LAS VEGAS, Nev. — Consumer Finance Protection Bureau (CFPB) director Rohit Chopra lobbed a surprise grenade onto the expo floor at Money 20/20 Tuesday morning by announcing plans for an open banking “doorman authority” rule.
Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
CFPB: US Consumer Agency Announces Open Banking Rule
Fintech Nexus | | Oct 25, 2022
LAS VEGAS, Nev. — Consumer Finance Protection Bureau (CFPB) director Rohit Chopra lobbed a surprise grenade onto the expo floor at Money 20/20 Tuesday morning by announcing plans for an open banking “doorman authority” rule.
Read: Rohit Chopra's speech for this announcement at money 20/20
- Ruling Initiative: “The CFPB will launch the process to activate a doorman authority under Section 1033 of the Consumer Financial Protection Act. The provisions provide for personal financial data rights for Americans but will only have teeth after the CFPB defines the specific store rules.
- While not explicitly open banking or open financial, the rule will move us closer by obligating financial institutions to share consumer data upon consumer requests, empowering people to break up with banks that provide that service and unleashing more market competition.”
- If successful, it will also reduce the ability for incumbents to build moats and for middlemen to serve as gatekeepers, providing big advantages to those who provide the best products, service quality, and rates, Chopra added.
- Chopra:
- The problem: The broader overall regime is broken because consumer access is based on a set of unstable and inconsistent norms across market participants. We have a number of highly concentrated sub-markets, credit reporting conglomerates, card networks, core processors, and more. It is absolutely critical that no one owns any critical infrastructure.
See: NCFA Open Banking Current State in Canada with Senator Colin Deacon and Mahi Sall
- Open Banking: Now, suppose a firm is required to make a person’s financial data available to them or to a third party acting on that consumer’s behalf through a secure method. In that case, we’ll be able to mitigate some of the problems that exist today. We expect to propose requiring financial institutions offering deposit accounts, credit cards, digital wallets, prepaid cards, and other transaction accounts to set up secure methods, like APIs for data sharing"
- Competition: “A competitive market would also lead to unbundling, where companies compete on individual products rather than relying on captive customers or cross-selling scams.”
- Expects deeper scrutiny of conglomerate security measures and protections.
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