October 27, 2022 Washington, DC- Following today’s Consumer Financial Protection Bureau publication of proposals for the upcoming Small Business Regulatory Enforcement Fairness Act (SBREFA) panel for the Dodd-Frank Section 1033 rulemaking, FDATA North America Executive Director Steve Boms released the following statement:
“FDATA applauds the CFPB for this timely release of its SBREFA outline. This outline marks the first concrete step towards the implementation of an open finance system in the United States and affirms that consumers should have complete control over their financial data. If implemented, the framework envisioned within the outline will strongly align with the goals that FDATA North America has long supported: a national, technology-neutral financial data portability standard that will allow consumers to select in a more competitive ecosystem from the financial services providers that can best improve their financial wellbeing. We applaud the CFPB staff and Director Chopra for their diligent work and look forward to working with the CFPB to promote an expansive, customer-centric proposed rule to implement Section 1033 of the Dodd-Frank Act.”
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!
Monthly FDATA Member Spotlight: Flinks
This month’s FDATA Member Spotlight features Dominique Samson, VP of Corporate Affairs at Flinks, who explains how improved data connectivity can reduce friction in the financial services ecosystem and benefit consumers with limited credit history:
FDATA NA News
FDATA submits comments to Canada’s Standing Committee on Finance (FINA) as part of its 2023 pre-budget consultations. In our submission to FINA, we called on the Canadian government to include language in Budget 2023 asserting the importance of governance in an open banking framework. We also argued that:
Any open banking governance entity must be neutral, transparent, and nimble;
Lawmakers allocate sufficient and sustained funding in Budget 2023 toward the implementation of an open banking framework and governance entity;
Lawmakers include language in Budget 2023 outlining its approach to Open Finance, the next logical step after Open Banking; and
The framework must truly unlock market innovation and competition to benefit Canadian consumers and businesses by including an amendment to the Canadian Payments Act to grant federally regulated payment service providers access to Payment Canada’s forthcoming real-time retail payment system and make them eligible for membership in Payments Canada.
We also asserted that any open banking governance entity in Canada must be:
Neutral and not controlled by any particular stakeholder(s) with commercial interests in the ecosystem;
Transparent in that it invites and considers stakeholder input and subjects its decisions to an open, publicly visible process); and
Nimble and capable of making binding decisions relatively quickly and without undue bureaucracy, and has all stakeholders in the open banking system agreeing to comply with the decisions and determinations made by the open banking governance entity as a condition of being active in the market.
FDATA Highlights Importance of API Standards and Monitoring. As both Canada and the United States continue to move toward open banking via APIs, it is essential that minimum API standards be set in open banking frameworks to ensure that consumers and SMEs have uninterrupted access to their financial data. To this end, FDATA has developed four principles that will be critical to the design of a well-implemented API environment in North America. These principles cover data scope, reliability standards, fallback options, and the necessity of establishing a neutral monitoring agency.
Member News & Activity
APImetrics CEO David O’Neill joined a live webcast to discuss five lessons they’ve learned monitoring Open Banking stacks over the last three years. O’Neill also discussed what the experience has taught the company about DevOps in regulated sectors where it’s possible for two teams of operations engineers to face off in front of a regulator and be able to prove that they are both in the wrong.
Basis Theory was tagged as one of Business Insider’s “Most Promising Fintech Companies.”
Fiserv posted a new episode of its podcast, “Blurring the Line Between Fintechs and Financial Institutions,” which featured David McIninch discussing how the evolution is changing how people move and manage money while providing growing opportunities for financial institutions.
Flinks product marketer Alex Coleman published a new blog post, “Open Banking, Open APIs, OAuth: What Does It All Mean?,” which covered existing data aggregation methods, the transition to open banking, how APIs and Open APIs work, an intro into OAuth, and the security and legal implications of open banking.
MX’s Nicky Klein, VP of Open Finance, spoke at MX’s Money Experience Summit saying “not embracing open banking is hurting your business. If you don’t enable your customers to connect with the apps they want, they’re going to bank elsewhere.” MX also announced record-setting gains in financial data connectivity and the general availability of new product innovation and new implementation partners that bolster the MX platform.
Plaid published a new blog post Q&A with Colby Ross from Project Finance, a digital banking solution for banks and credit unions. Ross shared with Plaid how his company is using their Core Exchange integration to remove credential sharing, help customers achieve financial wellness, and build a customized world-class digital banking experience.
Validify has partnered with Insight, a financial services software provider, to be their selected banking and payment data provider to offer new, exclusive services to their customers. The two companies have collaborated to create custom, proprietary solutions, including TruBank and TruDDA. These powerful data services will be available only on Insight’s DecisionCloud Platform for the exclusive benefit of their customers.
