News

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FDATA’s Ghela Boskovich on Financial Inclusion

Empowering individuals with the ability to share their data can absolutely improve financial inclusion, especially fairer access to credit for vulnerable underserved communities. We talk a lot about thin-file or no-file credit history customers being brought into the fold by using transaction data to assess behavioural and affordability risk; we’ve seen considerable expansion in loan approval and credit worthiness for those who had previously been excluded once they were able to share their open banking data.

But what if one could share their employment data, or government benefits data, when assessing affordability? What if there were a bigger picture that shed a different light on whether or not a candidate were a default risk? Being able to share tax data or vulnerability characteristics can change a no to a yes for certain types of underserved or excluded groups. Open finance and open data are formalised frameworks that enable this type of safe, secure, and consent/permissioned intelligence exchange. Making a variety of alternative data mobile and sharible for those who don’t have a deep history of traditional financial data means a chance to actually GET more traditional financial products and services.

Open data can literally open up inclusion.

Ghela Boskovich

FDATA Region Director Europe

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FDATA’s Steve Boms on Financial Inclusion

From a North American perspective, financial inclusion is a critical issue that hinges on the balance of robust regulatory frameworks, consumer protection, and innovation in financial services. In Canada, financial inclusion has been significantly shaped by the government’s initiative towards an Open Banking regime as announced in the 2024 Budget. The 2024 Budget was powered by the vision that consumers and small businesses should exert full control over their financial data. It paints a picture of an ecosystem where tailored financial products and services aren’t just a possibility but a standard. The Consumer-Driven Banking Framework established by the Canadian government is set to enhance financial inclusion through meticulously designed policies. For instance, it permits applications that develop credit scores, aiming to boost financial outcomes for “credit invisibles.” This strategy not only safeguards consumer data but also fosters innovations that dismantle barriers to access.

In the United States, the Consumer Financial Protection Bureau’s (CFPB) Section 1033 rulemaking is illustrative of a paradigm where consumer rights to access their financial data are placed at the heart of financial inclusion. This regulation, a component of the Dodd-Frank Act, is anticipated to unleash a wave of fintech innovations, thereby expanding the reach of financial services to historically underserved communities. This rulemaking envisions an inclusive financial sector where information is democratically available, allowing for a competitive environment that could lower costs and improve services for consumers.

Both Canada’s and the United States’ approaches underscore the importance of defining financial inclusion not just in terms of access but also in the quality of engagement between consumers and financial services. Use-cases and technologies that have been pivotal include digital identity verification, mobile banking, and personalized financial management tools. These innovations are instrumental in removing traditional barriers, like the need for physical bank branches in rural or low-income urban areas, thus changing the geography of financial services.

However, with innovation comes the challenge of ensuring equitable access and guarding against digital divides that could perpetuate or even exacerbate exclusion. In this regard, both countries are at a juncture where the question isn’t just which technologies should be embraced but how they can be deployed responsibly. As regulations like Canada’s Consumer-Driven Banking Framework and the United States’ Section 1033 come to fruition, a vigilant and adaptive approach is needed—one that continuously assesses the inclusivity of these innovations and the unforeseen barriers they may create. Moving forward, it’s crucial that both nations continue to foster environments where technology serves as a bridge rather than a gatekeeper to financial inclusion.

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FDATA North America Responds to the Bank of Canada’s Retail Payments Supervision Consultation

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

May 21, 2024, 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 responded to the Bank of Canada’s Retail Payments Supervision Consultation regarding its new supervisory guidelines for payment service providers (PSPs). FDATA North America expressed broad support for the Retail Payments Activities Act (RPAA) regulations while requesting additional clarity in the Bank’s guidance.

FDATA North America highlighted that implementation of the RPAA regulations will establish a robust regulatory framework for as many as 2,500 PSPs, significantly advancing Canada’s financial services modernization. In the response, FDATA North America emphasized that the RPAA regulations should facilitate the inclusion of payment use cases into Canada’s consumer-driven banking framework, as announced by Deputy Prime Minister and Minister of Finance Chrystia Freeland in the 2024 budget. By incorporating payment initiation use cases at this early stage, Canada can align with other G7 nations that have already established non-bank PSP regulations and open finance frameworks.

