Coming Soon: Section 1033 Obligations and Opportunities
October 7, 2024 | 2 min read
Copied
While the topic of Open Banking continues to grow in popularity, the concept itself has been in practice for decades and looks different across regions. For the United States and Canada, forthcoming rulemaking by the Consumer Financial Protection Bureau and delayed next steps on a Canadian open banking system are prompting financial institutions and fintechs to get ready for an open ecosystem.
A panel of industry experts discussed key trends, challenges, and use cases for Open Banking, and more broadly, Open Finance at this year’s Money Experience Summit:
There are a few narratives shaping the current state of Open Banking in Canada. The first pits banks and fintechs against each other — regulators view banks as having the edge, with access to data and a historically solid influence. Conversely, frequent demands and complaints have resulted in a measure of skepticism for policymakers engaging with fintechs. Fintechs and banks have an opportunity now to work together to reset the narrative and bring an economic boost to the current financial environment in Canada.
In the United States, the CFPB’s rulemaking under Section 1033, expected in the next few weeks, will be another step toward more consistent standards and consent management. A market-driven approach to Open Banking means financial providers can help influence the technical operation of the new rules while keeping the customer at the center of the conversation.
The core capability of Open Banking begins and ends with customer consent. The need for the right to customer privacy has created a shift in the U.S. from standardization and reducing credential-related risks, to core data interoperability between fintechs and banks. This interoperability can result in a mutually beneficial exchange between the customer and financial institution.
As data consumption increases, so does the complexity. While Open Finance has shifted in recent years from screen scraping to APIs, financial institutions should consider common standards and certifications to drive value. These standards and certifications create consistency, accuracy, and efficiency, which helps build trust and sets an expectation between financial institutions and the customer — and between institutions themselves.
The benefits of Open Banking expands beyond the immediate customer and financial provider:
At the end of the day, Open Banking has and will continue to progress for the benefit of the customer. And, financial providers across the U.S. and Canada can take calculated risks and participate in the conversation to continue to move the effort forward.
October 7, 2024 | 2 min read
August 16, 2024 | 1 min read
August 13, 2024 | 3 min read