November 17, 2020, Washington, DC – In response to ongoing discussions by large U.S. financial institutions and some policymakers to impose a mandatory 90-day reauthentication requirement for customers wishing to utilize third-party financial tools, the Financial Data and Technology Association (FDATA) of North America today released a paper that outlines the detrimental impact this requirement would have based on the real-world experience of consumers in the European Union and United Kingdom whose access to financial technology tools is hindered by a similar requirement.
FDATA North America provides insight into how a mandatory 90-day reauthentication requirement has had the following impacts in other markets:
- Resulted in the percent of customers no longer able to access a financial technology tool spiking from 6.6 percent prior to the implementation of the mandate to 44 percent afterwards;
- Forced a frustrating experience upon the customer that can result in them abandoning use of an otherwise valuable tool as their connection to the tool repeatedly breaks; and
- Imposed onerous requirements for customers who have accounts with multiple institutions to reauthenticate with each different institution every 90 days to access tools of their choice.
Mandating reauthentication events at least once every 90 days harms customers by aggravating their experience and unnecessarily hindering marketplace competition. The goal of an open finance system is to provide customers with control over their own financial data such that they can choose the products and services that best suit their needs. FDATA North America asserts that full customer control of financial data is the single best way to ensure good stewardship of that data.