Global: CFPB Publishes First Application for Open Banking Standard-Setter Recognition

The Consumer Financial Protection Bureau (CFPB) has taken a significant step towards shaping the future of open banking in the U.S. by publishing the first application from an organization seeking to be recognized as an open banking standard-setter. The application, submitted by Financial Data Exchange (FDX), is now open for public comments until October 16, according to a CFPB press release issued on Tuesday, September 24.

The CFPB emphasized the importance of standard-setters in creating a secure, reliable, and competitive framework for open banking, which allows consumers to share their financial data with third-party services. The Bureau outlined five key qualifications for organizations applying for standard-setter status: openness, transparency, balanced decision-making, consensus-building, and due process, including appeals.

Public feedback is essential, as it will help determine whether FDX is equipped to develop standards that serve all stakeholders, particularly consumers. In its application, FDX highlighted its role as a technical standards organization for permissioned financial data sharing in the U.S. and Canada. The organization stressed its commitment to the CFPB’s goals, noting its transition from credential-based data access methods like “screen scraping” to the FDX API, which is now used by over 94 million consumer accounts as of Fall 2024.

FDX has continuously improved its API to stay aligned with industry trends and technological advancements, driven by contributions from its diverse membership.

The CFPB’s proposed “Rule 1033” or “Section 1033” plays a pivotal role in establishing U.S. regulations on financial data sharing and permissions, offering a roadmap for how consumers can authorize data sharing with financial service providers. The CFPB also emphasized that the standard-setting process should be inclusive, involving stakeholders from public interest groups, app developers, and a broad range of financial institutions.

According to research, while nearly 46% of U.S. adults express interest in using open banking payment services, only 11% have engaged with these services in the past year. This indicates both the growing potential and the need for well-established standards to foster trust and adoption within the open banking ecosystem.