In its comments, FDATA North America provided detailed responses to key aspects of the supervisory guidelines. For operational risk and incident response, it urged comprehensive due diligence for outsourced service providers, flexible compliance standards like SOC II Type 2 audits, clear thresholds for distinguishing different types of PSPs, and an extended 24-hour reporting period for material breaches. It proposed that PSPs report incidents solely to the Office of the Privacy Commissioner (OPC) to reduce duplicative reporting. For safeguarding end-user funds, FDATA requested clarity on the definition of “holding funds” and recommended excluding firms that facilitate transactions but don’t hold funds. Additionally, it called for explicit criteria for changes warranting notification, particularly for cloud migration, to help PSPs manage risks while complying.

A full copy of the response is available here.

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FDATA North America May Newsletter

FDATA North America Monthly Newsletter for May 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 North America Statement on Budget 2024 Initiating Consumer-Driven Banking Framework. On April 16, 2024, the Financial Data and Technology Association of North America (FDATA) applauded the government’s inclusion of a framework to deliver consumer-driven banking as part of Budget 2024. FDATA North America, a longtime advocate for the benefits of open finance for consumers and small businesses, commended the government for its detailed plan and commitment to implement an open finance system through legislation this spring, which will be interoperable with similar U.S. frameworks. FDATA NA encouraged including small business accounts to ensure benefits extend to Canadian small businesses. FDATA NA Executive Director Steve Boms expressed strong support for this move, noting it aligns with global trends towards consumer-centric financial services and promises to enhance financial inclusion and innovation in Canada’s financial sector. FDATA released a statement, which can be found here.

Member News & Activity

Basis Theory published a blog outlining strategies for merchants to modernize their payments infrastructure, emphasizing the importance of evolving with the digital economy to enhance efficiency and reduce costs. The post highlights the critical role of adopting advanced systems like token vaults and payment processor decisioning to optimize transaction fees and improve overall financial performance.

Betterment was featured in a PR Newswire article announcing its acquisition of Marcus Invest’s digital investing accounts from Goldman Sachs, aiming to enhance its award-winning retail platform. This strategic move is set to expand Betterment’s scale by integrating Marcus Invest’s digitally customized portfolios, further establishing its position as a leader in the digital investment advisory space.

ByAllAccounts was featured in a Fintech Global article, which detailed how the company enhances data connectivity for wealth management firms and wealthtechs by addressing challenges in integrating data across diverse technology platforms. The article highlighted ByAllAccounts’ role in providing a single connection to its network, which facilitates access to a multitude of data sources, thereby simplifying data management and improving operational efficiency for its clients.

Codat posted a blog announcing their new Supplier Enablement data product designed to help issuing banks transition from checks to virtual card payments in B2B transactions. By partnering with J.P. Morgan, this innovative solution leverages data APIs to streamline the integration of supplier and spend data, enhancing payment processes and driving adoption of virtual cards.

Envestnet posted a blog highlighting how open banking is poised to transform South Africa’s economic landscape and enhance financial inclusion. Although still in its nascent stages, open banking facilitates the sharing of consumer-permissioned financial data through open APIs, paving the way for innovative financial services and broader access to financial products for underserved populations.

Fiserv published a press release detailing their new enhancements to billing and payment communications, designed to help billers increase on-time payments and streamline operations. By integrating call-to-action notifications and alerts into their BillMatrix® system and partnering with Tilli, Fiserv aims to improve customer engagement and operational efficiency through personalized, multi-channel communication.

Flinks posted a release outlining the significant updates in Canada’s Consumer-Driven Banking for 2024, emphasizing the formal adoption of Open Banking as mandated in Budget 2024. This initiative, set to commence this spring, involves the implementation of foundational components such as governance structures and technical standards, positioning financial institutions to adapt to evolving regulatory and technological landscapes.

