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FDATA North America December 2022 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:Questrade

This month’s Member Spotlight features Christine Day, Chief Information Officer at Questrade, who explains the myriad ways that consumer-permissioned data sharing can add value, lower costs, increase competition, and increase personalization of a wide variety of financial products and services:

FDATA NA News

FDATA Applauds CFPB’s Release of Small Business Panel Proposals for Section 1033 Rulemaking. The Consumer Financial Protection Bureau (CFPB) has published proposals for the upcoming Small Business Regulatory Enforcement Fairness Act (SBREFA) panel for the Dodd-Frank Section 1033 rulemaking, and  FDATA applauds the CFPB for this timely release. This outline marks the first concrete step toward implementation of an open finance system in the United States and affirms that consumers should have complete control over their financial data. If implemented, the framework envisioned within the outline will strongly align with the goals that FDATA North America has long supported: a national, technology-neutral financial data portability standard that will allow consumers to select in a more competitive ecosystem from the financial services providers that can best improve their financial wellbeing. FDATA North America commends the CFPB staff and Director Chopra for their diligent work and looks forward to working with the CFPB to promote an expansive, customer-centric proposed rule to implement Section 1033 of the Dodd-Frank Act. FDATA is in the process of preparing a comment letter to submit to the CFPB following completion of the SBREFA meetings.

Member News & Activity

Atomic Financial, a provider of payroll connectivity, announced that it is expanding its solutions suite beyond consumer-permissioned access to support connectivity for employer and human resource administrative systems. By offering broader integration options, Atomic aims to give customers the most comprehensive coverage, faster time from integration to go-live, and a vastly improved product experience when it comes to connecting with HR systems. This development makes Atomic the first to market with payroll connectivity integrations and authentications for both consumers and businesses to permission access to financial data in payroll systems and human resource platforms. Atomic’s EmployerLink solutions will initially support use cases for worker’s compensation insurance, earned wage access (EWA), and employer benefits.

Basis Theory’s co-founder Colin Luce joined Remy Blaire on Fintech.tv to discuss how companies use tokenization to handle financial data protection and compliance.

Codat published a new blog post entitled “What makes SMBs willing to share data with financial providers?” that shared their research showing 67 percent of SMB borrowers expressed willingness to share their financial data with credit providers. Codat’s research also shows that growing businesses and those open to alternative lenders are even more willing to share financial data, and that the ability to access better loan rates was the largest incentive for data sharing.

Envestnet’s Group President of Data & Analytics Farouk Ferchichi penned an article in Finextra entitled “We Must Accelerate Open Banking to Help Withstand Today’s Economic Volatility” which outlined how open banking can offer quick and reliable visibility of personal finances and gives users a more secure and seamless way to connect their financial accounts. They also produced an on-demand webinar entitled “Protecting customers, their data, and your business from financial fraud with account tokens” about how sensitive financial data can be protected from hackers and how complex account verification processes can be simplified via open banking.

Flinks published a new blog post by its product marketer Alex Coleman entitled “OAuth Performance: Improve User Experience and Increase Conversions” that describes how OAuth technology enables Flinks’ end users to connect their bank accounts to a chosen fintech without sharing credentials. This educational post includes screenshots and descriptions of of their authentication/onboarding flow, and describes hows OAuth eliminates errors and barriers from traditional login systems, such as password changes and multi-factor authorization.

MX’s Chief Advocacy Officer Jane Barratt joined Jim Marous on the Financial Brand to discuss how data and insight can transform banking into emotional relationships that can impact people, organizations, and communities. MX also published a video from their recent Money Experience Summit entitled “How Lenders Can Meet Borrower Expectations in Today’s Financial Climate” that featured discussion on how customer expectations of instant-access to a wide variety of products and services is driving further fintech innovation.

Petal’s Prism Data, an open banking analytics platform, recently introduced CashScore v3, a powerful new version of its CashScore credit scoring model that leverages anonymized, consumer-permissioned open banking data to fully illuminate a consumer’s true credit risk. CashScore v3 is the first-ever consortium-based cash flow underwriting model, built using millions of anonymized, consumer-permissioned records from a variety of different banks, credit products and customer segments. Similar to traditional models like FICO or VantageScore, Prism’s consortium-based CashScore v3 offers lenders a highly predictive tool they can use off-the-shelf to more precisely assess credit risk in any consumer context—from credit cards and personal loans to mortgages and auto loans, among others.

