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FDATA North America May 2023 Newsletter

FDATA NA News

FDATA North America Responds to CFPB Release of Section 1033 SBREFA Memo. In response to the Consumer Financial Protection Bureau’s (CFPB) recent release of its Section 1033 SBREFA memo, which summarizes the feedback it received from small business representatives (SERs) during the SBREFA panels earlier this year, FDATA stated that: “the CFPB’s forthcoming Section 1033 rule represents a significant opportunity to create a more competitive and customer-centric financial services marketplace in the U.S. We are glad to see that much of the feedback the CFPB has received from the SERs mirrors FDATA’s positions, including a general view that the 1033 rule should cover a broader scope of accounts, including mortgages, student loans, auto loans, personal loans, prepaid cards, payroll accounts, public benefits, and more. We are also encouraged by discussion among the SERs of the importance of the CFPB establishing authentication standards to ensure that third parties do not experience any undue restrictions in accessing user-permissioned data, as well as the importance of credential-based screen scraping continuing for some period of time given the general lack of token-based APIs that currently exist in the data provider ecosystem. We also echo the robust feedback from the SERs that the proposed limitations on secondary data usage could have unforeseen negative implications for research, product improvements, and a range of other use cases, and suggestions that the Bureau more carefully consider any such limitations. We look forward to continuing to work with the CFPB as it prepares to propose a Section 1033 rulemaking later this year.”

Member News & Activity

Codat CEO and Co-Founder Pete Lord joined the Bank of America Speaker Series to discuss small business data, integration use cases and future Codat growth. Peter will also be joining a session at the upcoming Fintech Nexus USA conference entitled “unlocking financial access through open finance” on May 11.

EQ Bank has been named the best bank in Canada on the Forbes 2023 list of the World’s Best Banks. This is the third year in a row that EQ Bank has been awarded best bank in Canada.

Envestnet’s Lisa Novier appeared as a guest on IBS Intelligence’s IBSi Podcast surrounding open banking in the US, and Yodlee’s partnership with Experian was mentioned in The Paypers coverage of Experian’s new cloud provider.

Flinks’ CEO and Co-Founder Yves-Gabriel Leboeuf was invited to sit on a panel at the Canadian Fintech Summit to talk about how Canadian fintechs can find success during economically uncertain times. He was joined by nesto as they discussed the funding challenges currently facing startups and how they managed to find a way to overcome these obstacles and thrive.

Method Co-Founder and CEO Jose Bethancourt spoke on a panel at the Fintech Meetup conference on ‘building the next decade of consumer finance,’ where he explained how Method connects consumers’ liabilities across over 60k institutions so that lenders can access all of a person’s debt obligations by combining data from credit bureaus with financial institutions’ core banking systems.

Morningstar’s Brian Costello, Head of Data Aggregation Strategy and Governance for ByAllAccounts joined Morningstar Simple, but Not Easy podcast episode entitled: “30,000-Foot View of Financial Advisor Challenges, Including Data and New Regulations.” In the episode, he took a 30,000-foot view of financial advisor challenges and dug into the importance of data and regulations in overcoming these challenges.

MX CEO Jim Magats joined Jim Marous on his “Banking Transformed” podcast to discuss how MX is empowering financial institutions with the tools and insights they need to succeed in the developing open banking landscape and provide exceptional customer experiences.

Plaid announced a new integration with Finastra’s Fusion Digital Banking platform. The partnership, delivered via Finastra’s FusionFabric.cloud open APIs, provides financial institutions of all sizes within the Finastra ecosystem with account verification tools, making it easier and more secure for consumers to link their account data from their main financial institution with external financial apps and services. This Plaid integration helps these institutions effectively meet these customer demands, ultimately helping them stay competitive with larger banks and emerging market entrants.

Trustly published two new posts on its blog highlighting the critical importance of “Know You Customer” (KYC) to mitigate fraudulent financial activity and a high level guide to the Financial Data Exchange (FDX) and its API standard for secure authorization and authentication.

Vaultree Co-Founder and COO Tilo Weigandt joined Solutions Review’s Expert Insights Series to share his thoughts on how data-in-use encryption is the key to thwarting to Cross-Border Cybercrime.

Vopay published a new comprehensive guide to EFT payments, which includes many useful infographics and explains the many types, problems with traditional payment processions, differences between EFT and ACH and wire transfers, the benefits to users, and a handful of use cases.

