PSD2 Based Financial Data Access Framework

One of the key players in the financial industry, the European Banking Federation (EBF), has taken an active part in the European Commission's "Have Your Say" consultation program. Stakeholders can use this platform to express their opinions on the proposed Financial Data Access Framework (FIDA), a plan that aims to completely change how financial data is exchanged and accessed within the European Union. In its extensive comments, the EBF has emphasized how important it is to take a prudent stance that balances the need for mandatory data sharing with any risks it may pose, as well as the market-driven factors that propel the financial industry's growth.

The framework aims to protect consumer trust while promoting innovation and technological growth in the light of the changing digital ecosystem. Given the diverse range of parties involved—from established banks to fintech startups—all of whom are essential to the financial ecosystem, this is especially important. The Payment Services Directive 2, or PSD2, is a key component of future developments, as the EBF's statement to the Commission emphasizes. The foundation for improved consumer rights, security, and the promotion of an environment that is competitive through open banking has already been established by PSD2.

The Federation has advocated for an open and progressive process in the negotiation and implementation of data sharing agreements, calling for a clearly defined scope for the FIDA. This strategy is seen to be necessary to guarantee that everyone is aware of their own tasks and duties within the framework. In its position paper, the EBF painstakingly details the necessity for exact definitions, especially with regard to "Financial Information Services," which are integral to the ecosystem. The Federation hopes to do this by doing away with uncertainty and creating a setting in which every entity may function confidently and clearly.

Moreover, a major focus of the EBF has been to tighten the authorization standards for Financial Information Service Providers (FISPs). By doing this, the financial system's integrity will be strengthened and it will be made sure that only organizations that fulfill strict requirements are permitted to take part. Because financial data is sensitive, the Federation maintains that strong security protocols and fraud protection measures are non-negotiable.

The EBF makes the important argument that the FIDA may benefit from the lessons learnt from PSD2's experiences. FIDA can be guided by PSD2's emphasis on security, customer rights, and open banking's ability to foster innovation. The Federation thinks a more unified and effective regulatory framework may be built by elucidating the relationship between FIDA and current legislation, such PSD2.

The EBF's commitment to developing a financial data sharing model that is safe, effective, and advantageous for all stakeholders is demonstrated by its participation in the "Have Your Say" campaign. The Federation is actively working towards a future where cross-sectoral data sharing is not just a dream but a reality by utilizing the insights from PSD2 and advocating for a transparent, structured approach to data sharing. This progressive strategy is expected to boost the financial services sector's innovation and competitiveness in the EU, which will ultimately help consumers and the overall economy.

PSD2 as the Foundation for the Financial Data Access Framework (FIDA)

In the European financial services industry, the Payment Services Directive 2 (PSD2) has revolutionized the landscape by establishing new guidelines for data security and consumer rights. The European Banking Federation (EBF) is looking to the strong framework offered by PSD2 with the introduction of FIDA in order to promote a fair and safe approach to financial data sharing.

• PSD2 has established a robust regulatory framework that is both consumer-centric and conducive to innovation.
• The EBF underlines the significance of mandatory data sharing, informed by PSD2, to ensure enhanced consumer protection and market competitiveness.

The goal of the FIDA plan is to expand on the achievements of PSD2, which has already established a standard for managing financial data with increased security and transparency. According to the EBF's analysis, the new framework might be developed using the PSD2's established principles as a guide, guaranteeing a smooth transition that is advantageous to all parties concerned.

Clarifying the Scope of Financial Information Services Under PSD2

As it stands, PSD2 has advanced the idea of open banking, creating a thriving ecosystem that supports the growth of Financial Information Service Providers (FISPs). The requirement for clarity that PSD2 has taught the financial industry is reflected in the EBF's proposal for a precise definition of "Financial Information Services" under FIDA.

• The EBF advocates for precise definitions to avoid ambiguities that could hinder the roles and responsibilities of financial institutions under FIDA.
• Harmonizing the scope and authorisation of FISPs as per PSD2’s established criteria will ensure only qualified entities participate in the market.

It is imperative to apply the lessons acquired from the implementation of PSD2 to the authorization and management of FISPs. They contend that under FIDA, a comprehensive structure akin to PSD2 may produce a more dependable and safe financial data sharing environment.

Leveraging PSD2's Security Protocols in the FIDA Framework

PSD2's strict regulations have made security a key component, guaranteeing the protection of customer data inside the open banking ecosystem. PSD2's effect is evident in the EBF's emphasis on promoting strong security measures under FIDA and enhancing the integrity of the financial system.

• PSD2's insistence on high-security standards has set the bar for what should be expected in any new financial data sharing framework like FIDA.
• The EBF's response to FIDA suggests that the security and fraud protection measures mandated by PSD2 should be the minimum standard.

The EBF suggests that FIDA might fortify the financial system against possible threats by using the security lessons learned from PSD2, so guaranteeing that the sensitive nature of financial data is never jeopardized.

Advancing Cross-Sectoral Data Sharing with PSD2 as the Benchmark

In order to provide a secure environment for cross-sectoral data sharing while promoting innovation and competition, the EBF saw FIDA as succeeding where PSD2 failed. The takeaways from PSD2 are unambiguous: an integrated and competitive financial market depends on a legislative framework that permits such sharing.

• PSD2 has already started breaking down barriers between different financial services, setting the stage for a more collaborative environment that FIDA aims to expand.
• The EBF sees the potential for FIDA to leverage PSD2’s regulatory framework to enhance the EU financial services industry's competitiveness and innovation.

In conclusion, PSD2's framework serves as a beacon of guidance and provides important insights into creating a safe, effective, and competitive environment for financial data exchange as the EU banking sector considers integrating FIDA. The EBF's reaction to the proposed FIDA, which was enhanced by PSD2 principles, emphasizes the importance of industry stakeholders in determining the future of financial services in addition to highlighting the need for a clear and safe data sharing mechanism. Financial institutions need to be proactive in order to be ready for the constantly changing environment and to take advantage of the benefits that a FIDA with knowledge of PSD2 will bring.

Read More

EBF response to European Commission ‘Have Your Say’ Consultation on Financial Data Access Framework proposal

The European Banking Federation responded to the European Commission’s ‘Have Your Say’ consultation on the proposal for a Financial Data Access Framework (FIDA). The EBF emphasizes the need for a measured approach, striking a balance between the mandatory data sharing elements, and the potential ris…

EBFVittoria Barbieri