Financial technology is transforming how everyday Americans manage their finances, providing access to low-cost, seamless, and secure financial products and services. Critical to these fintech innovations is open banking, or consumers’ ability to securely control and share their own data and finances. Open banking powers the apps and services that millions of people rely on to manage their financial lives, enabling more consumer choice and powering simpler, more convenient financial services and products.
Yet, consumers’ freedom to access these critical financial services – from sending payments to overdraft protections, shopping for a loan, and fraud monitoring – is at risk. Wall Street banks have been working to undermine financial services innovation and competition, targeting the Consumer Financial Protection Bureau’s (CFPB) consumer financial data rights rule.
Without these clear rules of the road for open banking, the largest banks could prevent consumers from using their financial data in the apps or services of their choice, locking them into bank-owned products. The future of Americans’ choice, competition, and innovation rests on protecting the fundamental right of consumers to make their data work for them.
What is the Section 1033 rule?
In 2024, the CFPB finalized a landmark rule, more than a decade in the making, under Section 1033 of the Dodd-Frank Act. Initiated under the first Trump Administration, this rule reinforces a simple but powerful principle: Americans, not their banks, should control their own financial data. The rule has notable bipartisan support and is critical for competition and innovation. It protects Americans’ ability to ultimately decide what services they want to use to manage their money and where they want to move it.
What’s at stake if the rule is rolled back?
According to recent press reports, the CFPB is preparing to roll back the 1033 rule. Rolling back the 1033 rule would be a mistake and a handout to the nation’s biggest banks, who want to return to the era of “closed banking,” where big banks – not consumers – control Americans’ financial data. It also goes against the will of consumers, who want the freedom to make their own financial decisions and use the digital financial apps of their choice.
- Debanking Americans and limiting financial freedom: If the big banks succeed in overturning the open banking rule, they would be taking away Americans’ freedom to choose the financial apps and services they want to use. This would, in effect, debank Americans from the digital financial world, limiting their ability to choose fintech apps and services, hurting innovation, and limiting consumer choice.
- Limiting popular apps and services: Without 1033, big banks could limit Americans from accessing popular apps, from signing up for a budgeting service, connecting to a crypto wallet, or using a peer-to-peer payment app. If Americans do not have a protected financial data right, the largest banks could block them from the use cases they’ve come to rely on.
- Charging for data access: The big banks want to roll back the rule’s ban on charging consumers and third parties for accessing consumers’ own data. This is fundamentally at odds with a consumer data right and the objective of the statute, suggesting banks own consumers’ data, not the consumer. Fees could be passed on to consumers and limit their ability to access and use the tools they want to help manage their financial lives.
How does the 1033 rule raise the safety bar?
While big banks claim their opposition to Section 1033 is rooted in concerns over privacy and security, the rule actually strengthens both by moving the industry toward standardized, regulated data-sharing practices. Blocking the rule under the guise of safety is a smokescreen—what’s really motivating big banks’ opposition is their desire to take control away from consumers and undercut competition.
The 1033 rule raises the bar on safety and security by encouraging widespread adoption of APIs to facilitate data sharing – mandating that APIs be used by all but the smallest banks – requiring companies to certify compliance with information security and data minimization standards, and allowing big banks to deny access if they believe a third party is not maintaining adequate data security controls. It also mandates the creation of industry standards.
The Path Forward
The largest banks are working to regain control over how Americans live their financial lives. The Trump Administration must protect critical consumer data rights and ensure financial innovation can flourish so the U.S. doesn’t fall behind. The Administration has an opportunity to protect and defend financial innovation, fight debanking, and ensure American financial products and services stay competitive globally.
ABOUT US
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.