Xero published a new video as part of its Xero Future Focus series entitled “Future of Financial Services Open Banking” featuring Xero’s EGM of Global Financial Services, Leigh O’neill. The video unpacks the basics of open banking, the differences between it and open finance, data security, and the opportunities it provides small businesses to manage their finances.

Events and Submission Deadlines

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FDATA North America April 2023 Newsletter

FDATA NA News

FDATA North America Responds to Release of Canada’s 2023 Budget.  In response to the recent release by the Government of Canada of its 2023 Budget, FDATA North America Executive Director Steve Boms said in a statement: “We are disappointed at the lack of progress in Budget 2023 toward the implementation of Canada’s open banking regime, particularly since the timeline set forth in the 2021 Open Banking Advisory Committee report has now passed. Despite this omission, FDATA North America and its over 30 member companies look forward to continued collaboration with the Department of Finance as it seeks to make a new Canadian consumer-centered open banking system a reality in the coming months.”

FDATA North America Responds to Canadian Draft RPAA Regulations. FDATA North America recently submitted its response to draft regulations from the Bank of Canada and Department of Finance that would implement the Retail Payment Activities Act (RPAA). The letter noted that adoption of these proposed regulations would see as many as 2,500 payment service providers (“PSPs”) overseen under a strong regulatory framework and would, once finalized and implemented, meaningfully advance the modernization of Canada’s financial services marketplace. It also respectfully suggested that the implementation of these regulations should facilitate an expedited inclusion into the scope of Canada’s open banking framework of payment use cases.

FDATA North America Submits Comments on Canadian Competition Act Review. FDATA North America submitted a letter in response to the Canadian government’s review of the Competition Act, expressing support for the development of a more competitive marketplace in which consumers and SMEs may choose the provider, tool or service that best fits their unique need. The letter stressed the important need to update the Competition Act to reflect today’s current business environment to maintain competition in the market for data-driven financial services. The letter described how restrictions on customer-directed data sharing that directly inhibit competition must be scrutinized under competition laws as the Department of Finance works to implement an open banking regime for Canada, and stressed that any new legislation or regulations regarding competition in the financial services marketplace should be aligned with the Department’s work on this file.

Register Now for FDATA’s Two Upcoming Summits in the US and Canada! FDATA North America will be hosting two Open Banking summits in 2023. The first will be held in Washington, DC, on April 20th, and the second in Ottawa, Canada on May 17th. These events will feature influential speakers, unique networking opportunities, and in-depth conversations with policymakers, public officials, and subject-matter experts from FDATA and its member companies. Space for both events is limited, so be sure reserve your spot via the links above!

Member News & Activity

Codat released a report entitled “America’s Small Business Credit Opportunity” that uses new research to explain how Open Finance can be used to widen access to credit, and how improved data flow can lead to more small business credit applications, higher acceptance rates, and additional revenue. The report can be downloaded here.

Envestnet’s Head of governance, Risk and Compliance Lisa Novier was featured in a Q&A profile in Open Banking Expo, where she explained why she has called for supervision of data aggregation platforms in her written recommendations to the CFPB regarding regulatory oversight of Open Banking, and how the US’s market-driven approach has generated strong demand from consumers for data sharing.

Flinks’ Content and Brand Marketer Annahita Mirsalari wrote a new post for their blog entitled: “Getting the Most Out of Your Financial Data – Broad Categorization vs Data Enrichment” which explained how broad categorization and data enrichment can turn raw financial data into valuable insights which can improve data-driven decision making, increase operational efficiency, and spearhead product innovation.

GoCardless featured a guest post on their blog from Cuckoo’s Principle Engineer Alexander Fenton which explained how open banking can drive innovation beyond just fintechs and online payments.

Morningstar’s Sheryl Rowling published an Advisor Insight article entitled: “Why Advisors Should Care About Open Banking” which explained open banking basics and gave a high-level overview of the CFPB’s work on issuing a new regulation under Section 1033 of the Dodd-Frank Act that would create a consumer data portability right in the U.S.

MX announced a partnership with Zūm Rails, an industry leader in data-powered, instant payment solutions, to power more seamless payments and money movement for customers of financial institutions and fintechs in Canada. Instant payment solutions from Zūm Rails and MX’s instant account verification (IAV) capabilities will work together to enable instant payments, including electronic funds transfers (EFT). This open banking approach streamlines the onboarding process and mitigates fraud risk for companies while also improving the money experience for end consumers who want better access to their financial data in a single view and the ability to transfer and use funds quickly.

