The Consumer Financial Protection Bureau (CFPB) released a proposal on October 19, 2023 aiming to aid with the facilitation of a more transparent way of banking, openly known as ‘open banking’. Commonly seen as long-awaited, the proposal is focused on the successful implementation of the Dodd-Frank Act Section 1033 (12 U.S.C. § 5533) that imposes new obligations on financial institutions.
Accordingly, financial bodies would have to meet certain criteria to provide customers, as well as the clients’ authorized third-party associates, with electronic access to essential account details. Accompanying this, a systematic shift towards a model of more open access to banking operations is being encouraged by the CFPB, hence the long-awaited proposal.
This novel development is a key step forward towards realizing a more consumer-focused banking landscape, the necessity of which has been emphasized by numerous industry analysts for years. With the CFPB’s proposal at the forefront, financial institutions would be ushered into a new era of open banking.
The full developments and updates on this key legal development are provided by Morrison & Foerster LLP.