A new organization hoping to establish a new standard in financial data sharing launched nationwide last week. More than 30 financial service institutions have already signed on to implement the new standards put forth by Financial Data Exchange LLC.
The organization stated its mission as developing “a secure, common, interoperable, flexible, and royalty-free industry standard for financial data sharing,” according to a press release. The goal is to deliver consumers greater control over the financial services they receive. The initial FDX Canada Working Group of 31 firms includes BMO, TD, CIBC, National Bank, and RBC as well as Mastercard, Desjardins, Visa, Equitable Bank, and Blanc Labs among others.
“The technology behind consumer-directed finance, also called open banking, will drive innovation and the way lending services are delivered to borrowers,” says Dariush Zomorrodi, Chief Innovation Officer at Blanc Labs. “In the mortgage industry, we will see the emergence of several solutions.”
Zomorrodi says those solutions include self-service mortgage discovery tools that help borrowers shop for lenders, AI-driven advisors that can track consumer cashflow and manage debt payments, and credit approvals delivered instantly by third-party non-lender apps. He also says the new benchmarks can deliver credit-risk calculations based on the aggregation of a consumer’s digital financial footprint, as well as automatic document- and data-flow between every point of the mortgage circuit: borrowers, brokers, lenders, appraisers, lawyers, etc.
“The launch of FDX Canada proves the success of this industry-led initiative to bring leading organizations in the Canadian financial services ecosystem together around a common financial data sharing standard,” that protects consumers and businesses while simplifying their banking experiences, said Don Cardinal, FDX’s Managing Director.
FDX was initially organized in the United States, where its standards were adopted by over 100 firms. According to the company’s press release, it was organized to help consumers and small businesses securely achieve financial goals, access capital, and manage their finances. The release says FDX Canada’s work will be based on five core principles: control, access, transparency, traceability and security.
The FDX Canada working group is open to Canadian financial service organizations involved in secure, consumer-directed finance. The group has ensured that FDX standards align with Canada’s unique market conditions.
While many of these changes may see consumers and borrowers take greater direct control of their mortgage processes, Zomorrodi says there’s still room for brokers in this new world.
“These evolutions will take time. Automation will change the way we originate and underwrite mortgages in the future. However, we cannot completely remove the role of people in the mortgage industry,” Zomorrodi says. “I think the role of the mortgage brokers will evolve. Mortgage brokers can educate themselves on the latest trends and continue as trusted advisors to borrowers, particularly for consumers that do not easily adopt new technology readily and seek guidance through their lending journey.”