Plaid’s John Anderson, Head of Payments, joined the Payments Journal Podcast alongside Mark Smith, Head of Payments Business and Market Development at AWS, and Tim Sloane, Vice President of Payments Innovation at Mercator Advisory Group. The group discussed how data connectivity is empowering the democratization of payments, improving consumer experience, and constantly driving new use cases. Anderson also penned a post on Plaid’s blog on the subject of “safer, smarter, faster” bank payments.

Trustly’s Rick Costello, Head of Digital Commerce, spoke with Rethink Retail at NACS online about what Trustly’s open banking payments solutions can do for merchants, particularly in the convenience store business, including reducing payment fees and risks.

Vaultree’s Pedro Aravena wrote a post on the Dev forum entitled “What is the difference between API and SKD?” that explained the difference between APIs and SKDs. APIs perform the integration between systems and SKDs make it possible to create an application and can couple APIs — but not the other way around.

Vopay published a real-time payment guide intended for Canadian business owners looking to learn more about real-time payment technology. The guide explains the operations and advantages of real-time payments, and makes some predictions for their future.

Events and Submission Deadlines

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Video Member Spotlight: Questrade

This Member Spotlight features Christine Day, Chief Information Officer at Questrade, who explains the myriad ways that consumer-permissioned data sharing can add value, lower costs, increase competition, and increase personalization of a wide variety of financial products and services:

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Video Member Spotlight: EQ Bank

This month’s Member Spotlight features Cathy Ly, Vice President of Customer Experience and Operations, who tells us how challenger banks like EQ rely on customer-permissioned data access to offer custom and competitive financial services to a wide array of Canadians:

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FDATA North America November 2022 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: EQ Bank

This month’s Member Spotlight features Cathy Ly, Vice President of Customer Experience and Operations, who tells us how challenger banks like EQ rely on customer-permissioned data access to offer custom and competitive financial services to a wide array of Canadians:

FDATA NA News

FDATA Applauds CFPB’s Release of Small Business Panel Proposals for Section 1033 Rulemaking. The Consumer Financial Protection Bureau (CFPB) has published proposals for the upcoming Small Business Regulatory Enforcement Fairness Act (SBREFA) panel for the Dodd-Frank Section 1033 rulemaking, and  FDATA is applauding the CFPB for this timely release. This outline marks the first concrete step towards the implementation of an open finance system in the United States and affirms that consumers should have complete control over their financial data. If implemented, the framework envisioned within the outline will strongly align with the goals that FDATA North America has long supported: a national, technology-neutral financial data portability standard that will allow consumers to select in a more competitive ecosystem from the financial services providers that can best improve their financial wellbeing. We applaud the CFPB staff and Director Chopra for their diligent work and look forward to working with the CFPB to promote an expansive, customer-centric proposed rule to implement Section 1033 of the Dodd-Frank Act.

FDATA Highlights Importance of API Standards and Monitoring. As both Canada and the United States continue to move toward open banking via APIs, it is essential that minimum API standards be set in open banking frameworks to ensure that consumers and SMEs have uninterrupted access to their financial data. To this end, FDATA has developed four principles that will be critical to the design of a well-implemented API environment in North America. These principles cover data scope, reliability standards, fallback options, and the necessity of establishing a neutral monitoring agency.

Member News & Activity

Codat published an article in Fintech Times explaining how open banking could be the key to reducing the funding gap for small businesses.  Codat uses its recent research, which found a negative attitude toward available financing options among SME decisionmakers.

DirectID recently announced a partnership with SME capital provider GOT CAPITAL, which will allow SMEs applying for financing to use the power of Open Banking within the application journey and allow agents at Got Capital to quickly categorize and determine businesses’ true revenue without the need for PDF or paper bank statements. This new solution will allow for a much faster and accurate process, de-risking the financing while providing a better experience for SMEs.

Fiserv’s Vice Chairman Frank Sanchez joined the Tearsheet Podcast to discuss the promise and challenges associated with next generation cores, how fintechs are leveraging them in pushing open finance forward, what sets them apart from legacy banking cores, and what innovations we can anticipate in the near future.

Flinks published a new blog post by its product marketer Alex Coleman entitled, “Open Banking: Building or Buying,” which describs the state of open banking in several nations and explains the role of data intermediaries, particularly data aggregators, in establishing connectivity between financial institutions and consumers and SMEs.

