FDATA North America November Newsletter

by rebecca

FDATA North America Monthly Newsletter for November 2024

Welcome to FDATA North America’s monthly newsletter! These regular dispatches will share developments from our organization and our 30+ member companies, all of which are promoting financial access and inclusion with open finance use cases. We also include a list of upcoming industry events, and coverage of any market developments that impact fintech innovators. Know someone who’d like to receive these monthly updates? Send them here to sign up.

FDATA North America News

FDATA North America Submits Comments to the Prudential Regulators’ RFI on Bank-Fintech Partnerships. On October 16, 2024, the Financial Data and Technology Association of North America (FDATA North America) submitted a comment to the Office of the Comptroller of the Currency (“OCC”), the Federal Reserve (“Fed”), and the Federal Deposit Insurance Corporation (“FDIC”; collectively, “the agencies”) in response to their Request for Information (“RFI”) on bank-fintech partnerships. FDATA expressed concern that the RFI did not adequately capture the variety of these collaborations and emphasized the benefits they bring to consumers, small businesses, and the financial marketplace, such as increased competition, reduced costs, and improved access to financial services. FDATA urged the agencies to defer oversight of consumer-permissioned data access to the CFPB, pending the finalization of its Personal Financial Data Rights rule, and allow for its full assessment before considering further regulatory action. FDATA released a statement on its submission of the letter, which can be found here.

FDATA North America Submits Comments on FDX’s Application for SSB Recognition Under Section 1033. On October 16, 2024, the Financial Data and Technology Association of North America (FDATA North America) submitted a submitted a comment in response to the Financial Data Exchange’s (“FDX”) application for recognition by the Consumer Financial Protection Bureau (“CFPB”) as a standard-setting body (“SSB”) under Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In its letter, FDATA commended FDX’s efforts to enhance transparency and governance, ensuring representation from diverse stakeholders, including smaller entities and non-banks. FDATA urged the CFPB to require that recognized standard-setting bodies allow smaller participants to review existing technical standards, promoting balanced representation in the open finance ecosystem. They also expressed eagerness to collaborate with FDX in advancing secure, consumer-permissioned data sharing. FDATA released a statement on its submission of the letter, which can be found here.

FDATA North America Applauds The CFPB’s Final Personal Financial Data Rights Rule. On October 22, 2024, the Financial Data and Technology Association of North America (FDATA North America) applauded the CFPB’s release of its final rule under Section 1033 of the Dodd-Frank Act, which grants consumers the right to access and control their financial data. FDATA celebrated the rule as a pivotal step toward a more consumer-focused and competitive financial services landscape, though it expressed disappointment over the exclusion of Electronic Benefit Transfer (EBT) data and urged for its future inclusion. Member companies like Betterment and Plaid voiced strong support, underscoring the rule’s potential to enhance financial access and spur innovation, while some, such as Trustly, raised concerns about provisions on reauthorization and tokenized account numbers. FDATA released a statement on the release of the final CFPB rule, which can be found here.

FDATA North America Submits Additional Comments to CFPB on FDX’s Application for SSB Recognition. On October 22, 2024, the Financial Data and Technology Association of North America (FDATA North America) submitted additional comments to the CFPB, urging a thorough review of the Financial Data Exchange’s (FDX) application for recognition as a standard-setting body. In light of recent litigation by the Bank Policy Institute (BPI) challenging the CFPB’s authority, FDATA highlighted potential conflicts of interest due to overlapping board memberships between FDX and BPI. FDATA also noted that FDX has advocated for the CFPB to establish standards for API performance, data breach liability, and technical certifications—roles not included in the CFPB’s final rule—and called for further examination of FDX’s capacity to independently manage these functions. FDATA released a statement on its submission of the letter, which can be found here.

