According to some insiders, U.S. open banking is poised for significant acceleration, but political uncertainty could hamper momentum.
The Consumer Financial Protection Bureau (CFPB) finalized its Personal Financial Data Rights Rule under Section 1033 of the Dodd-Frank Act two weeks ago. The rule mandates that banks and other FIs allow “consumers and third parties digital access to their bank account data,” thus codifying Open Banking rules.
Research from Oxford University points to a market inflection point with “a notable market split on the scope of regulation.”
The U.S. Open Banking market currently stands at “$7.08 billion with projected growth to $35.79 billion by 2031, a more than 5x medium term growth rate.
UK and other global Fintechs and Open Banking providers are poised to capitalise on the new regulation with a growing appetite for U.S. expansion following the finalisation of Open Banking rules.”
Open Banking in the U.S. has reached a market inflection point following recent significant new financial regulation. Still, the future direction of policy “is unclear with Donald Trump’s victory as the next U.S. president.”
The Transatlantic Index USA, a report released by Open Banking Excellence (OBE) is an in-depth, data-driven exploration of the ‘evolving U.S. financial landscape as the world’s largest market accelerates into Open Banking.”
The report features insight from Open Banking experts around the world and is built on both qualitative and quantitative research, “including expert interviews conducted by Oxford University.”
The CFPB’s Personal Financial Data Rights Rule seeks to enshrine “consumers with the right of access to their digital financial data and the ability to share it securely with third parties.”
However, the report states that Biden-Harris’s policy focus on banking ‘junk fees’ crackdown was key “to the support behind Section 1033.”
The future direction of Open Banking regulations in the U.S. is questioned following the change of administration, “particularly given Trump’s explicit rhetoric on looser regulation and tariffs.”
According to a global survey of Open Banking executives that predates the election result, 90% of companies were “considering U.S. expansion following the finalisation of the new regulations.”
Open Banking in the U.S. dates back 25 years and has an “estimated c.100 million users,” but it has largely been conducted via “screen scraping,” which is prohibited under the new rules.
The use of safer and more reliable Application Programming Interfaces (APIs) is rapidly ‘underway thanks in part to the CFPB’s rules.”
Helen Child, Founder and CEO of OBE, stated that the Transatlantic Index clearly shows a “gigantic market opportunity.”
Child also mentioned that the effect is transformative when the UK’s expertise in Open Banking, having created the blueprint, is combined “with the super-sized U.S. market scale. It marks the positive shift of the inflection point that the industry has been working towards.”
Child said the Global Open Finance Index is now regarded as an industry benchmarking report.
To show the impact of the U.S. market launching Open Banking and the market opportunity this creates, The Index is designed to support accessing this massive market “with diverse insights from industry leaders, regulators, and academics and a fascinating section on culture.”
Despite substantial market-driven advancements, the impending shift to a more regulated landscape promises both “advantages and obstacles.”
The update also mentioned that the “decentralised nature of U.S. financial regulation, with its intricate interplay of state and federal laws, coupled with a fragmented market structure composed of numerous smaller banks and credit unions, can complicate efforts to establish a cohesive and uniform Open Banking environment,”
Figen Ceceli, SVP and Head of Data Aggregation Product at Fidelity Investments, said new regulations on personal financial data rights will make certain types of financial data available “via the safer method of using Application Programming Interfaces (APIs).”
About the Transatlantic Index USA
The Transatlantic Index USA is said to be a data-driven report designed to benchmark the impact and market opportunity “following the launch of Open Banking in the U.S.” Building on the Global Open Finance Index, OBE is launching this report in collaboration with Oxford University, the British Embassy in Washington D.C., the Department for Business and Trade, and Financial Data Exchange (FDX), with sponsorship from Fidelity Investments.