Vaultree has shared the first episode of Vaultree Cast, a podcast “from data privacy enthusiasts to data privacy enthusiasts.” In this first episode, Thiago Alves, Head of Security Research at Mosyle, shares valuable cybersecurity career advice.
Vopay CEO Hamed Arbabi sat down with FinTec Buzz to chat about his career, payments modernization, entrepreneurship, how the pandemic has highlighted a strong need for innovation, and how businesses need to update legacy software and innovate their processes.
This month’s FDATA Member Spotlight features Dominique Samson, VP of Corporate Affairs at Flinks, who explains how improved data connectivity can reduce friction in the financial services ecosystem and benefit consumers with limited credit history:
September 29, 2022, Washington, DC -As both Canada and the United States continue to move towards open banking via APIs, it is essential that minimum API standards be set to ensure that consumers and SMEs have uninterrupted access to their financial data.
To this end, FDATA has developed four principles that will be critical to the design of a well-implemented API environment in North America. These principles cover data scope, reliability standards, fallback options, and the necessity of establishing a neutral monitoring agency. These principles can be found here, and below:
Any non-proprietary data available to an end user through a data provider’s online customer portal or paper statement must also be required to be made available in any API a data provider implements in an open banking environment. At present, data providers unilaterally determine which data elements their customers can and cannot share with third parties. In a true open banking environment, the customer – not their financial services provider – is empowered to make this decision. Within the PSD2 framework in Europe, this has led to services being withdrawn as API functionality did not keep pace with pre-existing technologies.
Any APIs built by data providers to facilitate data sharing in an open banking environment must, at a minimum, be as reliable as that data provider’s customer-facing online portal. Regulatory agencies in both Canada and the United States have understandably set prescriptive requirements regarding the uptime of online customer-facing portals at financial institutions to ensure that consumers and SMEs have continual access to their data. This same standard must apply in any open banking environment.
To the extent data requested by a customer is not available through an API connection, a fallback option must be permitted to be used to access the requested data. The legal customer data right upon which an open banking environment is built cannot be ignored if a data element requested by a customer is not available through a data provider’s API or if that API is down or unresponsive. Screen scraping must be maintained as a fallback option that may be used to access any data not included in or available from a data provider’s API.
A neutral entity must be responsible for regularly monitoring the robustness, reliability, and usability of data providers’ APIs in an open banking environment. A neutral entity should be tasked with the responsibility for regularly measuring and reporting, among other metrics: the uptime of all open banking providers’ APIs; whether all of the data available to the end user on the data provider’s online customer portal and/or paper statement is available through the API; the responsiveness of the API; whether the API is constructed in such a manner that it introduces unnecessary friction in the customer’s data connectivity journey. These measurements should be the basis upon which a fallback option is permitted. Ideally, these metrics would be made publicly available to facilitate the ability of end users to identify the effectiveness of their financial provider’s data sharing capabilities. Such an entity should come from outside of the sector itself in order to not be perceived as having their own fiduciary interest in the metrics delivered.
Issues related to API robustness, reliability, and user experience have stunted the growth of open banking use cases in multiple markets across the globe that have moved more quickly than North America toward implementing legally binding customer financial data rights. It has been evident from experiences in Europe, the United Kingdom and Australia that well-defined standards without equally well-defined systems to measure them in a way that all parties can agree to leads to increased friction and a technical overhead placed on the regulator which they may not be well-positioned to adjudicate. Ensuring at the outset minimum API requirements for any open banking data providers, as well as a neutral monitoring entity to measure the quality and reliability of those APIs, will prevent Canada and the United States from experiencing similar issues as we begin our own North American open banking journey.
September 26, 2022, Washington, DC – Today, the Financial Data and Technology Association (FDATA) of North America submitted comments to Canada’s Standing Committee on Finance (FINA) as part of its pre-budget consultations in advance of the 2023 budget.
In its comments, FDATA North America called on the government to:
Include language in Budget 2023 asserting the importance of governance in an open banking framework, and that any open banking governance entity must be neutral, transparent, and nimble;
Allocate sufficient and sustained funding in Budget 2023 towards the implementation of an open banking framework and governance entity; and
Include language in Budget 2023 outlining its approach to Open Finance, the next logical step after Open Banking, and the framework needed to truly unlock market innovation and competition to benefit Canadian consumers and businesses. This includes an amendment to the Canadian Payments Act to grant federally regulated payment service providers access to Payment Canada’s forthcoming real-time retail payment system and make them eligible for membership in Payments Canada.
