FiDA Regulation: How EU Regulation Is Transforming the Capital Markets and Asset Management Business of German Banks

Brussels is turning a wheel that will fundamentally alter the European financial industry. With the Financial Data Access Regulation – FiDA for short – the European Commission presented a draft regulation in June 2023 that extends the principle of open banking consistently into open finance. Trilogue negotiations between Parliament, Council and Commission have been under way since April 2025, and a political agreement is expected in the course of 2026. What initially sounds like yet another compliance exercise turns out, on closer inspection, to be a tectonic shift – particularly for the capital markets business and asset management of German banks.

FiDA goes far beyond the opening of payment accounts that became reality under PSD2. In future, data on investments, mortgages, savings, crypto-assets and occupational pensions will also have to be shared in real time via standardised interfaces with authorised third parties at the customer's request. For institutions whose business model is built on the exclusive knowledge of their clients' assets, this amounts to a watershed moment.

From Open Banking to Open Finance: What FiDA Regulates

The essence of the FiDA regulation is quickly summarised: financial institutions classified as "data holders" – i.e. banks, insurers, investment firms, fund management companies, credit rating agencies and crypto-asset service providers – must provide their customers' financial data promptly, free of charge and in machine-readable form upon request. Authorised "data users", including newly created Financial Information Service Providers (FISPs), can then use these data to develop data-driven financial products and services.

Three institutional pillars underpin the framework: mandatory membership in so-called Financial Data Sharing Schemes (FDSS), which define technical standards, liability rules and remuneration models; a permission dashboard to be provided by the data holder, through which customers can manage their data access rights in real time; and a licensing regime for FISPs, jointly supervised by the European Supervisory Authorities (ESAs) – EBA, EIOPA and ESMA.

Capital Markets: When Information Asymmetry Fades

In the capital markets business of German banks, FiDA will be felt most acutely at one point: the erosion of information advantages. Until now, institutions have held an exclusive picture of their clients' wealth structure, risk profile and investment history. This knowledge is the foundation for pricing, product placement and the management of the client relationship. FiDA breaks this monopoly.

In concrete terms, this means: when a retail client or a mid-sized company grants a competitor – be it a neobank, a fintech or a specialised FISP – access to its custody account and investment structures, an entirely new competitive landscape emerges. Third-party providers could submit tailored investment proposals on the basis of these data, without ever having built a business relationship with the client themselves.

Impact on the Securities Business

Several consequences arise for the traditional securities business. First, transparency over custody account structures will increase. Clients who hold portfolios at multiple institutions will for the first time be able to obtain a consolidated overview – provided by third-party providers, not by their principal bank. This fundamentally shifts the balance of negotiating power. Second, pressure on fee models is likely to intensify, as data-driven comparison services expose price differences. Third, fragmentation of the value chain looms: whoever loses the client interface becomes an interchangeable infrastructure provider.

At the same time, FiDA also offers opportunities for institutions with strong capital markets expertise. Those who act as data users and intelligently utilise data from other institutions can develop new advisory models – such as AI-powered portfolio optimisation that analyses a client's total wealth across all custodian banks and provides active allocation recommendations.

Asset Management: Between Threat and Reinvention

For the asset management arms of German banks, FiDA unleashes a dual effect whose ambivalence can hardly be overstated. On one side stand considerable defensive risks: when clients can share their investment portfolios at the touch of a button with independent robo-advisors, financial planners or comparison platforms, the high-margin advisory and wealth management business comes under pressure.

Defensive Risks: The Erosion of Client Loyalty

The threat is tangible. Platform providers with data-driven investment models are already pushing into the market. FiDA gives them the missing tool: regulatory-backed access to clients' portfolio data. A FISP could, for instance, develop a financial coach that aggregates, analyses and optimises a client's entire wealth – custody accounts, insurance, pensions. The principal bank is thereby relegated to a mere data supplier, while the client relationship migrates.

This is particularly explosive for discretionary portfolio management. When clients can compare their investment performance in real time via cross-provider dashboards, the pressure to justify active management fees rises enormously. Asset managers whose performance lags behind passive strategies will lose their mandates faster than before.

Offensive Opportunities: Data-Driven Business Models

The strategic counterposition is at least equally relevant. Asset managers who use FiDA offensively as a lever can position themselves as central players in the emerging open-finance ecosystem. The possibilities range from developing personalised investment strategies based on comprehensive financial data, through integrated retirement-planning cockpits, to AI-powered risk profiling that previously failed due to data availability constraints.

The decisive factor will be whether German institutions actively shape their dual role as data holder and data user. Those who merely hand over their data without building data-driven value-added services of their own will be the losers of this regulation. Those who, by contrast, harness the new data flows to differentiate their product offering and defend the client interface can emerge from the transformation in a stronger position.

Implementation Challenges

IT Infrastructure and Legacy Systems

The technical dimension of FiDA implementation is immense. German banks must develop standardised APIs that deliver financial data in real time, continuously and at a defined quality level. For institutions with legacy IT landscapes – and this applies to virtually all major German banks – this means massive investments in data architecture, master data management and API platforms. The experience from PSD2 implementation demonstrates that this transformation process is considerably more complex than initially anticipated.

Data Governance and Compliance

FiDA intervenes deeply in data governance. The regulation demands comprehensive documentation of all data accesses, transparent consent management via permission dashboards, and strict adherence to purpose limitation in data usage. Moreover, institutions must simultaneously ensure conformity with GDPR, DORA and the sector-specific requirements of the FDSS – a regulatory orchestration that ties up substantial resources.

Remuneration Models and Market Structure

A key open question concerns remuneration for data provision. The FiDA draft permits data holders to charge reasonable compensation including a margin. How this is to be calculated is the subject of intensive industry discussions. Excessively high fees could stifle innovation; excessively low ones could undermine data holders' willingness to invest. For German banks that must invest considerable sums in their IT infrastructure, the design of this model is of existential importance.

Market Dynamics: Winners and Losers

FiDA will permanently alter the market structure in the German financial sector. Among the potential winners are universal banks with a strong technology base that can serve both sides of the ecosystem – data holder and data user – simultaneously. Fintechs and specialised FISPs developing innovative services on the basis of the new data flows are also likely to benefit.

A notable finding from the latest KPMG study is that more than half of German consumers are fundamentally willing to share their financial data – provided it does not incur additional costs. At the same time, 68 per cent of respondents make the trustworthiness of the data recipient a central condition. This is good news for established institutions: their trust advantage over less well-known providers is a strategic asset that they must exploit consistently.

On the losing side are institutions that treat FiDA purely as a compliance obligation and underestimate its strategic implications. Those who neither build innovative data services nor actively defend their client interface will cede market share to more agile competitors – and in the worst case become an interchangeable product supplier in the background.

The European Commission has also responded to the industry's extensive criticism and published simplification proposals in May 2025. Among these is the much-discussed exclusion of big-tech companies as data users – a step that enjoys broad support across the industry and is intended to prevent European financial data from being captured by tech giants from the United States or China. France, too, once a staunch opponent of the regulation, now supports a demand-driven approach with phased implementation.

Recommendations for Action: What German Banks Should Do Now

The transition periods following adoption of the FiDA regulation – an estimated 36 to 48 months depending on the data category – may sound comfortable, but they are not. Experience from PSD2 implementation shows that lead times are routinely underestimated. German banks with significant capital markets and asset management operations should initiate the following six measures now: