Document co-authored by FDATA Europe and ETTPA. Download here.
NEXT STAGE OF EU DIRECTIVE “WILL CREATE WIDESPREAD CUSTOMER DISRUPTION AFFECTING MANY MILLIONS OF CONSUMERS AND BUSINESSES THROUGHOUT EUROPE”, SAY FINTECH BODIES
Fintech bodies call for National Regulators to work with industry to prioritise customer needs ahead of other regulatory factors
The Financial Data and Technology Association (FDATA Europe), in association with the European Third Party Providers Association (ETTPA), has highlighted a material risk to individual and business consumers in the next phase of the implementation of the Regulatory and Technical Standards (RTS) of the EU’s second Payment Services Directive (PSD2).
(Download here)
ETPPA and FDATA Europe, whilst fully supportive of PSD2, have identified a series of unintended consequences of the RTS, which will cause widespread disruption to consumers and businesses which use the services of many fintech applications. Notable examples include the impact on the many millions of businesses that use SME accountancy services such as Xero, Quickbooks and FreeAgent, unless steps are now taken.
The simultaneous attempt to encourage innovation and to introduce new payment security measures is at the root of these unintended consequences, including the deterioration of existing consumer services, the introduction of security risks to banks, interruption to retail card and bank transfer payments, and significant disruption to Fintech firms who use open finance in their business models.
Whilst the RTS has had many intricate technical challenges, with lobbying and counter lobbying between banks and fintech firms, the customer disruption issues are becoming increasingly clear, and all sides now need to work together to manage these interlocking challenges, reduce the disruption and buy some time to work on resolving the outstanding issues.
The key issues are summarised as follows
- Strong Customer Authentication, designed to improve the security between a bank and its customer, will unintentionally block access to non payments data, such as savings accounts and loan accounts, which are in very wide use
- The RTS provides no period of transition during which a TPP could seek to ask its customers to rejoin on the new technology. There needs to be a twelve month transition period after the banks have delivered a high quality API or Adjusted Interface to allow customers to migrate
- It is already crystal clear that the development of the technologies is not nearly mature enough at this stage, both in functionality and resilience. It is highly likely that on the current time table, the vast majority of banks will fail to deliver a suitable API and run out of time to then deliver the Adjusted Interface. If they simultaneously then introduce the new security measures, all access to account channels used by Fintech firms will be blocked.
FDATA and the ETTPA have suggested a new order which prioritises the needs of customers through a series of technical and practical measures.
Commenting, FDATA’s Chairman Gavin Littlejohn said:
“Open finance is the biggest and most important innovation in the financial services sector since the dawn of the internet. Customers have grown accustomed to innovative market and payment solutions that improve convenience and value. PSD2 is an important first step in creating a better framework of customer rights and protections to protect this new market.
“We have made a series of practical suggestions and we are confident both in their ability to reduce the risk, and in the good will of the EC and EBA to encourage markets to develop solutions.
“As it stands the banks, fintech firms and national regulators need to orchestrate a hierarchy of needs which puts customers first. A practical first step would be to delay any new implementation of Strong Customer Authentication which could block the traditional technology from functioning as it currently does, until such a time as the key issues are properly managed. Creating a ‘big bang’ approach to implementation, regardless of the connected circumstances, is simply creating an unnecessary cliff edge, which is easily avoided by this simple measure.
Commenting, ETPPA’s Chairman Arturo Gonzalez MacDowell said:
“During such a fast pace of change unintended consequences are always a potential difficulty.
“This is not about allocating blame – everyone is facing the right way and trying to do the right thing. But we do need to take action, and there is very little time to reduce the risk present in this next phase of implementation. We need real leadership now to navigate a path to avoid the regulations accidentally disrupting the markets they were designed to nurture.”
ENDS
NOTES TO EDITORS
- The Financial Data and Technology Association (FDATA) was established in Europe to advocate for Open Banking in 2013, during the negotiations to add account aggregation to PSD2. and then formally incorporated in 2014. It is a member organisation, is not-for-profit and has a charter to develop open secure market access to innovation across all financial verticals, including payments and payments data, but also loans, mortgages, savings, investments, pensions and insurance. Customer access to these financial verticals via Third Party Providers is described collectively as Open Finance.
