In October 2023, the Consumer Financial Protection Bureau (CFPB) proposed a new rule which aims to promote “open banking.” This emerging practice entails the sharing of consumers’ banking and financial data such as account balances, transaction history, payment due dates, and routing numbers, among other sensitive information, with third-party vendors. It’s crucial to note that this sharing of personal finance data is conducted with the express consent of the customers involved.
Third-party vendors utilise this data to offer a host of services, from financial portfolio management and bill paying to investment advice. They also facilitate a variety of financial transactions, thereby enhancing the overall user experience and promoting financial inclusion.
The move by the CFPB to encourage “open banking” signals a possible future trajectory for the finance sector where consumers have more control of their financial data and can leverage this control to access more diverse and possibly better financial services. It presents an opportunity for legal professionals in corporate entities and law firms to consider the possible implications of this practice, and appropriately prepare their clients to navigate the emerging terrain.