News

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FDATA North America Submits Comments to Canada’s Department of Finance Pre-Budget Consultations 2024

Contact: Laine Williams, (202) 897-4757, [email protected] 

February 9, 2024 Washington, DC – The Financial Data and Technology Association of North America (FDATA) submitted comments to Canada’s Department of Finance as part of its pre-budget consultations in advance of Budget 2024. Our submission emphasized the necessity for Canada to build upon the inclusion of consumer-driven banking (CDB) in the 2023 Fall Economic Statement, moving towards a fully realized Canadian open finance framework. The letter underscored the significance of CDB as a foundational step towards financial empowerment for consumers and small and medium-sized enterprises (SMEs), fostering a more innovative and competitive financial services marketplace in Canada.

Our letter urged the Canadian government to:

  • Legislate a CDB Framework: Introduce specific language in Budget 2024 to legislate the CDB framework, empowering consumers and small- and medium-sized enterprises (SMEs) with secure access to their financial data, thus ensuring Canada remains competitive in the global financial ecosystem.
  • Establish a Robust Governance Entity: Allocate funding for the creation of a new, neutral, and transparent governance entity to oversee the CDB framework. This body should be capable of making quick, binding decisions and be accountable for its actions, ensuring the framework’s success and longevity, and should be tasked with framework management, API auditing, accreditor oversight, technical standards oversight, liability apportionment, and dispute resolution.
  • Outline a Vision for Open Finance: Beyond CDB, Budget 2024 should detail the government’s approach to open finance, the next evolution in financial services, which promises to unlock unprecedented market innovation and competition for the benefit of Canadian consumers and SMEs.

In the submission, we also asserted that any CDB 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), nimble (i.e. capable of making binding decisions relatively quickly and without undue bureaucracy), and accountable (i.e. explain its decisions and actions and be subject to judicial oversight and administrative law processes) with all stakeholders in the 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 here.

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FDATA North America February Newsletter

FDATA North America Monthly Newsletter for February 2024

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.

Member News & Activity

API Metrics published a blog post sharing the top three API trends for 2024, focus on API Discovery, API Validation, and API Conformance. These trends emphasize the importance of discovering and monitoring all APIs for security and efficiency, ensuring APIs meet specific requirements and performance standards, and verifying that APIs conform to their intended use and governance rules.

Basis Theory published a blog post discussing chargebacks, explaining them as bank-initiated reversals of charges in response to consumer complaints, such as fraud or disputes over refunds. The post emphasizes the importance of clear communication, effective customer service, and robust fraud protection measures in payment systems to minimize chargebacks.

Betterment posted a press release announcing the launch of “Betterment at Work,” allowing small business employers to match their employees’ student loan payments with 401(k) contributions. This industry-first solution, aligned with the Secure Act 2.0 legislation, aims to aid workers burdened by student debt in enhancing their retirement readiness by enabling them to save for retirement while paying off their loans.

Codat posted a blog detailing its Bank Feeds API, which now supports platforms like NetSuite, QuickBooks, Sage, Xero, and FreeAgent, simplifying the integration process for corporate card and cross-border payment providers.

Envestnet Yodlee’s Head of Governance, Risk & Compliance Lisa Novier, remarked on the remarkable acceleration of open banking at the Money2020 conference, highlighting an increase of over 140% in their open banking volume from 2022 to 2023. During the event, she also delved into their strategy for educating data providers and discussed the advantages of expanding the Consumer Financial Protection Bureau ruling for both financial institutions and consumers.

EQ Bank published a press release highlighting its “Second Chance” campaign, which challenges Canadians to expect more from their checking accounts, particularly in light of a new survey revealing low awareness about interest earnings and dissatisfaction with financial incentives from banks.

Experian posted a press release announcing its new integration with Dark Matter Technologies, enabling the majority of U.S. mortgage lenders to instantly access verified income and employment information through Experian Verify, integrated with Dark Matter’s Empower loan origination system and Exchange service network.

Financsystech was mentioned in an article on Prensa, discussing the trends of 2022 in Open Finance and Open Insurance, where CEO and Co-founder Danillo Branco, a pioneer in building an Open Source Open Finance as a Service Platform, contributed to the debate on digital transformation and service provision in these sectors.

