This note aims to address some of the market confusion in relation to the rights of firms to move between EU jurisdictions when performing operations related to the second EU Payment Services Directive (PSD2).
Leading fintech trade association calls launch “the first waypoint on a long journey”
The Financial Data and Technology Association, the leading advocate of open banking in the UK and around the world, has welcomed the parallel implementation of PSD2 across Europe, and the launch of Open Banking amongst the large banks here in the UK.
FDATA, which is chaired by Gavin Littlejohn, who represents the fintech industry on the Open Banking Implementation Entity Steering Group, was set up by six fintech companies in 2014 at the request of HM Treasury, and has been working directly with government, regulatory authorities and financial industry stakeholders in our mission to open up Britain’s financial sector to the benefits of financial data and technology.
FDATA has members from across the financial sector who provide innovative financial applications and services to empower personal and small business consumers to make better decisions and take fuller control of their financial lives across all their bank accounts, credit cards, loans and investments.
PSD2 and Open Banking empower the customer, through his or her explicit consent, to ensure that their chosen third party provider can access their data, make payments and provide them with innovative financial solutions.
Commenting on today’s launch, FDATA Chairman Gavin Littlejohn said:
“This is an important day for consumers and small businesses. From today, PSD2 gives consumers the right to share their payments data with their chosen third party app without any lingering fear that they are breaching the terms of their bank account, and those third party providers are being brought into a regulated environment to further increase consumer protection. And, in the UK, the delivery by the nine largest current account providers of a common Open Banking standard has provided the opportunity to reduce fragmentation, enhance innovation and provide additional security measures for the whole ecosystem.
“The standardisation of Open Banking delivery will see the continued expansion of fintech companies, models and products, and this is an extremely exciting time for the consumer and for UK plc.
“However, Open Banking in the UK is merely the first waypoint on a long journey. The scope of this launch – only current accounts and only from certain banks – is limited, and customers will only experience the full benefits when the scope is expanded.
“FDATA has successfully campaigned to get us this far, and we will now campaign with renewed vigour to bring all financial products, from all over the world, into a standardised open banking system.
“The drive towards open banking has been, and will remain, customer outcome led. The fintech industry exists because customers required better outcomes. Today is the day where consumers of financial technology in the UK can know for sure that they are being listened to.”
FDATA is hosting a Summit in December to chart the Open Banking journey to 2030.
Open banking is the midwife of innovation. It is driving innovation at a breathtaking rate. The consumer tools of the future have not yet been invented. This is the fintech revolution in action. But the journey is long, and we’ve barely left the start line. So where do we go next? How do we get there? What scope of data can we expect to access? What technology will take us there? How can we bring the whole world along for the ride? And what will open banking in 2030 look like?
Join us for a day of expert speakers, lively panels and Q&A as we chart the journey to 2030.
More information and booking details can be found here.
Fintech Connect Live 2017: 6-7 December
FDATA is delighted to be a media partner of Fintech Connect Live 2017 taking place on the 6 and 7 December at Excel London.
Combining the hustle and bustle of an exhibition featuring over 3000 visitors, and 200 exhibitors and partners from over 50 countries, FinTech Connect Live is the UK’s largest fintech event. Playing host to four strategic conference sessions with inspirational case studies from around the world, a technology buyers theatre with 50 product demos, 12 educational workshops tackling practical fast growth challenges, and two full days of dedicated mentoring clinics for start up leaders, all brought to you from over 300 of the industries finest speakers, FinTech Connect Live is the ‘must have ticket’ for stakeholders from across the full fintech eco-system.
FinTech Connect Live provides a platform for all those attending to collaborate, differentiate, form connections, source solution, conduct and generate business with new, existing and upcoming fintech players in the market.
Get involved and find out more by visiting www.fintechconnectlive.com
Please click the link below to read FDATA’s response to HMT’s consultation on the implementation of PSD2.
The Financial Data and Technology Association has responded to the European Banking Authority’s consultation on authorisation and registration under PSD2.
The responses (submitted online) are:
Q1: Do you consider the objectives of the Guidelines as identified by the EBA to be plausible and complete? If not, please provide your reasoning.
FDATA considers the objectives to be plausible and almost complete. Our key concern, though, is to ensure that smaller applicants providing narrower services are not subject to the same requirements as large multi-state applicants with broad services. An adjustable, tiered system would be preferable to facilitate this.
