Within a broad executive order addressing competition across various industries, the White House has reiterated its support for US open banking reform.
Specifically, it is pressing the Consumer Financial Protection Bureau (CFPB) to execute rulemaking that would give banking customers the right to port their data from one bank to another.
The Executive Order on Promoting Competition in the American Economy is intended to “promote the interests of American workers, businesses, and consumers”.
It states: “The American promise of a broad and sustained prosperity depends on an open and competitive economy.”
The order spans consumer rights, agriculture, healthcare, IT, telecoms, and other sectors.
For financial services, the order calls on the director of the CFPB, “consistent with the pro-competition objectives stated in section 1021 of the Dodd-Frank Act”, to press on with section 1033 of that Act to facilitate “the portability of consumer financial transaction data so consumers can more easily switch financial institutions and use new, innovative financial products”.
The progress of open banking in the US has been slow to date, not least given the Dodd-Frank Act came into force in 2010. Since then there have been requests for information, a symposium for stakeholders, draft rules for feedback and, while the CFPB has included data sharing on its latest rule-making agenda, it has yet to issue the actual proposed rules.
Into the void have come private sector initiatives and entrants, most notably Plaid, as well as the work being done towards an API standard by US and Canadian financial institutions within the Financial Data Exchange (FDX).
However, the administration of President Biden looks to have now issued a clear instruction to the CFPB to finally enact the rule changes to simplify the bank-switching process, which in turn would aid challenger banks and fintechs to break into the sector and bring increased innovation.