Monday, October 23, 2023
"With the right consumer protections in place, a shift toward open and decentralized banking can supercharge competition, improve financial products and services, and discourage junk fees," he said in a statement. "Today, we are proposing a rule to give consumers the power to walk away from bad service and choose the financial institutions that offer the best products and prices."
Chopra pointed to a current lack of standardized procedures among financial institutions, many of which have hidden or obscured data points and pricing. The proposed ruling would solve for that, he noted, by enabling consumers to access competing products and services across multiple service providers without concerns about how their data might be collected, used or shared.
In addition to requiring banks and service providers to make personal financial data available to consumers at no charge, the proposed ruling gives consumers the right to share credit card, checking, prepaid and digital wallet account information with third-party service providers. Open information sharing would facilitate market competition and make it easier for consumers to access products and services and switch providers at will, CFPB representatives stated.
Scott Talbott, executive vice president of the Electronic Transactions Association, commended the CFPB for proposing rules that would drive convenience, security and market competition.
"ETA supports a policy framework where consumers and businesses can participate with financial products and services that are convenient, secure and reliable," he said. "We look forward to working with the CFPB to shape the open banking rules to allow ETA's member banks, fintechs and data aggregators to serve consumers and businesses."
Lewis Turek, vice president and general manager of North America at GoCardless, agreed that the CFPB proposal would help U.S. open banking grow sustainably while keeping customers' best interests in mind. "The United States is a hotbed of open banking innovation, and customer demand is rocketing," he said. "Over 65 million consumer accounts are now using a common, free API standard to securely connect to innovative fintech services."
If passed, the ruling would be rolled out in phases, the CFPB noted, beginning with large financial institutions and giving small providers and startups more time to update digital infrastructures. There would also be exemptions to the ruling for select community banks and credit unions that have no digital interfaces, the bureau stated, adding that proposed requirements promote fair, open and inclusive industry standard-setting practices.
The CFPB encourages early submissions of comments; all public commentary must be received on or before Dec. 29, 2023, when the request-for-comment period closes. Further details are available at regulations.gov.
For additional background and regulatory text of section 1033, visit files.consumerfinance.gov/f/documents/cfpb-1033-nprm-reg-text-with-1001_2023-10.pdf 
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