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 Vania Franceschelli,
FECIF Chairperson
Open finance and the role of financial advice
Financial advisors, by virtue of their function as connectors between financial markets and retail customers, are called upon to be ahead of the times and be ready to provide clients with the knowledge and skills necessary to allow them to make the most of the new opportunities offered by digitalisation. We are living in a historical moment in which technology is experiencing an unprecedented development: the possibilities offered by artificial intelligence applications seem to have no limits and, despite passing under the radar compared to the best-known applications of generative AI (one above all: ChatGPT), the digitalization of many of the services related to financial and banking activities (Open Finance) can greatly make more efficient the processes that underlie savers' investment decisions and make the advisory service even more effective in responding to customer needs with tailor-made solutions.
What role can (or rather, must) the financial advisor play within the digital revolution that is transforming the financial markets? How can he/she best carry out his/her task, taking advantage of the new possibilities offered by technology to provide a higher quality service and allowing their clients to orient themselves in the vast sea of new digital financial services present in the financial ecosystem?
To better understand what it is, the European initiative on Open Finance – to be framed in the context of the broader European digital finance project promoted by the EU institutions – concerns the development of finance based on the access of innovative service providers to customer data and their reuse (subject to the latter's consent) with respect to a wide range of financial services and products, enabling data sharing and third-party access in line with data protection and consumer privacy legislation. This initiative takes the form of a package of laws proposed by the European Commission, which consists of three pieces of legislation: a regulation governing access to and use of users' financial data, a directive on payment and electronic money services in the internal market ("PSD3") and a regulation on payment services in the internal market. Open Finance is based on the simple and fundamental principle that digital financial services customers own and control both the data they provide and the data created on their behalf by service providers: for example, where a consumer uses an account aggregation service (which allows for the collection and aggregation, on a single platform, of the data relating to different accounts of the same holder), the ownership of both the data that he/she provides to the service provider and those generated by the latter's processing belongs to him/her. This is by no means obvious, given that the big problem of these services concerns precisely the processing (and relative, indiscriminate exploitation for commercial purposes) of customer data by service providers. From this point of view, reaffirming the power of the customer over their own data seems to confirm the fact that the European institutions have learned the lessons of the past and aim with their action at empowering the consumer. Providing these rights on paper - as essential as it is - is not enough on its own, and this is where the financial advisor comes in. The professional must emphasize this concept in his narrative to the client, convey the "spirit" of the regulatory dictate and make sure that in daily operations the customer is aware of his/her rights and of what it is optional or not for him/her to accept in subscribing to a financial service in digital form of any kind. An informed and aware saver fearlessly turns to the services offered by the financial markets: therefore, what has been said can only contribute positively to the efforts put in place by institutions to bring closer small savers to the markets, from which many are staying away due to a feeling of mistrust, given the scarce (often absent) knowledge of how they work.
In parallel with the work on Open Finance, there is an important digital public infrastructure project - which was also carried out at the service of European savers - that is worth mentioning. In December last year, European regulation established the European Single Access Point: ESAP is a digital platform for accessing financial and non-financial information (including sustainability information) made public by companies, free and easy to use, which will make it easier for investors - in particular, retail investors – to make their own investment decisions, without imposing additional reporting burdens on European companies. ESAP will ensure that investors have access to information in a standard (and therefore comparable) format on companies and financial products, and that companies (and in particular SMEs) have greater visibility with investors and, consequently, more funding opportunities. ESAP is expected to be made available to citizens from the summer of 2027: it will be phased in, to ensure that European regulations and directives come within the scope of the ESAP legislation within four years, in order of priority. During this period, there will also be a regular evaluation of the functioning of ESAP and a review that should ensure the suitability of the platform to the needs of its users and its technical efficiency. It is important for advisors to become familiar with this platform right away; this can potentially be a very useful tool available to both advisors and savers: although the information contained in ESAP may be easily accessible and organised in a clear and orderly manner, it will certainly be useful for the financial advisor to assist less experienced clients in consulting and using it. To conclude, the task to which we European financial advisors are called today is to anticipate: we must immediately understand the impact of the new frontiers of technology on the financial operations of savers and make sure that we transform the tools offered by the market into opportunities for our customers, while making them more aware of their means and serene in their relationship with financial institutions. This, ultimately, in order to promote a digitalization of finance that allows an efficiency of the system and easier and more extensive access to the markets for savers, possibly through the mediation (or help) of an advisory professional.
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