Interac published a release announcing its acquisition of exclusive Canadian rights to the Vouchr platform, aiming to enhance Interac e-Transfer with personalized multimedia notifications. This strategic move allows Interac to integrate Vouchr’s technology into their services, offering customizable and engaging e-gifting experiences that reflect the increasing consumer preference for digital-first interactions.

Inverite was featured in a Yahoo Finance article highlighting its remarkable achievement of recording a record number of transactions in the first quarter of 2024 through its AI-driven open banking platform. The article details how Inverite Insights Inc. has seen significant growth in revenue-based transactions, with a 29% increase from the same period last year, emphasizing the company’s strong position in the financial technology sector.

Method published a blog emphasizing the critical need for diverse authentication regimes as the Consumer Financial Protection Bureau (CFPB) moves forward with finalizing Section 1033 of the Dodd-Frank Act, which aims to enable inclusive access to the benefits of open banking for all consumers, especially the unbanked, underbanked, and non-digitally banking populations. Highlighting the potential for existing credential-based authentication methods to exclude millions from accessing open banking benefits, Method proposes an alternative approach. This approach utilizes personally identifiable information and account numbers, aiming to ensure secure and inclusive access to financial services, fostering financial health and empowerment across broader demographics.

MX published a blog post discussing the recent progress in Canada’s Consumer-Driven Banking Framework, detailing the Canadian government’s plans to introduce legislation this spring as part of Budget 2024. The post highlights that this legislation will set the governance, scope, and technical standards for Open Banking in Canada, aiming to enhance financial data control for Canadians and foster a more inclusive and competitive financial ecosystem.

Petal was highlighted in a PR Newswire article discussing Empower Finance, Inc.’s definitive agreement to acquire Petal, a U.S.-based fintech company, alongside the completion of its acquisition of Cashalo, a lending company in the Philippines. The acquisitions are part of Empower’s strategy to expand access to fair credit and improve financial services for underserved consumers, using innovative approaches like cash flow underwriting and alternative data analysis to reshape credit accessibility globally.

Plaid published a blog post authored by Victoria Margolin, a product marketer focused on the evolution of open finance, providing a comprehensive overview of the upcoming Dodd-Frank Section 1033 rule by the Consumer Financial Protection Bureau (CFPB). The post details the implications of the rule for companies, emphasizing the need for compliance in managing consumer data rights and the benefits it brings in promoting a more secure and consumer-friendly financial ecosystem.

Trustly posted a release announcing their recent activation on the FedNow®️ rail, marking a significant advancement in their capabilities to offer instant payouts, particularly through their collaboration with ESPN BET. This integration not only enhances Trustly’s leadership in instant payments in the U.S. but also positions ESPN BET as the first sports betting merchant to leverage FedNow®️ for instant payout options, broadening access across the nation.

Events and Submission Deadlines

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FDATA North America Sends Letter to CFPB Advocating for Distinction Between Digital Wallets and Passthrough Payment Platforms

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

May 2, 2024, 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 sent a letter to the Consumer Financial Protection Bureau (CFPB or Bureau) addressing concerns in the Bureau’s approach to digital wallets and passthrough payment platforms in both its Notice of Proposed Rulemaking (NPRM) on Personal Financial Data Rights and its NPRM on Defining Larger Participants of a Market for General-Use Digital Consumer Payments.

The letter highlighted a critical oversight in the CFPB’s draft regulations, which grouped digital wallets—designed to hold consumer assets—with passthrough payment platforms that merely facilitate transactions via accounts at other financial institutions. FDATA emphasized that this conflation could compromise regulatory effectiveness, confuse consumers, and stifle innovation in the market, with key points from the letter including:

  • General Definitions: The proposed rules offered overly broad definitions for digital wallets that did not acknowledge the operational distinctions from passthrough payment services.
  • Regulatory and Consumer Impacts: The lack of distinction was criticized for potentially imposing undue regulatory burdens on passthrough platforms without offering additional consumer protections.
  • Call for Tailored Regulation: FDATA North America advocated for the CFPB to refine its regulations to accurately mirror the diverse functionalities within digital financial services, ensuring focused and effective consumer protections.
  • Concern Over Data Duplication: The current approach could lead to unnecessary and confusing duplications in regulatory data requirements.
  • Innovation at Risk: The letter emphasized the importance of a regulatory framework that understands the operational realities of digital finance to foster innovation and ensure consumer safety.
  • Plea for Precise Rulemaking: FDATA North America stressed the need for rulemakings that distinguish between the various digital financial services, benefiting consumers, providers, and the broader financial ecosystem.

