America’s financial system has always thrived when innovation, competition, and consumer empowerment work hand in hand. And when America’s financial system thrives, so too do Americans—from business owners to factory workers and families of all stripes. The long-anticipated, and soon to be released Consumer Financial Protection Bureau’s (CFPB’s) “Personal Financial Data Rights” rule—also known as the Section 1033 of Dodd-Frank—is an opportunity for the Trump administration to unleash a new wave of innovation that will empower consumers and make life more affordable for all Americans.
Section 1033 was designed to make “open banking” a reality in the United States. The principle is simple: consumers should be able to access and share their financial data safely and easily, empowering them to shop around for better products and services. In practice, this would (and already has) unleash a wave of innovation—much as the development of credit reporting and scoring transformed access to credit in the 20th century.
For most of American history, banks controlled information about their customers’ finances. Consumers were effectively locked into long-term relationships with a single bank, unable to take their financial history elsewhere. That system excluded millions—especially women, minorities, immigrants, and younger Americans. The advent of credit bureaus and scoring systems broke that monopoly, allowing consumers to “take their reputation with them.” The result was greater competition, broader access to credit, and fairer treatment for all.
Open banking promises a similar leap forward. By allowing consumers to share their verified financial information with trusted third parties—like fintech companies and new market entrants—it can spur competition, reduce costs, and expand access to innovative products.
In recent years, fintech has already shown what’s possible: small businesses can obtain faster credit decisions, consumers can better manage their budgets, and underserved communities have gained new financial options. Fintech companies are developing payment alternatives to traditional credit cards and even “AgeTech” applications that can spot early dementia in the elderly, even before their doctors.
But this all depends on consumers being able to share their data easily and securely with authorized providers. But today big banks want to hoard consumers’ data and keep them trapped within their walled gardens. Some have begun charging exorbitant fees to data aggregators and fintech firms when consumers provide authorization to access their accounts—fees that bear no relation to the actual costs of data sharing. These rent-seeking tactics threaten to choke off competition and innovation.
JPMorgan Chase, for example, has reportedly demanded hundreds of millions of dollars in new fees from a single aggregator—an unmistakable sign of market power, not cost recovery. If the other big banks follow suit, the costs could run into billions, effectively freezing smaller competitors out of the market and denying consumers access to valuable financial tools.
The CFPB must not allow that to happen. The Bureau should begin with the presumption that consumers’ access to their data—and the ability to share it with authorized third parties—should be free or nearly so. For decades, banks have shared data with credit bureaus because it created reciprocal benefits for everyone: consumers gained access to cheaper, more transparent credit, and banks gained access to a broader, more competitive marketplace. The same logic applies to open banking today.
Critics warn that expanding data access could increase risks to privacy and security. But that’s a false tradeoff. Innovation and security aren’t opposites—they’re complements. Consumers have consistently demonstrated that they value convenience and choice, and modern APIs and data-sharing standards can actually make financial data more secure than the ad hoc “screen scraping” practices consumers have resorted to in the absence of better options.
Section 1033’s central principle is clear. Consumers should be empowered to access their data and share it easily with authorized partners to improve their financial planning and to find better products and services for their families. By creating a clear, secure, and efficient framework for data sharing, the CFPB can ensure that open banking delivers on its promise of greater competition, inclusion, and consumer choice.
Financial innovation has always been a force for democratization and economic mobility in America. The open banking revolution should be no different. If the CFPB gets this rule right, it can help build a financial system that’s more open, more competitive, and more responsive to the people it’s intended to serve.
Todd Zywicki is George Mason University Foundation Professor of Law at the Antonin Scalia Law School and co-director of the Institute for Consumer Financial Choice. He served as Chair of the CFPB Taskforce on Consumer Financial Law. The views expressed are his own.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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