In the submission, FDATA NA also asserted that any open banking governance entity in Canada must be neutral (i.e. not controlled by any particular stakeholder(s) with commercial interests in the ecosystem), transparent (i.e. it invites and considers stakeholder input and subjects its decisions to an open, publicly visible process), and nimble (i.e. capable of making binding decisions relatively quickly and without undue bureaucracy), with all stakeholders in the open banking system agreeing to comply with the decisions and determinations made by the open banking governance entity as a condition of being active in the market.
In this Member Spotlight, Betterment’s Associate General Counsel Josh Rubin explains how access to consumer-permissioned financial data is critical to Betterment’s ability to offer high quality, low-cost advice to everyday investors:
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!
Monthly FDATA Member Spotlight: Betterment
In this Member Spotlight, Betterment’s Associate General Counsel Josh Rubin explains how access to consumer-permissioned financial data is critical to Betterment’s ability to offer high quality, low-cost advice to everyday investors:
FDATA NA News
FDATA To Host Virtual US Reporter Briefing on Open Banking and Section 1033 Rulemaking
Later this month, FDATA North America will host a virtual reporter briefing covering open banking in the United States and the status of the Consumer Financial Protection Bureau’s Section 1033 rulemaking. As the CFPB works to convene a SBREFA panel as part of this rulemaking, the briefing will feature insights from FDATA North America Executive Director Steve Boms, and representatives from five member companies including Plaid, MX, Trustly, Envsetnet, Morningstar, and Petal. Individuals interested in attending should contact [email protected].
FDATA NA Welcomes Newest Member Atomic Financial
FDATA North America is excited to announce its newest member Atomic Financial. Atomic is a Utah-based fintech that builds infrastructure for connecting payroll accounts to other apps, which can help with money management and income verification for lending.
Member News & Activity
Basis Theory published a new primer entitled “Data Security 101”, complete with visuals and examples, to help explain how encryption works to business leaders and product managers. Since there are many different ways to encrypt and decrypt data, uderstanding the fundamentals of data encryption can help design those solutions and remove some of the pain points.
BillGO published a new blog post entitled “Four Ways Your Consumer Benefit from Modern Bill Pay,” which details how easy, centralized biller set-up, secure payments using a virtual card, and instantaneous payments, confirmations, notifications and reminders provide value to customers.
Codat has joined the consortium of fintech and security compliance companies, supporting the Open Finance Data Security Standard (OFDSS), a proposed framework of requirements that address security risks commonly encountered by emerging fintechs that manage consumer financial information. The OFDSS is focused on setting a common standard for data security in the Open Finance industry and is designed to be a living document that will evolve over time to meet the needs of the industry, incorporate new technology, and mitigate emerging risks.
Envestnet has released a new report entitled “The Intelligent Financial Life: The Unexpected Intersection Between Technology, Clarity, and the Human Connection.” This report explores how clients’ attitudes toward financial advice, technology, and behaviors differ from one generation to the next.
Fiserv General Manager of Aggregation and Information Services , Jamie DelMedico, joined the Tearsheet Podcast to discuss how the evolution of data processes are helping drive the push toward open finance. Jamie explained how “the whole idea of open finance is powered by data, whereby the data from a financial institution or brokerage is pulled into an experience that then powers some other third-party experience…data is the crux of open finance.” He also shared some of Fiserv’s open finance use-cases and the potential of “alternative” financial data to expand access to credit.
Kabbage has been listed on this year’s Top 100 Financial Technology Companies by The Financial Technology Report. This recognition showcases its dedication for small businesses and its efforts to provide them with innovative products.
Morningstar announced an upcoming webinar entitled “Why open banking data access is essential for wealth management”, which will feature speakers from two FDATA NA Members as well as its Executive Director Steve Boms. The discussion will focus on how the current state of open banking in the US is rapidly evolving, why open banking is so significant for advisors and investors, how high-quality data makes a difference in powering investment solutions, and what to look for when partnering with a wealth data experts.
MX’s Lexi Hall sat down for a Q&A with Insider Intelligence, where she discussed the state of open banking regulation in the United States and the CFPB’s Section 1033 rule. She noted that “what’s exciting about open finance is that there is consensus around it….the industry has consensus on about 85% or 90% of the 1033 rule that the CFPB is considering. Some of the nuts and bolts that are still being decided, but we got here because the industry figured quite a lot of it out on its own.”
Petal was included in Forbes and TrueBridge Capital’s list of the US’s 25 venture-backed startups most likely to become unicorns. Using machine learning to analyze bank transactions, Petal offers credit cards to people who might previously have been disqualified. Since its 2017 launch, the New York City-based company has issued more than 300,000 cards with its banking partner WebBank.
