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The Consumer Financial Protection Bureau (CFPB) has activated its open banking requirements for banks and fintechs in the US, a move that has been welcomed by payments players even if they have their concerns.
Last month, the CFPB finalised its Personal Financial Data Rights rule, requiring banks, credit card issuers and other financial institutions to provide consumers free access to transfer their financial data to competitors.
Starting in 2026, this rule activates Section 1033 of the Consumer Financial Protection Act, empowering consumers to switch institutions more easily.
The changes have sparked widespread discussion in the US and beyond, with many sharing their views on platforms such as LinkedIn.
"The new open banking rules are the no.1 thing people were talking about at Money 20/20,” said Kat Cloud, open banking compliance director at Yodlee, commenting on the event that took place in Las Vegas recently.
“There is a global push to leverage data aggregation, and many are approaching this with an expansion-focused perspective."
Cloud said that many financial services insiders “are generally accepting of it but sense that litigation may play a role”, considering the lawsuit that was filed within hours of the legislation being passed.
“There's hesitation in sharing perspectives, though many are pleased with the rule's introduction and acknowledge that more work is needed,” she said.
A boon for consumers?
"This rule represents a significant evolution, impacting over 100 million consumers who use these tools,” said Steve Boms, founder and president of Allon Advocacy, which specialises in public affairs for fintech firms.
“Currently, a consumer’s ability to use them depends on their bank, but this rule aims to make access seamless. We can expect increased competition, lower fees, and expanded access in ways we haven’t seen before."
Boms, a resident of Washington, DC, said that the final rule closely follows last year’s proposal and incorporates feedback, such as extended compliance timelines. “There aren’t any major surprises. We had hoped the CFPB would include a framework for different types of accounts, but it’s something they may address in future rulemaking."
Manisha Baid, associate director at Acuity Knowledge Partners, agreed, stating that it “will make a significant impact on the US consumer financial landscape”.
Baid added that by granting consumers the right to access and share their financial data with third-party financial service providers, this rule could bring in new opportunities for innovation and competition.
“As is the goal of Rule 1033, this will lead to more innovative products and services, lower fees and better customer experience.”
But what about Trump?
Earlier in the year, sources suggested to Vixio that the outcome of the US election meant that the CFPB was likely to rush through the rule before November.
Considering that some believe the CFPB could even be scrapped under a Trump presidency, this is undeniably a consideration that firms looking to expand into the US are considering, seeing as the now returning Republican President is hardly known for his love of regulation and mandation.
Boms was positive that progress will not be affected, pointing out that Patrick McHenry, US House of Representative chair of the Financial Services Committee, had signalled his support.
“In fact, this is the one CFPB rule I can point to with bipartisan support from both Democrats and Republicans. It originally began under the Trump administration, and we hope this consensus continues."
However, others were less certain, with one source predicting that political change could dampen momentum, even if there is cross-party support in the US for tackling the monopoly that the large banks have on data access.
"Political uncertainty could potentially hinder momentum, especially considering Donald Trump’s well-known aversion to regulation," said Helen Child, CEO and founder of Open Banking Excellence. "However, this is all part of the broader landscape. The US got to this point without firm rules. The largest economy in the world has had over 20 years of screen scraping with open banking, so where does that position a businessperson who favours limited regulation amid forecasted growth?"
Child added that with nine out of ten companies seeing market access opportunities, there is significant potential for the UK's industry to leverage its expertise in this massive US growth market.
“Despite the uncertainty, this could be promising for all."
A competitive advantage for fintechs?
One of the issues that people are inevitably considering with the incoming rules is how much of a change this will result in for banks and fintechs status quo.
For example, is the fintech market about to open up, or will incumbents be able to maintain their monopoly, as has arguably happened in the UK and EU markets, despite work to increase competition.
According to Baid, Rule 1033 is a double-edged sword for financial institutions. “It offers new opportunities for both banks and fintechs, with a fair share of challenges too.”
“Banks will face heightened competition from fintechs which, due to their smaller size, agile processes and technology focus, can quickly leverage consumer data to offer innovative products and services,” suggested Baid.
She anticipates increased pressure on banks to invest in robust technology to comply with data sharing requirements and ensure data security.
“This brings a lot of opportunities for fintechs, which thrive on data and analytics,” she said. “With access to consumer data and spending patterns, fintechs can offer customised, personalised and innovative products and services to consumers.”
“Though they have increased regulatory compliance challenges, they overall will benefit from having access to consumer data from banks.”
Boms pointed out that banks could benefit from this data exchange and ease of access.
"Banks can also act as data recipients through third-party aggregation, and there's no doubt they will benefit from this rule,” he said. “It doesn’t require any additional compliance effort from them."
Meanwhile, Eric Goldberg, a partner at law firm Akerman, pointed out that the finalised rule may even usher in stronger compliance requirements for fintechs than for some types of bank.
“Notably, smaller fintechs are not exempt and will need to comply by 2027, even though small banks with less than $850m in assets are carved out,” he said.
“However, while a large fintech partnering with a smaller bank isn’t directly covered for bank-issued products, the smaller fintech is included in the scope for covered products it provides directly to consumers.
Goldberg, a former CFPB official, warned that fintechs may not have realised that they too face compliance changes with these new rules. "Fintechs may see this as a win, but they may not fully realise that they may also be data providers who will face new compliance requirements as a result.”
He said it is important for firms to evaluate their products to ensure readiness. “Even as data users, their products will likely face more restrictions than they do today, including the need for annual re-authorisation, which could impact the design and utility of some products."