Plaid’s Co-founder and CEO Zach Perret was recently featured in a CNBC interview, where highlighted how banks are gaining fintech market share, pointing out that, “The banks themselves are the biggest fintech companies.”

Vopay published a new guide to understanding APIs and financial data aggregation. This guide is written in clear, understandable language and includes several infographics to help explain the mechanics and benefits of data aggregation to those who may be entirely unfamiliar with it.

Events and Submission Deadlines

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FDATA North America Responds to CFPB Release of Section 1033 SBREFA Memo

For Immediate Release: FDATA North America Responds to CFPB Release of Section 1033 SBREFA Memo

Contact: Justin Santopietro; [email protected]

April 4, 2023, Washington, DC – In response to the Consumer Financial Protection Bureau’s (CFPB) recent release of its Section 1033 SBREFA memo, which summarizes the feedback it received from small business representatives (SERs) during the SBREFA panels earlier this year, FDATA North America Executive Director Steve Boms released the following statement:

“The CFPB’s forthcoming Section 1033 rule represents a significant opportunity to create a more competitive and customer-centric financial services marketplace in the United States. We are glad to see that much of the feedback the CFPB has received from the SERs during the SBREFA process mirrors FDATA’s positions, including a general view that the 1033 rule should cover a broader scope of accounts, including mortgages, student loans, auto loans, personal loans, prepaid cards, payroll accounts, public benefits, and more. We are also encouraged by discussion among the SERs of the importance of the CFPB establishing authentication standards to ensure that third parties do not experience any undue restrictions in accessing user-permissioned data, as well as the importance of credential-based screen scraping continuing for some period of time given the general lack of token-based APIs that currently exist in the data provider ecosystem. We also echo the robust feedback the SERs provided to the CFPB that its proposed limitations on secondary data usage could have unforeseen negative implications for research, product improvements, and a range of other use cases, and suggestions that the Bureau more carefully consider any such limitations. We look forward to continuing to work with the CFPB as it prepares to propose a Section 1033 rulemaking later this year.”

FDATA North America and its 30+ member companies have actively collaborated with the CFPB over the past several years as it has worked to implement Section 1033 of the Dodd-Frank Act. Our efforts have included detailed letters in response to the October 2020 Advanced Notice of Proposed Rulemaking (ANPR) and the recent SBREFA Outline of Proposals for Consideration.

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FDATA North America Responds to Release of Canada’s 2023 Budget

March 29, 2023, Washington, DC – – In response to yesterday’s release by the Government of Canada of its 2023 Budget, FDATA North America Executive Director Steve Boms issued the following statement:

“We are disappointed at the lack of progress in Budget 2023 toward the implementation of Canada’s open banking regime, particularly since the timeline set forth in the 2021 Open Banking Advisory Committee report has now passed. Despite this omission, FDATA North America and its over 30 member companies look forward to continued collaboration with the Department of Finance as it seeks to make a new Canadian consumer-centered open banking system a reality in the coming months.”

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FDATA North America Submits Comments on Canadian Competition Act Review

March 28, 2023, Washington, DC – FDATA North America today submitted a letter in response to the Canadian government’s review of the Competition Act. As a trade association representing dozens of some of the most innovative financial technology companies working alongside Canadian consumers and small- and medium-sized enterprises, we support the development of a more competitive marketplace in which consumers and SMEs may choose the provider, tool or service that best fits their unique need. We also used this review submission as another opportunity to urge the Government of Canada to make concrete progress on the development of its open banking regime, particularly since the deadline set forth in the 2021 Advisory Committee Report on Open Banking has now passed.

The letter stressed the important need to update and right-size the Competition Act to reflect today’s current business environment to maintain competition in the market for data-driven financial services, noting that these updates must address situations where certain market participants either individually or collectively override a decision by a consumer or SME to direct a potential competitor to electronically access their financial information. Our letter particularly described how restrictions on customer-directed data sharing that directly inhibit competition must be scrutinized under well-established competition laws as the Department of Finance works to implement an open banking regime for Canada, any stressed that any new legislation or regulations regarding competition in the financial services marketplace should be aligned with the Department’s work on this file.

The letter also identified several provisions of the Competition Act that apply to financial institutions could be more actively used to prevent financial institutions from blocking consumer-permissioned data access to third party financial providers of their choosing, and shared details on how the United Kingdom and Australia developed their open banking regimes to maximize competition and consumer benefit.

