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Open Banking Regulation in the U.S. Strikes a Chord

Open Banking | Feb 12, 2024

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Impending Open Banking Regulation Is Set to Transform Finance in the U.S.

In a recent Forbes article, Alexandre Gonthier, CEO of Trustly, Inc., digs into the transformative potential of open banking regulation in the U.S.  This forthcoming regulation, championed by the Consumer Financial Protection Bureau (CFPB), aims to formalize consumers' rights to share their banking data, ensuring the continued availability of innovative financial services that have become integral to modern financial management.

Threat or Financial Innovation and Security Catalyst?

  • Open banking levels the playing field by enabling consumers to share their banking data with third-party services, potentially bypassing traditional card-based transactions.  Some large banks view open banking as a competitive threat, particularly concerning the revenue generated from credit card interchange fees, which amounted to $100 billion in 2022.
  • The promotion of Tokenized Account Numbers (TANs) by big banks as a security measure. However, Gonthier points out that TANs, especially when tied to revocable data sharing, can be exploited by fraudsters, complicating fraud prevention efforts within the banking payments context.
  • The CFPB's proposal mandates that consumers renew their data-sharing consent every 12 months. While intended to protect consumer data, this requirement could introduce friction into recurring payment processes, inadvertently boosting card transaction volumes.

See:  BoE Report: Open Banking Boosts Productivity, Competition

  • Gonthier applauds the CFPB's push for an API-based connection standard but warns of potential consumer harm if a proper transition period is not allowed for fallback to legacy connection methods during API outages.
  • Monetization of Data Access: The lobbying efforts by banking associations to impose fees on consumer data access, a move that could adversely affect open banking business models reliant on high volume and low margin economics.

Gonthier believes that while the CFPB's proposal is a positive step towards fostering competition in the payments sector, the final rule must go further to ensure that alternative payment methods, such as ACH, RTP, or FedNow, can compete on equal footing with traditional card-based payments. This competition could lead to lower payment processing costs and, consequently, lower prices for consumers.

FIS's Open Access Platform

FIS recently announced its Open Access platform is set to revolutionize how consumers interact with their financial data. By integrating with leading data networks such as Akoya, Envestnet | Yodlee, MX, and Plaid, the platform offers consumers unparalleled access to and control over their financial information. This initiative not only accelerates the shift towards open banking but also aligns with the Consumer Financial Protection Bureau's (CFPB) proposed Personal Financial Data Rights rule, establishing industry-wide standards for data access and protection.

The Open Access platform empowers consumers to securely share their financial data with a broader array of financial institutions and third-party apps, enhancing their ability to manage finances through their preferred services. This approach not only fosters a more inclusive financial ecosystem but also ensures that consumers can exercise control over their data, with the flexibility to revoke access at any time.


By formalizing the right to data sharing, impending open banking regulation, led by the CFPB, challenges traditional banking paradigms, promising enhanced financial innovation and competition.

See:  Feds Promise Open Banking Laws in 2024 and to Broaden Access to Payments Canada

As the industry adapts, initiatives like FIS's Open Access platform exemplify the potential for greater consumer empowerment and control over financial data paving the way for a future where financial services are more accessible, efficient, and aligned with consumer needs.

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