Plaid’s Global Head of Policy John Pitts joined the Breaking Banks fintech podcast with Brett King to discuss how open banking can drive financial services toward a more consumer-centric model to build trust among users.
Trustly announced a new partnership with Conotoxia to give users a fast, safe way to transfer funds internationally via Open Banking. The company also published a blog post on the status of the developing Open Banking regulations in North America, and another that examines how new account-to-account payment trends are driving up the demand for more Open Banking solutions.
Validify published a new blog post entitled “Say No to Friction! Leverage Bank Data Without the Login” which explains how its frictionless, no login required, banking and payment solutions provideaccess to powerful bank and payment information without the associated friction.
Vopay published a new blog post entitled “Faster Payments: Fund Loans In Real-Time 24/7” which describes how lenders can benefit from real-time payments to rapidly fund their loans, avoid manual bank and credit card disputes, and save on transaction fees.
Xero announced a new partnership with the Canadian bank BMO to help small businesses further automate their bookkeeping tasks. This integration will enable BMO customers to connect directly and help gain back time previously spent on data entry and reconciliation. It will also introduce some new features, including tools to help customers automatically receive their latest transactions and account balances in their Xero account daily, a 1-year transaction and balance history right upon starting, and the ablity to modify or deactivate this integration at any time from their BMO account.
In this interview, Trustly Americas President Pete Ohser explains how consumer-permissioned data access greatly expands options, lowers costs, and removes barriers to financial services, as well as detailing how Trustly has been working with the policymaking and banking communities to make open banking a reality:
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!
Monthly FDATA Member Spotlight: Trustly
In this interview, Trustly Americas President Pete Ohser explains how consumer-permissioned data access greatly expands options, lowers costs, and removes barriers to financial services, as well as detailing how Trustly has been working with the policymaking and banking communities to make open banking a reality:
FDATA NA News
FDATA Develops Draft Open Banking Privacy Principles
FDATA North America’s Privacy Working Group, a joint and ongoing effort between representatives from FDATA’s 30+ members, is continuing development of draft set of privacy principles to guide the implementation of open banking in the United States and Canada. These principles include detailed definitions of data types, basic requirements for transparency and liability, governance and oversight requirements, and technology standards for ensuring the privacy of consumer data in an open banking environment. This work will inform FDATA’s input into data privacy discussions taking place in both the U.S. and Canada in the months ahead. In the U.S., House Financial Services Committee Ranking Member Patrick McHenry (R-N.C.) recently introduced a financial data privacy discussion draft that, among other priorities, proposes to modernize the Gramm-Leach-Bliley Act (GLBA) to include data aggregators under the Act’s framework, and calls for consumers to have increased control over how their financial data is used. In Canada, the government recently tabled bill C-27, which, if enacted would provide federal data privacy and portability standards across the country.
As policymakers in the United States and Canada contemplate the data privacy safeguards for consumers and small businesses in both countries’ open banking frameworks, FDATA NA stands ready to provide its perspective on customer and small business data protection.
Member News & Activity
Basis Theory published two new posts on its blog; One which answered 10 of their most frequently asked questions about data tokenization, and another that provided a brief explainer breaking down the 2022 Nacha Data Protection Requirements.
Betterment, which relies on customer-permissioned financial data to streamline investment decisions, was named “Best Overall Robo Advisor” by The Wall Street Journal because of its competitive fees, investment offerings, and customer support.
BillGO published a blog post entitled, “Why Fintechs Should Invest In Bill Pay Technology,” which featured thoughts from Daniel Hawtof, BillGO’s SVP of Bill Pay Product. Hawtoff said, “Consumers are busy…and real time bill pay is hard to deliver. Most banks and fintechs don’t want to invest the time or resources to build the technology and payment network necessary to make real time — or even same-day payments a reality. But BillGO has built (and continues to invest in) the technology and payment network to ensure we are on the leading edge of real time payments.”
Codat CEO & Co-Founder Peter Lord recently joined Miguel Armaza on the Fintech Leaders podcast to discuss Codat’s origins, its international expansion, how it helps SMBs access credit, and the company’s future plans.
DirectID recently launched a new page on its revamped website explaining how the power of open banking data can scale businesses, drive efficiencies, manage risk, and create fairer outcomes for all. The company also announced a partnership with Mansfield Building to launch an open banking platform to make it easier for mortgage applicants to provide their bank statements online.