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FDATA North America Responds to Canadian Draft RPAA Regulations

March 27, 2023, Washington, DC – FDATA North America today submitted its response to draft regulations from the Bank of Canada and Department of Finance that would implement the Retail Payment Activities Act (RPAA). The letter noted that adoption of these proposed regulations would see as many as 2,500 payment service providers (“PSPs”) overseen under a strong regulatory framework and would, once finalized and implemented, meaningfully advance the modernization of Canada’s financial services marketplace. It also respectfully suggested that the implementation of these regulations should facilitate an expedited inclusion into the scope of Canada’s open banking framework of payment use cases.

The letter strongly supports the objectives of the draft regulations and the underlying Act, but noted the absence of the critical component of end-user education. FDATA therefore suggested that the Bank of Canada and/or the Department of Finance develop an end user education plan to be deployed in concert with the implementation of the draft regulations, and that government work with market stakeholders, including PSPs, in an effort to provide consumers and SMEs with consistent information about the benefits and protections afforded to them under the draft regulations.

FDATA also expressed appreciation for inclusion of a clear timeline within which applications submitted by PSPs would be required to be reviewed by the Bank of Canada and the Department Finance. Since many FDATA members have experienced regulatory delays in application processing in other jurisdictions’ payment modernization and/or open banking frameworks, FDATA welcomes the certainty provided by the regulatory-imposed timelines for consideration of a PSP’s application.

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FDATA North America March 2023 Newsletter

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: Envestnet

This month’s member spotlight features Lisa Novier, Head of Governance, Risk and Compliance at Envestnet Data Analytics. Lisa tells us how Envestnet’s role in providing connectivity of consumer-permissioned financial data is critical in realizing the full potential of this data and explains Envestnet’s high level of engagement with policymakers to promote finalization of the Dodd-Frank Section 1033 rulemaking.

FDATA NA News

FDATA North America Releases Data Privacy Principles. FDATA North America and its 30+ member companies recently released a set of principles to govern the usage, disclosures, liability, oversight, and technology involved in open finance ecosystems. Upon release of these new principles, FDATA North America Executive Director Steve Boms said: “As policymakers in both Canada and the United States contemplate open finance and federal data privacy frameworks, FDATA North America’s members are pleased to have collaborated on a set of privacy principles that we hope will inform their work. This release is a detailed and comprehensive set of principles which we intend to serve as critical guideposts for legislators and regulators in the U.S. and Canada as they undertake the important work of creating modernized, customer-centric financial services regulatory environments.” A high-level summary of these principles is available here. The full set of these principles is available here and can be shared with attribution.

Save the Dates: FDATA to Host Two Upcoming Summits in the US and Canada. FDATA North America will be hosting two Open Banking summits in 2023. The first will be held in Washington, DC, on April 20th, and the second in Ottawa, Canada on May 17th. These events will feature influential speakers, unique networking opportunities, and in-depth conversations with policymakers, public officials, and subject-matter experts from FDATA and its member companies. Space for both events is limited, so be sure reserve your spot via the links above!

Member News & Activity

Basis Theory has been named to Fast Company’s list of the World’s Most Innovative Companies in Security for 2023, ranking #3 ‘for making it easy to tokenize any data.’

Codat’s Gabby Macsweeney, Head of Communication and Product recently sat down with Caary Capital for a Q&A to discuss what Canada can learn from the UK regarding Open Banking and funding small businesses, particularly on the use of standardized ‘funding passports’ that can improve and shorten the application process for small businesses. While acknowledging that Canada is behind the UK when it comes to formal open banking implementation, Macsweeney did note “that four million Canadians are already accessing budgeting or account aggregation tools via screen scraping in the absence of APIs.”

Flinks’ Meng Guan, Product Marketing Manager, published a new post on the Flinks blog entitled: “Lending in volatile times: harness the power of cash flow analysis” which explains how consumer-permissioned data aggregation allows lenders to obtain cash flow data directly from borrowers’ bank accounts and conduct cash flow analysis to quickly gauge borrowers’ ability to repay. The post also explained how this cash flow analysis can be used to expand access to credit, strengthen fraud prevention, and improve the efficiency of lenders’ processes.

Method Financial’s Co-Founder and COO Mit Shah published a new blog post entitled: Open Finance Takes Center Stage in Washington” which described the importance of the CFPB’s Section 1033 rulemaking to facilitate open banking in the US, and detailed how and why Method is engaging with policymakers on this issue, including an overview of the recent comment letter they submitted in response to the CFPB’s Section 1033 SBREFA Outline.

