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How Fintech got Banks to Come Around on Open Banking


It’s been 12 years since Congress passed the Dodd-Frank Act, the largest Wall Street reform in American history. The effects of the bill have been far-reaching, but one key part, Section 1033, has been on hold all this time.

The provision was meant to provide marching orders to banks and fintech firms looking to share data and grow their businesses by providing new digital services to customers, like budgeting software and online bill pay. Instead, it prolonged years of squabbling and competition between banks, fintech companies, and consumer advocacy groups, which couldn’t agree on how rules stemming from Section 1033 needed to be written. At stake was control over customer data, the ability to ensure secure online transactions, and a chance to shape a new era of digital banking.

Now, finally, an end appears to be in sight. The Consumer Financial Protection Bureau, the agency tasked with rulemaking under Section 1033, has signaled that the issue will go before its small business review panel before the end of the year.

An industry group called the Financial Data Exchange, or FDX, has been a key player in breaking the stalemate, generating surprising cohesion between fintechs, banks, and consumer groups on the technical tenets of what those rules should be. Though FDX doesn’t advocate for specific policy proposals, its approximately 230-organization membership — composed of banks like Citi and Wells Fargo, fintechs like Intuit and Plaid, and consumer groups like the National Consumer Law Center — has settled on a single open API standard they think should adequately address any regulatory or industry concerns. Now those members are acting in unison, pushing CFPB director Rohit Chopra to write rules that are friendly to their standard.

“Once you start getting everyone together, you realize there’s a lot of commonality,” Don Cardinal, FDX’s managing director, told Protocol. Cardinal says his sources on Capitol Hill tell him that draft rulemaking can be expected six months after panel review, and rules 90 days after that, putting the end of what would be a 13-year wait for rules governing the field of open banking sometime near August 2023.