consumption
A bank or a fintech company?
Everything you need to know about the financial information revolution
The financial information services reform enters into force today and will allow the public to receive comparative financial information and offers from fintech companies that will receive a license from the Securities Authority.
Chairman of the Authority: "For the first time we can easily and simply compare the financial services we all receive"
Walla!
Of money
14/06/2022
Tuesday, 14 June 2022, 10:04 Updated: 10:18
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As of today, fintech companies licensed by the Securities Authority will be able to obtain, with the consent of interested customers, access to the financial information of customers currently stored in banks, credit companies and other financial entities.
Upon receipt of the information, those companies will be able to offer the public financial services, some of which have until now been the property of the banks.
Thirteen fintech companies have so far applied for a license to provide information services.
Ten of them are companies that are operating in the market today using Screen Scraping technology.
By the full implementation date of the reform in December 2024 they must fully switch to API technology.
The Securities Authority estimates that in the near future the public will receive offers from fintech companies regarding financial information services and adds that they urge the public to verify on the authority's website that the companies have indeed received the appropriate license.
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It will take us a while to get used to the competition
The basis of the "open banking reform" is the principle that the customer has control over his personal information that is among the financial entities, through which he manages his financial activities.
A customer who is interested in receiving financial information services from fintech companies will authorize the financial entity to transfer the information to fintech for the purpose of centralizing the information, analyzing it and receiving competitive value offers tailored to his needs based on this information.
The transfer of information from the financial entity (information provider) to the fintech company (information service provider), in a secure manner will be possible thanks to API technology, which produces secure access to a secure database.
Information services reform is already being implemented around the world, and experience shows that the reforms have indeed led to efficiencies and even to the creation and increase of savings among households using financial information services.
Also, world experience shows that full implementation of the reform takes time.
For example, in England it takes about two years for stabilization and the realization of the potential of the reform to begin.
Anat Guetta, Chairman of the Securities Authority: "Push for real competition for the client's pocket, which will lead to the improvement of the public's financial health" (Photo: Reuven Castro)
"Consumer revolution"
As part of the reform, the Securities Authority works to ensure that the transfer of information from financial entities to
fintech
companies is conducted securely and under the client's control at all times, in accordance with the following emphases
: Each customer must confirm to the fintech company access to his personal information, and at the same time confirm with the bank that he does allow the company access.
The approval process is digital and executed in a simple way.
• As part of the approval process, the customer will choose the
type of information to which the company will be exposed
, and the length of time in which the company will be given access to the personal information.
• It is important to mention that
at any point a customer can return to it and revoke access to his accounts
through one step - calling the banks and / or the information company to revoke the authorization to access the personal information.
The types of information that the fintech companies, which have been licensed, will be able to obtain access permission, and offer offers to the public, after the customer's approval:
•
First stage
, start date 14.6.2022 - information regarding current and debit card transactions. The shekel and foreign currency, as well as the debit cards used by customers.
•
Second stage
, start date 31.10.2022 - Information regarding loans and savings. Companies will be able to receive information regarding loans and savings (deposits) at banks and credit card companies.
•
Third stage
- date Beginning June 2023 - Information regarding securities activity The companies will be able to offer securities offers to the public, regarding securities activity
•
Fourth stage
- Start date November 2023 - Information regarding loans from institutional entities.
The companies will be able to gain access from the institutional bodies such as insurance companies, pension funds, provident funds and study funds, and offer value propositions to the public, with regard to loans from these bodies.
•
Fifth stage
- start date May 2024 - information from deposit and credit unions.
Companies will be able to access information from credit deposit associations that provide banking services of current accounts, savings, credit and securities activities, and offer value propositions to the public, regarding the receipt of services from
these
entities
.
Non-bank credit and credit intermediation companies will be able to access information from other credit intermediation companies and credit intermediation companies, and therefore offer value propositions to the public, with regard to loans from these entities.
The entry into force of the sixth phase in November 2024 will in fact mark the application of the Information Services Act in its full form to all types of financial activity and to all types of financial entities that will be required to grant access to fintech companies.
It should be noted that from the beginning of 2023, corporate accounts are also expected to be added to the reform, which will inflate competition from the fintech companies as well as the business sector.
Anat Guetta, Chairman of the Securities Authority:
"The entry into force of the information services reform is a consumer revolution.
For the first time we will be able to easily and simply compare the financial services we all receive such as deposits, credit and transfer costs between the banks and various financial entities, something that has not been possible until today.
The reform will create value for the public and even beyond that - push for real competition for the customer's pocket that will lead to the improvement of the public's financial health.
The reform will contribute to accelerating the transition from a centralized market to a competitive financial market for the benefit of the economy and the public in Israel. "
Of money
consumption
Financial consumerism
Tags
Banks
Fintech
Securities Authority
reform