FDATA North America

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FDATA North America Options for Governance of Customer-Directed Finance in Canada

FDATA North America Options for Governance of Customer-Directed Finance in Canada

Earlier this year, Canada’s Open Banking Advisory Committee submitted recommendations to the Minister of Finance regarding the need for a customer-directed finance regime in Canada. Quite a lot has happened since then – both globally and in the financial technology sector – but the Department of Finance has continued to consider how to deliver customer-directed finance in Canada.

As the department enters the second phase of its consultative process, FDATA North America provided several suggestions that should act as a guide for the deployment of a successful open finance regime, gleaned from experience in other markets.

FDATA North America’s suggested governance models note that the core of any successful framework is a customer data right – and that only government can implement this open finance tenet, and that it is the foundation of every successful customer-directed finance framework globally. The document warns that a customer-directed finance model that defers decisions around data rights to industry results in an ecosystem in which incumbents are further empowered to determine how much control their customers may have over their data – to the detriment of competition, innovation and financial access.

As such, the document proposes governance models with the strong recommendation that industry alone cannot deliver customer-directed finance but can provide technology solutions that meet the policy standards set by government.

Image result for paperclip iconFDATA North America’s suggested governance models

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. Existing FDATA North America members include: air (Alliance for Innovative Regulation), API Metrics, Betterment, Direct ID, Envestnet Yodlee, EQ Bank, Experian, Fintech Growth Syndicate, Fiserv, Flinks, Interac, Intuit, Kabbage, Mogo, Morningstsar, M Science, MX, Petal, Plaid, Questrade, Quicken Loans, TransUnion, Trustly, ValidiFI, VoPay, Wealthica, Xero, and others.

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FDATA North America Submits Comments to US FDIC on Standard Setting and Voluntary Certification Models for Third-Party Providers

FDATA North America Submits Comments to US FDIC on its Request for Information on Standard Setting and Voluntary Certification Models and Third-Party Providers of Technology and Other Services

September 21, 2020, Washington, DC – Today, FDATA North America submitted comments to the US Federal Deposit and Insurance Corporation (FDIC) in response to its Request for Information (RFI) on standard setting and voluntary certification models and third-party providers of technology and other services.

In its comments, FDATA North America praises the FDIC for its support of innovative technology and efforts to enable FDIC-supervised banks and savings associations to utilize technology that will provide their customers with tools and services that can be transformative to their financial health. FDATA North America Executive Director Steve Boms noted that “as the trade association representing firms that currently partner with many small and community banks to provide critical financial wellness tools to millions of Americans, we believe that streamlining the ability for banks to partner with third-party providers will be critical to the survival of small and community banks in the United States and to the financial wellness of their customers.”

Image result for paperclip iconFDATA North America FDIC RFI Submission

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Member Spotlight: Trustly

 

Today, our salaries are deposited straight into our bank accounts and we shop online, from merchants all around the world. So why is it so hard to pay straight from our bank accounts? This is where Trustly comes in.

The fintech, which now has operations in Canada and Australia in addition to the United States and Europe, is building an Online Banking Payments network that bypasses the card networks, letting consumers make and receive simple and safe payments to/from merchants by signing in to their online banking. With support for more than 7,600 banks, Trustly enables merchants to accept payments from roughly 600 million consumers across Europe and North America.

Trustly serves many of the world’s most prominent merchants within e-commerce, financial services, gaming, media, telecom and travel, which all benefit from increased consumer conversion and reduced operational, fraud and chargeback costs.

In the United States, for instance, Trustly partners with AT&T to help subscribers pay their monthly bills, and with Dell to help customers purchase computers online, in both cases with a simple and safe user experience — no card or registration needed. At the same, AT&T and Dell increase their payment approval rates while reducing their payment acceptance costs and eliminating chargebacks. These are just two examples of how Trustly is helping large North American merchants circumvent the limitations of the card networks.

In Europe, Trustly helps PayPal users top up their wallets, and Norwegian Air travelers pay for plane tickets directly from their bank accounts. And, last year, Trustly established a partnership with the Help to Help Foundation, which grants scholarships to university students in East Africa. Using Trustly’s Direct Debit service to digitize recurring payments and simplify the management of donations from monthly donors, Help to Help has reduced churn, allowing a greater portion of donations to go toward scholarships. Help to Help founder Malin Cronqvist said the organization now saves two to three percent of donations in fees.

