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Member Spotlight: DirectID

 

Most consumers are aware that their financial institution holds all kind of information about them that is used to determine everything from interest rates to credit-worthiness.

But how could this data be used by small enterprises, and consumers themselves, for consumers’ own benefit? That was the question DirectID CEO James Varga asked about a decade ago. “I wanted to give consumers the ability to do more online, by taking the trusted data that they had in their bank account and using it to access additional services,” said Varga.

Since 2011, DirectID’s mission has been to enable businesses across the globe to effortlessly use bank data to grow their business, revolutionize their offerings, and, most importantly, better understand customers in order to improve the consumer experience. Specifically, DirectID builds products using bank data, which helps firms onboard their customers quickly, gain a fuller understanding of them, and make more informed decisions, faster. This insight also lowers operational costs for small enterprises.

For example, DirectID customer JustUs, a cutting edge peer-to-peer lending platform that helps credit-challenged consumers find responsible and affordable capital, has used DirectID’s platform to move away from traditional background credit checks. After partnering with DirectID, JustUs can now connect to an applicant’s online bank account – with their approval – to verify identity and review live bank statement transactions in just a few seconds. That means a faster decision time for in-need applicants and a higher certainty of repayment for lenders.

Security is one of DirectID’s chief concerns. Its security model is bank level, layered and protected by tokenized oAuth authentication and strong encryption. All transaction data is encrypted and access to customers’ bank information is read only.

The global move toward open banking already has enhanced DirectID’s ability to serve small businesses and consumer. Today DirectID operates in more than 50 countries with more than 13,000 banking connections.

And how does Open Banking help the very consumers Varga was thinking about 10 years ago? In a recent company blog post, DirectID said, “Open Banking has significant advantages in security, speed and convenience over existing technologies, and can be adapted for any sector including local businesses.”

by rebecca rebecca No Comments

Member Spotlight: AIR

The Alliance for Innovative Regulation, or AIR, is a nonprofit organization dedicated to bringing financial regulation into the 21st century. What would consumers and small businesses have to gain from this move? According to AIR, improved financial inclusion, better consumer protection, lower rates of financial crime, and continuous innovation that helps them save and earn more and that drives economic expansion.

AIR generates thought leadership, connects and educates innovators and regulators, and runs a policy accelerator to test and demonstrate new regulatory technologies. It also works directly with regulators throughout the world to support government innovation efforts.

Sound financial regulation is particularly important during times of economic distress, like the coronavirus pandemic, when businesses and families are doing more with less and are rapidly shifting to digital channels. AIR CEO Jo Ann Barefoot says, “The pandemic has packed a decade’s worth of innovation and technology adoption into a few short months, in every field including finance and financial regulation. It opens an opportunity for very rapid progress toward regulatory strategies that can work better, cheaper and faster, all at once.”

During the COVID crisis, AIR hosted two Save Small Business Hackathons to accelerate the U.S. Small Business Administration’s Paycheck Protection Program (PPP) loan application process by helping banks calculate, track, and report on requirements for loan forgiveness for the PPP. More recently, AIR ran a techsprint examining how to curtail use of cryptocurrency to purchase child sexual abuse material (CSAM) online. The participating teams of engineers, financial companies, and child advocates will present proposed solutions to FinCEN in December.

CEO Barefoot has explained how improving financial regulation can spur an economic recovery after this crisis. “Regulation may not be sexy, but the rules we create to enforce laws carry a massive economic cost,” Barefoot said In an op-ed in The Hill in May 2020. Barefoot. “Estimates are that federal regulations alone cost $2 trillion annually. Not only is that comparable in cost to the recently passed stimulus bill, but it’s also equivalent to 10 percent of total U.S. GDP.”

AIR Cofounder David Ehrich notes, “Regulation is the aperture through which all financial innovation has to pass. We need to get it right.” As part of that effort, AIR issued a Regtech Manifesto in July, seeking public comment on why and how to modernize the regulatory system. The organization also hosts a podcast, Barefoot Innovation, which explores better solutions for financial consumers at the intersection of technology innovation and regulation with regtech and fintech CEOs, lawmakers, regulators, bankers, and academics.

“A critical trend in financial innovation is the global move toward open finance, grounded in assuring that consumers can use their financial data to advance their own goals and widen their choices, with confidence that it will be secure,” says Barefoot, who was inducted into the CB Insights Fintech Hall of Fame in November. “In the US, 2021 will be pivotal as the CFPB works through how to shape a data landscape that protects consumers and also enables innovation to flourish.”

by rebecca rebecca No Comments

FDATA North America Outlines the Negative Consequences of Mandating a 90-Day Reauthentication Requirement

November 17, 2020, Washington, DC – In response to ongoing discussions by large U.S. financial institutions and some policymakers to impose a mandatory 90-day reauthentication requirement for customers wishing to utilize third-party financial tools, the Financial Data and Technology Association (FDATA) of North America today released a paper that outlines the detrimental impact this requirement would have based on the real-world experience of consumers in the European Union and United Kingdom whose access to financial technology tools is hindered by a similar requirement.

