FIDA: Open Finance is coming

FIDA (Financial Data Access) is the upcoming regulation that will transform the financial industry towards open finance. It will profoundly impact financial actors with personalized and real-time solutions tailored to customer needs. We explore potential use cases and how the future may look like with FIDA: 

The European Commission published in June 2023 a regulatory proposal for the Financial Data Access (FIDA) framework that will profoundly impact the financial sector. Under FIDA, financial institutions will have to share broad set of customer data to authorized third parties. This represents a shift from Open Banking with PSD2 towards Open Finance with FIDA. It will bring new challenges and opportunities.
 

Illustration 1: From Open Banking to Open Finance

Data holders (e.g., banks, insurance companies and investment firms) will have to share customer information to data users (authorized financial information service providers) upon permission granted. FIDA introduces requirements to share broad scope of customer data (including savings, loans, mortgages, investments, insurance, etc.). Data holders will have to put in place a permission dashboard for customers with a real-time view on access granted and the ability to withdraw permissions.

Illustration 2: Overview of actors and data sharing
 

Financial institutions will be significantly impacted and some of the challenges foreseen include:

• Challenging timeline: Comply and adhere to financial data sharing scheme(s) 18 months after the adoption of the regulation
• Broad data scope: Provide access to broad set of data and implement API interface
• New real-time dashboard: Provide permission dashboards with real-time information
• Data management: Define and implement proper data management rules and ensure data protection, privacy, and security
• Competitive pressures: Increase competition with new actors able to access strategic data about customers
   

FIDA can bring new opportunities for financial institutions to increase revenue notably:

• Data monetizing: Allow reasonable compensation for providing access to data
• New offering: Propose new innovative products and services
• Cross-selling: Integrate services from third parties to sell
• Holistic view: Provide consolidated view about customer finances, insurance and investments
• Tailored offering: Provide tailored advice based on advanced customer profiling
   

18 months after adoption of the regulation, financial institutions will have to comply with part of requirements and adhere to financial data sharing scheme(s). The European Banking Authority (EBA) in cooperation with the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA) will develop regulatory technical standards specifying some aspects.

Deloitte can provide information about FIDA implications, support with regulatory compliance and identify new revenue opportunities.

Feel free to contact us for more information.

Maxime Gaborieau
Senior Manager | Advisory & Consulting
mgaborieau@deloitte.lu