CFPB introduces new regulations to enhance open banking and consumer data control in the US

The US Consumer Financial Protection Bureau (CFPB) introduced new rules to boost open banking by giving consumers more control over their financial data. These regulations will allow people to share their information more freely when seeking services, promoting competition between financial technology companies and traditional banks, which have been slow to grant access to customer data. CFPB Director Rohit Chopra likened the move to the system that lets mobile phone users switch providers while keeping their numbers, noting that it could modernise US payment systems.

The rules include strong privacy protections, ensuring companies can only use consumer data for specific services requested and preventing unauthorised use. They will also enable consumers to transfer their financial data between institutions at no cost, borrow on better terms by sharing data with lenders, and make direct payments from bank accounts. Consumers will also be able to revoke access to their data at any time.

The rules were part of the 2010 Wall Street reforms following the 2008 financial crisis. Smaller banks are exempt, while larger fintech firms have until 2026 to comply, and smaller ones have until 2030. These adjustments were made after feedback from industry stakeholders and the public.