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Insights and Expertise
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Will 2025 be the the framework for both the bloc's 27 members and the
UK eight years ago. This is due to be strengthened by the
year open banking forthcoming PSD3 rule.

But despite Europe's regulatory head start, accurately
accelerates gauging who is winning the global open banking race is
no mean feat. Statistics on regional penetration vary by
source. Yet one thing's for sure: the trend for data sharing
in the US? between large financial institutions and fintechs is one of
growth.

And this leads us to a question. Following a challenging
few years in the fintech sector, could the CFPB's open
banking rule spur a wave of innovation and growth as
third-party providers, or TPPs, race to build out products
and services?

The answer is yes. That's because the move is another
milestone in the digital transformation of financial
services. Not to mention the fact that it's the world's biggest
economy signaling that open banking matters and is here
to stay.
Challenge and opportunity ahead

However, as far as banks are concerned, this represents
both a challenge and an opportunity. On one hand, large
financial institutions will be required to connect to many
more fintech APIs over time, increasing complexity in a
payments ecosystem composed of legacy and modern
platforms.
By Anthony Walton It will also create further imperatives for banks around
Iliad Solutions reducing fraud and improving financial literacy among
customers. Additionally, there will be a need to develop
he approach to open banking in the United new customer retention strategies as it becomes easier for
States is shifting, thanks to a new regulation people to switch providers.
anticipated later this year that will require
T financial institutions to share customer data Yet on the other hand, the rule should create a fertile
upon request. environment in which banks and fintechs can deepen
partnerships to deliver more customer-centric user
The Consumer Financial Protection Bureau (CFPB)'s experiences through the use of digital technology.
Personal Financial Data Rights Rule represents the long-
awaited implementation of section 1033 of the Dodd-Frank To make the most of these opportunities and overcome
Act and comes in response to growing public appetite for the challenges presented by the new rule, it's sensible for
mobile banking and payments apps. banks to review and optimize their ability to integrate
with modern systems. By becoming open-banking ready,
Heralding a switch from industry-led open banking U.S. banks will be well-placed to deliver innovation
adoption to a regulation-driven model, the aim of the quickly and securely when the CFPB rule goes live.
rule, according to CFPB Director Rohit Chopra, is to
"supercharge competition, improve financial products Becoming innovation ready
and services, and discourage junk fees".
Knowing exactly what readiness for open banking will
In theory, it should empower individual consumers and entail remains to be seen. But what we can say for sure is
lead to increased data sharing after its implementation in that with any new system, comes new standards.
the autumn.
And in recent weeks the CFPB has been engaging the
Not new in other world regions financial sector on the criteria organizations need to meet
to become a recognized standard-setting body. These
In other parts of the world, legislation-driven open banking institutions will play an important role in setting technical
is nothing new. For example, the EU's PSD2 regulation set standards for banks and third-party providers to follow
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