Fintech Explained

Technological innovation is transforming financial services, giving people low-cost, transparent, and frictionless alternatives to traditional products. Open banking – or consumers’ right to securely control and share their financial information with financial institutions and third-party applications – is foundational to these innovations.

Whether it’s personal financial management, digital banking, making payments, applying for credit, or handling investments, open banking technology gives consumers greater choice, control, and access to the financial services they want.

Yet, despite significant innovation, and growing consumer demand for fintech services, many of the financial benefits that consumers enjoy today could be undermined without clear rules of the road. Under the current system, traditional providers like large banks can slow down or outright block consumers from sharing their data with the apps of their choice.

Regulators can stop this from happening. By establishing consumers’ right to their financial data, the Consumer Financial Protection Bureau can ensure consumers have control of their data and how it is shared, preserving the open banking ecosystem. This will protect competition and choice in financial services and usher in a new era of accessibility and innovation.

Open banking underpins popular and valuable consumer benefits. 

In the past, consumers used to bring print-outs of financial information to their accountants, financial advisors, or bankers to access services. Today, open banking technology helps consumers seamlessly and securely connect their accounts to the thousands of apps and services they choose.


Because of open banking, consumers can better manage their day-to-day financial decisions using information about their cash flow across different accounts, as reflected in their apps. This insight can help individuals take advantage of rewards, pay bills, prevent fraud, and avoid costly fees. The majority of fintech users report using apps to set aside at least $50 in monthly savings that they otherwise wouldn’t have. Open banking also enables innovations like peer-to-peer payment services, allowing consumers to send and receive funds with the click of a button, services that used to take days and be done on paper.

Open banking helps small financial institutions offer more competitive, technology-driven products and services. Seventy-six percent of Americans say the ability to connect their accounts to apps and services is a top priority when selecting a bank. Open banking helps these smaller financial institutions – from community banks to Minority Depository Institutions, Community Development Financial Institutions, and credit unions – meet consumer demand.

Washington should establish consumer data rights to promote choice and competition.  

When Congress passed the Dodd-Frank Act in 2009, it established consumer rights to access financial records. Specifically, Section 1033 of the Dodd-Frank Act instructed regulators to enable an open banking system that would affirm consumers’ rights to control their personal information. Soon after President Biden took office, he issued an executive order calling on the CFPB to accelerate Section 1033 rulemaking as part of a government-wide effort to enable greater competition in the economy. The CFPB is now preparing to move forward with this rulemaking.

Regulators should continue to accelerate this process to drive competition, ensure choice, and provide consumers with the right to access all of their financial data. Robust guidelines for consumer transparency and control will ensure that critical financial benefits can continue to flourish in the future. Without clear rules of the road, consumers will face more friction and fewer services, and the market will suffer from less competition.

Full adoption of open finance would further benefit American consumers. 

While regulators should prioritize Section 1033 rulemaking, embracing an open finance future in the long term will deliver even more consumer benefits. Open finance would extend consumer data rights a step beyond open banking to encompass even more financial services and more fully reflect consumers’ financial lives. Full adoption of open finance would increase competition in the marketplace, drive greater financial inclusion, and create more consumer choice in the long term.

Open finance gives users a secure channel to share their banking data and other financial information like insurance, pension funds, or utility payments with third parties. It would unlock even more fintech innovations in the future, allowing fintechs to focus on building connectivity between their apps and other digital financial services rather than just legacy banks.

This system could lead to more personalization, consumer savings, and improved financial health, especially for underserved communities. For example, open finance could help unbanked and underbanked people build a financial profile by compiling a transaction history outside of a traditional bank account.

Despite being home to technological innovation, the United States lags behind other countries in adopting open finance. The United Kingdom, European Union, Brazil, Singapore, Canada, and Australia are all establishing rules to enable open finance. American consumers risk losing out if regulators fail to usher in a new era of financial innovation.