- The European Third Party Providers Association (ETPPA) is the European trade association of bank-independent PSD2 TPPs. ETPPA is an international not-for-profit association (IVZW/AISBL) organised under Belgian law. ETPPA formalises the former Future of European Fintech (FoEF) coalition, which was created ad-hoc at the beginning of 2017 to represent the interests of TPPs in the negotiations around the PSD2 RTS on SCA & CSC. ETPPA represents the bank-independent TPP interests in the implementation and evolution of PSD2 and RTS vis-a-vis the national and EU authorities and other stakeholders.
- FDATA and the ETTPA have jointly authored a paper – The Unintended Consequences of PSD2 RTS – which has been presented to the regulatory authorities in the EU and the UK.
- Media – for more information contact Andy Maciver (+44 7855 261 244, [email protected])
Financial Data and Technology Association and OpenID Foundation in Global Agreement
Not-for-profits to campaign jointly on open finance initiatives.
The OpenID Foundation (OIDF), the international standardization organization which maintains a standard known as the Financial-grade API (FAPI), and the Financial Data and Technology Association (FDATA Global), the global trade association for companies working to promote ‘open finance’ and best practice financial data sharing, have signed a liaison agreement to enable them to work jointly across the world.
Under the agreement, FDATA Global, with chapters in Europe, North America and Australia/New Zealand, will lead policy efforts to implement open banking frameworks across the globe while OIDF will focus on the technology behind a digital identity solution. The agreement will:
- Provide a mechanism for the parties to work together on mutually approved white papers, press releases, activities, presentations and other communications;
- Allow participation of each party’s staff and members in the other party’s meetings, as mutually agreed by both parties;
- Provide a line of communications in order for the parties to communicate (without obligation and only to the extent each party chooses) about new work under consideration and about upcoming meetings;
- Support their common goals, including where appropriate and mutually agreed, to promote common standards across markets, and to collaborate on the development and implementation of certain standards and publications of common interest; and
- Avoid market confusion regarding their respective organizations and activities.
FDATA Global works with governments, regulatory authorities, and the financial services industries to open up the financial sector all over the world to the benefits of financial data and technology, including advocating for the adoption of open banking frameworks and open banking standards.
The OIDF is an international standards development organization of leading identity and security architects, with a broad range of communities and companies developing open standards that enable firms and customers to safely interact in digital channels. The FAPI working group of OIDF has collaborated to produce the FAPI security profile, which is an integrated set of schemas, security and privacy recommendations and protocols which enables common connections that enable API to easily connect and for financial data to be safely shared and privacy protected.
As Open Banking and Open Finance initiatives develop across the world, the FAPI profile will be the starting point for markets seeking to reduce complexity, risk and engineering costs, making it easier for firms to connect and test their APIs.
Commenting, FDATA Global’s Chairman Gavin Littlejohn said:
“Open finance is the single biggest movement in financial services globally. It will change the world, and it will change the lives of young and old, rich and poor.
“The core components of delivering this change are the enshrining of the customer’s right to share their data, a regulatory environment that supports this right and an implementation capability that transitions the market access to high quality secure APIs.
“In the UK API initiative, the introduction of the FAPI security profile and FAPI conformance testing suites ensured that both sides of the API connection conformed to the profile. This had a transformational impact on the implementation experience, making connections easier between banks and fintech firms, making it easier for regulators to understand that security standards were being met, and greatly reduced the complex engineering and maintenance costs across the industry.
“As the Australian, Japanese, US and some of the European groups are developing their API initiatives, it is great to see the FAPI Security Profile discussed in the standardization agenda. FDATA Global is happy to be able to support the brilliant work of the OIDF and recommend that the FAPI working group output become the starting point of that conversation and a cornerstone of the implementation experience.”
Don Thibeau, Executive Director of the OpenID Foundation, said:
“The development of open global standards like FAPI require the painstaking commitment and contributions of a wide variety of companies, communities and individual developers. This is demonstrated in the ongoing work of the OpenID Foundation’s FAPI Work Group and the leadership of Nomura Research, Microsoft, Intuit and many others. Open standards are only as valuable as their adoption and adoption is driven by trust. The FAPI Self Certification Test Suite enables trust by helping assure interoperability across computing platforms and international regulatory regimes.
