FIDA: A Gateway to Innovation and Opportunity in Financial Services?
TL;DR
FIDA Framework Overview: A new EU initiative to harmonize financial data sharing, extending beyond PSD2 to include data on mortgages, insurance, pensions, and investments, enabling personalized financial products and enhanced services.
Beyond Compliance: FIDA is more than a regulatory requirement; it’s a chance for banks and FIs to innovate, commercialize new opportunities, and create hyper-personalized products that drive customer engagement.
Key Takeaway: Approach FIDA as a business opportunity, exploring its potential for broader value creation rather than treating it as a compliance checklist.
Understanding the Financial Data Access (FIDA) Framework
The financial sector is on the cusp of significant change with the introduction of the Financial Data Access (FIDA) framework. Designed to spur innovation, enhance competition, and strengthen user protection in the financial sector, the framework will make data sharing more accessible and harmonic across the EU. It will enable market participants to develop personalized financial products, such as tailored investment opportunities and streamlined loan processes.
But it is not just a regulatory shift, it is an opportunity for innovation and better interconnectivity.
What is FIDA?
In essence, FIDA is a harmonized framework for financial data sharing within the EU. Think of it as an extension of the foundations laid by PSD2. It takes the same concepts of consumers owning their data, and sharing it with companies when there are clear benefits but applies these to new areas. The scope of FIDA includes data on mortgages, insurance, investments, pension products, and more. For us we envision that in the same way we all happily share our data with Google and ChatGPT to reap the benefits of a digitally driven life, we will happily share other types of data that bring us value. Some of the potential applications and new products could include personalised investment opportunities and innovative insurance offerings tailored to customer needs.
More than just an exercise in compliance
Having been involved in open banking from every angle – implementation from inside the bank, supporting banks with integration, and helping businesses unlock the value of transactional data – we want to share our perspective on how to approach FIDA. As the subheading suggests, the secret is to see it as more than just an exercise in compliance.
Of course, there is no way to get around the regulatory obligation. We understand that the implementation of FIDA will be no walk in the park, and it is not something that can be approached lightly. However, we want to encourage banks, FIs, and other affected actors to keep an open mind around FIDA. To approach it in the same way you would any other business opportunity. Take a step back, not just take it so figuratively, and try to view the bigger picture of what it could mean.
Rather than viewing FIDA as another box to tick, we encourage organizations to explore its potential to open up new opportunities. Our best advice is to keep an open mind, and not base decisions solely on compliance objectives. Try to take a creative approach when exploring the opportunities opened up by FIDA. Consider how it can be commercialized. Think about how it can be used differently to add value to existing products and services. But even more than that, take a wider perspective and reflect on the potential of the indirect benefits of hyper-personalised and more tailored products such as enhanced customer engagement and relationships.
For those ready to embrace the possibilities of FIDA, our message is clear: go beyond the regulatory perspective and reimagine what is possible.