The new Consumer Financial Protection Bureau (CFPB) proposed rule released in October 2023 requires U.S. banks, credit unions, and other financial firms that offer transaction accounts — such as checking accounts, prepaid cards, credit cards, and digital wallets — to give consumers access to their personal financial data. Not complying with the CFPB proposed rule by the deadline can have some serious consequences. By taking proactive steps to implement open banking as soon as possible, you can avoid the following five risks and continue to thrive in the evolving financial landscape.
01 Missed competitive opportunities
Waiting until the compliance deadline to implement open banking means you’ll miss out on opportunities that competitors who acted early are taking advantage of. Larger financial firms with plenty of resources are already gaining market share. The CFPB rule levels the playing field for smaller banks.
02 Falling short of customer expectations
Consumers increasingly expect seamless digital experiences and more control over their financial data — the main advantage of open banking. Younger, tech-savvy consumers don’t have a strong sense of loyalty to one bank and are not likely to visit a brick-and-mortar location. Delaying open banking implementation will continue to disenfranchise this growing demographic.
03 Lagging behind industry trends
The financial industry is evolving rapidly, with innovative technologies and opportunities emerging regularly. Those who can’t keep up will drop by the wayside. Complying with the CFPB proposed rule by implementing open banking will give everyone a fighting chance.
04 Reduced ability to attract fintech partners
Fintech companies and other third-party solution providers are more likely to collaborate with banks that have already implemented open banking, since financial data can be shared securely. A bank that waits to adopt open banking will limit their ability to form strategy partnerships that can open new markets.
05 Continued reliance on screen scraping
Today, the CFPB estimates that about half of third-party data access currently occurs through APIs; scraping comprises the bulk of the balance.* Not providing an API alternative to screen scaping can result in risks to security and brand reputation. Implementing open banking as soon as possible will usher you out of this risk group.
*CFPB Proposed Rule, October 19, 2023
Ready to implement open banking to be ready for the new CFPB rule?