FDATA called on the CFPB to exempt passthrough payment platforms from being considered data providers under its Personal Financial Data Rights rule and from the supervisory requirements set forth in its payments Larger Participant Rulemaking.

A full copy of the letter is available here.

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Video Member Spotlight: Xero

This member spotlight features FDATA NA Spotlight with Michael Cascone, Vice President, Government Experience, Americas, Xero. Michael shared insights on how Xero is championing Open Banking to alleviate the financial burdens on small business owners across North America.

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Video Member Spotlight: Ozone API

This member spotlight features Eyal Sivan, General Manager, North America, aka. Mr. Open Banking, Ozone API. Mr. Open Banking delves into how SMEs can leverage new offerings from their suppliers and enhance their own services to customers, unlocking new avenues for growth.

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FDATA North America Statement on Budget 2024 Initiating Consumer-Driven Banking Framework

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

Washington, DC, April 16, 2024 – 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 government’s inclusion of a framework to deliver consumer-driven banking as part of Budget 2024.

FDATA North America, which has long advocated for consumer and small business benefits that an open finance framework will deliver for Canadians, commended the government for outlining a detailed vision of the design of open finance in Canada and a commitment to begin implementing the system through legislation this spring and announcing its intention to create an open finance framework in Canada that is interoperable with the framework that the U.S. Consumer Financial Protection Bureau will finalize later this year. As the government begins its work to finally deliver open finance in Canada in 2025, FDATA North America encourages the Department of Finance to include small business accounts under the scope of the framework to ensure that Canadian SMEs receive the same open finance benefits as consumers.

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

“We are greatly encouraged by the Government of Canada’s commitment to advance open finance in Canada. The inclusion of Consumer Driven Banking in Budget 2024 marks a significant step for the financial empowerment of consumers and small and medium-sized enterprises. Once successfully implemented, this will foster a more innovative Canadian financial services marketplace, and promote 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 framework announced in the budget and look forward to working closely with the government as it actualizes open finance to benefit Canadian consumers and small businesses.”

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Video Member Spotlight: ByAllAccounts

This member spotlight features Brian Costello, Head of ByAllAccounts Data Aggregation Strategy and Governance, Morningstar Wealth. Brian tells us how ByAllAccounts’s role in providing connectivity of consumer-permissioned financial data is critical in realizing the full potential of this data and explains ByAllAccounts’s high level of engagement with policymakers to promote finalization of the Dodd-Frank Section 1033 rulemaking.

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FDATA North America April Newsletter

FDATA North America Monthly Newsletter for April 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 Sends Letter to Wyoming Governor Mark Gordon and Wyoming Legislators Urging Revision of Open Banking Legislation. On March 15, 2024, the Financial Data and Technology Association of North America (FDATA) sent a letter to Wyoming Governor Mark Gordon and legislators, including Representatives Cyrus Western, Daniel Singh, Mike Yin, and Senators Alfie Ellis, Tara Nethercott, Chris Rothfuss. The letter, motivated by the recent enactment of HB 145, raised concerns over its alignment with the essential tenets of open banking, particularly the principle that allows consumers and small businesses complete control over the sharing of their financial data. As a globally recognized advocate for consumer-permissioned, third-party access to financial data, FDATA underscored the importance of revising Wyoming’s open banking legislation to reflect global best practices. With the Consumer Financial Protection Bureau on the verge of implementing a federal open banking framework, FDATA offered to provide input and collaborate with Governor Gordon and the state’s legislators to explore solutions that could establish Wyoming’s open banking regulations as a model for consumer empowerment and market competitiveness. FDATA released a statement on its submission of the letter, which can be found here.

