The CFPB’s Open Banking Rule Takes Another Step Toward Implementation

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The CFPB’s new rules on open banking and the recognition of standard-setting bodies present challenges for banks, including potential compliance burdens and the risk of new monopolies dominating the standard-setting process.

Treliant can provide strategic guidance on navigating the new rule, ensuring balanced participation in standard-setting bodies, and developing compliant data-sharing frameworks that align with consumer data rights. Additionally, we offer expertise in managing operational risks and facilitating effective change management strategies to ensure a smooth transition and sustained competitiveness in the evolving financial landscape.


The Consumer Financial Protection Bureau (CFPB) has finalized a rule that outlines the qualifications for becoming a recognized industry standard-setting body as part of its efforts to implement the Personal Financial Data Rights Rule under Section 1033 of the Dodd-Frank Act. This rule aims to accelerate the shift to open banking in the United States by allowing consumers to share their financial data with fintechs and other third parties. The new rule mandates that standard-setting bodies must demonstrate attributes such as openness, transparency, balanced decision-making, consensus, and due process to prevent dominant firms from manipulating standards to stifle competition.

The CFPB’s rule requires that industry bodies seeking recognition must include a diverse range of stakeholders, including consumer advocates, to ensure fair and balanced decision-making. The rule also provides mechanisms for revoking recognition if a standard-setting body fails to adhere to these attributes. The full open banking rule, expected to be finalized in the coming months, will address how consumers should be made aware of where their data is held and how it is used, and will debate whether consumers should opt in or out of data sharing for secondary purposes. While the rule aims to enhance consumer data rights and market competition, it has faced criticism from banks and fintechs regarding the potential compliance burdens and operational challenges it imposes.

What Does This Mean for Financial Institutions?

The implications for financial institutions required to abide by the CFPB’s new open banking rule include:

Compliance Cost: Financial institutions will need to ensure their systems and processes are compliant with the new standards, which may involve significant investments in technology and resources to meet the data-sharing requirements.

Operational Risks: Implementing the new standards will require changes to existing operational processes, potentially introducing risks associated with data security, system integration, and continuity of service.

Change Management: Financial institutions will need to manage the transition to the new standards, which includes training staff, updating policies and procedures, and ensuring that all stakeholders are aware of and adhere to the new requirements.

Increased Competition: By enabling consumers to share their financial data with third parties, the rule is likely to increase competition from fintechs and other non-traditional financial service providers, challenging established institutions to innovate and improve their offerings.

Data Governance: Institutions will need to enhance their data governance frameworks to ensure the accurate, secure, and efficient handling of consumer data, complying with transparency and due process requirements set by the CFPB.

Stakeholder Engagement: Financial institutions may need to actively participate in standard-setting bodies to ensure their interests are represented and to influence the development of fair and balanced industry standards.

Consumer Trust and Relationships: Maintaining consumer trust will be critical, as consumers will have greater control over their data and the ability to share it with other service providers. Institutions must demonstrate robust data protection and privacy practices to retain consumer confidence.

By addressing these implications proactively, financial institutions can better navigate the regulatory landscape and leverage the opportunities presented by the shift to open banking.

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Laura Huntley

Laura Huntley is a Managing Director in Treliant’s Regulatory Compliance, Mortgage, and Operations Solutions practice. Laura brings almost two decades of specialized experience in regulatory strategy, compliance, and risk management within the financial services industry. Beginning her career as a practicing attorney, she honed her expertise in regulatory compliance and…