By Douglas Gillison
(Reuters) – U.S. consumers would be able to more easily transfer their data between financial services providers under a long-awaited Consumer Financial Protection Bureau (CFPB) proposal unveiled on Thursday that would boost competition between fintechs and banks.
The so-called open banking draft rule would supercharge competition by giving customers “the power to walk away from bad service” and more easily switch providers, CFPB Director Rohit Chopra said in a statement.
Currently, consumers face varying conditions for accessing their own financial data depending on lenders’ policies, and a lack of industry norms that harms customers, according to the CFPB.
Open banking would unleash growth in the industry for payment, investment, lending, financing and money-saving services and apps, according to fintechs companies. For example, Americans could share all their bank account, debit and credit card transaction data with an app that could then provide tips on how to avoid a range of costly fees.
Europe, Britain and other countries already have open banking laws. In the United States, Congress mandated the rule following the 2007-09 global financial crisis. The provision in the Dodd-Frank Wall Street reform law requires that “upon request” banks give customers access to their data, including transaction histories, costs and usage, and that the CFPB set rules for standardized data sharing.
The White House in July 2021 urged the CFPB to get moving on the rule as part of President Joe Biden’s broader competition push, while fintechs and lawmakers have also been pressing the agency to speed up the rulemaking. The White House National Economic Council jointly unveiled the rule with the CFPB.
Reuters reported last year that the CFPB had been grappling with how to handle consumer privacy and data protection issues created by the rule, particularly how Big Tech companies may use the data.
(Reporting by Douglas Gillison; editing by Michelle Price and Chizu Nomiyama)