Interac sponsored an event in Ottawa on open banking. Hosted by The Globe and Mail, the event featured panels that discussed the framing of open banking, data privacy and security, and accreditation and liability. Abraham Tachjian, Canada’s Open Banking Lead, closed the event by discussing what’s next for open banking now that the work of the working groups is coming to a close.

Kabbage was listed as a winner for this year’s IBSIntelligence NeoChallenger Bank Awards 2022. This recognition showcases its commitment to backing small businesses through innovative and impactful banking technology.

Morningstar ByAllAccounts published a whitepaper entitled “Open Banking for Wealth Management in the United States,” which advocates for open baking within the investment and wealth management sphere. The whitepaper explains how today’s open banking direct data connections provide reliable and secure access to the critical data necessary to provide personalized advice and maximize positive client outcomes.

MX’s Bose Chan, Head of Strategic Partnerships, joined the LiminalStrategy State of Identity podcast with Cameron D’Ambrosi to discuss what open banking means for banks, how it differs from end users or non-banking entities, and what to consider when building open banking capabilities.

Plaid’s Ginger Baker wrote a post for their blog entitled, “Access to financial data helps consumers navigate a difficult economy.” The post detailed how the growth of fintech adoption will increase the role that financial service providers have in helping their consumers tap into the benefits of data connectivity. The post included a link to Plaid’s recently published report, “The Fintech Effect: Stability, Impact, and Building for the Future,” which offers the latest data on consumer trends and insights on the future of digital finance.

Petal was named to CB Insight’s Fintech 250 list of most promising fintech companies around the world and Tracxn’s Emerging Startups 2022: Top Payment Startups.

Trustly welcomed back its founder Alex Gonthier, who will now operate as CEO of its Americas division. They were also featured in FinExtra’s first-ever North American 2023 Digital Banking Report where Nate Marquiss, Trustly’s Head of Finance, gave his expert take on what the future holds for Open Banking. They also published this blog post which highlights some key takeaways from this year’s G2E Summit, where they explored the future of all things Open Banking in the Gaming industry.

Vaultree has been shortlisted as one of the Top 50 global startups for the 4 Years From Now (#4YFN23) Awards 2023.

Vopay CEO Hamed Arbabi wrote an article for Fintech.Ca entitled, “Financial Inclusion Is Our Next Economy,” which detailed the reasons why many Americans remain unbanked, the risk of a cashless society, and how consumers could be better served by digital financial services.

Events and Submission Deadlines

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FDATA North America Applauds CFPB’s Release of Small Business Panel Proposals for Section 1033 Rulemaking

October 27, 2022 Washington, DC- Following today’s Consumer Financial Protection Bureau publication of proposals for the upcoming Small Business Regulatory Enforcement Fairness Act (SBREFA) panel for the Dodd-Frank Section 1033 rulemaking, FDATA North America Executive Director Steve Boms released the following statement:

“FDATA applauds the CFPB for this timely release of its SBREFA outline. This outline marks the first concrete step towards the implementation of an open finance system in the United States and affirms that consumers should have complete control over their financial data. If implemented, the framework envisioned within the outline will strongly align with the goals that FDATA North America has long supported: a national, technology-neutral financial data portability standard that will allow consumers to select in a more competitive ecosystem from the financial services providers that can best improve their financial wellbeing. We applaud the CFPB staff and Director Chopra for their diligent work and look forward to working with the CFPB to promote an expansive, customer-centric proposed rule to implement Section 1033 of the Dodd-Frank Act.”

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FDATA North America October 2022 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: Flinks

This month’s FDATA Member Spotlight features Dominique Samson, VP of Corporate Affairs at Flinks, who explains how improved data connectivity can reduce friction in the financial services ecosystem and benefit consumers with limited credit history:

FDATA NA News

FDATA submits comments to Canada’s Standing Committee on Finance (FINA) as part of its 2023 pre-budget consultations. In our submission to FINA, we called on the Canadian government to include language in Budget 2023 asserting the importance of governance in an open banking framework. We also argued that:

  • Any open banking governance entity must be neutral, transparent, and nimble;
  • Lawmakers allocate sufficient and sustained funding in Budget 2023 toward the implementation of an open banking framework and governance entity;
  • Lawmakers include language in Budget 2023 outlining its approach to Open Finance, the next logical step after Open Banking; and
  • The framework must truly unlock market innovation and competition to benefit Canadian consumers and businesses by including an amendment to the Canadian Payments Act to grant federally regulated payment service providers access to Payment Canada’s forthcoming real-time retail payment system and make them eligible for membership in Payments Canada.