Flinks published a blog exploring the benefits of Open Banking for commercial banking, highlighting how this innovation is transforming the Canadian financial landscape by offering more efficient, secure, and accessible services to businesses and reshaping operations in an increasingly digital world.

GoCardless was mentioned in “The State of Open Banking: Six Years After PSD2” article in the Fintech Times, where Tom Burton, the Director of External Affairs and Public Policy, discussed the evolution and challenges of open banking payments technology. He emphasized that for open banking to become a primary alternative to card payments, it needs to achieve ubiquity through comprehensive bank coverage, excellent user experience, and integration into digital wallets.

MX published a blog proclaiming 2024 as the year of financial data intelligence, predicting significant growth and success for financial institutions and fintechs that effectively harness and leverage vast amounts of transaction and customer data.

Portabl published a blog titled “Portabl x Mastercard: Start Path Open Banking 2024,” announcing their participation in the Mastercard Start Path Open Banking Program as the first reusable identity platform. This collaboration aims to leverage Portabl’s reusable KYC and verifiable credentials to enhance financial access and consumer choice, by integrating identity with payments within Mastercard’s global network.

Trustly held a webinar titled “Embedded Finance vs Open Banking: What’s the better build for your customers?”, where they explored the significant market potentials of open banking and embedded finance, projected to reach $164.8 billion and $6.5 trillion respectively in the coming years.

Events and Submission Deadlines

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FDATA North America January Newsletter

FDATA North America Monthly Newsletter for January 2024

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.

FDATA North America News

FDATA NA Comment Letter Submitted on CFPB’s Section 1033 NPRM. On December 27, 2023, FDATA NA filed a comment letter in response to the Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Rulemaking (NPRM) on personal financial data rights, which will implement Section 1033 of the Dodd-Frank Act. FDATA views this rulemaking as a crucial step forward for U.S. competitiveness in a global economy in which many other countries have already developed and implemented open finance regimes. In its comment letter, FDATA underscored areas for potential improvements in the final rule that will more effectively align the rule with the vision the CFPB presented when announcing its pursuit of this rulemaking. FDATA released a statement on its submission of the comment letter, which can be found here.

Member News & Activity

API Metrics published a blog post providing comments to the CFPB’s Personal Financial Data Rights rulemaking, emphasizing the need for real-time compliance monitoring, scalability testing, standardization and compliance verification, and improved performance and uptime metrics in open banking. They stated that these measures are crucial for enhancing the security, efficiency, and consumer experience in the financial data services ecosystem.

Basis Theory published a blog post discussing the concept and importance of frictionless payments in both physical and digital retail environments. It highlighted the benefits and challenges of implementing such systems, emphasizing their growing relevance in the evolving e-commerce landscape and the increasing use of mobile technologies.

Envestnet Yodlee hosted a webinar entitled “The Opportunities and Challenges of Open Banking in Wealth Management.” During the webinar, they provided insights into how firms can leverage the right infrastructure to gain a competitive edge through enhanced data utilization, improved customer experiences, and increased loyalty, while also addressing U.S. open banking regulations and exploring innovative use cases.

Experian issued a press release announcing they integrated NeuroID’s behavioral analytics into its fraud prevention solutions, including CrossCore® and Precise ID®, to enhance protection against fraud rings and AI-enabled bots.

Fiserv published a press release discussing the rise of embedded finance and its integration into various business sectors, emphasizing how it enhances customer experiences and financial services.

Flinks posted a blog highlighting the transformative impact of transactional data on lending operations, detailing how it enhances understanding of borrowing behaviors and informs credit decision-making.

GoCardless was featured in an Open Banking Expo Unplugged podcast to discuss the key themes and trends set to define Open Banking payments in 2024. During the podcast, Siamac Rezaiezadeh, Vice President of product marketing and insights at GoCardless, took stock of the progress made in 2023, as Open Banking payments took off.

Intuit published a press release announcing their global QuickBooks brand campaign, “Business Differently,” which highlighted the innovative ways small businesses and solopreneurs work towards success.

Morningstar announced it unveiled Direct Web Services, a suite of APIs designed to enhance digital platforms with sophisticated investment data, research, and calculations.

Ozone API published a blog entitled “5 Observations from Supporting the Major Global Open Banking Standards,” which explored the fragmented yet interoperable landscape of global open banking standards and highlighted their mission to assist banks and financial institutions in leveraging these standards for regulatory compliance and revenue generation.

