News

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FDATA North America Sends Letter to Wyoming Governor Mark Gordon and Wyoming Legislators Urging Revision of Open Banking Legislation

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

March 15, 2024 Washington, DC – The Financial Data and Technology Association of North America (FDATA) today sent a letter to Wyoming Governor Mark Gordon and Wyoming legislators including Representative Cyrus Western, Representative Daniel Singh, Representative Mike Yin, Senator Alfie Ellis, Senator Tara Nethercott, and Senator Chris Rothfuss, highlighting concerns about a Wyoming bill (HB 145) that was recently enacted into law and offering to provide input into Wyoming’s open banking regulations and financial innovation agenda.

As a leading advocate for consumer-permissioned, third-party access to financial data globally, our letter underscored the importance of aligning Wyoming’s open banking framework with global best practices, which provide complete control to consumers and small businesses over what data they decide to share with third parties. We pointed out that HB 145 deviates from this important open banking tenet.

As the Consumer Financial Protection Bureau moves to implement a federal open banking framework later through rulemaking later this year, we offered to engage in further discussions with Governor Gordon and the legislators to explore solutions that would make Wyoming’s open banking regulations a model for consumer empowerment and market competitiveness.

A full copy of the letter is available here.

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FDATA North America March Newsletter

FDATA North America Monthly Newsletter for March 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 Submits Comments to Canada’s Pre-Budget Consultations 2024. On February 9, 2024, FDATA NA submitted comments to Canada’s Department of Finance as part of its pre-budget consultations for Budget 2024. The submission advocated for Canada to enhance the inclusion of consumer-driven banking (CDB) outlined in the 2023 Fall Economic Statement, aiming for a comprehensive Canadian open finance framework. Our comments also called on the Canadian government to legislate a CDB Framework in Budget 2024, establish a robust governance entity to oversee this framework, and outline a vision for open finance, signifying the next advancement in financial services. The submission noted that the proposed governance entity should be neutral, transparent, capable of making quick, binding decisions, and accountable, ensuring the framework’s success and sustainability while promoting market innovation and competition for the benefit of Canadian consumers and SMEs. FDATA released a statement on its submission of the comment letter, which can be found here.

FDATA NA Submits Comments to Canada’s Consultation on Strengthening Competition in the Financial Sector. On February 28, 2024, FDATA NA submitted comments to Canada’s Department of Finance regarding the consultation on strengthening competition in the financial sector. Our comments outlined four initiatives crucial for creating a more inclusive, innovative, and competitive financial ecosystem: 1) advancing Consumer-Driven Finance (CDF) and adopting an open banking regime to empower consumers and SMEs with control over their financial data; 2) accelerating the deployment of the Real-Time Rail (RTR) to modernize payment infrastructure, enabling instant payment processing; 3) implementing the Retail Payment Activities Act (RPAA) regulations for payment service providers (PSPs) within a robust regulatory framework to enhance payment system security and efficiency; and 4) amending the Canadian Payments Act (CP Act) to allow non-bank payment providers direct access to payment rails. 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 announcing the formation of APIContext Inc., a merger between APImetrics Inc and Contxt Ltd, to offer comprehensive solutions for API oversight and integrity. The newly formed company aims to address the challenges of creating reliable, productized APIs by providing end-to-end visibility, proactive risk measures, and comprehensive monitoring capabilities to empower businesses.

Basis Theory posted a blog explaining the intricacies of global payment processing, highlighting its necessity for e-commerce businesses to reach an international customer base and the variety of services offered by global payment processors to facilitate cross-border transactions efficiently. The blog emphasized the importance of selecting the right global payment processor, considering factors such as supported currencies, fees, security, and integration capabilities, to enable businesses to cater to global markets effectively.

Betterment’s VP of Legal, Joshua Rubin, discussed on the #inSecuritiespod how the company navigates the complex regulatory landscape, including its approach to the fiduciary rule, by addressing overlapping regulations and explaining why their stance sometimes diverges from the broader financial services industry’s perspective on rulemaking proposals.

EQ Bank was mentioned in a Business Wire article for partnering with Trulioo, an industry-leading identity verification platform, to streamline its digital banking onboarding process. This partnership enables EQ Bank to provide a frictionless customer experience with enhanced security and compliance, utilizing Trulioo’s advanced document verification, AI checks, and customizable workflow solutions.

Flinks posted a blog highlighting the growing importance of Account-to-Account (A2A) payments, describing them as a significant evolution in the financial transaction landscape. A2A payments, which enable direct fund transfers between accounts and bypass traditional intermediaries, are gaining traction due to their speed, cost efficiency, and enhanced security, supported by financial institutions, fintech companies, and payment processors.

GoCardless published a blog post announcing the extension of its partnership with Dyce Energy, a UK-based energy provider, for an additional three years, for easy bill collection through Direct Debit payments.

Inverite was mentioned in a BNN article for its advancements in the fintech and alternative lending sectors through its Open Banking Platform. The article noted that Inverite is revolutionizing consumer directed banking, providing innovative solutions for data enrichment, identity verification, risk management, and compliance, thereby transforming the alternative credit economy.

