PSD3 and FIDAR in lending

Mariann Harrison

PSD3 and FIDAR in lending


Will PSD3 and FIDAR lead to a boost in lending?

While changes in regulations related to payment services may seem disconnected from the lending business, the market is indeed undergoing a significant transformation. Let’s delve into how!

A complete transformation of digital lending is expected. There is an enormous opportunity with FIDAR!

Until now, only account balances and histories were available, but that’s not enough for responsible credit assessment.

The rapid evolution of technology since the inception of the EU’s second Payments Services Directive (PSD2) has exposed shortcomings in the existing legislative and regulatory framework. Divergent national interpretations of PSD2 and varying administrative approaches across EU Member States have posed many obstacles for regulated entities and third-party providers, hampering progress.

In response to these challenges, the EU introduced the Payments Services Package, comprising three key components: the third Payment Services Directive (PSD3), a new EU Payment Services Regulation (PSR), and a Regulation on a framework for Financial Data Access (FIDAR).

Let’s focus on the last element, FIDAR, as it extends beyond payments to encompass a wider spectrum of financial services. FIDAR aims to establish explicit rights and responsibilities for managing customer data sharing in the financial domain beyond payment accounts. Key aspects of FIDAR include the introduction of guidelines for specialized data access interfaces and the removal of the requirement for banks to support dual access interfaces.

The proposed FIDAR regulations pave the way for clearer guidelines on data management in the financial realm beyond payment accounts, encompassing areas like mortgages, loans, savings products, investments, pension plans, insurance products, and creditworthiness assessments.

This is the big deal! Just imagine the possibilities! Customers won’t need to deliver tons of documents anymore!

If we think about it, by integrating data sets with information available from Land Registry, Credit Bureau, and government portals, the whole process can be accelerated and partially or fully automated.

This evolution towards “Open Finance”, driven by expanded data sharing in standardized formats, holds the potential to unlock innovative financial services and products through enhanced data utilization. The interconnectivity of financial accounts supported by APIs, coupled with data analytics and AI, can add value to customers in various financial domains such as investments, insurance, mortgages, and credits.

And here we arrived at the lending business: time-to-yes and time-to-money shortens, making customer journey more enjoyable, while on the financial institution’s side it comes to raised effectiveness and business growth. The vision of a 15-min-mortgage we shared in a previous post is no longer distant, but a very close reality.

It has never been more actual to digitalize legacy, setting up a new lending business, or being creative about new loan products and services. Are you ready?

Leveraging digital solutions like ApPello’s Digital Lending Solutions, which offer configurable low-code products covering the entire loan lifecycle, can help businesses adapt to the evolving landscape efficiently and effectively. Embracing the opportunities presented by FIDAR could be a catalyst for success in the dynamic financial market.

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