The American Fintech Council has issued a statement commenting on emerging barriers to consumer data access. The statement addresses the sector of Open Banking and providing consumer control over their data and the ability to leverage the information to improve financial services.
For example, simplifying the transfer of accounts or accessing a new service. In the past, user data has primarily been controlled by large firms, mainly for their benefit.
If appropriately instituted, Open Banking can lead to more competition in the market and superior services for both consumers and businesses.
Many Open Banking advocates believe the user should own their data and not the service provider.
AFC CEO Phil Goldfeder says consumers have a right to control their own financial data; “full stop.”
Goldfeder says that any effort to restrict or monetize access to consumer financial data is a threat to innovation and competition.
“At a time when consumers are demanding more flexibility, transparency, and control over their financial lives, placing a tollbooth on data access will harm the very families a safe financial system is meant to serve. This is a shameless attempt to further entrench the position of incumbents,” said Goldfeder. “Open banking only works when the largest institutions embrace, not obstruct, the transparency and interoperability that drive responsible innovation. Financial institutions should be empowering consumers, not creating new barriers to access.”
Jurisdictions around the world have been pursuing Open Banking innovation. Some have taken a more regimented approach with new regulations mandating Open Banking, while others have been more market-driven.
In 2024, the Consumer Financial Protection Bureau (CFPB) completed its rules for Open Banking. Today, it appears the rules may be reversed.
While many modern financial services firms like Fintechs see opportunity in Open Banking, some establishment firms may view it as a revenue threat.