Morningstar Wealth published a blog highlighting the significance of diversity, equity, and inclusion (DEI) within the U.S. financial data-sharing ecosystem, particularly focusing on the evolving open banking system. Brian Costello, Head of Data Aggregation Strategy and Governance at ByAllAccounts, emphasized the importance of empowering consumers with greater control over their financial data to support innovation in financial services, advocating for a holistic approach that promotes DEI in financial product design and implementation to ensure the financial well-being of all.

MX published a blog summarizing the ten key themes of the Consumer Financial Protection Bureau’s proposed rulemaking on personal financial data rights, including concerns about the scope of data covered, restrictions on secondary use cases, ambiguity in liability definitions, the potential for charging fees, the need for technical and interface standards, transitioning from screen scraping, consent and authentication protocols, tokenized account numbers, overlaps with existing regulations like Fair Credit Reporting Act and Gramm–Leach–Bliley Act, and concerns about the proposed compliance timeline.

Trustly’s Matt Janiga, Legal Counsel and Director of Regulatory and Public Affairs, published a blog applauding the CFPB’s efforts in advancing Open Banking through Section 1033 of the Dodd-Frank Act, while offering suggestions to improve the proposal for a more inclusive Open Banking ecosystem. Janiga emphasized the need for adjustments in areas such as data-sharing duration to align with consumer expectations, the practicality and security concerns around Tokenized Account Numbers (TANs), the importance of allowing safe, pro-consumer secondary data usage, and enhancing consumer experiences through better API standards and fallback options.

Ozone API was mentioned in The Paypers article for partnering with CLOWD9 to enhance their services to clients, combining Ozone API’s expertise in facilitating Open Banking innovations with CLOWD9’s payments processing platform. The article noted that the collaboration aims to create a comprehensive ecosystem to support banks and financial institutions in adapting to the evolving landscape of Open Finance, promising to foster growth and innovation within the industry.

Events and Submission Deadlines

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FDATA’s Walter Pereira on Mandatory vs Voluntary Approaches

During 2023, open data regulations in Latin America have significantly evolved, with industry, governments, and financial regulators collaborating to establish a regulated data-sharing infrastructure.

Financial data sharing has been a reality in the financial system since its inception, adapting to a more digital and instantaneous reality as technology progressed. While some Latin American countries are still exploring opportunities and best practices in the open data ecosystem, others such as Brazil, Chile, Colombia, and Mexico have implemented regulated and some case mandatory data-sharing infrastructures. This aims to create a true network effect in the data economy, wherein major financial institutions, typically holding a significant portion of customer data, share this information with third parties.

The region has predominantly taken a mandatory approach for large institutions, and it is anticipated that in the coming years, countries still operating under a market-driven model will also engage in the implementation of regulated infrastructures.

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FDATA North America Submits Comments to Canada’s Consultation on Strengthening Competition in the Financial Sector

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

February 28, 2024 Washington, DC – The Financial Data and Technology Association of North America (FDATA) today submitted comments to Canada’s Department of Finance as part of its consultation on strengthening competition in the financial sector. Our submission underscored the necessity for the enactment and realization of several previously announced initiatives that will provide increased competition in Canada’s financial sector once delivered.

FDATA NA’s feedback highlighted four cornerstone initiatives, each critical to fostering a more inclusive, innovative, and competitive financial ecosystem:

  1. Consumer-Driven Finance (CDF): We advocated for the swift advancement of CDF including the pivotal adoption of an open banking regime. This approach is designed to empower consumers and small and medium-sized enterprise (SMEs) with enhanced control over their financial data, serving as a catalyst for broadening the range of financial products and services available. Such a framework is indispensable for stimulating market competition and driving innovation.
  2. Real-Time Rail (RTR): Our comments emphasized the urgent need for the accelerated deployment of the RTR to modernize Canada’s payment infrastructure. This development is key to enabling instant payment processing capabilities that will benefit both consumers and SMEs, thereby encouraging innovation and improving efficiency across the financial sector.
  3. Retail Payment Activities Act (RPAA) Implementation: We stressed the importance of promptly implementing RPAA regulations to cover approximately 2,500 payment service providers (PSPs) within a comprehensive and robust regulatory framework. This initiative aims to significantly enhance the security, efficiency, and competitive nature of Canada’s payment systems.
  4. Canadian Payments Act (CP Act) Amendments: FDATA NA called for essential amendments to the CP Act, allowing regulated non-bank payment providers direct access to Canada’s payment rails. This strategic move is expected to democratize the financial services marketplace, lower transaction costs, and foster a more vibrant and competitive landscape.

Through the enactment and realization of these initiatives, FDATA NA envisions a fundamental transformation within Canada’s financial sector. Leveraging models of success from international jurisdictions, we highlighted the potential of our recommendations to significantly boost the sector’s competitiveness, inclusivity, and innovation. The ultimate beneficiaries of these reforms that will deliver a more competitive financial ecosystem will be consumers, small and medium-sized enterprises, and the broader Canadian economy.

A full copy of the submission is available here.