Plaid was featured in a PR Newswire article announcing a significant data-access agreement between it and TD Bank Group, facilitating secure and convenient financial data sharing for TD customers across North America.

Questrade was featured in a Yahoo Finance article announcing that it has been ranked #1 for providing the best mobile experience among Canadian self-directed online brokerages, as per Surviscor’s 2023 Mobile Brokerage Experience Review.

Trustly published a press release highlighting the transformative impact of Open Banking APIs in improving business processes for financial institutions. The release emphasized how these APIs facilitate secure and automated data exchange, driving efficiency, and innovation in the banking sector, and details Trustly’s role in enhancing customer experiences and operational capabilities.

Xero announced it partnered with Flinks to connect more Canadian and U.S. small businesses to their banking data, offering secure access to over 20 direct bank connections and enhancing the accuracy of banking transactions for Xero’s customers.

Events and Submission Deadlines

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FDATA North America: Comment Letter Submitted on CFPB’s Section 1033 NPRM

Contact: Laine Williams, (202) 897-4757, [email protected] 

December 27, 2023 Washington, DC – The Financial Data and Technology Association of North America (FDATA), a trade association representing more than 30 financial technology companies and consumer-permissioned data access platforms in Canada and the United States, today filed a comment letter in response to the Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Rulemaking (NPRM) on personal financial data rights, which will implement Section 1033 of the Dodd-Frank Act.

Steve Boms, Executive Director of FDATA, released the following statement:

“We are pleased to comment on the CFPB’s proposed personal financial data rights rulemaking, which once implemented, will create a legally binding consumer financial data right in the United States. Under this open finance regime, consumers will have the right to access and securely share their financial data electronically with third-party providers of financial tools, products, and services, heralding an era of improved competition and greater consumer control in the U.S. financial services marketplace. Beyond the obvious benefits to consumers, FDATA views this rulemaking as a crucial step forward for U.S. competitiveness in a global economy in which many other countries have already developed and implemented open finance regimes.

Our comments to the CFPB underscore areas for potential improvements in the final rule. We believe these changes will more effectively align the rule with the vision the CFPB presented when announcing its pursuit of this rulemaking, as well as with the open finance regimes implemented by other jurisdictions globally. FDATA looks forward to continued engagement with the CFPB as it works to finalize this pivotal rule in 2024.”

A FDATA member company released the following statement alongside the submission of FDATA’s comment letter.

Brian Costello, Head of Data Aggregation Strategy and Governance at Morningstar Wealth, a member of FDATA, stated:

“Morningstar Wealth actively champions the interests of both investors and the professionals who serve them as the U.S. Open Banking landscape transitions from a commercially managed ecosystem to a regulated financial data right for consumers. The CFPB’s Notice of Proposed Rule Making underscores the Bureau’s strong commitment to addressing this pivotal issue, which holds significant implications for millions of Americans. FDATA’s response letter draws upon the collective expertise of its diverse membership of responsible innovators to provide practical guidance and recommendations essential for the seamless adoption and execution of the final rule. As long-standing members of FDATA, we are pleased to contribute our perspective and experience to this response.”

Click here to read FDATA’s full comment letter.

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FDATA North America December Newsletter

FDATA North America Newsletter December 2023

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.

FDATA North America News

FDATA NA Statement On Canada’s FES Implementing Consumer-Driven Finance. On November 21, 2023, the Canadian Government released its 2023 Fall Economic Statement, which included a comprehensive framework for consumer-driven finance and open finance directives. The Canadian Government’s implementation plan includes a data portability right for financial institutions and fintechs, a third-party accreditation regime with audits and a public registry, an overseeing government-led entity, a single technical standard deemed fit for purpose, and a liability framework for consumer harm in cases of data misuse or fraudulent account access. FDATA released a statement on the inclusion of consumer-driven finance in the FES, which can be found here.

Member News & Activity

API Metrics announced it launched a free service level agreement (“SLA”) monitoring feature for popular API suppliers like Amazon Web Services, Azure, and Google Cloud, aimed at helping application owners track API performance and automatically request service credits for issues. This new capability allows easy integration and monitoring without coding, providing insights into API quality for both technical and business users.

Basis Theory published a blog post emphasizing the importance of continuously enhancing payment performance for businesses, highlighting strategies such as diversifying Payment Service Providers, employing tokenization for data management, and optimizing transactions through automated processing and specific payment method routing.

