Earlier this month, the Consumer Financial Protection Bureau (CFPB) proposed new rules seeking to boost Open Banking (Open Finance) in the United States.
Open Banking, sometimes called Open Finance, is a concept where data can be seamlessly transferred from one financial service provider to another – if the customer allows it. Think of immediate credit approvals or changing banks in minutes. Today, there is all kinds of data leveraged by financial services firms but customers don’t understand it, typically have little control and are usually not the beneficiary of their own information. Open banking can change all of this.
The CFPB’s proposed Personal Financial Data Rights claims it will encourage competition while halting the hording of consumer information by banks and other financial services firms.
Sensedia’s Head of Open Finance, Natalia Cruz, share her thoughts on the proposals with CI:
“The CFPB’s proposed Personal Financial Data Rights Rule marks a significant milestone in addressing the critical issue of consumer data sharing. This effort is pivotal for establishing fairness and transparency in the interactions between consumers, financial institutions, and tech companies. Users’ newfound role in sharing their data will securely support access to hyper-personalized services with user-controlled, revocable consent. More open data unlocks better products, services, and seamless navigation across financial institutions and technology companies. Sensedia is excited about the potential for more open finance opportunities in the US and API design and security as the cornerstone for this secure access, preventing data manipulation and paving the path for innovation in personal finance.”
As always, the devil is in the details and the CFPBs announcement is just a proposal. But if firms and regulators get it right, Open Banking can be a boon for all consumers.
