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America has an opportunity to organize its use of financial data in a way that enhances competition, innovation and consumer autonomy. The
Historically, banks have often resisted reforms that expanded consumer choice and improved efficiency, from easing branching restrictions to deregulating deposit interest rates, even when those changes imposed no cost to financial stability. The same dynamic is visible in the current debate: Many in the banking industry are pushing back against the current rule implementing the Dodd-Frank Act’s Section 1033, which gives consumers control over their financial data.
The CFPB’s most consequential decision is whether to preserve the current rule’s prohibition on data access fees. Banks argue they need compensation for the infrastructure supporting data sharing. But the economics are clear: The marginal cost of transmitting standardized financial data is close to zero, and each bank holds a monopoly over its customers’ transaction history, recurring bill data and deposit records.
Aggregating data from multiple providers is like crossing a chain of toll bridges, each controlled by a different gatekeeper with pricing power. Even small or opaque fees, multiplied across providers, can raise costs enough to freeze out fintechs and stall innovation. In addition, some banks are so large, with so many customer relationships, that they alone could exert “hold-up” power to make industry-wide open banking impractical through sufficiently high fees.
For these reasons, a no-fee rule remains a strong starting point. If the CFPB chooses to revise this section, it should consider alternatives that limit rent extraction. One option is a “commercially reasonable” fee standard — though that would require costly and intrusive enforcement. A cleaner alternative is for the CFPB to enforce a fixed fee set by regulators based on data-transmission cost estimates.
The rule’s current limits on data use are appropriately cautious. It only permits collection of data reasonably necessary to fulfill a consumer’s request, and restricts data retention, marketing and AI training without additional consent. While some providers may see these boundaries as restrictive, they preserve consumer control. If problems arise, the bureau retains flexibility to adjust these limits.
On technical standards, the rule wisely refrains from prescribing formats, delegating that task to an industry-led process. In the interim, the current rule encourages development of robust application programming interfaces, or APIs, that meet minimum standards of uptime, full data-field coverage and nondiscriminatory access. Those standards should be retained in the new rule. However, the transition period — allowing screen scraping for up to four years in the absence of a compliant API — could be shortened. Given available technology and the risks associated with scraping, a faster transition would improve safety and reliability.
Open banking enables consumers to securely share their financial data across services. It lowers switching costs, reduces search frictions and drives product innovation. These benefits are not hypothetical; they have been realized in markets around the world. A Bank of England cross-country study found that when trust in data transmission is established, adoption of open banking policies reliably spurs fintech entry, improves services and expands credit access.
In the U.S., consumers increasingly manage their finances across multiple institutions — banks, brokerages, credit cards, insurers and more. Open banking helps stitch those fragments together. Whether it’s financial planning, retirement advice, or cash flow underwriting, consumers are better served when they can control the flow of their financial data securely and conveniently. An analogy to health care is apt: Just as a physician can avoid prescribing harmful medication when she has a complete medical history, so too a financial advisor can offer better guidance with a full view of the customer’s finances.
As the financial industry evolves, the goal should be to enhance convenience and competition without compromising security or consumer rights. By limiting bank fees for data access, safeguarding data use, and accelerating the transition to modern APIs, the CFPB can ensure that its final rule delivers on the promise of Section 1033: consumer-authorized, innovation-enabling financial data access.