Cfpb Open Banking Proposed Rule

Consumer Financial Protection Bureau Proposes Rule on Open Banking Lending

CFPB's Proposed Rule Aims to Empower Consumers with Control Over Financial Data

Proposed Rule Prioritizes Consumer Consent and Control

On October 19, 2023, the Consumer Financial Protection Bureau (CFPB) released a proposed rule on consumer access to financial data. The rule, if implemented, would establish a framework for consumers to:

• Access their financial data from various sources, including banks, credit unions, and other financial institutions.
• Share their financial data with third-party providers, such as fintech companies and financial advisors.
• Control who can access their financial data and for what purposes.

Key Provisions of the Proposed Rule

The proposed rule focuses on two main categories of entities: data providers and data recipients.

1. Data providers, such as banks and credit unions, would be required to provide consumers with access to their financial data through secure application programming interfaces (APIs).
2. Data recipients, such as fintech companies and financial advisors, would be required to obtain consumers' consent before accessing their financial data. Data recipients would also be required to use strong data security measures to protect consumers' data.

Potential Impact of the Proposed Rule

The proposed rule could have a significant impact on the financial services industry. It could lead to increased competition and innovation in the fintech sector, as well as provide consumers with greater control over their financial data. The rule could also help to reduce the risk of fraud and identity theft.

Conclusion

The CFPB's proposed rule on consumer access to financial data has the potential to reshape the financial services landscape. By prioritizing consumer consent and control, the rule could empower consumers to better manage their finances and protect their financial information.