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Financial Data Exchange (FDX) has submitted its application to the Consumer Financial Protection Bureau (CFPB) to become a US standard-setting body (SSB) for open banking.
FDX, a leading standard setter for data sharing in North America, has submitted its application for recognition as an SSB in accordance with the CFPB’s Final Rulemaking on Personal Financial Data Rights, which is set to pave the way for regulated open banking in the US market.
“As the leading technical standards body for sharing permissioned financial data in North America, FDX shares the CFPB’s goal for a fair, open, and inclusive technical standards body and we are excited to submit this application,” FDX said in a joint statement from its co-chairs: Steve Smith of Mastercard and Franklin Garrigues of TD Bank.
FDX, founded in 2018, has established itself as the leading technical standards organisation in North America for exchanging permissioned financial data.
Its membership covers a broad span of the US payments ecosystem, and includes Amazon Web Services, Mastercard, Visa and Bank of America.
According to the non-profit, the FDX API is currently in use by more than 94m consumer accounts, and is playing a pivotal role in transitioning the industry away from outdated "screen scraping" practices to secure APIs.
“FDX appreciates the significant work that the CFPB has undertaken to promulgate proposed rules under Dodd-Frank Act Section 1033, especially the acknowledgement of the value that consensus industry standards have brought, and can continue to bring to, the US open banking ecosystem,” the application says.
FDX’s application follows a June announcement from the CFPB that outlined the requirements for industry SSBs to gain official recognition, which will aid compliance with the upcoming Personal Financial Data Rights rule.
The new rule, proposed in 2023, permits companies to use technical standards developed by CFPB-recognised standard-setting organisations.
The CFPB has said that it is seeking feedback from stakeholders on FDX’s application.
“Your input is crucial in evaluating whether FDX is equipped to develop fair and effective open banking standards that serve the interests of all stakeholders, especially consumers,” the regulator said in a blog post.
What’s in the application?
FDX’s application states that it is committed to creating and maintaining open, royalty-free standards for financial data sharing, adding that the organisation’s existing API addresses key regulatory concerns, including data privacy, security and consumer control.
In the submission, FDX outlines its evolution, from the early stages of API development to the present, where it continues to refine the API based on market demands.
Seven iterations have been released since the first version in 2018, with the latest version, FDX 6.2, leading industry adoption.
FDX says in its application that it is seeking CFPB approval to formally define the “data format” standards under Section 1033 rulemaking.
Although the current FDX API covers a wide range of financial data, the organisation says that it is prepared to adapt its guidelines to meet the new legal requirements.
“We are aiming to complete that adaptation exercise as quickly as possible following the final rulemaking,” the application says, continuing that this includes making further changes warranted by new or amended requirements in the final rulemaking, as needed.
FDX has also said that it “will also implement a voluntary technical certification program in the near term”.
“The initial version will allow data providers to certify that their developer interface (API) adheres to the FDX data format standard and to promote ecosystem interoperability.”
In alignment with the CFPB’s criteria for SSBs, FDX’s application focuses on five critical attributes: openness; balance; due process; consensus; and transparency.
The organisation argues that its governance structure allows smaller firms and non-commercial entities to participate, and says it believes that its board composition, voting processes and member engagement protocols ensure no single interest dominates decision-making.
FDX’s application also notes the organisation’s efforts to maintain balance within its board, ensuring equal representation between data providers, third parties and non-commercial groups.
In addition, it discusses plans to establish councils specifically for smaller entities and non-commercial members to foster inclusive participation in the development of new standards.
