Theresa: Hi Joris, it's a pleasure meeting you and discussing the impact of the upcoming Financial Data Access (FIDA) framework on banks and consumers. You've been working in the data environment for a while, right? Tell me, what is your role and how did you become involved with FIDA?

Joris: Hi Theresa, happy to be here! I’ve been working with financial data since 2015, when we launched our API Program at Deutsche Bank. APIs or Application Programming Interfaces allow third parties to access the bank’s data and use it to enrich and personalize their own applications or offers. Over the years, we have formed more than 55 partnerships and on our global API portal we offer over 40 data-driven products. As the API Program’s lead of customer business, I’ve focused on the impact the new EU regulation FIDA will have on banks, consumers, and the broader data economy. It's an exciting time to be in this space, as FIDA has the potential to introduce much needed legal clarity for data sharing use cases beyond payments data and with that to increase long-term trust into the concept of a financial data landscape. As we all know: trust is a key pre-requisite for the benefits of a data economy to materialize.

Theresa: Some may be unfamiliar with FIDA, could you please summarize what this regulation is all about?

Joris: FIDA, or the Financial Data Access Framework, is a comprehensive EU regulation that builds on the Payment Services Directive 2 (PSD2) but goes much further. It will open up access to a wider range of financial data beyond payment accounts – including mortgages, loans, savings, insurance, and pensions. Crucially, it sets out arrangements to allow third parties to access this data securely, with the customer’s permission, while also making provisions to compensate banks or other data holders for the use of the data. A key element of secure and efficient data exchange will be the establishment of data sharing schemes in which data holders and data users set-up a governance to agree on the financial service(s) covered, data scope, data standards and the technical infrastructure. One of the standout features is the permissions dashboard, which allows consumers to control who accesses their data and for what purpose. This new level of transparency and control empowers consumers while driving innovation in financial services, enabling the long-term development of more tailored and personalized offerings. It is important to keep in mind that discussions on FIDA still continue at the political level and additional legal clarity, particularly over implementation, is still missing. A political agreement on the final provisions of FIDA is expected in the first half of 2025.

Theresa: That sounds like a significant development. What advantages do banks gain from FIDA?

Joris: If drafted right, FIDA offers a number of benefits to banks. One of the most important is that it could allow them to have a more complete view of their customers' financial situation and health, beyond transactional data. This holistic understanding enables banks to provide more individualized and proactive services, which in turn increases customer satisfaction and loyalty. In fact, 72 percent of consumers say they highly value personalization in financial services, underscoring the growing demand for tailored interactions.

Banks will also benefit from seamlessly embedding their services into non-financial platforms such as e-commerce. The global Embedded Finance market is expected to grow from $81.4 billion in 2023 to $1,160 billion by 2033.

Additionally, the new regulation, through financial data sharing schemes, will allow banks to charge third parties for accessing their data via APIs, thus giving them the opportunity to generate new revenue streams. In doing so, banks not only comply with regulation, but also turn it into a profitable business model. This is a core difference between PSD2 and FIDA.

Finally, FIDA has the potential to position banks as key players in a more open and connected financial ecosystem. Those that invest early in the necessary API infrastructure can secure a competitive advantage and become key data hubs in this evolving landscape.

Theresa: When it comes to FIDA, what advantages do banks gain when they have already embraced Open Banking?

Joris: Banks that have already adopted Open Banking are well positioned to maximize the potential benefits FIDA will bring. They already have the basic infrastructure, e.g. a centralized API platform, and the operational experience needed to work with third parties. FIDA extends data access beyond payments, and banks that are already familiar with PSD2 will be able to scale their services more quickly and effectively. Yet, it must be said that, even with the Open Banking experience, FIDA implementation, particularly when it comes to data sharing schemes and the complexity in setting them up, will take time. There are also differences across the products and services in scope - mortgage and investment data are different from payments data and so forth. And we observe historically driven differences in how these products are structured and used in the different Member States. All of this adds to the complexities and challenges involved for operationalising the vision of FIDA. These considerations are important when banks are developing their FIDA strategy. Therefore early movers can leverage their experience to meet FIDA requirements and have a competitive edge, if they also take into account the specificities of data sharing under the new framework. By offering individualized, data-driven services across the financial spectrum, these banks can innovate faster, enter new markets with greater agility, and position themselves as leaders in the evolving financial landscape.

Theresa: What does FIDA mean for consumers?

Joris: For consumers, FIDA can be a game changer. It aims to provide greater transparency and control over their financial information and potentially offer a variety of new use cases. For example, instead of managing multiple platforms for different financial products – such as bank accounts investments, pensions or insurance – all their data can now be in one place. This centralization allows for better financial planning and budgeting, as well as more tailored offers. Imagine a single app that not only aggregates your financial data, but also uses AI to suggest better loan or insurance options or optimized investment strategies based on your unique profile.

In addition, FIDA emphasizes consumer permission, a shift that will help empower consumers to make the most of their financial data and choose services that best meet their needs. By sharing financial data, banks might also find it easier to reach underserved populations, thus bridging the gap for those who have been excluded from traditional banking systems.

In essence, data sharing under FIDA can create a more distinct, secure and streamlined financial experience for customers, empowering them to make better financial decisions while giving them greater control over their data.

Theresa: How should banks approach the changes that will be introduced by FIDA?

Joris: Banks should view FIDA not just as a regulatory obligation, but as a transformative opportunity. Those who act quickly will be best positioned to drive long-term growth and enable a deep customer engagement. Those who hesitate risk falling behind, missing out on these growth opportunities, and ceding ground to more agile competitors.

We’ve already seen with PSD2 that early movers gained significant advantages by developing data-driven solutions. FIDA presents a similar opportunity for innovation and allows banks to tap into new market segments. To take advantage of FIDA, banks need to rethink their business strategies. This may involve moving away from traditional banking models and embracing open finance, where data sharing becomes central to their operations.

To prepare for FIDA, banks must conduct a thorough assessment of their existing data infrastructure. Banks need to invest in building scalable API platforms and prioritize the development of APIs as foundational elements of their technology stack. Operational efficiency is crucial. By automating processes and using internal APIs as building blocks, banks can significantly reduce the time-to-market for new products.

Innovative collaborations with third parties should be a top priority. Early partnerships will enable banks to explore new business models and co-create customized products. The ability to form these partnerships quickly and efficiently will be a key competitive differentiator.

Internal training is equally important. Teams need to understand both the technical and regulatory aspects of FIDA to implement it effectively, especially when it comes to data sharing schemes which will decide how the data is shared (the standards, format, interfaces, etc.). This isn’t just an IT project – it’s a strategic initiative that will affect the way banks interact with their customers, partners and third parties who, with the permission of the consumer, will be able to access a wide range of data. Ensuring that all teams are aligned with the bank’s FIDA strategy is critical to success.

Theresa: What is your outlook on the future of data-based business models in general?

Joris: The future of data-driven business models is promising. Finance will be more deeply integrated into consumers’ daily lives, offering real-time, personalized solutions based on their unique financial needs. However, success won’t come from simply accumulating data. The companies that thrive will be those that can seamlessly share and integrate data across networks, creating ecosystems in which data drives innovation. The future belongs to those who can turn data into real value, whether through better partnerships, more personalized services, or entirely new business models.

Theresa: That sounds like an exciting future for us. I appreciate you taking the time out of your day to do the interview.