Q2: Do you agree with the options the EBA has chosen regarding the identification of payment services by the applicant; the way information is to be submitted to the competent authority; the four-part structure of the Guidelines, and the inclusion of authorisation for electronic money institutions? If not, please provide your reasoning.
FDATA has no objections to these chosen options. However, we would ask you to clarify the process for an applicant with multiple lines of business.
Q3: Do you consider it helpful how the EBA has incorporated proportionality measures in the Guidelines in line with PSD2? If not, please explain your reasoning and propose alternative approaches.
FDATA does consider this helpful and has no specific objection. In general terms, however, we would ask the EBA to constantly assess whether barriers to entry are too high and may stifle innovation. Would the EBA consider an exemption for some applicants under defined conditions?
Q4: Do you agree with the Guidelines on information required from applicants for the authorisation as payment institutions for the provision of services 1-8 of Annex I of PSD2, as set out in chapter 4.1? If not, please provide your reasoning.
Please treat this answer as a catch-all for questions 4, 5 and 6.
Again, FDATA’s key concern here is the potential stifling of innovation which would result from barriers to entry for early-stage applicants. In this respect, the requirements around business plans, marketing and forecasting seem overly onerous.
Secondly, some of the information required appears too granular and technical in nature and lacks focus on the more important issue of the quality of an applicant’s information security management system.
Furthermore, for applicants with dynamic, cloud-based systems, some of the information requested is likely to change on a regular basis. We would ask the EBA to clarify whether notification of every change would be required.
In all these cases, it is possible to be more selective in the information required and still ensure that the approval process ensures only well-qualified applicants.
Finally, we would ask the EBA to clarify why ISO27001 has not been recommended as a standard to apply, having been mentioned in the Regulatory Technical Standards and recommended by the UK’s Open Banking Standard. Adoption of this would reduce the workload on competent authorities.
Q5: Do you agree with the Guidelines on information required from applicants for registration for the provision of only service 8 of Annex I PSD2 (account information services), as set out in chapter 4.2? If not, please provide your reasoning.
See answer 4.
Q6: Do you agree with the Guidelines on information requirements for applicants for authorisation as electronic money institutions, as set out in chapter 4.3? If not, please provide your reasoning.
See answer 4.
Q7: Do you consider the Guidelines regarding the assessment of completeness of the application, as set out in chapter 4.4 to be helpful? If not, please provide your reasoning.
FDATA would recommend an addition. We would ask the EBA to explicitly state how long an incomplete application can wait before it is invalidated, after which a new application will be required.
The Financial Data and Technology Association (FDATA) has responded to the CMA’s draft order following its publication of the retail banking investigation, which led to the creation of the Implementation Entity.
Commenting on the submission, which can be read here, FDATA’s Executive Director Andy Maciver said:
“FDATA’s interpretation of the purpose of this order is that it should reflect the letter and spirit of the CMA’s final Retail Banking Investigation report. In that sense, we are broadly satisfied that this Order achieves its purpose.
“However, in our response we have taken the opportunity to make a series of general points which we believe are critical to the successful delivery of ‘open banking’, surrounding three areas: the ‘live market’ for fintech, the market for cyber-insurance and the need for a public awareness programme.”
Please click the link below to see FDATA’s response to the draft order by the CMA on open banking.
Gavin Littlejohn, Chairman of the Financial Data and Technology Association, has been named by the Implementation Entity as the Convener of its Advisory Group on Fintech, and a result will take a seat on the body’s Steering Committee.
The Implementation Entity is the group tasked by the Competition and Markets Authority with delivering an open banking API for the UK.
In addition to Gavin’s appointment, Ian Major from Runpath (an FDATA founding member), has been named as the Convener of the Third Parties advisory group, covering price comparison websites and credit reference agencies.
Other appointments include Thaer Sabri of the Electronic Money Association to convene the Payments group and James Whittle of Payments UK to convene the PSD2 group, both of which FDATA will seek involvement in. The convener of one Advisory Group – that of Challenger Banks – is still to be named, and FDATA is assisting in that process.
Commenting, FDATA’s Executive Director Andy Maciver said:
“We are delighted that FDATA’s members and those close to FDATA have been appointed to these positions. We are perfectly placed to serve our members’ interests by influencing the direction of the API and ensuring that it delivers the enormous benefits to the consumer which were envisaged when HM Treasury started this process in 2015.”