Envestnet Yodlee published a blog post detailing the expansion of Australia’s Consumer Data Right (“CDR”) into open finance, emphasizing the inclusion of non-bank lending in the statutory data sharing regime from November 2024. This development highlights significant steps for non-bank lenders to become compliant data holders under new CDR rules.

Experian announced it expanded its digital verification service, Work Report™, by partnering with Datagraphic, enabling employees using Epay to consent to digital payroll information sharing for identity verification. This integration now covers 82% of UK employees, significantly streamlining financial processes like mortgage and car finance applications.

Fiserv published its consumer survey, “Expectations & Experiences: AI and Payments Innovation,” highlighting the increasing role of conversational and generative AI in personal finance management, with consumers using these technologies for various financial insights. The survey revealed the growing opportunities and challenges for AI in banking, emphasizing the need for financial service providers to adapt to evolving consumer preferences.

Flinks announced that the Large Credit Union Coalition (“LCUC”) in Canada has chosen Caspian One as their preferred partner to create a customized Open Banking platform, tailored to the Canadian credit union system.

Intuit announced new e-commerce innovations for QuickBooks Online, designed to aid small businesses in managing their inventory across multiple sales channels from a single platform.

Method posted a blog on how their partnership with Budge enabled the launch of a financial management solution for millennials struggling with personal debt and savings. Budge’s platform, supported by Method’s technology, offers tailored financial advice and seamless integration of users’ debt accounts.

MX was featured in a B FinTec Buzz article announcing their new open finance product innovations, including advanced data-driven insights, budgeting tools, and a mobile banking SDK to enhance financial health and enable customized mobile banking app development.

Plaid was featured in a Alkami Technology press release announcing their partnership to provide financial institutions direct API access to Plaid via the Financial Data Exchange Aligned (“FDX”) API Core Exchange.

Questrade published a press release welcoming the Canadian Government’s Fall Economic Statement, which outlines steps towards establishing Canada’s open finance framework in Budget 2024.

Trustly published a blog outlining five key use cases of Open Banking for merchants. These use cases include providing instant payouts for quick consumer refunds, verifying account information efficiently, enhancing “Know Your Customer” (“KYC”) processes through bank-grade data, preventing payment fraud with secure ACH transactions, and modernizing subscription payments with stable bank account alternatives.

Xero was featured in a Open Banking Expo article for unveiling two new payment features aimed at aiding UK small businesses with cash flow management. These features, including a bill payments tool powered by Open Banking, enable businesses to efficiently handle bills directly within Xero, marking Xero as the first major small business cloud accounting software in the UK to offer such Open Banking-enabled functionalities.

Events and Submission Deadlines

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FDATA North America Statement on Deputy Prime Minister Freeland’s FES Implementing Consumer-Driven Finance Directives

Contact: Laine Williams, (202) 897-4757, [email protected] 

November 21, 2023 Washington, DC – The Financial Data and Technology Association of North America (FDATA), a trade association representing more than 30 financial technology companies and consumer-permissioned data access platforms in Canada and the United States, today applauded the inclusion of consumer-driven finance in the 2023 Fall Economic Statement (FES).  

Steve Boms, Executive Director of FDATA, released the following statement:  

“We are greatly encouraged by Deputy Prime Minister and Finance Minister Freeland’s commitment to advance consumer-driven finance in Canada. The inclusion of consumer-driven finance in the FES marks a significant step for the financial empowerment of consumers and for small and medium-sized enterprises, for fostering a more innovative Canadian financial services marketplace, and for promoting a fairer and more inclusive financial services ecosystem. It reflects a global trend towards consumer-centric financial services, and brings Canada in line with the regimes established by nearly every other G-7 nation.  

We applaud the comprehensive consumer-driven finance framework announced in the FES and look forward to working closely with the Government of Canada as it delivers consumer-driven finance through next year’s budget to benefit all Canadian consumers and businesses.” 

Additionally, we have received supportive comments from our member groups, highlighting the significance of these developments. Tanya Woods, Head of Government and Regulatory Affairs & Policy Counsel at Questrade Financial Group, a member of FDATA, stated

“We welcome today’s announcements on open banking which will give Canadians more power over their financial wellbeing. These are positive developments towards a fulsome and competitive open finance framework which we will continue to advocate for.” 