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FDATA’s Ghela Boskovich on Mandatory vs Voluntary Approaches

Financial services is a hyper conservative industry, and a protectionist stance is common. No institution naturally wants to share customer data with a competitor, and data custodianship is often conflated to mean institutional data ownership.

The benefit of a mandatory approach is that it often enshrines a consumer data right, which clarifies the ownership vs. custodianship conundrum. Mandatory approaches also often consider consumer outcomes first and foremost, something that is not first priority when industry is left to voluntarily design delivery and outcome.

There is ample evidence to show that without a regulatory push, certain markets are reluctant to move towards a standard open data sharing scheme of their own volition. Even in voluntary markets, the regulatory pressure to deliver open banking is so strong it might as well be considered mandatory (it’s a case of “do it, or else we’ll do it for you”).

The advantage to a voluntary approach, though, is that incumbents recognise the incentive to participate, and often see economic and commercial value from participation; the ROI is there in some form, and the business case for broad data sharing is compelling enough to participate because the majority of FIs have a similar POV.

However, experience seems to prove that a mandatory approach is needed to accelerate open data sharing at scale.

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FDATA’s Steve Boms on Mandatory vs Voluntary Approaches

In the evolving world of open banking and finance, the United States and Canada initially adopted similar voluntary approaches. FDATA North America has closely monitored this landscape, recognizing the importance of these nations’ transitions from voluntary to more mandatory frameworks.

In the United States, the shift towards a mandatory approach in open banking has been a significant development. Initially following a voluntary regime, the U.S. saw a notable change with the Consumer Financial Protection Bureau’s (CFPB) introduction of a proposed rule under Section 1033 of the Dodd-Frank Act. This proposed rule, aimed at enhancing consumer control over their financial data, signals a move towards a mandatory regulatory framework. This transition marks a major alignment with global financial technology trends and opens new opportunities for consumer benefits and innovation. Departing from the market-driven solutions that once dominated, this shift suggests a more competitive and innovative financial market, breaking away from the traditional dominance of large financial institutions.

Canada, following the U.S.’s lead, has also begun to shift away from its voluntary stance. This movement was highlighted by the Canadian Government’s Fall Economic Statement, which included a comprehensive framework for consumer-driven finance and open finance directives. This development indicates Canada’s progression towards a more structured, mandatory approach. This transition aligns Canada with other G-7 nations and reflects a global shift towards consumer-centric financial services, signifying a substantial change in the country’s approach to financial services regulation.

For FDATA North America, these developments in both the U.S. and Canada represent pivotal moments. The U.S.’s move towards a more defined regulatory framework under the CFPB is expected to lead to a more dynamic and competitive market, in line with global consumer data empowerment trends. In Canada, the enactment of consumer-driven finance will mark a significant step from a voluntary to a mandatory approach in open banking. As both countries refine their open finance strategies, the potential for transformative changes in consumer and business interactions with financial services is substantial. These shifts open exciting prospects for innovation, competition, and financial inclusion, reshaping the financial landscape in both countries.

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FDATA’s Ludmila Volochen on Mandatory vs Voluntary Approaches

Acknowledging the global context in which Open Finance operates, it’s important to understand the distinct roles of mandatory and voluntary approaches, particularly when contrasting Latin America’s experience with other regions. While the voluntary approach is more prevalent in other parts of the world, Latin America has been more inclined towards a mandatory framework, as highlighted in the report by FDATA LATAM in collaboration with the Inter-American Development Bank (IDB).

The mandatory approach in Latin America, as the report suggests, brings numerous advantages. It sets a clear regulatory framework, ensuring standardized practices across the financial sector. This is essential in a region with diverse economic and financial landscapes, as it provides a consistent and secure environment for data sharing. Mandatory regulations drive competition, lower barriers to entry for new players, and foster innovation, which is crucial for a dynamic financial ecosystem.

In comparison, the voluntary approach, predominant in other regions, allows for flexibility and market-driven innovation. Financial institutions and fintechs develop data-sharing practices organically, which can lead to highly tailored solutions. However, this approach may result in uneven adoption and standards, which can be challenging for ensuring universal access and consumer protection.

In Latin America, the emphasis on a mandatory framework reflects a proactive stance towards creating an inclusive and competitive financial environment. This approach aligns well with the region’s goals of accelerating financial inclusion and leveraging technology and data to empower consumers and businesses. It ensures that all stakeholders, regardless of size, have equal opportunities to participate in the evolving financial landscape.

Thus, while recognizing the value of voluntary systems globally, the mandatory approach in Latin America, as advocated by FDATA LATAM and the IDB, is particularly well-suited to the region’s objectives. It strikes a balance between regulation and innovation, paving the way for a more equitable and progressive financial sector.

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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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Moneyhub’s Sam Seaton on Open Wishes for the New Year

I have two special requests for the New Year:

I would love to see more institutions, government sectors, and private entities embracing the principles of Open Data, making datasets publicly available in machine-readable format.

Equally important is helping people to become more aware of the value of their own data and how useful it is when used in an Open Data environment.

It is so important to remember the power of Open Data lies in its use, so the ultimate wish would be to see more innovative applications of Open Data in solving real-world problems and enhancing people’s lives.

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