Member News & Activity

API Metrics published a blog highlighting the importance of interoperability in the digital transformation of financial services. Through their advanced solutions and involvement in standards bodies like FDX and the OpenID Foundation, APIContext is leading the way in fostering financial inclusivity and innovation by ensuring APIs are built with open standards, focusing on reliability, security, and meeting the challenges of Open Banking standards.

Basis Theory published a blog emphasizing their commitment to security, especially in protecting Personal Health Information and other sensitive data, highlighting recent achievements of SOC2 Type1+HIPAA and ISO 27001 certifications. These certifications demonstrate their adherence to stringent security standards and regulations, ensuring the protection and compliance of user data through technical and organizational safeguards.

Codat posted a blog underscoring the potential of banking data as a key asset in the lending industry for making informed decisions on creditworthiness. The blog emphasized the need for lenders to automate the processing and categorization of banking data to unlock actionable insights and improve underwriting efficiency, highlighting Codat’s role in simplifying this process through its technology that connects open banking and accounting data for enhanced decision-making.

Envestnet Yodlee posted a blog discussing the burgeoning interest in open banking within South Africa as part of a global trend toward increased data-sharing and financial innovation. The blog highlighted South Africa’s potential to lead in open banking, given its Financial Sector Conduct Authority’s interest in an Open Finance regime, the proactive stance of major banks, and the opportunity to enhance financial inclusion for the unbanked or underbanked, promising a series of deeper explorations into the benefits and regulations of open banking in the region.

Flinks published a blog detailing the growing momentum of Open Banking in Canada, driven by consumer and business demand for personalized financial services and the Canadian government’s commitment to establishing a consumer-driven banking framework. Highlighting Flinks’ role in facilitating this transition, the blog showcased their partnerships and contributions to developing Open Banking capabilities, positioning them as a key player in enhancing financial innovation, competition, and consumer choice in Canada’s financial ecosystem.

GoCardless published a press release announcing its approval as a supplier on the Crown Commercial Service’s Open Banking Dynamic Purchasing System framework, enabling it to bid for account information and payment initiation services tenders from UK public sector bodies. This inclusion marks a significant step for GoCardless, allowing it to expand its strategic opportunities within government sectors and strengthen its presence in the charity sector.

MX published a blog addressing the struggle of many financial providers to fully utilize consumer financial data for enhancing customer and business outcomes. Highlighting findings from a Forrester Consulting study, the blog underscored the critical need for financial institutions to embrace data intelligence, invest in breaking down data silos, and leverage technology and partnerships to unlock the transformative potential of this data for improved personalization and decision-making.

Plaid published a blog detailing how integrating with Plaid’s Payment Initiation services helped Paysend, a global payment platform, to overcome challenges in customer bank account top-ups, resulting in a 125% increase in transaction volume within a year. The partnership enabled Paysend to offer instant bank transfers, significantly improving customer satisfaction and expanding their service with successful launches in the UK and plans for further expansion across the European Union.

Trustly posted a blog highlighting the advantages of ACH autopay for billers, emphasizing its potential to significantly reduce processing fees compared to card payments, thereby maximizing revenue and safeguarding cash flow. The blog also discussed how leveraging Open Banking can address the inefficiencies of traditional ACH setups by providing a streamlined user experience, reducing manual input, and enhancing security, ultimately increasing ACH autopay adoption among customers.

VoPay was featured in a PYMNTS article announcing its partnership with Cross River Bank to expand its embedded payments technology into the U.S. market, providing VoPay with access to major payment rails and networks along with Cross River’s regulatory expertise. This collaboration aligns with VoPay’s goal of delivering innovative financial solutions and will enable the company to offer a wider range of payment services including ACH, Same-Day ACH, RTP, FedNow® Service, and Pull-from-Card, enhancing its North American service offerings.

Events and Submission Deadlines

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