CFPB Reveals Open Banking Rules To Jump Start Banking And Finance Competition

Open banking rules have now been finalized by the CFPB to help bring extra competition in US banking and finance sector and let consumers access their financial data much easier.

After several delays, the Consumer Financial Protection Bureau (CFPB) has finally issued its much-anticipated “open banking” regulations designed basically to promote competition in the US banking and finance markets. The new development, which was made public on Tuesday, is aimed at making it easy for users to integrate their banks while using other creative financial solutions.

The CFPB’s Director Rohit Chopra reiterated this when he said, “So much of the population is trapped in financial products with bad rates and bad service.” The proposed rules will help the US catch up with the likes of UK and Europe, whence data-exchange regimes already exist.

Meanwhile, banks opposed the project, and the Bank Policy Institute started legal action to check the banks, claiming that it would violate client privacy. While allowing technology companies to enter the market without some checks jeopardized sensitive data, the institute's president warned.

As per section 1033 of the Dodd-Frank Act, financial institutions intend to offer their client’s all personal data at no charge via proposed rule. The rule’s proposal is based on concerns about the negative aspects of the business environment, such as the need for clients of third party applications to ‘rescreen’ themselves by providing their login and password so as not to be earning for nothing.

The Bureau has established new banking rules with the objective of increasing competition amongst the 4000 banks. The customers should be prepared for better terms. Direct account payments will minimize the use of credit and debit cards.