Where Progress Meets Pressure: the State of Open Banking in the U.S.

Open Banking in the United States has never followed a straight line. Unlike other markets where regulation sets the pace, progress in the U.S. has largely been shaped by consumer demand and industry-led innovation. Consumers expect their financial lives to work seamlessly across apps, platforms, and institutions, and over time the ecosystem has responded. 

Today, Open Banking widely serves as a foundation for much of modern financial services, even if most consumers and institutions do not label it as such. At the same time, increased regulatory debate and legal uncertainty in recent years have created a sense of strain across the industry, even as the need for clarity grows more urgent.

Those dynamics were explored in depth at Fintech Xchange last week during a session titled What’s Next in Open Banking? Moderated by John Pitts of Affirm, the panel featured Jane Barratt of MX, Dan Murphy of Sunset Park Advisory, Ethan Geiling of Plaid, and Paul LaRusso of Akoya. Together, they traced how Open Banking arrived at its current moment and what must happen to sustain progress.

How Consumer Demand Shaped Open Banking

The panelists emphasized that Open Banking in the U.S. has always been consumer driven from the ground up. Long before formal frameworks were introduced, consumers were already linking accounts, sharing financial data, and using third-party applications to better manage their financial lives. And, these early connections were often powered by imperfect and insecure methods, but consumers’ demand for access, portability, and control persisted. 

Over time, the growing consumer demand pushed the industry to evolve from brittle approaches like screen scraping and to develop a more secure, stable, and scalable infrastructure built on standardized APIs. Consumers may not have explicitly asked for APIs, but their growing desire for Open Banking required financial institutions to provide reliability, security, and better experiences. 

And, it was that continued desire for connectivity and control sent an unmistakable signal to the industry. Consumers want their financial institutions to use their data to deliver more meaningful financial experiences, and they expect that data to move safely and with their permission. 

This consumer-led momentum played an important role in shaping Section 1033. While the regulatory journey has been complex, and even exhausting at times, the rule was intended to reflect a reality that was already in place. Consumers expect to control their financial data and to use it where and how they choose. That expectation has not changed, even as the industry continues to debate how best to support it at scale.

Regulation, Fees, and the Question of Access

As Section 1033 continues to be revisited and refined, the industry is grappling with important questions about data access and cost. One of the most pressing issues discussed was potential impacts of large banks charging fees to aggregators for access to consumer-permissioned financial data. While framed as a cost of infrastructure or security, these fees raise broader questions about who ultimately pays for Open Banking and raise concerns about barriers that limit consumer choice.

The concern is not limited to the immediate impact on FIs, fintechs and aggregators. Over time, those costs are unlikely to stop at the institutional level. The costs risk being passed down to fintechs and FIs, potentially limiting access and slowing innovation and consequently harm the competitive landscape and foster stagnation in the financial industry. 

“Fees will flow down stream until ultimately humans will pay.” Jane Barratt

But, in the end, the greatest risk of added cost lands on the consumer. Open Baking ideals and regulation have been built on the idea that consumers own their financial data, and introducing fees for access will inevitably find consumers paying for access to their own data. 

After years of debate over the foundations of Open Banking, there is a growing desire across the industry to resolve these questions and move forward with greater certainty.

The Role of Aggregators in Making Open Banking Work

A consistent topic in the discussion of Open Banking is the role of aggregators, particularly in conversations about data access and value. Financial data is frequently treated as if it were a static resource that simply needs a connection point. In reality, raw financial data is fragmented, inconsistent, and difficult to use without significant intervention. 

Aggregators invest heavily in building and maintaining secure connections across thousands of financial institutions, adapting continuously as systems change, APIs evolve, and security requirements shift. This process forms standards bodies like the Financial Data Exchange (FDX) to create industry wide standards for APIs. These standards reduce risk and simplify the process of sharing consumer-permissioned data. 

Beyond connectivity, aggregators refine and enhance data so it can be understood and used consistently across applications, while enforcing permissioning, consent management, and bank-grade security. This work is largely invisible to end users, but it is what enables Open Banking to function at scale and allows innovation to reach consumers in meaningful, trusted ways.

Progress Through Unprecedented Collaboration

One reason Open Banking has progressed as far as it has in the U.S. is the level of cooperation that has emerged across the financial industry. Banks, fintechs, aggregators, regulators, and advocacy groups have worked together in ways that were uncommon even a decade ago. While disagreements remain, this collaboration has allowed the ecosystem to move forward despite regulatory uncertainty and evolving technical standards.

That cooperative spirit was evident at Fintech Xchange and is increasingly reflected in Utah’s growing fintech community. The state has become a hub where innovative financial companies come together to share perspectives, address collective challenges, and collaborate on solutions that benefit the broader ecosystem. 

In an industry navigating both complexity and change, those forums for open dialogue and collaboration help explain why Open Banking has endured and why it continues to evolve.

Why the Next Phase Matters

Looking ahead, the stakes for getting Open Banking right are increasing. As artificial intelligence becomes more deeply embedded in financial services, the systems that support data access, permissioning, and governance will matter more than ever. After years of effort to establish a workable framework, the industry faces a pivotal moment to align on durable standards that protect consumers while enabling responsible innovation.

The next phase of Open Banking will depend not just on regulation, but on continued collaboration and shared commitment. The progress made so far shows what is possible when the industry works together. Building on that foundation will be essential to turning momentum into long-term value for consumers and the financial ecosystem as a whole.