FDATA North America

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FDATA North America Responds to CFPB Request for Information (RFI) on ‘Junk Fees’

Contact: Kerrie Rushton, (202) 365-6338, [email protected] 

April 8, 2022, Washington, DC – The Financial Data and Technology Association (FDATA) of North America submitted a comment letter today to the Consumer Financial Protection Bureau (CFPB) in response to its Request for Information (“RFI”) regarding fees assessed by financial services companies. FDATA used this opportunity to once again urge the CFPB to finalize a regulation under Section 1033 of the Dodd-Frank Act, an action which would create a long-overdue consumer data right in the United States. 

The letter states that FDATA believes the most practical remedy to reducing predatory fees in the financial ecosystem is to implement an open finance regime in the United States, stressing that “the center of such a framework must be an unambiguous and legally binding customer financial data right, which would ensure that consumers and small businesses could easily shop for financial services and products among scores of potential providers in an open, transparent marketplace.”

The lack of a customer financial data right in the United States reduces competition in data-driven financial services, artificially stifles consumer choice and creates an environment in which fees charged to end users may stay stagnant – or even increase – over time. To tackle these thorny challenges, FDATA North America once again encouraged the CFPB to utilize the authority vested in it under Section 1033 of the Dodd-Frank Act to promulgate, by rule, a customer financial data right that will “spur greater financial services innovation and competition, lower fees, and improve financial access and inclusion.” 

To further demonstrate how a consumer data right could help address the issues raised in the RFI, the letter makes note of CFPB Director Rohit Chopra’s remarks during a press call regarding overdraft fees in December of last year, where he astutely noted that “If America can shift to an open banking infrastructure, it will be harder for banks to trap customers into an account for the purpose of fee harvesting.” 

The letter also shared information on the successful implementation of open finance regimes in other countries which demonstrate the wide-ranging economic and consumer benefits that can be delivered by a final 1033 rule. A copy of the letter is here: FDATA CFPB Junk Fee RFI Letter April 2022

ABOUT FDATA NORTH AMERICA
FDATA was heavily involved in the UK Open Banking Working Group in 2015. In 2016, the working group’s output was published by Her Majesty’s Treasury as the Open Banking Standard. FDATA North America was founded in early 2018. Its members collectively provide tens of millions of consumers in Canada, the United States and Mexico with aggregation-based tools to better manage their finances.

Members include air (Alliance for Innovative Regulation), APImetrics, Basis Theory, Betterment, BillGO, Codat, Direct ID, Envestnet Yodlee, EQ Bank, Experian, finansystech, Fiserv, Flinks, Hank Payments, Interac, Intuit, Inverite, Kabbage, Mogo, Morningstsar, M Science, MX, Petal, Plaid, Questrade, RocketMortgage, SaltEdge, Trustly, ValidiFI, Vaultree, VoPay, Wealthica, Xero, and others.

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Video Member Spotlight: MX

FDATA member MX has been a leader in the open banking movement in North America with their approach to modern connectivity. In this interview, Chief Advocacy Officer Jane Barratt explains how the company has been on the front lines of promoting open baking to the public and policymakers.

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FDATA NA and Paytechs of Canada Release Landmark Survey on Canadian Consumer and Small Business Attitudes Toward Financial Sector and Open Banking

Contact: Steve Boms ([email protected]); Alex Vronces ([email protected])

April 4, 2022, Toronto and Washington, DC: More than half of Canadians feel stress when interacting with Canada’s financial services sector and believe they would benefit from increased competition and transparency in the financial services market, according to a landmark survey commissioned by FDATA North America and Paytechs of Canada. The findings indicate this is especially true among women, young people, and new Canadians. Among the biggest sources of dissatisfaction are high fees and a lack of choice.

The findings are derived from two surveys conducted by Pollara Strategic Insights. One was of a randomly-selected sample of 2,001 Canadians 18 years of age or older. The other was of a randomly-selected sample of 600 Canadian small business owners. In each, respondents were asked about their experiences with Canada’s financial services sector. 

