FIDA Regulation: Status 'Pending' – But not off the table yet
First yes, then no, now back on the table? The past week (week 7/25) has been an eventful one for the followers of EU’s open finance plans and shows just how challenging the development of such regulation can be. Many aspects must be weighed, sometimes against each other, as such changes have far-reaching implications on market participants and the market itself.
The Financial Data Access Regulation (FIDA), originally seen as the next major step in this direction, was considered for withdrawal in a leaked draft version of the EU Commission work programme for 2025 but is now back in “pending” status in the published version.
It will be interesting to see how much this shift is an indication of the EU’s commitment to pushing for an open finance framework in Europe or whether it was, in fact, rather driven by the strong speculative reaction on the initial withdrawal plans – as many market participants did not hold back on voicing their disappointment, even before the work programme had been made public.
The future of FIDA remains uncertain, but the discussion continues
At finAPI, we have been following the development of FIDA from the very beginning. We evaluated the European Commission’s proposal for the framework for financial data access (FIDA) in the summer of 2023 and communicated our position on it together with OFA. Fundamentally, we support the vision behind the regulation: broader access to financial data to foster innovation, competition, and customer benefits.
Critical points and open questions
At the same time, we pointed out weaknesses and challenges one and a half years ago that remain unresolved to this day. Other critics have also stated that FIDA could impose significant burdens and complexity on financial actors, contradicting the EU’s goal of simplifying regulations.
Some of the most cumbersome points left open by the current proposal:
- Uncertainty regarding the provision of customer data: It is not sufficiently defined which specific data must be made available by data holders.
- Lack of specific guidelines for “Financial Data Sharing Schemes”: Leaving the setting up of data sharing frameworks to the market participants is likely to lead to fragmentation and low uptake
- Unclear cost compensations for data holders: The exact mechanism and to what extent data holders may charge fees for providing data remains undefined and can therefore discourage participation in the schemes
The open questions surrounding FIDA are reminiscent of the challenges that arose with the introduction of PSD2. At that time, unclear guidelines and the assumption that “the market will regulate itself” led to considerable uncertainty and delays. Similar issues could also affect FIDA if precise and practical guidelines are not established. It is therefore crucial to learn from the experiences with PSD2 and set clear, uniform rules from the outset to ensure smooth implementation and acceptance.
Why FIDA still deserves a chance
Despite these challenges, we at finAPI see a great opportunity in FIDA for Europe. A well-defined and well-implemented regulation could drive Open Finance forward, giving consumers more transparency and control over their financial data. At the same time, it creates opportunities for companies to develop innovative and tailored financial products that sustainably improve the market.
Our experience with Open Banking has shown how much the market can benefit from fair and secure data usage. Faster credit decisions, simple identity verification, and customized financial services are just some of the advantages that Open Finance can enable.
Moreover, Embedded Finance is gaining momentum, allowing businesses to integrate financial services seamlessly into their platforms. Whether it’s instant payments, embedded lending, or automated financial management, companies across industries are leveraging Open Banking APIs to create more efficient and customer-friendly experiences. With a clear regulatory foundation like FIDA, these innovations could scale even faster and with greater consistency across the market.
What’s Next? Open Finance & Embedded Services keep moving forward
Even as FIDA remains on the EU’s legislative agenda for 2025, the topic of Open Finance is far from reaching its conclusion. The discussion continues, and we hope that the open questions will be resolved, and the regulation will be passed in an optimized form.
At finAPI, we will closely monitor further developments and continue to actively participate in the debate. As a member of the Open Finance Association (OFA), the Digital Lending Association (DLA), and the Free Insurance Data Initiative (FRIDA), we are committed to ensuring that Open Finance is designed to be fair, transparent, and future proof.
Regardless of the fate of FIDA, the industry is moving forward. Embedded Finance, in particular, continues to expand, demonstrating that market-driven innovation can thrive even in the absence of immediate regulatory clarity. The key challenge will be to ensure that these developments remain secure, interoperable, and beneficial for all stakeholders.
Only in this way can the full potential of financial data be realized – for consumers, businesses, and the entire market.
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