“Our collaboration with FDATA and others demonstrates the importance of the ongoing improvement of trusted standards and certification tests needed by a diverse and dynamic set of financial services players. Open Standards like FAPI enable the easy to use, secure and privacy protecting solutions for clients, consumers and consumers worldwide.”
NOTES TO EDITORS
- FDATA Global is a not-for-profit global association for financial services companies operating in fintech. Our members provide innovative financial applications and services to empower customers to make better decisions and take fuller control of their financial lives across all their accounts, credit cards, loans and investments. We seek to work with government, regulatory authorities and the financial services industry in our mission to open up the financial sector all over the world to the benefits of financial data and technology. We have chapters in Europe, North America and Australia/New Zealand, with other territories being developed. www.fdata.global
- The OpenID Foundation promotes, protects and nurtures the OpenID community and technologies. It is a non-profit international standardization organization of individuals and companies committed to enabling, promoting and protecting OpenID technologies. Formed in June 2007, the foundation serves as a public trust organization representing the open community of developers, vendors, and users. OIDF assists the community by providing needed infrastructure and help in promoting and supporting expanded adoption of OpenID. This entails managing intellectual property and brand marks as well as fostering viral growth and global participation in the proliferation of OpenID. www.openid.net
- Images of Gavin Littlejohn and Don Thibeau can be downloaded via the links.
- For more information on FDATA contact Andy Maciver, Message Matters, +44 (0)7855 261 244, [email protected]
- For more information on OIDF contact Don Thibeau [email protected] Michelle Parkes at [email protected]
FINANCIAL DATA AND TECHNOLOGY ASSOCIATION AND OPEN ID FOUNDATION IN GLOBAL AGREEMENT
Not-for-profits to campaign jointly on open finance initiatives
The OpenID Foundation (OIDF), the international standardisation organisation which maintains a standard known as the Financial-grade API (FAPI), and the Financial Data and Technology Association (FDATA Global), the global trade association for companies working to promote ‘open finance’ and best practise financial data sharing, have signed a liaison agreement to enable them to work jointly across the world.
Under the agreement, FDATA Global, with chapters in Europe, North America and Australia/New Zealand, will lead policy efforts to implement open banking frameworks across the globe while OIDF will focus on the technology behind a digital identity solution. The agreement will:
- Provide a mechanism for the parties to work together on mutually approved white papers, press releases, activities, presentations and other communications;
- Allow participation of each party’s staff and members in the other party’s meetings, as mutually agreed by both parties;
- Provide a line of communications in order for the parties to communicate (without obligation and only to the extent each party chooses) about new work under consideration and about upcoming meetings;
- Support their common goals, including where appropriate and mutually agreed, to promote common standards across markets, and to collaborate on the development and implementation of certain standards and publications of common interest; and
- Avoid market confusion regarding their respective organizations and activities.
FDATA Global works with governments, regulatory authorities, and the financial services industries to open up the financial sector all over the world to the benefits of financial data and technology, including advocating for the adoption of open banking frameworks and open banking standards.
The OIDF is an international standards development organization of leading identity and security architects, with a broad range of communities and companies developing open standards that enable firms and customers to safely interact in digital channels. The FAPI working group of OIDF has collaborated to produce the FAPI security profile, which is an integrated set of schemas, security and privacy recommendations and protocols which enables common connections that enable API to easily connect and for financial data to be safely shared and privacy protected.
As Open Banking and Open Finance initiatives develop across the world, the FAPI profile will be the starting point for markets seeking to reduce complexity, risk and engineering costs, making it easier for firms to connect and test their APIs.
Commenting, FDATA Global’s Chairman Gavin Littlejohn said:
“Open finance is the single biggest movement in financial services globally. It will change the world, and it will change the lives of young and old, rich and poor.
“The core components of delivering this change are the enshrining of the customer’s right to share their data, a regulatory environment that supports this right and an implementation capability that transitions the market access to high quality secure APIs.