“As the government advances critically important initiatives to modernize Canada’s financial services market, including open banking and payment modernization, the voices of consumers and small businesses must be at the center of the conversation,” said Steve Boms, Executive Director of FDATA North America. “These first-of-their-kind surveys clearly demonstrate Canadians’ hunger for a more competitive, transparent, and innovative Canadian financial system.” 

“At a macro level, we’ve long known that the Canadian financial services sector isn’t as productive as it could be because of barriers to competition and innovation, which is part of the reason why the government is modernizing its approach to financial sector policy,” said Alex Vronces, executive director of Paytechs of Canada. “These surveys shine a light on the often-neglected human cost of less competition and innovation for consumers and businesses.”

“The survey findings show that navigating the financial services sector is a stressful experience for about half of Canadians and small business owners.” said Dan Arnold, Chief Strategy Officer at Pollara. “So it is not surprising that both audiences see the potential benefits that reforms to the sector could bring.”

Key Findings:

  • About half of Canadians (52%) and small business owners (51%) feel stress when interacting with the financial services sector. Those who operate larger small businesses (10+ employees) are significantly more stressed (72%). Moreover, the majority (54%) of these larger small business owners feel the amount of time they spend dealing with the financial services sector is getting in the way of them actually running and growing their business, twice the overall level among small business owners (26%). Immigrant small business owners are more likely to be stressed by their interactions with the sector.
  • Over two-thirds of Canadians believe more competition in the financial services sector would lead to a greater choice in products (70%) and lower financial services fees (67%). Moreover, small business owners are over four times more likely to agree than disagree with the sentiment that Canadian small businesses would benefit from increased competition in the financial services sector (64% vs. 14%).
  • Among specific changes tested, Canadians are most likely to feel they would personally benefit from easier ways to “shop around” to get the best possible rate (75% would benefit), easier ways to transfer money quickly and securely (73%), and tools that help make personalized investment decisions (69%). 
  • Among specific changes tested, small business owners are most likely to feel they would benefit from easier ways to “shop around” to get the best possible rate (73% would benefit), better ways to transfer funds between different accounts (68%), and alternatives to credit cards with lower interchange fees for merchants (62%). 
  • There is widespread agreement among the users of Non-Bank FinTech Apps that they are easy to use (91%), have lower fees (82%), and help save money (73%).

To access the full survey data, click here.

For media enquiries or interviews, please contact:

Steven Boms

Executive Director, FDATA North America

[email protected]

Alex Vronces

Executive Director, Paytechs of Canada

[email protected]

About FDATA North America

FDATA was heavily involved in the UK Open Banking Working Group in 2015. In 2016, the working group’s output was published by Her Majesty’s Treasury as the Open Banking Standard. FDATA North America was founded in early 2018. Its members collectively provide tens of millions of consumers in Canada, the United States and Mexico with aggregation-based financial tools to better manage their finances.

About Paytechs of Canada

Paytechs of Canada is a not-for-profit association that provides a harmonized voice for technology companies that move money. Our mission is to make Canada’s financial sector more competitive and innovative, without compromising its safety and soundness. Serving millions of Canadians on a daily basis, our membership includes payment processors, financial technology companies, and financial institutions, among others.

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FDATA North America Applauds Choice for Canadian Open Banking Lead

Contact: Kerrie Rushton, (202) 365-6338, [email protected] 

March 22, 2022, Washington, DC – The Financial Data and Technology Association (FDATA) of North America today issued a statement following the announcement that Abraham Tachjian will serve as Canada’s Open Banking Lead. In its August 2021 report, the Minister of Finance’s Advisory Committee on Open Banking recommended the appointment of an Open Banking Lead who would report to the Associate Minister of Finance Canada as a critical first step in the delivery of open banking in Canada.