Trustly joined FDATA North America to bring more opportunities like these to more consumers in the United States and Canada. “We look forward to helping U.S.and Canadian consumers pay their favorite merchants and billers with our Online Banking Payments service, a modern, simple and safe alternative to cards,” said Alex Gonthier, CEO of Trustly Inc.

The company now has more than 400 employees, 10 offices across the Americas and Europe, and processed more than 100 million payments last year.

In February 2020, Trustly was recognized as Best Payment Initiation Service Provider(PISP)/Account Information Service Provider (AISP) at the Merchant Payment Ecosystem Awards, which honor the achievements of companies in the European merchant payments ecosystem. The PISP AISP award goes to the company “that most efficiently brings open banking services to the merchant community, and provides the best customer experience.”

Leon Dhaene, Chairman of the MPE Awards, explained why Trustly was chosen. “Make e-commerce simple again. It could have been the slogan of a politician, but it is essential if you want to bring potential customers to effectively buy over the internet,” said Dhaene. “The Jury appreciated the fact that Trustly delivers fast, simple, and secure payments in only three steps.”

Simplicity and security – just what consumers can expect with Open Banking in North America.

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Member Spotlight: EQ Bank

EQ Bank is the digital banking platform offered by Equitable Bank, Canada’s Challenger Bank™. Equitable employs more than 900 Canadians and is now the country’s ninth largest independent Schedule I bank. Launched in 2016, EQ Bank provides state-of-the-art digital banking services, including the Savings Plus Account which reimagines banking by offering an everyday high interest rate, plus the flexibility of a checking account, with free transactions, no everyday banking fees, no minimum balances, fast, cheap, and fully transparent international money transfers, and more—all from one account.

CEO and President Andrew Moor has said, “Making smart, future-ready decisions to better the way Canadians bank has always been our primary focus. Cloud-based banking is just one way we’re challenging the status quo in order to bring smarter money solutions to our customers.”

EQ Bank also is challenging the status quo by using various social platforms, including its own blog, to educate its customers and the broader Canadian public about everything from how interest is taxed on a joint account to strategies for increasing personal savings to buying a home.

The blog provides practical, easy-to-digest tips like explaining why consumers are better off when they can link their accounts – a process that would be made much easier with the implementation of an open banking regime in Canada. In a November 2019 blog post, EQ Bank explained, “Linking your account not only streamlines the application process, but it’s the easiest way to start adding funds to your account. When you sign in to your new account for the first time, you’ll already be linked to another bank account; this means you can transfer money and start earning high interest on that amount immediately.”

The bank has regularly spoken about its commitment to bringing open banking to Canada in order to drive innovation and to serve the changing needs of its customers. Equitable CIO Dan Dickinson was the first bank representative to address the Standing Senate Committee on Banking, Trade and Commerce on the topic of Open Banking. Equitable Bank is pushing for Open Banking so that Canadians at all banks can have better options and an improved customer experience.

In September 2020, EQ Bank announced that it had reached more than $4 billion in deposits. (The company has more than 150,000 customers.) In the first three months of the coronavirus pandemic, sign-ups for new accounts tripled. “The need for fair, well-valued banking products and a complete understanding of one’s financial picture has never been more important,” according to Dickinson.

EQ Bank has received multiple awards for its efforts to provide outstanding service and innovative solutions to Canadians. It recently was awarded the Celent Model Bank Awards, which recognizes financial institutions as “model banks” for their outstanding technology initiatives that demonstrate clear business benefits, innovation, and technology or implementation excellence. The company also received one of Ratehub.ca’s inaugural Personal Finance Awards. Rathhub recognized the EQ Bank Savings Plus Account as one of the country’s top high-interest savings accounts.

EQ Bank joined FDATA North America in 2020. As EQ Bank President Moor has said, “Open banking will transform and modernize our industry enormously, benefitting consumers, businesses, and the economy alike. Innovation is in EQ Bank’s DNA, and our recent move to the cloud means we’re not only ready for the future of banking in Canada, we’re driving it.”

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FDATA North America Submits Comments to US OCC in Response to its ANPR on Digital Activities

FDATA North America Submits Comments to US OCC in Response to its ANPR on Digital Activities

July 29, 2020, Washington, DC – Today, FDATA North America submitted comments to the US Office of the Comptroller of the Currency (OCC) in response to its Advanced Notice of Proposed Rulemaking (ANPR) regarding national bank and federal savings associations digital activities.

