During its meeting on 19 June 2024, the Federal Council was informed by the Federal Department of Finance (FDF) about the most recent open finance developments in Switzerland.
The latest advances made by the industry are considered sufficient at this time, so that there is no need for further regulatory measures to be proposed. The FDF will continue to closely monitor developments in the financial sector as a whole based on the targets set by the Federal Council in December 2022.
Open finance refers to the practice of financial institutions using standardised and secure interfaces to make financial data available to other financial service providers such as fintechs, insurance companies and banks at the request of clients. In this way, clients can benefit from new, innovative products. It would be possible to create an overview of all bank accounts, investments and retirement assets or calculate the carbon footprint of financial investments, for example, at the click of a button.
Open Finance: Different to UK
Unlike in the European Union or the United Kingdom, there is no legal obligation in Switzerland for financial institutions to make financial data available to third-party providers at their clients’ request. Instead, the Federal Council expects the private sector, together with interested stakeholders, to push ahead with the standardisation and opening of interfaces in the various areas. In December 2022, the Federal Council instructed the FDF to submit possible measures to it by June 2024 in the event that the financial sector failed to make sufficient efforts to open its data interfaces.
The Federal Council was updated on the latest progress in the area of open finance during its meeting on 19 June 2024. The most recent developments, especially the multibanking initiative that was launched by means of a memorandum of understanding signed by 40 banks in May 2023, are seen as a clear commitment by the banking sector to open finance, even if the Federal Council’s targets for open finance in Switzerland (common standards, opening of interfaces, scalability) have not yet been fully reached. The FDF therefore informed the Federal Council that no government measures are required at present.
Deadline end of 2025
The February 2022 Federal Council report on digital finance stipulates that the need for action to promote and expand open finance should be reviewed on a regular basis, with a deadline of the end of 2025. The FDF will thus keep a close eye on further developments. It will monitor whether the multibanking initiative is being implemented effectively, whether the interfaces to non-bank third-party providers such as fintechs are being opened and how committed the insurance sector is to open finance. In addition, the multibanking initiative offers an interesting model for opening further interfaces, e.g. for securities custody accounts, for pillar 3a or in the insurance sector.
The Federal Council will continue to have the FDF keep it abreast of any measures that may need to be taken to promote open finance in Switzerland.
Featured image credit: edited from freepik
