FIDA on the consumers’ side: how is FIDA empowering consumers?
The core objective of the Financial Data Access proposal is to empower consumers with greater control over their financial data. This would enable individuals to benefit from financial products and services that are more tailored to their needs. Overall, the FIDA proposal aims to foster a more consumer-centric and financial data-driven economy, promising enhanced user experiences and opportunities.
Nevertheless, questions have been raised regarding the safety of consumers' data within the Financial Data Access framework and whether there are adequate safeguards in place to protect consumers from the large technology platforms.
In this blogpost we will delve into how FIDA can effectively address those concerns, thereby benefiting and empowering consumers.
What are the current issues that FIDA aims to resolve?
FIDA seeks to address the challenge of accessing and reusing consumer data to promote better access to financial information and unlock opportunities for consumers to benefit from better financial products and services.
Consumers are willing to share their data when they receive good services in return. However, currently they hesitate to do so due to lack of trust. This is because:- There are no rules and tools to manage data-sharing permissions.
- Consumers feel that they are not able to control how their data is being used.
- They are concerned about cybersecurity risks and the protection of their data and privacy when sharing information.
- Limited access to financial data poses challenges for data users seeking to innovate and provide new services, consequently limiting the opportunities available to consumers for accessing tailored products and services that better suit their needs. At the same time, the current lack of authorisation and supervision of the activity of the data users creates risks for customers, underscoring the need for enhanced oversight and regulation in this area.
The absence of standardisation in both the type of data and the technical infrastructure increases the cost of data-sharing, leading to significant divergence between data types.
How will FIDA benefit consumers?
Greater control over data. FIDA promises consumers enhanced transparency and control over their data, thanks to innovative features, such as the financial data access permission dashboards. Requiring data holders to provide consumers with permission dashboards to manage customer consent for data sharing empowers consumers to confidently manage data access, fostering more data sharing transactions. Ultimately, this greater control facilitates easier access to innovative and affordable financial services for customers.
Personalised financial services. Data-driven finance paves the way for an industry shift from offering one-size-fits-all products to personalised solutions which are tailored to individual customer needs. This transition includes the development of customer interfaces that elevate competition, enrich user experiences, and prioritise the customer as the ultimate beneficiary of financial services.
Protection of personal data. FIDA takes a customer-centric approach and aims to ensure that all consumers have effective control over their financial data, notably by strengthening personal data protection in line with the General Data Protection Regulation (GDPR).
Improved financial management. FIDA opens the possibility for improved personal finance management by consolidating all financial services into a single dashboard. This consolidation could also facilitate the delivery of personalised advice.
Tailored services through automation. Data-driven services have the potential to automate complex processes further that are used to be arduous and time consuming tasks. An example of this automation, includes offering comparison services among competing serviced providers, with tailored results to the consumer needs for easier and more cost-effective access to financial services.
Summary
In summary, FIDA is poised to address the existing market challenges and bring significant additional advantages to consumers. Through its implementation, individuals gain greater control and transparency over their financial data. This shift towards more personalised financial solutions through data-driven finance, fosters competition, enhances user experiences, and places the customer's needs at the forefront, whilst protecting personal data.