Faye Pang, Canada Country Manager, Xero, provided the following statement: 

“We are incredibly energized by the language in the FES that supports the progress of open banking and applaud Deputy Prime Minister and Finance Minister Freeland for their support. A fair, fast, and efficient open banking system can not only open up new avenues of capital, but help small business owners focus on what’s important: running their business. Today’s commitments noted in the FES take us one step closer to achieving this vision.” 

 

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FDATA North America November Newsletter

FDATA North America Newsletter November 2023

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.

FDATA North America News

FDATA NA Statement On The CFPB Proposed Rule Implementing Section 1033. On October 19, 2023, the Consumer Financial Protection Bureau (“CFPB”) released its long-awaited proposed rule implementing Section 1033 of the Dodd-Frank Act. As anticipated, the Notice of Proposed Rulemaking (“NPRM”) calls for a legal right for consumers to access and share to their data, requires that data providers build dedicated “developer portals” to make data available to consumer-permissioned third parties, promotes competition and innovation, and includes data privacy and security requirements for third parties. FDATA released a statement on the NPRM, which can be found here.

Submission by FDATA NA To the House of Commons Standing Committee on Industry and Technology (INDU) Regarding the Study of Bill C-27. On October 31, 2023 – FDATA NA submitted a written brief to the Canadian House of Commons Standing Committee on Industry and Technology ahead of testifying before the panel, advocating for consumer-permissioned access to financial data in Canada. FDATA NA noted it supports the implementation of an open finance regime in Canada, emphasizing the right of consumers and SMEs to securely share their financial data across providers. FDATA NA praised recent U.S. advancements in open finance regulation and urged Canada to follow suit, highlighting the importance of Bill C-27 for data portability and privacy. Click here to read the brief and click here to watch the hearing.

Member News & Activity

API Metrics released a blog post entitled “Navigating The CFPB’s Latest Rulemaking On Personal Financial Data Rights: Lessons From Open Banking And Beyond,” focusing on the Consumer Financial Protection Bureau’s (CFPB) new draft rules on Personal Financial Data Rights.

Basis Theory published a blog post highlighting its pivotal role in empowering businesses across various industries to offer branded debit and credit cards to their customers. The blog noted that the platform does more than just issue cards; it assumes responsibility for numerous security elements, including KYC, and extends additional services like funding, transaction monitoring, and reporting.

Envestnet Yodlee introduced Credit Accelerator, a new technology solution that uses alternative data to enhance credit access, particularly for those with limited or no traditional credit history. The press release noted that this innovation aligns with the CFPB’s proposed open banking rule, enabling more inclusive credit decisions.

Experian announced a partnership with what3words, integrating their unique location system into Experian’s address validation solution. This enhancement allows businesses to provide more accurate delivery locations, particularly beneficial in hard-to-find areas.

Fiserv announced that it enhanced its financial technology offerings by streamlining access to its core banking APIs, enabling immediate, self-service access for developers. This development, part of the Banking Hub within Fiserv’s Developer Studio, aims to accelerate innovation in the financial industry.

Intuit announced that it expanded its financial offerings with QuickBooks Bill Pay, designed to enhance bill payment and accounts payable automation for businesses. This new feature within QuickBooks streamlines bill management, offering automated bill creation from vendor invoices, digital record-keeping, and various payment options.

Method published blog announcing its strategic partnership with Plannery, focusing on alleviating the financial burdens of healthcare professionals. This collaboration introduces a bespoke financial wellness platform, specifically designed to address the unique debt challenges faced by healthcare workers.

MX announced that the Financial Technology Report named MX as one of The Top 100 Financial Technology Companies of 2023.

Plaid was featured in a PYMNTS article highlighting “consumer-centric” innovation in empowering money movement.

Questrade announced that MoneySense recognized Questrade as the Best Low-Fee Robo Advisor is Canada. Robo-advisors, like Questrade’s Questwealth Portfolios, use financial technology to make investment management more affordable and accessible.

Trustly published a blog summarizing how open banking transforms the consumer onboarding process by simplifying account verification. Trustly’s solution, Trustly Connect, leverages this technology to offer real-time, secure account information retrieval, streamlining the onboarding process, reducing fraud, and enhancing customer experience.

