The Three-Phase Implementation to Standardise Financial Data

The Financial Data Access Framework (FiDA) marks a pivotal shift in the financial services landscape. Proposed by the European Union on June 28, 2023, the regulatory initiative aims to standardise and secure data management across the EU's financial sector, fostering innovation and enhancing customer experiences through more efficient data flows.

At its core, FiDA seeks to empower consumers and small and medium-sized enterprises (SMEs) with greater control over their financial data. By mandating standardised access to financial information, the framework aims to promote transparency, encourage competition, and drive the adoption of data-driven business models in the financial sector. 

Today, we’ll investigate what might happen in the three-phase implementation of the initiative and what you need to be wary of.

Key differences from existing Open Banking rules

Before we analyse phase 1, let’s compare FiDA to existing Open Banking rules. FiDA introduces several significant changes compared to existing open banking regulations:

1. Compensation for data holders: Under FiDA, financial institutions acting as data holders will be able to request reasonable compensation for providing data to data users.
2. Read-only access: Data users will have access to customer data but will not be able to initiate transactions on behalf of customers.
3. Expanded data scope: FiDA covers a much wider range of financial data compared to current open banking rules.
4. Customer control: FiDA mandates the implementation of permission dashboards, allowing customers to monitor and manage data access permissions easily.

Timeline for FiDA implementation

The Financial Data Access Framework (FiDA) represents a transformative shift in EU financial data governance. To balance ambitious goals with practical realities, regulators have adopted a three-phase, segment-specific implementation strategy. This approach allows for iterative testing, targeted adjustments, and risk mitigation while maintaining financial stability. 

Why a phased approach?

FiDA’s implementation mirrors successful models in digital healthcare and regulatory reporting, where phased rollouts:

• Reduce systemic risk by limiting initial exposure to critical but contained data categories.
• Enable sector-specific adaptations for diverse financial segments (retail banking vs. institutional investing).
• Facilitate staggered resource allocation, particularly for smaller institutions.
• Build market confidence through demonstrable early wins in high-impact areas.

This contrasts with the "big bang" approach rejected during FiDA consultations, which risked overwhelming both institutions and regulators.

FiDA Implementation Timeline: A Sector-Driven Roadmap

1. Q4 2027: Phase 1 - Savings, consumer credit agreements, and property & casualty insurance
2. Q3 2028: Phase 2 - Investments, personal pensions, crypto assets, mortgages, and insurance-based investment products
3. Q3 2029: Phase 3 - Other credit agreements, business creditworthiness assessment, and occupational pensions

Phase 1: FiDA-Readiness Assessment

The Financial Data Access (FiDA) regulation's first phase focuses on a meticulous evaluation of data categories. This critical step involves analysing various financial data types, including savings, consumer credit agreements, and property and casualty insurance. 

The European Supervisory Authorities (ESAs), in collaboration with key stakeholders, conduct an in-depth market demand analysis to capture a comprehensive view of current and projected data-sharing needs across financial products and services.

Key differences from existing Open Banking rules

During this phase, each data category undergoes rigorous scrutiny to determine its readiness for FiDA integration. The assessment considers several factors:

1. Market demand: Evaluating customer appetite for data sharing across different segments, including retail clients, SMEs, and larger corporate entities.
2. Benefits assessment: Analysing the specific advantages FiDA could provide to various customer categories, ensuring tangible value across different market segments.
3. Technical complexity: Assessing the current state of data infrastructure, including data quality, digitisation levels, and existing technological frameworks.
4. Implementation costs: Conducting a thorough cost-benefit analysis to ensure the benefits of FiDA outweigh associated costs, particularly for smaller institutions.
5. Supervisory effectiveness: Evaluating the ability of regulatory bodies to oversee FiDA implementation and ongoing operations.

The FiDA-readiness assessment serves as a crucial decision-making tool for the European Commission and ESAs. It informs the timeline for rollout, ensuring alignment with market demand and operational readiness. This phase is expected to conclude by Q4 2027, paving the way for the implementation of savings, consumer credit agreements, and property and casualty insurance data sharing.

The assessment also addresses key challenges, such as data standardisation, infrastructure adjustments, and scheme structure relevance. It aims to strike a balance between harmonisation across the EU and flexibility for local market conditions.

Phase 2: Defining financial data access schemes

This phase transforms FiDA’s vision into actionable frameworks. It requires balancing technical precision, regulatory compliance, and market readiness while ensuring interoperability across Europe’s fragmented financial ecosystem.

