Trends 2024: Consumers will drive open banking, not regulators

Momentum is building for U.S. financial services to operate on "open banking" principles, in which consumers control directly how their financial data is used. Yes, the government is poised to enforce new rules, but the decisive demand is coming from the marketplace. Banks need to respond.

Does the United States lag behind in the race toward “open banking”?

“Open banking” is an umbrella term to describe the idea that sharing anonymized financial data between institutions can lead to innovation and new financial products and services, and that consumers should have the ability to move their data freely from one institution to the next.

For years, the United Kingdom and Europe have mandated that banks share data, creating a longstanding perception that the U.S. is falling behind. A 2021 McKinsey report, for example, found that the U.K. was far outpacing the rest of the world in regulating third parties to provide open banking data. Moreover, some of America’s largest banks have lobbied against the idea of opening up their data.

Does innovation trump regulation?

And yet, many in the financial sphere argue that this perception doesn’t reflect American reality. The U.K. and Europe, acknowledges Phillip Rosen, global chief technology officer at MoneyLion, may have taken the lead in enforcing open banking through regulation. “However, in other regards, when it comes to what companies are doing and the infrastructure that actually exists in the U.S. even though it’s not compelled or made easier by regulation, the U.S. is substantially further ahead,” Rosen argues.


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