Xero announced its newest artificial intelligence (AI) feature that it said would enhance user experience by providing quick and efficient responses to queries asked in Xero Central. In addition to direct answers, the AI also supplies a list of other relevant content, significantly speeding up the process of accessing needed information.

Events and Submission Deadlines

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Submission by FDATA North America To the House of Commons Standing Committee on Industry and Technology (INDU) Regarding the Study of Bill C-27

October 31, 2023 – The Financial Data and Technology Association of North America (“FDATA North America”) is the leading trade association advocating for consumer-permissioned access to financial data in both Canada and the United States. Our members include firms with a variety of different business models that collectively provide more than six million Canadian consumers and small- and medium-enterprises (“SMEs”) with access to vital financial services and products. Utilizing the products, services, and tools, that FDATA North America’s members provide, Canadian consumers can, for example, access more competitive banking services, including more affordable credit, utilize more efficient payment options, and benefit from technology to better manage their finances and grow their wealth. Canadian small businesses across the country depend on FDATA North America member companies to manage their accounting and credit needs and more easily send and receive payments.

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.

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FDATA North America Statement On The CFPB Proposed Rule Implementing Section 1033

October 19, 2023, Washington, DC – The Financial Data and Technology Association of North America (FDATA), a trade association representing three dozen financial technology and open finance companies, today celebrated the release of the Consumer Financial Protection Bureau’s proposed rule implementing Section 1033 of the Dodd-Frank Act.

Steve Boms, Executive Director of FDATA, released the following statement:

“Today, we’re celebrating a moment that our members – and millions of consumers across the country – have been waiting for: the CFPB’s release of its proposed rule creating a legally binding consumer financial data right. We strongly support the proposed rule, which will put consumers in full control of their financial data and empower them to choose the financial provider best suited to meet their unique needs. The proposed rule will create more competition and choice in the financial services marketplace, ultimately leading to better consumer outcomes.

We are also pleased that the proposed rule creates strong data security and privacy standards to ensure that consumers are protected wherever they choose to manage their finances.

The long-awaited rulemaking commenced with the issuance of the CFPB’s Request for Information regarding Section 1033 of the Dodd-Frank Act in 2016. While the need for this rule was clear then, with hundreds of millions of consumers now relying on digital financial tools, it is imperative today. We look forward to working with the CFPB as it seeks to finalize this rule next year and bring U.S. consumer financial data rights on par with many other nations across the globe.”

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Coalition of leading industry stakeholders voice continued support for vital Canadian Payments Act amendments

OTTAWA, October 11, 2023 — The Fall Economic Statement presents an opportunity to modernize the Canadian Payments Act to strengthen financial competition, innovation, consumer protection and economic stability.

Leaders across Canada’s payment industry continue to demonstrate unified support for amendments to the Canadian Payments Act to expand Payments Canada’s membership. This support was previously expressed through various pre-budget consultation submissions, a joint letter to the Minister of Finance and a 2018 Department of Finance consultation.

Expanded membership eligibility is essential to broaden safe access and participation on Payments Canada’s infrastructure. By broadening access to include payment service providers, credit union locals, and operators of financial market infrastructures that meet regulatory and legislative requirements, the Government of Canada will foster competition and innovation and help ensure the future of digital payments happens within — and not outside — the regulatory system.

“Payments are changing at an unprecedented rate,” said Tracey Black, President and Chief Executive Officer of Payments Canada. “Canada must evolve its payment systems and supporting legislation in parallel to deliver continued financial stability, to support increased competition and innovation and to ensure Canada remains globally competitive.”

“Payments Canada, and the regulatory framework that underpins the organization, has a long, proven history of serving Canadians’ best interests by getting money to where it needs to be, safely,” said Garry Foster, Chair of the Board of Directors of Payments Canada. “But the world is changing. Payments are changing. And innovation is happening no matter what. If we want to continue to serve Canadians in a way that reflects the level of safety and security expected from Canada’s financial system, we need to modernize the Canadian Payments Act.”

Currently, Payments Canada membership is limited to banks, credit union centrals, and select other financial institution types, including securities dealers. Membership is required to access Payments Canada’s infrastructure as a participant. Proposed changes to the Canadian Payments Act would expand membership eligibility to include payment service providers registered with the Bank of Canada, provincially regulated credit unions, and operators of financial market infrastructures designated by the Bank of Canada. To gain access to the payment systems, a Payments Canada member must meet the risk-based access and participation requirements set out in Payments Canada’s by-laws, rules and standards.


