WASHINGTON, D.C. – The Financial Technology Association (FTA) today released a statement applauding the Consumer Financial Protection Bureau (CFPB) for finalizing a proposed rule under Section 1033 of the Dodd-Frank Act to establish personal financial data rights and usher in a new era of open banking benefits.
“Today’s rule is a win for consumers, who are one step closer to having a strong right to control their financial data,” said Penny Lee, President and Chief Executive Officer of the Financial Technology Association. “We look forward to the CFPB creating strong rules of the road that guarantee people’s right to use the digital financial tools they want, regardless of where they bank. The proposal builds on our industry’s progress and can provide assurances for continued consumer-friendly innovation. Looking ahead, we urge the CFPB to implement open banking in a way that prevents anti-competitive behavior from incumbent financial institutions, safeguards consumer data privacy, and fosters innovation in the marketplace.”
Open Banking in the U.S.
Today, more than eight in 10 American consumers rely on fintech apps and services to manage their financial lives. Open banking has lowered costs and improved services for consumers, helping drive financial inclusion and empowering them to view and manage their money and shop for new, more tailored, and lower-cost financial products. These services are powered by consumers’ ability to securely access and share their financial information. In fact, nearly 70 percent of Americans would consider switching banks if their primary account could not connect to their other financial accounts and apps.
This rule will also protect and reaffirm open banking in the U.S., as many other nations have already done across the globe, including Australia, the United Kingdom, Brazil, Europe, India, and Singapore, among others.
Key Issues in the 1033 Rule
FTA has long called on the CFPB to advance open banking rules and recently released a primer spotlighting five key issues to watch in the rule. Some of those issues include:
- Securing Clear Consumer Benefits: Open banking helps people spend, save, and manage their money with confidence, and the 1033 rule will guarantee clear consumer benefits such as better money management, faster digital payments, increased access to credit, more investment options, and more.
- Preventing Anti-Competitive Behavior: Incumbent financial institutions have historically held consumers’ financial data captive to prevent them from switching to a different service provider or shopping for alternative products and services. The CFPB should monitor and prevent attempts to block the sharing of financial data, restrict data parity, and advance anti-competitive objectives.
- Helping Small Financial Institutions Compete: Open banking not only helps consumers manage their finances but also enables financial institutions of all sizes to offer the digital financial apps and services that their customers want. Over 75 percent of Americans say it’s essential to be able to connect their bank accounts to digital finance apps and services.
- Ensuring Shift to APIs: Today, thousands of financial institutions and millions of consumers already have access to secure application programming interfaces (APIs), a transition led by many of FTA’s members. At the same time, it is critical to preserve consumers’ ability to share their financial data with third-party digital tools as institutions adopt this new technology.
- Ensuring Consumer Control and Data Privacy: FTA members are industry leaders in privacy protection and make their data practices clear and transparent to consumers. FTA released privacy principles for the future of finance that outline commitments to consumer data protection and embrace a comprehensive federal privacy framework.
ABOUT US
The Financial Technology Association (FTA) is a Washington, DC-based trade association representing industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.