EQ Bank has partnered with fellow FDATA member Flinks, a leader in open banking, to provide EQ Bank customers with the ability to share their financial data securely with third-party fintech applications of their choosing. This partnership, and the integration of Flinks Outbound, an open banking environment, provides EQ Bank with the framework to quickly deliver flexible open banking capabilities and easily launch and operate new API data sharing methods while providing the bank with critical new data management capabilities. EQ customers who provide explicit consent will have the visibility into what data are they sharing, with whom, and for how long.
Envestnet Yodlee recently published a free white paper entitled, “Unlocking The Benefits Of U.S. Open Banking,” which provided detailed analysis of how the developing ecosystem of new and improved data access methods between financial institutions, data aggregators, application providers, and consumers offers powerful benefits for those who are ready.
Flinks¸ in addition to its new partnership with EQ Bank, announced a new partnership with Ping, an enterprise identity solutions. This partnership will enabled millions of customers across the U.S. and Canada to link their financial accounts to fintech apps and enjoy new streamlined banking experiences in a safe and compliant way. The new partnership also will help ensure Flinks’ open banking API technology is secure and scalable, allowing hundreds of third-party financial apps to gain instant access to user-permissioned data fast and simply. The customer experience will be seamless, with Flinks handling the user authentication and access on the front end and Ping Identity’s solutions working invisibly on the back end. The partnership enabled Flinks to build and launch its new solution within six months.
Fiserv and fellow FDATA Member MX are joint recipients of the Tearsheet 2022 Data Innovation Award. This award underscores the companies’ roles as leaders in open finance. Fiserv and MX were recognized for enabling consumers to securely and reliably share financial data with their favorite apps or services through direct connections, eliminating the need to share personal credentials such as usernames and passwords with third parties. The award was presented as part of Tearsheet’s DataDay Awards 2022, which recognize and celebrate the best data products, services, and brands powering the modern financial system.
MX has expanded its reach into open banking through partnerships with Sionic Mobile Corp., a provider of consumer-to-business payments technology, and FuturePay Inc., a provider of digital revolving credit solutions for e-commerce merchants and their customers. Sionic is embedding MX’s instant account-verification and account-aggregation services into its consumer microsite and mobile software development kit. FuturePay will integrate MX’s instant account-verification and data-cleansing apps with FuturePay’s MYTab digital revolving credit platform for online merchants, which allows them to offer online shoppers a credit line for making purchases with any merchant in the FuturePay network.
Plaid’s Payment Initiation Service (PIS), an API for real-time payments via Open Banking, received the Highly Commended recognition from FinTech Futures as a Best Real-Time Payments Solution.
Salt Edge published a new blog post entitled, “Three Practical Ways For Any Business To Leverage Open Banking,” which explained the many ways that granting access to businesses bank account data can be leveraged to reduce costs, increase automation, and create seamless experiences for users.
Vopay announced a partnership with Canadian property management software provider Plexflow to create a combined technology that will allow property managers to focus on the service they provide rather than be bogged down by manual processes. With VoPay’s payment technology in place, property managers can verify available funds, facilitate instant rent collection, and streamline the onboarding process for tenants. By managing all payment-related operations from a single portal instead of many, cash flow management, and reconciliation will become a much more fluid process.
Trustly published a new blog post entitled, “How Open Banking Meets The Needs Of The Creator Economy.” The blog post explained how open banking offers more freedom and transparency for individuals no matter the source of income, which is perfect for content creators, small entrepreneurs, and artists, who often need access to different services. They’ve also announced a new partnership with Gr4vy that will allow its online merchants to add Trustly as an Open Banking payment option at checkout.
Xero released the beta version of a new bank statement extraction feature in Hubdoc that will be gradually rolled out over the next few weeks in the United States and Canada. This new beta feature exports transaction data from PDF statements of supported banks into a pre-formatted CSV file that allows manual upload into Xero or QuickBooks Online. It will support debit and credit statements from Royal Bank of Canada, TD Canada Trust, and Chase Bank. To work around bank data access issues in the US and Canada, this feature will only work with digital PDFs downloaded directly from a bank account statement.
August 2, 2022, Washington, DC -In response to the recent petition from several banking trade associations urging the Consumer Financial Protection Bureau to supervise both data aggregators and data recipients, FDATA is releasing the following statement:
“FDATA and its members have long advocated for the CFPB to supervise data aggregators as part of its 1033 rulemaking. The joint trades petition, however, calls for the Bureau to supervise aggregators and data recipients. This would require the Bureau to supervise thousands of additional entities — including scores of community banks and credit unions that are today acting as data recipients but are currently exempt from CFPB supervision.
FDATA continues to believe that the most appropriate path for the Bureau to oversee the consumer-permissioned data spec is to supervise aggregators and to promulgate third-party guidance laying out the CFPB’s expectations for the aggregators’ clients: the data recipients.”