We also asserted that any open banking governance entity in Canada must be:

  • Neutral and not controlled by any particular stakeholder(s) with commercial interests in the ecosystem;
  • Transparent in that it invites and considers stakeholder input and subjects its decisions to an open, publicly visible process); and
  • Nimble and capable of making binding decisions relatively quickly and without undue bureaucracy, and has all stakeholders in the open banking system agreeing to comply with the decisions and determinations made by the open banking governance entity as a condition of being active in the market.

FDATA Highlights Importance of API Standards and Monitoring. As both Canada and the United States continue to move toward open banking via APIs, it is essential that minimum API standards be set in open banking frameworks to ensure that consumers and SMEs have uninterrupted access to their financial data. To this end, FDATA has developed four principles that will be critical to the design of a well-implemented API environment in North America. These principles cover data scope, reliability standards, fallback options, and the necessity of establishing a neutral monitoring agency.

 

Member News & Activity

APImetrics CEO David O’Neill joined a live webcast to discuss five lessons they’ve learned monitoring Open Banking stacks over the last three years. O’Neill also discussed what the experience has taught the company about DevOps in regulated sectors where it’s possible for two teams of operations engineers to face off in front of a regulator and be able to prove that they are both in the wrong.

Basis Theory was tagged as one of Business Insider’s “Most Promising Fintech Companies.”

Fiserv posted a new episode of its podcast, “Blurring the Line Between Fintechs and Financial Institutions,” which featured David McIninch discussing how the evolution is changing how people move and manage money while providing growing opportunities for financial institutions.

Flinks product marketer Alex Coleman published a new blog post, “Open Banking, Open APIs, OAuth: What Does It All Mean?,” which covered existing data aggregation methods, the transition to open banking, how APIs and Open APIs work, an intro into OAuth, and the security and legal implications of open banking.

MX’s Nicky Klein, VP of Open Finance, spoke at MX’s Money Experience Summit saying “not embracing open banking is hurting your business. If you don’t enable your customers to connect with the apps they want, they’re going to bank elsewhere.” MX also announced record-setting gains in financial data connectivity and the general availability of new product innovation and new implementation partners that bolster the MX platform.

Plaid published a new blog post Q&A with Colby Ross from Project Finance, a digital banking solution for banks and credit unions. Ross shared with Plaid how his company is using their Core Exchange integration to remove credential sharing, help customers achieve financial wellness, and build a customized world-class digital banking experience.

Validify has partnered with Insight, a financial services software provider, to be their selected banking and payment data provider to offer new, exclusive services to their customers. The two companies have collaborated to create custom, proprietary solutions, including TruBank and TruDDA. These powerful data services will be available only on Insight’s DecisionCloud Platform for the exclusive benefit of their customers.

Vaultree has shared the first episode of Vaultree Cast, a podcast “from data privacy enthusiasts to data privacy enthusiasts.” In this first episode, Thiago Alves, Head of Security Research at Mosyle, shares valuable cybersecurity career advice.

Vopay CEO Hamed Arbabi sat down with FinTec Buzz to chat about his career, payments modernization, entrepreneurship, how the pandemic has highlighted a strong need for innovation, and how businesses need to update legacy software and innovate their processes.

Events and Submission Deadlines

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Video Member Spotlight: Flinks

 
This month’s FDATA Member Spotlight features Dominique Samson, VP of Corporate Affairs at Flinks, who explains how improved data connectivity can reduce friction in the financial services ecosystem and benefit consumers with limited credit history:

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FDATA North America Highlights Importance of API Standards and Monitoring

September 29, 2022, Washington, DC -As both Canada and the United States continue to move towards open banking via APIs, it is essential that minimum API standards be set to ensure that consumers and SMEs have uninterrupted access to their financial data.

