Financial Data Access Framework (FIDA)

A few years ago, 'Open Banking' was introduced in the European Union (EU) by the second Payment Services Directive (PSD2), reviewed by the EC at the end of June. Open Banking has enabled customers to allow Payment Services Providers (PSPs) to access their payment account data, which changed how customers and businesses use payment services.

The FiDA now goes one step further and introduces 'Open Finance' by enlarging the scope of data customers may allow to share. This opens the door to new types of services and business models in the financial industry.

Thanks to FiDA, customers will be able to share additional data, such as:

• Mortgage, other loans, savings accounts and all other accounts which are not yet in scope of PSD2 (or the draft PSR), including balance, conditions and transaction details;
• Creditworthiness assessment performed during a loan application process or a request for a credit rating;
• Investments in financial instruments, insurance-based investment products, crypto assets, real estate and other financial assets and economic benefits derived from it;
• Non-life insurance products, including data on insured assets (excluding life, health and sickness products)
• Suitability and appropriateness assessment under MiFID;
• Sustainability-related data; Pension
  rights in occupational pension schemes and personal pension products;

FiDA builds upon an existing concept of Open Banking: customer's permission. Financial Information Service Providers (FISPs, e.g. authorized Third Party Providers) need to obtain permission from customers before accessing their data, which may be withdrawn at any time. Similarly to what's required in the PSR regarding data access management, Data Holders (e.g. financial institutions) should ensure that their customers can easily manage, consult, re-establish, and withdraw their permissions in a dedicated permission dashboard.

FIDA also introduces by requiring Data Holders (financial institutions) and Data Users (Third Service Providers) to become members of one or more Financial Data Sharing Scheme(s). Those schemes should be mandated to enable data access between multiple Data Holders and Data Users, to develop standardized contracts as well as data sharing standards and industry-recognized interface standards.

Outlook

A more open banking system can pave the way for innovative and user-friendly solutions in the payments market and strengthen competition. In addition, enhanced consumer rights and new rules on access to financial data are expected to increase customers' confidence in using their financial data. They are to be given more responsibility and should be free to decide who and when may use which data and when they would prefer to restrict third-party access to their data. The legislative package is now in the hands of the European Parliament and the Council and further changes are expected.