The United States don’t often come last in tech, but as it currently stands, they’re trailing well behind the United Kingdom when it comes to open banking capability.
But if the Consumer Financial Protection Bureau (CFPB) have it their way, it won’t remain like this for long. In an open letter posted by the bureau, Director of the CFPB, Rohit Chopra, set out the bureau’s intentions to speed up the process and implementation of open banking in the US. They plan to do this by implementing a rule that sets expectations for the market, finalized in 2024.
“The CFPB is working to accelerate the shift to open banking through a new personal data rights rule intended to break down these obstacles, jumpstart competition, and protect financial privacy”, said Chopra.
However, the agency has to do this without taking full control of open banking. Chopra is adamant this also must be run and developed by the market as well.
“The financial industry itself will play a significant role in developing and maintaining open banking standards, but the CFPB will pay close attention to any efforts to limit consumers’ efforts to exercise their rights.”
“To thrive, standard-setting organizations must not skew to the interests of the largest players in the market. They must reflect the full range of relevant interests — consumers and firms, incumbents and challengers, and large and small actors”.
But ultimately the aim is to provide more power to the consumer so customers can earn higher rates, pay lower rates, and more efficiently manage their finances.
”The new technologies, and the competition they can fuel, have not yet reached their full potential. Consumers continue to encounter all too familiar obstacles when trying to switch banks or apply for loans”, said Chopra.
In the meantime, are asking those developing open banking standards in the US to discuss plans with the agency, as they look to play a critical role in the development of open banking in the United States.
Read the full letter here.