To this end, FDATA has developed four principles that will be critical to the design of a well-implemented API environment in North America. These principles cover data scope, reliability standards, fallback options, and the necessity of establishing a neutral monitoring agency. These principles can be found here, and below:

  • Any non-proprietary data available to an end user through a data provider’s online customer portal or paper statement must also be required to be made available in any API a data provider implements in an open banking environment. At present, data providers unilaterally determine which data elements their customers can and cannot share with third parties. In a true open banking environment, the customer – not their financial services provider – is empowered to make this decision. Within the PSD2 framework in Europe, this has led to services being withdrawn as API functionality did not keep pace with pre-existing technologies.
  • Any APIs built by data providers to facilitate data sharing in an open banking environment must, at a minimum, be as reliable as that data provider’s customer-facing online portal. Regulatory agencies in both Canada and the United States have understandably set prescriptive requirements regarding the uptime of online customer-facing portals at financial institutions to ensure that consumers and SMEs have continual access to their data. This same standard must apply in any open banking environment.
  • To the extent data requested by a customer is not available through an API connection, a fallback option must be permitted to be used to access the requested data. The legal customer data right upon which an open banking environment is built cannot be ignored if a data element requested by a customer is not available through a data provider’s API or if that API is down or unresponsive. Screen scraping must be maintained as a fallback option that may be used to access any data not included in or available from a data provider’s API.
  • A neutral entity must be responsible for regularly monitoring the robustness, reliability, and usability of data providers’ APIs in an open banking environment. A neutral entity should be tasked with the responsibility for regularly measuring and reporting, among other metrics: the uptime of all open banking providers’ APIs; whether all of the data available to the end user on the data provider’s online customer portal and/or paper statement is available through the API; the responsiveness of the API; whether the API is constructed in such a manner that it introduces unnecessary friction in the customer’s data connectivity journey. These measurements should be the basis upon which a fallback option is permitted. Ideally, these metrics would be made publicly available to facilitate the ability of end users to identify the effectiveness of their financial provider’s data sharing capabilities. Such an entity should come from outside of the sector itself in order to not be perceived as having their own fiduciary interest in the metrics delivered.

Issues related to API robustness, reliability, and user experience have stunted the growth of open banking use cases in multiple markets across the globe that have moved more quickly than North America toward implementing legally binding customer financial data rights. It has been evident from experiences in Europe, the United Kingdom and Australia that well-defined standards without equally well-defined systems to measure them in a way that all parties can agree to leads to increased friction and a technical overhead placed on the regulator which they may not be well-positioned to adjudicate. Ensuring at the outset minimum API requirements for any open banking data providers, as well as a neutral monitoring entity to measure the quality and reliability of those APIs, will prevent Canada and the United States from experiencing similar issues as we begin our own North American open banking journey.


 

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FDATA North America Submits Comments to Canada’s Standing Committee on Finance Pre-2023 Budget Consultations

September 26, 2022, Washington, DC – Today, the Financial Data and Technology Association (FDATA) of North America submitted comments to Canada’s Standing Committee on Finance (FINA) as part of its pre-budget consultations in advance of the 2023 budget.

In its comments, FDATA North America called on the government to:

  • Include language in Budget 2023 asserting the importance of governance in an open banking framework, and that any open banking governance entity must be neutral, transparent, and nimble;
  • Allocate sufficient and sustained funding in Budget 2023 towards the implementation of an open banking framework and governance entity; and
  • Include language in Budget 2023 outlining its approach to Open Finance, the next logical step after Open Banking, and the framework needed to truly unlock market innovation and competition to benefit Canadian consumers and businesses. This includes an amendment to the Canadian Payments Act to grant federally regulated payment service providers access to Payment Canada’s forthcoming real-time retail payment system and make them eligible for membership in Payments Canada.

In the submission, FDATA NA also asserted that any open banking governance entity in Canada must be neutral (i.e. not controlled by any particular stakeholder(s) with commercial interests in the ecosystem), transparent (i.e. it invites and considers stakeholder input and subjects its decisions to an open, publicly visible process), and nimble (i.e. capable of making binding decisions relatively quickly and without undue bureaucracy), with all stakeholders in the open banking system agreeing to comply with the decisions and determinations made by the open banking governance entity as a condition of being active in the market.

A full copy of the submission is available below:

Image result for paperclip iconFDATA North America 2023 Pre-Budget Consultations


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Video Member Spotlight: Betterment


In this Member Spotlight, Betterment’s Associate General Counsel Josh Rubin explains how access to consumer-permissioned financial data is critical to Betterment’s ability to offer high quality, low-cost advice to everyday investors:

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