In its comments, FDATA North America praises the OCC for recognizing that the US banking system is not “frozen in time” and that innovation and safety and soundness are not mutually exclusive principles. The association also notes that as the OCC attempts to strike the right balance between these principles, it should observe the experiences of other markets around the world and create an open finance ecosystem that has a consumer’s right to access and share their own data as its centerpiece.

Image result for paperclip iconFDATA North America OCC ANPR Submission

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FDATA North America Welcomes Two New Members

FDATA North America Welcomes Two New Members

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

July 28, 2020, Washington, DC – The Financial Data and Technology Association (FDATA) of North America today announced it has added two new members, boosting the organization’s roster of member companies and organizations united behind the notion that consumers and small businesses should have full utility over their own financial data.

“Innovation in financial services is powered by consumers and small businesses granting permission for access and use of their data, often in conjunction with cutting edge machine learning and other data analytics technologies that enable better financial access and inclusion,” said FDATA North America Executive Director Steve Boms. “As consumers and businesses continue to face a deteriorating economic landscape because of COVID-19, it is critical to maintain competition in the market for these data-driven financial services. Equitable Bank and Xero are committed to that mission, and we’re excited to welcome them to our growing list of advocates supporting an open finance system in the United States and Canada.”

The following organizations recently joined FDATA North America:

  • Equitable (EQ) Bank has grown to become Canada’s ninth largest independent Schedule I bank through its proven branchless approach and customer service focus in providing residential lending, commercial lending, and savings solutions. EQ Bank, the digital banking platform offered by Equitable Bank, provides state-of-the-art digital banking services.
  • Xero is the emerging global leader of online accounting software that connects small businesses to their advisors and other services. Xero provides business owners with real-time visibility of their financial position and performance in a way that’s simple, smart and secure. For accountants, Xero forges a trusted relationship with clients through online collaboration.

These firms discussed the importance of FDATA North’s mission to advance data access and open banking in North America:

  • Equitable Bank’s Chief Information Officer Dan Dickinson: “In joining FDATA, we’re furthering our commitment to the industry, our customers and consumers more broadly to make banking better for everyone. We have a long-standing focus on the need for robust open banking practices in Canada and this partnership is another way we’re gaining insights and helping to move the needle on greater access to financial data for all.”
  • Xero Partnerships Manager Jon Bellamy: “Xero is committed to improving the environment for small businesses. Open Banking is a critical aspect of that, aiding their digital transformation. By joining FDATA we will be able to plan for important regulation and have a stronger industry voice as we represent the interests of our customers.”

Existing FDATA North America members include: air (Alliance for Innovative Regulation), API Metrics, Betterment, Direct ID, Envestnet Yodlee, Equifax, Experian, Fintech Growth Syndicate (FGS), Fiserv, Flinks, Interac, Intuit, Kabbage, Mogo, Morningstsar, M Science, MX, Petal, Plaid, Questrade, Quicken Loans, TransUnion, Trustly, VoPay, Wealthica and others.

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.

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FDATA North America Outlines Competition Issues Surrounding Open Banking

FDATA North America Outlines Competition Issues Surrounding Open Banking

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

July 17, 2020, Washington, DC – Today, the Financial Data and Technology Association (FDATA) of North America released a paper on competition issues surrounding customer-directed finance and the financial data access competitive landscape in Canada. The paper’s release comes ahead of a virtual presentation by FDATA North America Executive Director Steve Boms, Senator Colin Deacon, and Michael Binetti, partner at Affleck Greene McMurtry LLP.

A replay of the webinar can be found here.

Consumers and small businesses in Canada have become increasingly reliant on financial services and products offered by financial technology (“fintech”) providers. Today, as many as four million Canadians utilize fintech tools to improve their financial wellbeing. Regardless of the type of product or service offered by fintech firms, all rely on the ability of the consumer or small business to grant them access to their financial data, which is typically held at a financial institution.

The paper, “Competition Issues in Data-Driven Consumer and Small Business Financial Services in Canada,” outlines how restrictions on consumer-directed access to individual financial data raise serious competition concerns in the market for data-driven financial services and underscores the need for the Canadian government to advance a customer-directed finance ecosystem.

“The financial impact from COVID-19 – and the government’s refusal to allow fintech lenders to participate in its response – is the latest in a growing string of examples that underscore the need for Canada to have a customer-directed finance regime as soon as possible,” said Senator Colin Deacon. “FDATA North America’s paper makes clear that the absence of such a regime is actively thwarting competition in the financial marketplace. Accordingly, I urge the Department of Finance to expedite its consultation process and to submit to Parliament draft legislation as soon as possible that would allow Canada to join the growing number of innovative economies that provide consumers and small businesses choice and autonomy over their financial data.”