Contributed quotes

“As new technology and services continue to transform the way payments are made and processed, amending and broadening access to the Canadian Payments Act can help modernize Canada’s payment landscape. Allowing for a more diverse group of financial service providers can ensure the path is open for innovation and encourage the development of new user-friendly, accessible and cost-efficient payment solutions for small businesses. It can also foster competition within the industry, which can drive costs down and improve financial services.”
Dan Kelly, President and Chief Executive Officer
Canadian Federation of Independent Business (CFIB)

“The most important benefits we can offer Canadian consumers are greater choice and competition within the context of a safe and well-regulated payment system. A measured approach to broadening access to Payments Canada membership, which includes effective rules and robust consumer protection, can help to create a more innovative and competitive marketplace that is good for everyone.”
Elizabeth Mulholland
Prosper Canada

“Canada has a strong record of payment innovation. At the same time, we know we must continue to update policy and regulatory frameworks to ensure they meet the needs of Canadians and support growth and competitiveness in the market. Interac supports updating the Canadian Payments Act to enable broadened participation in national payments infrastructure and will continue to work with industry stakeholders to advance opportunities for increased access on our network and products.”
Kirkland Morris, VP Enterprise Initiatives & External Affairs
Interac

“Making the financial sector work harder for its customers is a necessary part of solving Canada’s affordability crisis. Expanding access to payment systems would promote responsible competition in the financial sector, letting Canadian consumers and businesses keep more of their hard-earned money in their pockets.”
Alex Vronces, Executive Director
Fintechs Canada

“Expanding membership to Payments Canada will allow fintechs to serve on the front lines of bringing the benefits of faster payments to consumers, merchants and the economy.”
Scott Talbott, SVP, Government Affairs
Electronic Transactions Association (ETA)  

“The payment fintech industry in Canada has made commendable strides in introducing new and innovative concepts. However, there are still some elements hindering the overall progress of the sector. The lack of representation and access to these fintechs in Payments Canada’s membership is presenting certain obstacles in the discussions surrounding crucial policies and infrastructure. To overcome these hurdles, we firmly believe that expanding membership criteria is necessary. This will enable innovative fintechs to offer Canadians superior products and services, foster healthy competition, and promote innovation. Ultimately, this will help Canada remain competitive in the global fintech landscape. At Fintech Cadence, we wholeheartedly support the idea of extending membership eligibility to Payment Canada’s membership.”
Layial El-Hadi, Executive Director
Fintech Cadence

“Canada must act now to modernize payments. The amendments to the Canadian Payments Act are long overdue and necessary to enable non-bank access to the payment system. Allowing a broader group of financial service providers like Wise to become members of Payments Canada will lower payment costs while increasing speed, competition, innovation, and consumer adoption. Payment modernization will allow Canada to go from a global fintech laggard to a leader.”
Nick Catino, Global Head of Policy & Social Impact
Wise

“It is evident that the most significant innovations in payment services within Canada have been pioneered by organizations that, unfortunately, do not qualify for membership within Payments Canada. This exclusion has placed payment service providers (PSPs), such as Telpay, and their valued customers, in a highly disadvantageous position. The inability to participate in the Payments Canada network has stifled competition and hindered progress within our industry. This has resulted in a glaring disparity in access to essential payment infrastructure, directly impacting the ability of PSPs  to offer reliable and flexible solutions to their clients. We firmly believe that broadening access to these systems is not only a matter of fairness but also of economic necessity. It is our assertion that providing greater access will not only empower PSPs but also benefit end-users — both payors and payees. A more inclusive approach to payment systems will foster innovation, enhance competition, and drive the demand for more reliable and flexible payment solutions.”
John Zajic, Vice President, Corporate Policy & Compliance
Telpay

“Implementation of open banking and amendments to the Canadian Payments Act that allow a broader set of stakeholders to safely and securely gain access to Canada’s payment systems will facilitate a consumer-centric 21st century financial services marketplace. The Fall Economic Statement provides a unique opportunity to meaningfully advance both of these important initiatives and to promote innovation, competition, and a more inclusive Canadian financial services system.”
Steve Boms, Executive Director
Financial Data and Technology Association of North America

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