“In the UK API initiative, the introduction of the FAPI security profile and FAPI conformance testing suites ensured that both sides of the API connection conformed to the profile. This had a transformational impact on the implementation experience, making connections easier between banks and fintech firms, making it easier for regulators to understand that security standards were being met, and greatly reduced the complex engineering and maintenance costs across the industry.
“As the Australian, Japanese, US and some of the European groups are developing their API initiatives, it is great to see the FAPI Security Profile discussed in the standardisation agenda. FDATA Global is happy to be able to support the brilliant work of the OIDF and recommend that the FAPI working group output become the starting point of that conversation and a cornerstone of the implementation experience.”
Don Thibeau, Executive Director of the OpenID Foundation, said:
“The development of open global standards like FAPI require the painstaking commitment and contributions of a wide variety of companies, communities and individual developers. This is demonstrated in the ongoing work of the OpenID Foundation’s FAPI Work Group and the leadership of Nomura Research, Microsoft, Intuit and many others. Open standards are only as valuable as their adoption and adoption is driven by trust. The FAPI Self Certification Test Suite enables trust by helping assure interoperability across computing platforms and international regulatory regimes.
“Our collaboration with FDATA and others demonstrates the importance of the ongoing improvement of trusted standards and certification tests needed by a diverse and dynamic set of financial services players. Open Standards like FAPI enable the easy to use, secure and privacy protecting solutions for clients, consumers and consumers worldwide.”
ENDS
NOTES TO EDITORS
- FDATA Global is a not-for-profit global association for financial services companies operating in fintech. Our members provide innovative financial applications and services to empower customers to make better decisions and take fuller control of their financial lives across all their accounts, credit cards, loans and investments. We seek to work with government, regulatory authorities and the financial services industry in our mission to open up the financial sector all over the world to the benefits of financial data and technology. We have chapters in Europe, North America and Australia/New Zealand, with other territories being developed. www.fdata.global
- The OpenID Foundation promotes, protects and nurtures the OpenID community and technologies. It is a non-profit international standardization organization of individuals and companies committed to enabling, promoting and protecting OpenID technologies. Formed in June 2007, the foundation serves as a public trust organization representing the open community of developers, vendors, and users. OIDF assists the community by providing needed infrastructure and help in promoting and supporting expanded adoption of OpenID. This entails managing intellectual property and brand marks as well as fostering viral growth and global participation in the proliferation of OpenID. www.openid.net
- Images of Gavin Littlejohn and Don Thibeau can be downloaded via the links.
- For more information on FDATA contact Andy Maciver, Message Matters, +44 (0)7855 261 244, [email protected]
- For more information on OIDF contact Don Thibeau at [email protected] or Michelle Parkes at [email protected]
FDATA North America Highlights Benefits of Open Banking for U.S. Consumers
Contact: Kerrie Rushton, (202) 365-6338, [email protected]
April 2, 2019, Washington, DC – The Financial Data and Technology Association of North America today released a new paper, “Opportunities in Open Banking,” that outlines the benefits of open banking for U.S. consumers, businesses, financial institutions and the economy.
“The ‘data revolution’ is reshaping nearly every element of Americans’ lives – how we connect, communicate, travel and work,” said FDATA North America Executive Director Steve Boms. “It’s also fueling a fundamental shift in how people and businesses spend, save and manage money around the world. To spur improved financial outcomes and to keep up with global innovation, policymakers in the United States should implement an open banking regime that provides consumers with the legal right to their financial data and builds appropriate safeguards around a well-managed ecosystem.”
The new paper discusses:
- The consumer demand for open banking and why the right to share data is at the heart of it;
- The benefits of open banking, including empowering customer choice, ensuring customer protection and enabling industry innovation;
- Consumer consent in an Open Banking system;
- How data and technology are shared and utilized in an open banking ecosystem; and
- Policy and oversight recommendations for U.S. lawmakers and regulators.
“If implemented properly, open banking will preserve the security and stability of the financial system while empowering customers and accelerating opportunities for innovation,” said Boms. “This paper provides an outline for success in the United States, based on lessons learned from other jurisdictions. Other countries, including Canada, Australia, Russia and China are moving swiftly in the direction of open banking. U.S. policymakers must act if they want to enhance financial inclusion and ensure their constituents to have similar opportunities for financial success.”