Executive Director Steve Boms said:

“Today represents an important step forward in Canada’s efforts to deliver open banking by 2023. We are encouraged by this action and look forward to working with Open Banking lead Tachjian to ensure a competitive, customer-centric open banking ecosystem in Canada that boosts financial access and inclusion.

“Consumers and small businesses also should be pleased with this forward momentum. Around the world, open banking regimes have led to greater financial access and competition, lower pricing, improved financial outcomes. Canadian consumers have increasingly moved toward digital financial services, particularly throughout the pandemic. Today’s announcement is a meaningful step towards the realization of an innovative, customer-centric financial services system in Canada.”

In a letter to Freeland sent in early November 2021, FDATA said the Open Banking Lead should be responsible for working with industry to create the policy and governance standards under which open finance can be delivered in early 2023 as set forth in the report.

ABOUT FDATA NORTH AMERICA
FDATA was heavily involved in the UK Open Banking Working Group in 2015. In 2016, the working group’s output was published by Her Majesty’s Treasury as the Open Banking Standard. FDATA North America was founded in early 2018. Its members collectively provide tens of millions of consumers in Canada, the United States and Mexico with aggregation-based tools to better manage their finances.

Members include air (Alliance for Innovative Regulation), APImetrics, Basis Theory, Betterment, BillGo, Codat, Brian J. Costello, Direct ID, Envestnet Yodlee, EQ Bank, Experian, finansystech, Fiserv, Flinks, Hank Payments, Interac, Intuit, Inverite, Kabbage, Mogo, Morningstsar, M Science, MX, Petal, Plaid, Questrade, RocketMortgage, SaltEdge, Trustly, ValidiFI, Vaultree, VoPay, Wealthica, Xero, and others.

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FDATA North America Submits Letter to NIST on Draft Open Banking Report

March 2 2022, Washington, DC – Today, the Financial Data and Technology Association (FDATA) of North America submitted a comment letter to the US National Institute of Standards and Technology (NIST) on its draft report “Cybersecurity Considerations for Open Banking Technology and Emerging Standards.”

The letter expressed appreciation for the Institute’s research in this important policy space, but respectfully offered that this report, published in January, would significantly benefit from expanded input from market and government stakeholders to appropriately frame the current open banking environment in the United States as well as to accurately reflect the significant regulatory attention that has already been given to this space.  

The letter states that “as one of the earliest federal government research publications on open banking, it is crucial that this report accurately define and describe all the elements of open banking that are relevant to policymakers. Unfortunately, in many cases we believe that NISTIR 8389 falls short. From the onset, the definition and framing of open banking is too narrow, and critical distinctions between customer-permissioned data access – the foundation of open banking – and non-permissioned data mining, as well as the important differences between propriety and non-proprietary data, are insufficiently distinguished. Use cases are inaccurately described, and the full impact of Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act on the development of open banking in the United States could be better articulated.”

FDATA NA is concerned that certain errors and omissions in this paper could misinform both the public and key policymakers as they develop open banking regulations. In the absence of this meaningful stakeholder engagement, we are concerned that this draft paper also does not fully appreciate the market and regulatory environment in which open banking use cases are currently delivered to consumers and small businesses in the United States today and will be in the future. Our letter therefore urged NIST to consider input from key stakeholders and republish a revised version of this report.

Image result for paperclip iconFDATA Response to NISTIR 8389

ABOUT FDATA NORTH AMERICA
FDATA was heavily involved in the UK Open Banking Working Group in 2015. In 2016, the working group’s output was published by Her Majesty’s Treasury as the Open Banking Standard. FDATA North America was founded in early 2018. Its members collectively provide tens of millions of consumers in Canada, the United States, and Mexico with aggregation-based tools to better manage their finances.

Members include air (Alliance for Innovative Regulation), APImetrics, Basis Theory, Betterment, BillGo, Codat, Direct ID, Envestnet Yodlee, Equitable Bank, Experian, Finansystech, Fiserv, Flinks, Interac, Intuit, Inverite, Kabbage, Mogo, Morningstsar, M Science, MX, Petal, Plaid, Questrade, Rocket Mortgage, SaltEdge, Trustly, ValidiFI, Vaultree, VoPay, Wealthica, Xero, and others.