FDATA North America provides insight into how a mandatory 90-day reauthentication requirement has had the following impacts in other markets:

  • Resulted in the percent of customers no longer able to access a financial technology tool spiking from 6.6 percent prior to the implementation of the mandate to 44 percent afterwards;
  • Forced a frustrating experience upon the customer that can result in them abandoning use of an otherwise valuable tool as their connection to the tool repeatedly breaks; and
  • Imposed onerous requirements for customers who have accounts with multiple institutions to reauthenticate with each different institution every 90 days to access tools of their choice.

Mandating reauthentication events at least once every 90 days harms customers by aggravating their experience and unnecessarily hindering marketplace competition. The goal of an open finance system is to provide customers with control over their own financial data such that they can choose the products and services that best suit their needs. FDATA North America asserts that full customer control of financial data is the single best way to ensure good stewardship of that data.

Image result for paperclip iconFDATA North America Paper on the Negative Consequences of Mandating a 90-Day Reauthentication Requirement

by rebecca rebecca No Comments

Member Spotlight: APImetrics

Headquartered in Seattle, FDATA North America member APImetrics offers the fintech industry’s only intelligent, analytics-driven API performance solution built specifically for the enterprise. By interfacing with all current and legacy API protocols, APImetrics helps companies to know if their APIs are performing as designed. Clients include Microsoft, Philips Signify, leading global banks, and mobile telephone carriers.

Still wondering what an API is? APImetrics has the answer (of course).

According to a company blog post, the term application programming interface (API) was first used in 1968, but meant something a bit different than it does today since in 1968 there was no World Wide Web. Regardless of its evolution, APIs make programming – any kind of programming, according to APImetrics – easier by abstracting out the details of what goes on at both sides of request/response pair. (A request/response pair could be a lot of things, but the easiest way to think about it might be a financial transaction – where there are two sides, both making decisions.)

In today’s world, APIs can tell us a lot about how individuals use everything from social media to e-commerce websites to online banking applications.

And, as APImetrics explained, APIs also can tell us a lot about the spread of viruses like COVID-19. The website covid19api.com, for example, provides an API that allows users easy access to a range of up-to-date data about the virus and how it is traveling.

Even if this information would have been available a century ago during the 1918 influenza outbreak, it would have taken years to assemble. As APImetrics said, “In the past, the required information might have been hidden away in paper documents stored in a filing cabinet somewhere. Whether the information was needed by an organization or someone from outside, getting hold of it was often a slow and unreliable process. Even when information eventually started to be stored electronically, finding it was still often a frustrating and time-consuming experience. But now with the advent of the API, organizations can provide a structured way for users to discover and consume easily, conveniently, and quickly the exact information they need.”

And how would Open Finance improve the data consumers, small businesses, and financial institutions can derive from APIs? CEO David O’Neill responds:

“There are two parts to that. The first is by making sure that the APIs themselves work as documented. There is nothing more frustrating or worse for an eco-system than not being able to get the APIs to actually work in the first place.

“The second is to ensure that they enable that eco-system with consistent, accurate, and fast data that can help create the next generation of financial services. The explosion in open banking isn’t just about making it easier to access services; it’s about creating new services that build on what we have. We have had taxis for over a century, but Uber and Lyft are new. With open banking, the ENTIRE financial service sector benefits when the next ‘Uber of finance’ appears.”

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FDATA North America Statement on the CFPB ANPR on Dodd-Frank 1033

FDATA North America Statement on the CFPB ANPR on Dodd-Frank 1033

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

October 22, Washington, DC – Steve Boms, Executive Director of the Financial Data and Technology Association (FDATA) of North America released the following statement regarding the Consumer Financial Protection Bureau’s advanced notice of proposed rulemaking (ANPR) on Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act:

“This day certainly is a welcome one for consumers and small businesses. Congress gave the CFPB the power a decade ago to ensure Americans have a uniform right to access and use their financial data however they see fit, and today the Bureau is a step closer to asserting that right. If adopted, a rule implementing Section 1033 of the Dodd-Frank Act would be a major building block toward a consumer-centric open finance ecosystem in the United States.

“In any open finance system, consumer protection and security are paramount, which is why every market globally with an open finance framework has a legally binding data right as its centerpiece. We encourage the CFPB to fully utilize its Section 1033 authority to create a consumer financial data right to allow consumers and small businesses to have unrestricted access to technology-based tools that can help them improve their financial wellbeing.”

ABOUT FDATA NORTH AMERICA

FDATA was heavily involved in the UK Open Banking Working Group in 2015. In 2016, the working group’s output was published by Her Majesty’s Treasury as the Open Banking Standard. FDATA North America was founded in early 2018. Its members collectively provide tens of millions of consumers in Canada, the United States and Mexico with aggregation-based tools to better manage their finances. Existing FDATA North America members include: air (Alliance for Innovative Regulation), API Metrics, Betterment, Direct ID, Envestnet Yodlee, EQ Bank, Experian, Fintech Growth Syndicate, Fiserv, Flinks, Interac, Intuit, Kabbage, Mogo, Morningstar, M Science, MX, Petal, Plaid, Questrade, Quicken Loans, TransUnion, Trustly, ValidFi, VoPay, Wealthica, Xero, and others.

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