Has CFPB started a war over open banking—or created new opportunities for banks?
The same day that the Consumer Financial Protection Bureau unveiled its final personal financial data rule, the banking industry sued to stop the bureau's controversial take on open banking. Then Donald Trump regained the White House. Should institutions wait to see what happens after the smoke clears? Or should they exploit opportunities that may benefit early adopters?
The banking industry and the Consumer Financial Protection Bureau have two very different viewpoints about “open banking.”
The industry and the CFPB have been circling and skirmishing for a couple of years over rulemaking. Now a major battle is looming over the result, even as some think it’s time for banks to simply acquiesce and figure out how to profit from an inevitability.
Given the changeover in the White House — and note that a federal court decided during the first Trump administration that the CFPB director serves at the pleasure of the President — the future of the rule could change. Certain late-stage regulatory moves in the Trump years were paused and killed when President Biden took office, so it’s not inconceivable.
The new rule arises, 14 years later, from the Dodd-Frank Act of 2010, though banks have maintained that the bureau overreached the letter of the law. As it is written, the CFPB open banking rule could have far-reaching effects, including a major boost to pay-by-bank payment models through fintech apps.
continue reading »