On Compliance: CFPB could propose giving big tech access to credit unions’ core systems
This would give fintechs a new marketplace advantage that credit unions would have to pay for.
The Consumer Financial Protection Bureau is in the process of writing new regulations that will likely mandate a de facto “open banking” system where financial technology companies have virtually unrestricted access to credit unions’ core banking systems. If CFPB continues to move forward with these new rules, it is certain to give fintechs a new competitive advantage that allows them to ride credit unions’ rails for free while sticking credit unions with the bill for the implementation costs as well as ongoing cybersecurity and other operational expenses.
What Dodd-Frank Says
It is doubtful that Congress intended to authorize “open banking” for fintechs when it adopted Section 1033 of the Dodd-Frank Act in 2010. Titled “Consumer Rights to Access Information,” the key provisions of Section 1033 read:
“Subject to rules prescribed by the Bureau, a covered person [such as a credit union] shall make available to a consumer, upon request, information in the control or possession of the covered person concerning the consumer financial product or service that the consumer obtained from such covered person, including information relating to any transaction, series of transactions, or to the account including costs, charges and usage data. The information shall be made available in an electronic form usable by consumers…The Bureau, by rule, shall prescribe standards applicable to covered persons to promote the development and use of standardized formats for information, including through the use of machine readable files, to be made available to consumers under this section.”
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