Member News & Activity

FDATA North America was featured in The Paypers article, where Steve Boms, Executive Director of FDATA North America, discussed the CFPB’s new rule on consumer financial data. The rule enhances privacy protections by mandating explicit consumer consent for data usage and limiting it to specified purposes, with a 12-month expiration on authorizations. This regulation aims to strengthen Open Banking in the U.S., fostering competition, transparency, and better consumer access, while also setting a phased compliance timeline that extends to 2030 for smaller institutions.

FDATA North America was also featured in American Banker article, with Executive Director Steve Boms quoted expressing strong support for the CFPB’s new open banking rule, emphasizing its importance in giving consumers control over their financial data and enabling them to choose providers that best meet their needs. Despite this support, Boms voiced disappointment that Electronic Benefit Transfer (EBT) data was excluded from the scope of the rule, highlighting a missed opportunity to broaden financial inclusion.

ByAllAccounts published a blog highlighting the latest “tricks and treats” in financial data sharing this Halloween season. Among the treats, the CFPB’s new Personal Financial Data Rights rule brings clarity and uniformity to data access, empowering consumers and advisors alike. However, the Department of Education’s STOP Act implementation is seen as more of a “trick,” restricting advisor access to critical student loan data. Fidelity’s recent screen-scraping ban, viewed as either a trick or treat depending on perspective, seeks to bolster data security but also disrupts some advisor workflows.

GoCardless published a report exploring the trajectory of open banking payments in the UK, noting significant growth in adoption due to benefits like reduced costs, faster transaction speeds, and stronger security. The report outlines that while some sectors are adopting open banking payments rapidly, there are key barriers, including the need for consistent API standards, low consumer awareness, and limited integration with in-person payment systems. To reach mainstream adoption, the report recommends industry cooperation and regulatory support to address these challenges and expand open banking payment use cases across more sectors.

Inverite published a release announcing rapid growth through its partnership with Mortgage Automator, with over 90 mortgage lenders now utilizing Inverite’s open banking platform. This integration allows lenders to leverage Inverite’s real-time financial data, AI-driven risk scoring, and compliance solutions, streamlining mortgage processing while enhancing decision-making and fraud prevention. CEO Karim Nanji emphasized the significant demand for Inverite’s data solutions in the mortgage sector, highlighting improved compliance and faster, more accurate service. Mortgage Automator also praised the partnership, noting that Inverite’s technology aids lenders in meeting regulatory requirements and delivering a competitive edge in the mortgage industry.

MX’s Jane Barratt shared how technology can empower consumers financially and highlighted future trends she’s excited about on  The C-Suite Podcast at Money 2020. She emphasized the importance of the CFPB’s new data-sharing rule under Section 1033, which enables consumers to securely access and share their data, fostering a more competitive and privacy-focused financial landscape. Jane noted the transformative potential of AI in personalizing financial services but stressed that data quality remains key to unlocking AI’s full benefits. She also discussed the need for financial systems to adapt to changing income patterns, where tools can help individuals manage irregular cash flows effectively.

Plaid published a release celebrating the CFPB’s final rule under Section 1033, which affirms consumers’ rights to access and control their financial data, moving the U.S. closer to an open finance future. The release highlights Plaid’s commitment to supporting financial institutions and consumers through compliance tools that align with the new rule, including solutions for authorization, data management, and risk control. Plaid’s FDX-aligned Open Finance Solution suite, which aids institutions in transitioning to secure API connectivity, is also emphasized as part of its dedication to consumer transparency and choice in financial services.

Pontera and Envestnet were highlighted in a PR Newswire article announcing their integration to streamline 401(k) account billing for financial advisors. Pontera’s platform now includes access to Envestnet’s BillFin solution, which simplifies fee calculation, invoicing, and billing setup for advisors managing workplace retirement accounts. This integration aims to enhance the client experience by providing efficient, secure, and compliant billing processes, further empowering advisors to deliver comprehensive retirement management services.

Trustly, Inc. was awarded an InfoSec patent for its proprietary split-token authentication technology earlier this month. This technology enables users to be authenticated without their sensitive information being stored all in one place, substantially reducing the risk of fraud. More information about the patent can be found here.

Events and Submission Deadlines

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