Financial Data and Technology Association of North America

FDATA North America was founded in early 2018 by several financial technology firms whose technology-based products and services allow consumers and SMEs to improve their financial wellbeing. Regardless of their business model, each FDATA North America member’s product or service shares one fundamental and foundational requisite: the ability of a consumer or SME to actively permission access to some component of their own financial data that is held by financial services providers.

We are strong advocates of Canada’s implementation of an open finance regime, which was first outlined as a government priority in Budget 2018. The core idea of open finance is this: a Canadian consumer or SME should be able to safely and securely share access to their data held at one provider with another provider that offers a better financial product, service, or tool. Whether it’s a chequing, savings, business, brokerage, pension, mortgage, or auto loan account, or data held by a payroll or benefits provider, open finance is the straightforward notion that the customer should have the right to use that data for their own benefit. Once built, open finance in Canada will put consumers and SMEs in full control of their financial data, facilitating a more transparent and competitive Canadian financial services marketplace that provides safe and secure data portability. FDATA North America views the data portability right and data privacy framework included in Bill C-27 as fundamental cornerstones of this modernized approach to financial services.

Following the pandemic, a period of economic uncertainty and rising inflation, one thing is obvious: Consumers and entrepreneurs are demanding access to financial solutions in new and novel ways that better meet their needs. Digital financial services, typically offered by non-bank financial technology (“fintech”) companies can help meet those needs. In a 2022 survey of consumers in the U.S. and U.K., two-thirds said fintech helped them weather economic challenges.
Half of respondents said fintech helped them feel more in control of their finances. And nine in ten users saw benefits from using fintech tools.

A survey of Canadians commissioned last year by FDATA North America and Fintechs Canada found similar results. That data showed that half of Canadians feel stress with interacting with Canada’s existing financial services sector and that more than two-third of Canadians believe more competition in the financial services marketplace would lead to a greater choice in products and lower financial services fees. Ninety percent of Canadians indicated they found fintech products easy to use, with more than eighty percent reporting they paid lower fees to fintechs than to their
banks for similar services or products.

Open finance results in more choices and better experiences for consumers and SMEs, as banks and nonbanks compete aggressively to win over customers. Canadians deserve access to these alternatives, just like their neighbors in the U.S. and U.K.

As the committee has heard from other witnesses, Canada lags significantly behind virtually every other G-20 country with regard to open finance, data portability, and data privacy. The United Kingdom, Australia, New Zealand, Singapore, Japan, Brazil, the European Union and other jurisdictions have all enacted some version of government-led open finance under which consumers and SMEs have legally binding data access rights and data privacy protections afforded to them to access a more competitive and vibrant financial services marketplace.

In contrast, today, Canadian consumers and SMEs have no legal right to access or share access to their financial data. Unlike the overwhelming majority of other developed countries, in Canada, a consumer’s or SME’s bank is empowered to determine whether their customer may share elements of their data with a third-party provider of financial services to get a better deal, access a new product or tool, or avoid paying exorbitant fees. And, to the extent that a bank does allow its customers to share access to their financial data, there are generally onerous and, in some cases, restrictive terms dictating the limitations under which customers are able to do so.

While Canada has taken important steps towards a more open, consumer-directed finance (CDF) regime, significant work remains to reach implementation. Abraham Tachjian was appointed as Canada’s open finance lead in March 2022, and FDATA North America commends him for establishing working groups for some of the most crucial issues associated with the introduction of open finance in Canada.

Unfortunately, the efforts of these working groups have yet to come to fruition, as concrete progress towards implementation of open banking has stalled. The 18-month timeline the government had established is now out of reach, which should be a concern to Canadian policymakers, consumers and SMEs alike.

Earlier this month, the United States formally launched its own open finance regulatory regime with a Consumer Financial Protection Bureau (“CFPB”) rulemaking. Recognizing that incumbents in the financial services market would not on their own deliver a more competitive, customer-centric ecosystem for U.S. consumers and SMEs, the Director of the CFPB noted in announcing the U.S. rules that the CFPB’s open finance rule will “supercharge competition, improve financial products and services, and discourage junk fees.” Like Bill C-27, the CFPB rule would provide data portability rights to consumers and would require those firms that access, with their express consent, end users’ data to abide by strict data privacy and security provisions.