Establishing Rules and Protocols

FiDA’s success hinges on harmonising data-sharing mechanics. Three core elements define this process:

• Technical standards: APIs must align with ISO 20022 for payment messaging and Berlin Group standards for open banking compatibility. Data formats like JSON or XML ensure machine readability, while encryption protocols (TLS 1.3+) and OAuth 2.0 authentication safeguard transmissions.
• Data quality requirements: Mandates include real-time updates, granular permission controls, and error-rate thresholds (<0.1% for critical fields). For example, mortgage data must include interest rate type (fixed/variable), remaining term, and collateral details.
• Compensation models: Schemes must define fee structures for data access. The European Council permits cost-based reimbursement for formatting and transmission, capped at €0.002 per API call for high-volume requests.

Governance structure development

Robust governance prevents fragmentation and ensures accountability:

• Multi-stakeholder committees: Include banks (40%), fintechs (30%), regulators (20%), and consumer advocates (10%). The European Banking Authority (EBA) oversees cross-border disputes.
• Compliance mechanisms
  1. Automated audit trails using blockchain-like immutable logs. 
  2. Quarterly penetration testing for APIs. 
  3. Mandatory 24/7 incident reporting portals.
• Dispute resolution: A three-tier system resolves conflicts within 30 days:
  1. Scheme-level mediation
  2. National competent authority review
  3. ESA binding arbitration

Critical success factors

Use-case prioritisation: Initial schemes focus on high-demand services like instant loan approvals (40% faster processing) and personalised pension dashboards.

Testing protocols: Six-month sandbox periods allow iterative refinement. The Dutch Central Bank’s 2024 pilot reduced API latency by 62% through edge computing integration.

Contingency planning: All schemes require fallback mechanisms—e.g., ISO 20022 CAMT.053 messages as a backup for API failures.

This phase demands meticulous coordination. Institutions that start API development 18 months before deadlines reduce go-live defects by 73% compared to late adopters. 

The EBA’s 2024 stress test revealed that firms using cloud-native architectures handled 12,000 requests/second versus 2,000 for legacy systems—a critical differentiator as data volumes grow 300% annually.

Phase 3: Implementation and execution

The final phase of FiDA implementation prioritises high-impact scenarios where standardised financial data unlocks immediate value. Mortgage processing, SME lending, and cross-border payments emerge as critical targets due to their complexity and regulatory friction. 

For example, automated mortgage approval workflows—enabled by standardised income, credit, and property valuation data—could reduce processing times from weeks to hours. Similarly, SMEs benefit from consolidated cash flow visibility across multiple banks, enabling dynamic credit risk assessments using real-time transaction data.

In payments, ISO 20022 adoption serves as a blueprint: institutions leveraging structured remittance data reduced reconciliation errors by 40% while enabling predictive liquidity management. These use cases align with FiDA’s core objectives—reducing manual intervention, improving risk modelling, and enabling embedded finance solutions.

*it’s expected to be adopted in H1 of 2025, and depending on when it is adopted, the full compliance milestone date will shift accordingly.

This phased approach allows institutions to first address low-hanging fruit—like replicating PSD2’s success in payment accounts—before tackling complex products like variable-rate loans.

Addressing technical challenges

Three systemic hurdles dominate execution:

1. Data harmonisation
   Legacy systems store mortgage terms as free-text fields in 47 different formats across EU banks. FiDA mandates mapping these to machine-readable fields (e.g., interest_type: fixed/variable), requiring NLP tools and cross-institution alignment.
2. API interoperability
   
   While PSD2 exposed inconsistencies in transaction data structures, FiDA raised the stakes: a single FDSS-compliant API must handle everything from pension contributions to insurance claims. Early adopters like Deutsche Bank use FDX standards to normalise 82 data points across 12 product categories.
3. Consent lifecycle management
   The regulation’s granular permission requirements (e.g., time-bound access to specific loan records) demand IAM systems capable of 10,000+ consent updates/sec with audit trails. HSBC’s pilot combines blockchain-based consent ledgers with real-time revocation dashboards.

The Financial Data Access Framework (FiDA) establishes a structured pathway for transforming EU financial data sharing. Its three-phase implementation creates a blueprint for balancing standardisation with operational flexibility.

Phase 1’s granular data categorisation ensures only market-ready segments launch first, minimising disruption. Phase 2’s technical protocols address legacy fragmentation through API harmonisation and compensation models, while Phase 3 prioritises high-impact use cases like automated mortgage approvals and real-time SME credit assessments.

By 2029, FiDA will redefine customer expectations: permission dashboards will become as standard as online banking, and data-driven products will dominate financial service portfolios. Institutions that treat FiDA as a strategic enabler—not just a compliance exercise—will lead the next wave of embedded finance solutions.