc., TD Bank NA, Truist Financial Corp. and U.S. Bancorp have also invested. FMR kept a stake for itself.
Mr. Rubinstein declined to say how much each bank put into the startup, or what those investments meant for Akoya's valuation. The company hasn't yet started to bring in revenue, and so far only Fidelity has plugged into the Akoya platform.
Based in Boston, Akoya has fewer than 50 employees.
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