To advance its open finance regulations, the CFPB had an advantage in the United States that the Departments of Finance (“Finance Canada”) and Innovation, Science, and Economic Development (“ISED”) currently do not: strong statutory authority to do so. Finance Canada has been studying how to deliver open finance in Canada for the better part of five years. FDATA North America views enactment of Bill C-27 as a critical element of a transition from open finance ideation to implementation. Once consumer and SME data portability have been enshrined in law, ISED and
Finance Canada will have the statutory tools required to finally deliver open finance in Canada.

Consumers and SMEs in Canada are being left behind as the rest of the G-20 build and deploy open finance frameworks that facilitate competition, enable greater access to and inclusion within the financial services marketplace, and provide their citizens with appropriate data protections when utilizing a legally binding data portability right. The data portability and data privacy provisions included in Bill C-27 represent integrally important statutory tools that ISED and Finance Canada will need to help Canada catch up – and to foster a safer and more competitive
financial services sector for all Canadians.

September 21, 2023, Washington, DC – Steve Boms, the Executive Director of the Financial Data and Technology Association of North America, a consortium of financial technology companies united behind the notion that consumers and small businesses should have full control over their financial data, today released the following statement in response to the Consumer Financial Protection Bureau’s (CFPB) outline of proposals and alternatives under consideration by the agency ahead of its “data broker” rulemaking:

 “We welcome the CFPB’s close scrutiny of companies that collect and sell consumers’ data, often unbeknownst to the consumer, and use that data for marketing and advertising purposes.

At the same time, we are concerned that the CFPB did not distinguish in this outline between entities that collect consumer information without consumers’ informed consent and third-party providers of financial products and tools that access consumers’ data at their express direction and consistent with the CFPB’s forthcoming Section 1033 Open Banking rule. 

Entities that enable consumers to access and share their own personal financial information – at consumers’ express direction – are at the heart of open banking and empower consumer choice and control, and improve consumers’ ability to manage their financial lives. These companies should be appropriately regulated under Section 1033, including adhering to the privacy principles FDATA North America members released in March of this year.

The same principles that led to the enactment of the Fair Credit Reporting Act in 1970 – transparency and control for consumers over their financial data – are the hallmarks of customer-permissioned data access marketplace today. Accordingly, as it contemplates a proposed rule in this space, we encourage the CFPB in the strongest possible terms to distinguish between “data brokers” and third-party financial providers that access consumer data based on a consumer’s affirmative request to do so.”

FDATA North America previously responded to the CFPB’s Request for Information (RFI) Regarding Data Brokers and Other Business Practices Involving the Collection and Sale of Consumer Information, submitting a comment letter in June stressing in the strongest possible terms, that third-party providers of financial services that rely on consumer-permissioned data are not data brokers, and therefore should be exempt from any Bureau rulemakings, guidance, or other actions it may consider in the data brokerage space.

June 16, 2023, Washington, DC – In response to the Consumer Financial Protection Bureau’s (CFPB) Request for Information (RFI) Regarding Data Brokers and Other Business Practices Involving the Collection and Sale of Consumer Information, FDATA North America submitted comment letter stressing in the strongest possible terms, that third-party providers of financial services that rely on consumer-permissioned data are not data brokers, and therefore should be exempt from any Bureau rulemakings, guidance, or other actions it may consider in the data brokerage space.

We also used this opportunity to further deploy our FDATA Privacy Principles which define customer-directed data as financial data that is collected or shared in accordance with a clear affirmative action by or request from an end user or their authorized agent, rather than data collected passively, such as data that may be collected automatically through pixels or cookies as a consumer navigates through web pages. For data to be considered customer-directed, our principles further assert that the end user must also have full utility over any non-proprietary data element for which a data holder holds about them. And critically, our principles state that the end user must have the ability to opt-out of future use of their data at any time.

Finally, the letter reiterated our long-standing positions that no third party should have access to any financial data element permissioned by a customer that is not required to fuel the use case for which that customer has opted in, and that the CFPB should expand its supervisory authority to cover data aggregators.

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.

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.”

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.