Highlights from “Competition Issues in Data-Driven Consumer and Small Business Financial Services in Canada”:

  • The innovation in financial services is powered by consumers and small businesses granting permission for access and use of their data, often in conjunction with cutting edge machine learning and other data analytics technology.
  • As consumers and businesses face a deteriorating economic landscape, it is critical to maintain competition in the market for these data-driven financial services.
  • Competition issues cannot take a back seat as the regulatory and technological framework in data sharing continues to evolve. As open finance develops, competition laws provide a critical backstop to ensure that existing competition in the market for data-driven consumer financial services is not stifled.

Click here to read the paper.

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. Existing FDATA North America members include: air (Alliance for Innovative Regulation), API Metrics, Betterment, Direct ID, Envestnet Yodlee, EQ Bank, Experian, Fintech Growth Syndicate, Fiserv, Flinks, Interac, Intuit, Kabbage, Mogo, Morningstsar, M Science, MX, Petal, Plaid, Questrade, Quicken Loans, TransUnion, Trustly, VoPay, Wealthica, Xero, and others.

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Member Spotlight: Flinks

 

Founded in 2016, Flinks is a Montreal-based company that empowers businesses to provide better financial services to consumers and small businesses. Data security and privacy are among the company’s very top priorities.

By virtue of its information security program, Flinks invests heavily in state-of-the-art security measures and approaches its operations with a “privacy by design” mindset. These measures make the Flinks environment extremely robust from a data protection standpoint. And while Canada waits for open banking to specifically regulate the sharing of financial data, Flinks operates under and is compliant with the relevant applicable privacy laws, including PIPEDA, Canada’s federal privacy and data protection law.

All of the data handled by Flinks is collected, used and shared per the consumer’s direction, following consent protocols that are explicit and easy to understand. Consumers also have the opportunity to request Flinks to correct, update, or erase their personal information in the company’s records. In short, they are in complete control and can withdraw their consent from Flinks to share their data at any time.

Flinks CEO Yves-Gabriel Leboeuf says implementing an open banking framework in Canada will make it even easier to secure consumers’ information and ensure their privacy. As Flinks’ Data Protection Officer Francis Lepine said in this blog post, open banking really is the modernization of existing banking policies. “Sharing bank and financial information has been a common thing to ask consumers for years. All sorts of institutions and businesses rely on void checks, bank statements and tax returns to operate and deliver services,” said Lepine. “Too often, such sensitive information is shared through email — and we’ve heard of even less secure means of communication being used.”

Flinks is enabling a financial system that benefits underserved populations, for example in the area of access to credit. While the traditional credit scoring systems work well for financially active and well-off consumers, they can inhibit companies and individuals that are just getting started, or trying to recover from financial hardship. Credit reports also are slow to capture sudden changes in a person’s financial situation; underwriting models based on financial data can allow for a more real-time, granular picture.

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FDATA Successful in Collaborative Bid for £23m GOFCoE Funding

FDATA Successful in Collaborative Bid for £23m GOFCoE Funding

June 26, 2020, Edinburgh, Scotland: Today, FDATA Global Executive Chairman Gavin Littlejohn announced in a letter to FDATA membership the association’s success in acquiring £23m in funding for the Global Open Finance Centre of Excellence (GOFCoE) to advance Open Finance across the United Kingdom, Europe, and around the world.

Following recent notification by the UK Government, I am delighted to announce that the Global Open Finance Centre of Excellence (GOFCoE) has been successful in acquiring a seed fund of £23m by way of grant, to cornerstone its investment strategy.

This major award is part of a much larger funding strategy to build a world-class global utility for Research and Development in this domain; GOFCoE will be seeking to quickly build on this cornerstone investor with private sector involvement from both within the UK and international markets. The initial goal is to double the funding. The long term aim is to make GOFCoE self-sustaining as an industry utility.

As Open Finance initiatives proliferate throughout the world, FDATA has developed considerable capability and influence to shape the fundamental policy, governance and technology elements that are vital to successful delivery and for a healthy, competitive ‘Open’ market.

As PSD2 came into force in Europe in early 2018, it became apparent that there were various things which the market place desperately needed but for which there was no obvious focal point or leadership to make these assets available. To respond to these gaps in market fulfilment, FDATA prepared a paper and developed a strategy for solving some of these issues: GOFCoE, originally announced to the market at the FDATA Global Summit in December 2018. Since then, FDATA has developed relationships with key partners, including the University of Edinburgh (UoE), to build out its capability, resourcing a small team to develop the business plan, funding requirements, governance arrangements and strategic vision to make it a reality.