Morningstar ByAllAccounts Head of Data Aggregation Strategy Brian Costello is featured in a question and answer-styled article titled  “The hopes and limitations of consumer data services in the US” by The Paypers. The article provides valuable insight and details into the latest consumer financial data moves in the US, and the future of data sharing and embedded finance.

MX’s CTO Wes Hummel joined the Fintech Confidential podcast with Tedd Huff to discuss his journey in the fintech industry, the future of open banking, and shared his insights on customer focus, scalability, and security in financial technology. He also talked about the legacy of MX’s late co-founder, Brandon Dewitt, and the opportunities ahead for the company and the broader fintech industry.

Plaid’s Head of Policy John Pitts and Kaitlin Asrow, Executive Deputy Superintendent of Research and Innovation of the New York Department of Financial Services, discussed innovation and regulation at a recent Money 20/20 conference. The discussion was recently released on Money 20/20s “Money Pot” podcast and is available here. The pair discussed ways that regulators can think more in line with innovators, and innovators can better communicate with rulemakers.

Trustly announced a partnership with PointsBet in collaboration with Cross River Bank to leverage Open Banking so PointsBet can offer players instant payouts, giving them real-time access to their winnings. In addition to the announcement, Cross River Bank, Trustly, and PointsBet hosted a webinar: Enhancing the Faster Payments Ecosystem. Trustly also hosted a webinar on Open Banking: The Open Banking Era: How We Got Here & Where We Are Going, and published this blog post which breaks down the concept of Open Finance.

Vaultree published a new blog post entitled: “How encryption can help the finance industry win the battle against cyberattacks” which explains how fully functional data-in-use encryption is becoming the best tool to help financial institutions mitigate the costs of data breaches and ensure customer data privacy.

Vopay published a new blog post entitled: “Hidden Value in Plain Sight: The Potential of Embedded Finance” which details the significant growth and future potential of embedded finance and the ‘API economy’ that goes with it.

Xero produced a new video entitled: “Quality over Quantity: Exploring Data Collection Minimization,” in which Xero’s experts unpack data collection minimization, including the pitfalls of collecting more data than necessary, the benefits of giving customers choice about what data they disclose, and the importance of explaining why personal data is being requested. Kendra Vant, EGM, Data at Xero, moderates this panel discussion featuring Claire Knight Whiting, GM Legal, Global Privacy at Xero, and Xero’s Responsible Data Use Advisory Council members Anna Johnston of Salinger Privacy and Maribel Lopez of Lopez Research.

Events and Submission Deadlines

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Video Member Spotlight: Envestnet

This member spotlight features Lisa Novier, Head of Governance, Risk and Compliance at Envestnet Data Analytics. Lisa tells us how Envestnet’s role in providing connectivity of consumer-permissioned financial data is critical in realizing the full potential of this data and explains Envestnet’s high level of engagement with policymakers to promote finalization of the Dodd-Frank Section 1033 rulemaking.

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FDATA North America Releases Data Privacy Principles

March 6, 2023, Washington, DC – FDATA North America and its 30+ member companies today released a set of principles to govern the usage, disclosures, liability, oversight, and technology involved in open finance ecosystems. Upon release of these new principles, FDATA North America Executive Director Steve Boms said:

“As policymakers in both Canada and the United States contemplate open finance and federal data privacy frameworks, FDATA North America’s members are pleased to have collaborated on a set of privacy principles that we hope will inform their work. Today’s release is a detailed and comprehensive set of principles which we intend to serve as critical guideposts for legislators and regulators in the U.S. and Canada as they undertake the important work of creating modernized, customer-centric financial services regulatory environments.” 

The first section of this document includes definitions of data types, and requirements for minimization, secondary usage, and silent parties. The second section covers consumers disclosures, what elements they should include, their length, and options for consumer revocation. The third section discusses assessments of data breach liability, notification requirements, and consumer redress. The fourth section covers regulatory oversight, and suggests which regulators in the U.S. and Canada should be granted supervisory authority over data privacy to ensure that consumers, data providers, and third-parties are protected and acting responsibly. The final section covers the technology involved in user authentication and authorization, and how they can be changed and revoked by consumers.

A high-level summary of these principles is available here. The full set of these principles is available here and can be shared with attribution.

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Video Member Spotlight: Method Financial

This month’s member spotlight features Mit Shah, COO and Co-Founder of Method Financial, who explains how Method’s technology allows customers to securely permission their financial data to third-party providers of their choosing without having to use traditional credential-based methods:

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