FDATA North America also recently submitted comments to the U.S. Senate Committee on Banking in response to its request for information on data privacy. In that letter, Boms argued, “Under an Open Banking system, data empowerment goes hand in hand with data privacy. By placing consumers and small businesses – the owners of financial data – at the center of the framework, end users are given complete control over their data. This construct provides them with the opportunity to improve their financial wellbeing by empowering them to use their data for value-based services of their choice, and to control which entities have access to their financial data at all times.”
FDATA’s “Opportunities in Open Banking” is available here. The letter to the Banking Committee is here.
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 by several firms whose technology-based products and services allow consumers and small businesses to improve their financial wellbeing. Its members provide approximately 3.5 million Canadians, or roughly 15 per cent of Canada’s adult population, with aggregation-based tools to better manage their finances.
FDATA North America Highlights Benefits of Open Banking for Canadian Consumers
Contact: Kerrie Rushton, (202) 365-6338, [email protected]
March 20, 2019, Washington, DC – In advance of a Canada Standing Senate Committee on Banking, Trade and Commerce hearing on March 21, the Financial Data and Technology Association today released a new paper, “Opportunities in Open Banking,” that outlines the benefits of open banking for Canadian consumers, businesses, financial institutions and the economy. Executive Director Steve Boms will testify before the committee tomorrow to present the paper.
“Canadians increasingly depend on technology-powered tools to improve their financial lives,” said Boms. “To foster innovation and spur improved financial outcomes, Canada should implement an open banking regime that provides consumers with the legal right to their financial data and builds appropriate safeguards around a well-managed ecosystem. For the sake of consumers’ financial wellbeing and innovation, the time to act is now.”
The new paper discusses:
- What open banking is and how it recognizes consumer demand and needs make it necessary to share financial data;
- The benefits of open banking, including empowering customer choice, ensuring customer protection and enabling industry innovation;
- The need to ensure consumer access, consent and protection;
- A discussion of how data and technology are shared and utilized in an open banking ecosystem; and
- The importance of implementing effective policy and regulatory oversight.
“If implemented properly, open banking can preserve the security and stability of the financial system while empowering customers and accelerating opportunities for innovation,” said Boms. “This paper provides an outline for success, based on lessons learned from other jurisdictions.”
In his testimony before the Standing Senate Committee on Banking, Trade and Commerce, Boms also will discuss how open banking has been embraced by other countries, outlining how the technology-powered products and services provided by incumbent financial services and fintech firms are supporting consumers and businesses as they manage and improve their finances. “Canadian consumers are already demanding the same opportunity, and they deserve to receive it,” Boms will conclude.
FDATA’s “Opportunities in Open Banking” is available here. The hearing will begin at 10:30am EST. To watch via webcast, click here. Boms’ written statement is available here.
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 by several firms whose technology-based products and services allow consumers and small businesses to improve their financial wellbeing. Its members provide approximately 3.5 million Canadians, or roughly 15 per cent of Canada’s adult population, with aggregation-based tools to better manage their finances.
FDATA North America Submits Comments to US Senate Banking Committee on Data Privacy
FDATA North America submitted comments to the US Senate Banking Committee in response to their request for information on data privacy.
UK Open Banking – Setting the Record Straight
Across the world, governments, regulators, banks and fintechs are talking about open banking, and also trying to follow the progress and success of UK Open Banking. They sense excitement, threat and opportunity, and there is much talk about innovation, security, standards and risk.
But are we all talking about the same thing? What is ‘open banking’?
Open Banking in the UK: Setting the Record Straight
Across the world, governments, regulators, banks and fintechs are talking about open banking, and also trying to follow the progress and success of UK Open Banking. They sense excitement, threat and opportunity, and there is much talk about innovation, security, standards and risk. But are we all talking about the same thing? What is ‘open banking’?
UK Open Banking – Setting the Record Straight
Across the world, governments, regulators, banks and fintechs are talking about open banking, and also trying to follow the progress and success of UK Open Banking. They sense excitement, threat and opportunity, and there is much talk about innovation, security, standards and risk.
But are we all talking about the same thing? What is ‘open banking’?