The UoE, chosen for its internationally recognised strengths in supercomputing and data science, has proven to be an outstanding partner, fully committing to the vision of problem-solving through international collaboration and, making its resources and funding available to kick-start the programme.

About GOFCoE

GOFCoE aims to provide leadership, coordination, research, and capability to develop the benefits of Open Finance and to help safely unlock the potential of customer data as a force to improve lives. GOFCoE is set up to be an industry, regulatory and academic collaboration, and focusing on areas of the market that can only be really solved through collaboration. Some examples include:

  1. A Financial Data Sandpit of pseudonymised financial data contributed from multiple market verticals to help banks, fund managers, insurers and fintechs to more rapidly develop hypothesise, prototype algorithms, test business models and work with regulatory sandboxes to develop proof points.
  2. A Global Economic Observatory – a longitudinal study of how human kind earns, spends and saves through the lens of both consumers and businesses. This observatory will source a wide variety of private sector and public sector data sets to provide an unprecedented research and policy capability including looking at things like how people manage unfair credit or prepare for a long life.
  3. An Algorithmic Bias Test Laboratory – a new capability to assist financial services practitioners reduce discrimination, providing assurance of compliance and ethical standards in their algorithmic distribution of products and services.
  4. A Global Open Finance Technical Standards Working Group – creating a digital library of the output of national and international agencies developing API standards, coupled to a working group of those agencies seeking to develop harmonisation of security standards for data sharing, digital identity, conformance testing and interoperability across markets. The OpenID Foundation will be a key partner in this initiative.
  5. An Economic Crime Unit – providing an international collaboration environment to enable enhanced pattern recognition research and development to reduce money laundering and fraud.
  6. An Education and Training Programme – running courses in machine learning in financial services, data ethics and data governance.
    In the coming months, GOFCoE will be spun out of FDATA and the UoE into an independent entity, while continuing to be hosted on campus at the university. The intention behind this evolution is to put it into an internationally diverse governance framework. Although it is very much intended to support firms (including FDATA members), regulators, policy makers and academic research, it is critical to its success that it remains independent of these actors, not perceived to be controlled by one nation state, and is positioned always on the side of the end customer. To that end, trust, market neutrality and ethics have a special meaning for the GOFCoE ethos. I will join the initial board of directors and work with them to ensure that this market positioning goal is achieved.

Since its earliest origins in 2013, FDATA has lobbied for the rights of consumers and businesses to share their financial data with regulated actors of their choosing and to represent the interests of members in the delivery of Open Finance. GOFCoE is a major new international collaboration, a research and development facility through which Open Finance objectives will be supported, with a suite of practical capabilities for you to work with.

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Member Spotlight: Fintech Growth Syndicate

 

Since its founding in 2016, Canada’s Fintech Growth Syndicate (FGS) has won multiple awards and helped companies transform through corporate innovation. FGS is a trusted innovation firm for large international and Canadian corporations, visionary startups, multi-stakeholder organizations, academic institutions, and governments.

FGS’s deep fintech and financial services expertise sets it apart from other advisory firms. With a mission to revolutionize Canada’s fintech ecosystem until it becomes the best on the planet, FGS launched Maple by FGS – Canada’s most exhaustive fintech ecosystem platform.
FGS tracks and analyzes over 1,200 fintechs in Canada and uses data to help companies quickly explore customer needs and untapped business models.

FGS is actively engaged in the fintech ecosystem, staying up to date with regulatory changes, Open Banking initiatives, payment modernization updates, and more to advise and represent stakeholders’ needs in the financial industry. Along with being members of FDATA, FGS is a member of the Payments Canada Stakeholder Advisory Committee, Canadian Lenders Association (CLA), Canadian Innovation Exchange (CIX), Financial Data Exchange (FDX), and the Canadian Prepaid Providers Association (CPPO).

Innovation is at the core of what FGS does – its dynamic team of fintech experts, innovators, and designers create growth strategies for Canada’s largest companies by looking at their external and internal forces, what their customers want, to provide recommendations for products and solutions. They embrace a culture of experimentation and learning focused on minimal investments to assess, define, test, refine, and validate new products.

FGS hosts a podcast, The Disrupticons, intending to explain how various innovations—from artificial intelligence to digital banking to Open Banking—will disrupt the financial services industry for the benefit of the average citizen.

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