Why We Don't Connect to Your Bank (And Why That's a Feature)
Why We Don't Connect to Your Bank (And Why That's a Feature)
Every finance app wants your bank login. "Connect your accounts for automatic tracking!" It sounds convenient, and for plenty of people it is.
It also costs something. With financial data, that cost has become harder to wave away.
How bank connections actually work
When you "connect" a bank account to a finance app, here is what usually happens behind the scenes.
- You type your bank username and password into the app.
- The app passes those credentials to a data aggregator (Plaid, Yodlee, Finicity).
- The aggregator logs into your bank with your credentials and scrapes your account data.
- The data comes back to the app. Sometimes the aggregator keeps a copy too.
Newer API-based connections skip the credential handoff. Most connections still do not use them, especially at smaller banks and credit unions.
The privacy problem
The Plaid litigation
A class action lawsuit against Plaid, one of the largest fintech privacy cases so far, alleged that the company:
- Built login screens that looked like bank interfaces, so users thought they were typing credentials straight into their bank
- Collected more financial data than users authorized or apps needed
- Kept detailed transaction histories beyond what the connected service required
The case covered January 2013 through November 2021 and ended in a settlement. Plaid has changed its practices since. The tension the case exposed has not gone away: share credentials with one company and you may be sharing data with many. That is the practical argument for why financial privacy matters.
It did not stop in 2021
In November 2024, a lawsuit reported by American Banker accused several companies of collecting and sharing sensitive financial information without consent, including using data aggregators to pull bank account data and running AI analysis over conversations and account data.
These are court filings, not hypotheticals.
The reliability problem
Set privacy aside for a second. Bank connections break, constantly.
Multi-factor authentication is the usual culprit. Banks tighten security, and you re-authenticate every few weeks. When a connection drops it rarely announces itself, so your app can show a stale balance for a month before you catch it. International banks, crypto exchanges, and small institutions often have no aggregator coverage at all.
The part that annoys me most: when the "automatic" tracker stops working, you do the updates by hand anyway, in an interface that was never designed for typing numbers.
The regulatory response
Regulators noticed. In October 2024 the Consumer Financial Protection Bureau finalized its Personal Financial Data Rights rule under Section 1033 of the Dodd-Frank Act.
As Reuters reported, the rule says "a company that ingests a consumer's data can use the data to provide the product or service the consumer asked for, but not for unrelated purposes the consumer doesn't want."
It pushes banks toward API-based sharing and away from credential scraping. Good. It also confirms that the system running today has problems worth writing rules about.
The alternative is manual-first tracking
Instead of handing credentials to a third party and hoping the pipe stays connected, you type your balances in yourself.
That is not a step backward. It is a design choice with a clear ledger.
What you gain
No bank logins go to anyone, so no credential can leak from a database you never populated. Nothing syncs, so nothing breaks. You can track any asset, at any institution, in any country. Your data lives where you put it instead of being copied across aggregator databases.
The monthly update turns out to be the sneaky benefit. Five minutes with your own numbers is the moment you actually look, notice a trend, and catch the account you forgot about.
What it costs
About five minutes a month. That is the honest trade.
Why we built MyMoneyViz this way
When we started building MyMoneyViz, integrating Plaid was the obvious move. Every competitor does it. Users expect it.
We kept snagging on three questions. Do we want to be responsible for storing bank credentials? Do we want to depend on aggregators that get sued over data practices? Do we want the product to break every time a bank changes its login flow?
No, three times.
So we built a net worth tracker that works without a bank login. You enter balances in a spreadsheet-style grid that covers 13+ asset types, and you get charts, allocation breakdowns, goal tracking, and history. A monthly email reminds you to update.
Everything a finance app is good for, minus the part where you hand over your bank password.
When bank connections make sense
Bank connections are not always the wrong call. They fit when your finances are simple (one bank, one broker, all domestic), when you need daily transaction data, or when you are tracking spending rather than net worth. For those cases the convenience probably wins.
If your money is spread across several platforms, sitting in more than one country, or parked in assets no aggregator has heard of, manual-first tracking is the better deal.
The bottom line
The most secure financial data is data that was never shared. No aggregator can leak credentials you never gave it. No connection can break if there is no connection.
Privacy-first finance is not more work. It is five minutes a month with your complete financial picture, on your terms, with your data staying where you put it.