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FDATA North America Submits Comments to Canada’s Department of Finance in Response to 2022 Budget Consultation

February 22, 2022, Washington, DC – Today, the Financial Data and Technology Association (FDATA) of North America submitted comments to the Canadian Department of Finance, Finance Minister Chrystia Freeland and Associate Minister Boissonnault as part of the Canadian government’s 2022 Pre-Budget consultation.

With the resumption of Parliament, and Budget 2022 planning well underway, our letter urged the Department to fully implement all phases of the Advisory Committee on Open Banking’s recommendations, which lay out a thoughtful, well-researched approach to building a “made in Canada” open finance system that puts consumers and small businesses at the center of a more competitive financial marketplace.

Our letter also clarified that the first step to achieving this important goal, and to provide market stakeholders with a legally binding policy framework under which such a regime can be delivered, is to appoint an Open Banking Lead, which should be responsible for working with industry and government stakeholders to create the policy and governance standards under which open finance can be delivered in early 2023.

We also called on the government to begin work on the Advisory Committee’s second phase, which must include write access – a critical component of account creation and account switching capabilities – as well as modernization of the Canadian Payments Act to ensure payments service providers, including credit unions and fintechs, have access to the critical Payments Canada system. As we say in the letter, these are thorny issues which require much consideration and engagement and will take time to get right. 

Image result for paperclip iconFDATA Finance Canada Budget 2022 submission

ABOUT FDATA NORTH AMERICA
FDATA was heavily involved in the UK Open Banking Working Group in 2015. In 2016, the working group’s output was published by Her Majesty’s Treasury as the Open Banking Standard. FDATA North America was founded in early 2018. Its members collectively provide tens of millions of consumers in Canada, the United States, and Mexico with aggregation-based tools to better manage their finances.

Members include air (Alliance for Innovative Regulation), APImetrics, Basis Theory, Betterment, BillGo, Codat, Direct ID, Envestnet Yodlee, Equitable Bank, Experian, Finansystech, Fiserv, Flinks, Interac, Intuit, Inverite, Kabbage, Mogo, Morningstsar, M Science, MX, Petal, Plaid, Questrade, Rocket Mortgage, SaltEdge, Trustly, ValidiFI, Vaultree, VoPay, Wealthica, Xero, and others.

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FDATA North America Submits Comments to OSFI’s Consultation on Technology and Cyber Risk Management

February 7, 2022, Washington, DC – Today, the Financial Data and Technology Association (FDATA) of North America submitted comments to the Office of the Superintendent of Financial Institutions (OSFI) as part of its public consultation on Draft Guidance B-13: Technology and Cyber Risk Management.

Throughout the response, FDATA North America discussed the interplay between B-13 and the development of open banking in Canada, particularly that the harmonization of efforts between the Department of Finance’s open banking work and OSFI’s approach to third-party cybersecurity risk will be essential. FDATA North America’s Executive Director Steve Boms noted that as OSFI develops its technology guidelines for third-party technology partners to banks, “we respectfully offer that significant consideration has already been undertaken on this issue by the Department of Finance, and stakeholders would benefit from some form of public documentation that clearly distinguishes OSFI’s authority and responsibilities with regards to third-party financial technology providers from those of the Department of Finance as it works to implement a Canadian open banking system.” Boms noted that publicly clarifying how these two projects will interact will provide clear direction to the marketplace about how third-party providers can continue to offer their valuable financial services and products in an innovative, competitive marketplace. 

Additionally, FDATA North America touched on the importance of clarification from OSFI that providers with whom consumers engage directly, without any intervention from their federally regulated financial institution (FRFI), do not fall under the B-13 framework. Thus, the goal of the consultation should be to ensure that FRFIs third-party risk management requirements mirror their ability to oversee entities with whom they have direct relationships, and not to overburden FRFIs with system-wide oversight that instead “should fall to a collaborative regulatory effort including Finance Canada’s open banking accreditation regime.”

