WASHINGTON, D.C. – The Financial Technology Association today released a statement on reports that the Consumer Financial Protection Bureau intends to vacate the Section 1033 open banking rule:
“The open banking rule puts in place important consumer protections and raises the bar on safety for the entire ecosystem,” said Penny Lee, President and CEO of the Financial Technology Association. “Vacating it is a handout to the biggest banks, who are trying to limit competition and debank Americans from the digital financial services they want to use. It is a missed opportunity to further financial innovation. Americans must have a right to control their financial lives, not Wall Street.”
The 1033 rule protects Americans’ fundamental rights and ensures banks cannot lock consumers into using only bank-owned services. A strong consumer financial data right is integral to how consumers and businesses interact with their finances and participate in our digital economy. These rights allow consumers to securely connect their bank accounts, credit and debit cards, and other financial accounts to third-party apps and services.
Initiated during the first Trump Administration, the rule has enjoyed historic bipartisan support, as it promotes competition, choice, and innovation. The rule also helps financial institutions of all sizes, including community banks and credit unions, compete and meet consumer expectations for connectivity in the digital age, even without the billion-dollar technology budgets of the big banks. These smaller institutions serve Main Street America and are key drivers of small businesses and the economy. They would be severely disadvantaged by vacating the rule.
Efforts by the biggest banks to roll back the rule are anti-consumer and counterintuitive. It goes against the will of Americans, as 3 in 4 consumers say it’s important to be able to connect their bank accounts to apps and services. The biggest banks criticize fintech companies for allegedly resisting consumer protections in data sharing. Yet, their own actions suggest a reluctance to fully establish secure data sharing standards in order to empower consumers with control over their financial data. Specifically:
- Resistance to Consumer Data Portability: While the big banks advocate for secure data sharing through APIs and criticize practices like screen scraping, they also expressed concerns about the Consumer Financial Protection Bureau’s (CFPB) efforts to implement Section 1033 of the Dodd-Frank Act, which aims to help expedite the wider industry’s move to APIs.
- Selective Support for Data Sharing: The big banks support data sharing frameworks that benefit traditional financial institutions but are critical of similar frameworks when they empower consumers to share data with fintech companies. This selective stance suggests a preference for maintaining control over consumer data rather than promoting true consumer autonomy.
- Innovation Through Data Access: Fintech companies have driven significant innovation in financial services by leveraging consumer-permissioned data to offer personalized and efficient services. Restricting consumers’ ability to share their data with these innovators could stifle competition and slow the development of new financial products.
- Consumer Empowerment: The essence of open banking and data portability is to empower consumers to make informed choices about their financial lives. By opposing measures that enhance consumer control over data, the big banks’ stance seems to contradict the broader goal of consumer empowerment.
The big banks’ claims about data security are also misleading, as the final 1033 rule establishes a higher bar for safety and security across the financial services ecosystem. It encourages widespread adoption of APIs to facilitate data sharing – mandating that APIs be used by all but the smallest banks – and requires companies to certify compliance with information security and data minimization standards. It also allows banks to deny access if they believe a third party is not maintaining adequate data security controls. In addition to providing core guidelines, the rule also mandates developing industry standards, which prevents arbitrary limits as technologies evolve.
The Trump Administration has an opportunity to protect and preserve the future of financial innovation, fight debanking, and uphold Americans’ personal data rights by ensuring the CFPB does not roll back the 1033 rule. The CFPB should keep the 1033 rule and launch a formal rulemaking process to correct areas of overreach introduced during the previous Administration.
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The Financial Technology Association (FTA) is a network of fintech leaders shaping the future of finance. We champion the power of technology-driven financial services to catalyze innovation and advocate for modernized policies and regulations that reflect the digital transformation.