CFPB Reportedly Reworking Biden-Era Open Banking Rule

The Trump administration is reportedly preparing to re-examine a Biden-era rule governing open banking.

That’s according to a report Monday (May 5) from Bloomberg Law, citing sources who say the Consumer Financial Protection Bureau (CFPB) could rework the rule, which lets customers share deposit account and card info with the likes of Venmo and other FinTechs.

One source said the bureau will likely revisit the rule after requests from banks about possible liabilities for data breaches and the ability to charge for data access. In addition, banks want to be able to bar companies from the open banking system if those companies abuse their access to customer data.

According to the report, it’s not clear if the CFPB will try to add to the rule or eliminate it, though advocates for the regulation are concerned about delays to it being implemented.

“Reopening this rulemaking means stalling financial innovation and prolonging uncertainty for both businesses and consumers in America,” Steve Boms, President and CEO of FDATA North America, an open banking advocacy organization, told Bloomberg.

As the report notes, the effort is happening as the Trump administration is in the middle of trying to pare down the CFPB, with plans to eliminate 90% of its staff. That push is now on hold pending litigation from plaintiffs such as the National Treasury Employees Union.

“The question facing those in charge at CFPB is this: how will it be possible to manage a very significant and sensitive rule making affecting both banks and FinTechs without industry experts to do the research, legal analysis and rule drafting?” said Todd Baker, senior fellow at the Richard Paul Richman Center for Business, Law, and Public Policy at Columbia University.

Writing about the issue earlier this year, PYMNTS argued that if the rule is struck down, banks could re-examine their open banking efforts and forge FinTech partnerships that are economically beneficial to both sides as data is shared. 

“There are already aggregators that act as a data-transfer bridge between banks and FinTechs,” that report said. “The organic, market-based approach would bring more momentum to embedded finance and other services.”

Research from PYMNTS Intelligence — from the report “Consumer Sentiment About Open Banking Payments” — found that 46% of consumers would be “highly willing” to use open banking options for bill payments and financial services. But just 11% of U.S. consumers have used open banking payment options, which leaves 89% of a so-far untapped market.

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