Boms concluded by noting that in order to facilitate enhanced market competition and customer choice, “it is imperative that OSFI with the Department of Finance to harmonize regulatory expectations of customer-selected financial providers as open banking takes hold in Canada.”

Image result for paperclip iconFDATA North America Submission to OSFI’s B-13 Consultation on Technology and Cyber Risk Management

ABOUT FDATA NORTH AMERICA
FDATA was heavily involved in the UK Open Banking Working Group in 2015. In 2016, the working group’s output was published by Her Majesty’s Treasury as the Open Banking Standard. FDATA North America was founded in early 2018. Its members collectively provide tens of millions of consumers in Canada, the United States, and Mexico with aggregation-based tools to better manage their finances.

Members include air (Alliance for Innovative Regulation), APImetrics, Basis Theory, Betterment, BillGo, Codat, Direct ID, Envestnet Yodlee, Equitable Bank, Experian, Finansystech, Fiserv, Flinks, Interac, Intuit, Inverite, Kabbage, Mogo, Morningstsar, M Science, MX, Petal, Plaid, Questrade, Rocket Mortgage, SaltEdge, Trustly, ValidiFI, Vaultree, VoPay, Wealthica, Xero, and others.

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Member Spotlight: Xero

Xero is a cloud-based accounting software platform for small businesses with more than 3 million subscribers globally. Through Xero, small businesses and their advisors have access to real-time financial data at anytime, anywhere, and on any device.

Founded in 2006, Xero is a global business, domiciled in New Zealand and listed on the Australian Securities Exchange (ASX: XRO). Our team of more than 3,600 employees is driven by our purpose to make life better for people in small businesses, their advisors, and communities around the world.

The relationships we have with our partners in the accounting and bookkeeping communities are part of what makes Xero unique. Xero’s platform allows accountants and bookkeepers to collaborate with their small business clients on a single, up-to-date general ledger and manage their finances, including invoicing, payroll, tax compliance, cash flow, and much more.

Xero has built a thriving ecosystem of over 1,000 connected apps and more than 300 connections to banks and financial service providers. With apps that support everything from inventory and logistics to point of sale and project management, the Xero App Marketplace empowers small businesses to build their own toolkit to run all aspects of their business and have them all work together seamlessly.

We are dedicated to building a socially conscious and environmentally sustainable business, benefitting the millions of customers we serve, their advisors, communities and the shareholders and employees of Xero. We are committed to reducing our impact on the environment. During the year ended 31 March 2021 (FY21), Xero was certified carbon neutral by the Australian Government’s Climate Active program.

Our commitment to gender diversity and inclusion was recognized with Xero’s inclusion in the 2022 Bloomberg Gender-Equality Index, which is the third consecutive year the company has been included.

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Member Spotlight: TransUnion

TransUnion has been on the cutting edge of consumer data technology for more than half a century and is one of the world’s leading global information and insights companies. TransUnion serves consumers in more than 30 countries on five continents. In the United States alone, more than 166 million people have received free access to their credit information through TransUnion or its partners.

Information for good is TransUnion’s mission and the company is focused on using data to enhance financial inclusion. Helping individuals who too often have been left behind by traditional systems, the company’s alternative data assets can help create a more complete picture of a consumer’s risk profile. To date through trended and alternative financial data, TransUnion has helped 35 million credit invisible or credit-disadvantaged people gain greater access to credit. If scaled, the company estimates that the inclusion of alternative financial data could help an additional 60 million people gain access to credit.

TransUnion has long been an advocate for the use of alternative financial data. The company’s President & CEO, Chris Cartwright remarked “If alternative data is widely captured on credit reports and used by lenders in credit underwriting, the benefits would cascade across generations and all corners of America.” Because of that “more families would be able to flourish in the financial ecosystem, constructing legacies of prosperity they can pass along to their children,” he added.

