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November 10, 2024 • Issue 24:11:01

CFPB sets up guardrails for open banking

The report points to examples such as theuse of debit and
credit cards to make routine bill payments, or ACH trans-
actions to fund investment accounts as examples of open
banking.

Mastercard and JPMorgan have collaborated on an ACH-
based pay-by-bank solution that uses open banking tech-
nology developed by Mastercard. The two began piloting
the solution in 2023 with "a small number of U.S. billers and
merchants," according to a Mastercard press release.
But until now, the United States has had no regulatory
guardrails.
CFPB gets plenty of pushback

The new CFPB rule aims to govern data sharing between
all manner of financial services firms, making it easier for
consumers to switch providers without incurring costs or
By Patti Murphy risking financial privacy or data security, the consumer
watchdog agency said. "The rule moves the United States
he Consumer Financial Protection Bureau closer to having a competitive, safe, secure and reliable
unveiled a personal financial data rights rule 'open banking' system," the CFPB said in a statement.
set intended to provide consumers with greater
T control over what organizations can have access CFPB Director Rohit Chopra, in remarks delivered at the
to their critical banking information, and to what extent, in Federal Reserve Bank of Philadelphia, likened the current
furtherance of a trend that has come to be known as "open market to the early years of wireless telephones when con-
banking." sumers had to jump through hoops and get new phone
numbers whenever they wanted to change carriers—until
The consultancy Deloitte dubbed Europe the "cradle of the Federal Communications Commission stepped in.
open banking" in recognition of the fact that, in accordance
with government standards, the European Union's Payment Today, when a consumer has a checking account, credit card
Services Directive (PSD2) and the United Kingdom's Open or mobile wallet, the provider holds much of their personal
Banking Standard pioneered the notion of secure sharing information and can make it difficult or costly to port that
of consumer financial data between traditional financial information accurately over to a competitor, Chopra noted.
institutions and other financial services providers.
But over the years, open banking has been defined differ-
ently by different governments and even by providers of Contributed articles inside by:
different types of financial services. In the United States
there has been an obvious lack of coordination and stan- Allen Kopelman .....................................................................................16
dardization. Andrew Russell .....................................................................................24

In a 2024 report titled Open banking, open possibilities: Un- Ken Musante ..........................................................................................26
locking the power of financial data for payments and financial Elie Y. Katz ...............................................................................................28
services, Visa stated that "consumer adoption of experiences
powered by open banking is nearing ubiquity, with 91 per-
cent of U.S. consumers already benefiting from them."
Continued on page 22