THREAD: CFPB Open Banking Comment Letter

1/ In Oct 2020, the CFPB announced the start of a rulemaking process on section 1033 of the Dodd-Frank Act, which provides “consumer access to financial records.” Comments were due last week.

2/ This is often called “open banking”, where financial institutions connect directly via APIs at the direction of consumers. You may already utilize it via personal financial tools like Mint, adding money to payments apps, or investment aggregation in Betterment.

3/ Until now, open banking in the US has been almost entirely industry driven. That stands in contrast to the UK's prescriptive approach with unified standards and registration/accreditation. The UK forced big banks to comply to foster more financial innovation and competition.

4/ As the US moves towards implementing its first ever regs, TransferWise offered comments from its perspective as one of the UK’s largest open banking payments initiators, at one point originating as much as 70% of transactions.

5/ TW Recommendations include:

- Ensure a consumer right to financial data access;
- Encourage data holders to fully implement;
- Support development of standards focused on consumer rights, not competitive interests;
- Support access to public information on rates and fees;

6/ (cont)

- Consider open finance roadmap that includes payments initiation;
- Provide guidelines that enshrine consumer control/ transparency of data sharing; and
- Make consumer control and transparency central to product design decisions to maximize outcomes.

7/ The benefits of authorized data access, and open finance more broadly, are clear. Consumers benefit from increased innovation and competition. This should be a continued priority for US policymakers.

Here’s the TransferWise comment letter: https://beta.regulations.gov/comment/CFPB-2020-0034-0065