As financial institutions look for new ways to support financial inclusion, TransUnion remains committed to doing their part to create a better future and more fair society. They recognize this important work is just beginning and their goal will be met once equity and credit access is an integral part of an economy where no American is left behind.

For more information on TransUnion, please visit www.transunion.com

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Member Spotlight: Petal

Technology has changed the way people bank, invest, and manage their money. Petal takes a new approach to consumer credit, enabling customers to use their own bank account data – rather than a traditional credit report – to access safe and affordable financial products and services and to build credit, avoid debt, and spend responsibly.

Traditional banks often rely on outdated measures of creditworthiness, such as traditional bureau-based credit scores, in determining which consumers get approved for a new loan or line of credit. This approach has resulted in the tens of millions of Americans with thin or no credit files being unable to access financial products such as car loans, credit cards, or mortgages. To address this problem, Petal offers credit cards (issued by WebBank) to consumers based on “cash flow underwriting” – using a customer’s bank transaction history to evaluate their creditworthiness, examining income, savings, and spending patterns. The insights gained from cash flow underwriting have allowed Petal to expand access to the financial system to many American consumers who otherwise would not have received credit and enable these consumers to build credit profiles to help them access additional products and services. The majority of Petal members had little to no credit history when approved, and more than 40% were previously denied credit by a major bank or card issuer. Petal members with no prior credit history achieve an average credit score of 680 after just a few months of responsible use.

The Petal card goes beyond providing access to credit: it has numerous features designed to help members succeed financially. Petal’s Leap program provides a clear pathway for members to qualify for a credit limit increase, while also promoting responsible financial behavior. Customers enrolled in Petal’s Leap program that make six on-time monthly payments in a row and maintain a healthy credit score are guaranteed a credit limit increase. The Leap tab on Petal’s mobile app provides a convenient platform for customers to track their progress and includes customized suggestions for members to improve their financial health and build their credit profile. In addition, Petal distinguishes itself from other credit cards by encouraging customers to pay their full balance each month. Mainstream credit cards, meanwhile, often put consumers on a more expensive path by making “pay the minimum” the starting point. Petal members who cannot pay the full balance can use the Petal app’s payments calculator to easily understand exactly how much interest they will owe. Petal has also offered incentives, including a chance to win up to $500, to encourage members to pay more than the minimum on their monthly statement. Finally, to further encourage financial responsibility, Petal provides qualifying members with extra cash back on purchases – beyond the standard 1% – when they establish a history of making on-time monthly payments.

In April 2021, Petal launched Prism Data, a new company that enables banks, fintechs and other business customers to translate consumer-permissioned bank account data into useful insights and a CashScore that can help determine creditworthiness. By integrating Prism Data into their lending applications, users can improve their ability to reach consumers that have been left out of the mainstream financial system – particularly those who are credit invisible. Prism Data was founded on the belief that open banking and access to consumer-permissioned bank account transactional data will change the way consumer finance works. When announcing Prism Data, Jason Gross, Petal CEO and co-founder, said, “Prism Data is the next great step in furthering Petal’s original mission to democratize access to credit, now by empowering other organizations to serve more customers, build better products, and make smarter decisions.”

Petal’s success at reaching traditionally underserved consumers has demonstrated that open banking policies can help expand financial inclusion. In a June 2019 op-ed co-written with FDATA North America, Gross argued that bringing open banking to the United States could help policymakers address the fact that:

  • 45 million Americans cannot access the modern credit system because of a lack of information in their credit report;
  • 4 in 10 American adults don’t have savings necessary to cover a $400 emergency; and
  • American consumers face up to $34 billion in overdraft fees annually.

For more information on Petal’s advocacy for open banking, you can read Petal’s written statement provided as part of the CFPB’s February 2020 symposium on consumer access to financial records, as well as Petal’s submitted comments to CFPB as part of the1033 rulemaking process and a Medium post by CEO Jason Gross published earlier this year titled “Your financial data belongs to you, not your bank.”

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