The Consumer Financial Protection Bureau (CFPB) proposed a rule in October that requires non-depository and depository entities to release certain types of data related to customer accounts and transactions to consumers and third parties.

As a result, larger financial institutions will need to adhere to the compliance regulations earlier than their smaller counterparts. Initially, community banks and credit unions lacking digital interfaces will be exempted. Advocates of this regulation argue that it will provide consumers with more control over their financial information, enabling them to make more informed financial decisions. Overall, this initiative is expected to foster competition within the financial services sector.

Kevin Hughes, Director of Aggregation Solutions at Fiserv, and Matthew Gaughan, Analyst of Emerging Payments at Javelin Strategy & Research, delved into this proposed rule during a recent PaymentsJournal podcast. They discussed some of the highlights of the CFPB proposed 1033 update and its impact on banks and credit unions.

PaymentsJournalCFPB’s Proposed Rule Is Poised to Level the Playing Field Among FIsPaymentsJournal CFPB’s Proposed Rule Is Poised to Level the Playing Field Among FIsPaymentsJournaljQuery(document).ready(function ($){var settings_ap27282039 = { design_skin: "skin-wave" ,autoplay: "off",disable_volume:"default" ,loop:"off" ,cue: "on" ,embedded: "off" ,preload_method:"metadata" ,design_animateplaypause:"off" ,skinwave_dynamicwaves:"off" ,skinwave_enableSpectrum:"off" ,skinwave_enableReflect:"on",settings_backup_type:"full",playfrom:"default",soundcloud_apikey:"" ,skinwave_comments_enable:"off",settings_php_handler:window.ajaxurl,skinwave_wave_mode:"canvas",pcm_data_try_to_generate: "on","pcm_notice": "off","notice_no_media": "on",design_color_bg: "111111",design_color_highlight: "ef6b13",skinwave_wave_mode_canvas_waves_number: "3",skinwave_wave_mode_canvas_waves_padding: "1",skinwave_wave_mode_canvas_reflection_size: "0.25",skinwave_comments_playerid:"27282039",php_retriever:"https://www.paymentsjournal.com/wp-content/plugins/dzs-zoomsounds/soundcloudretriever.php" }; try{ dzsap_init(".ap_idx_437741_28",settings_ap27282039); }catch(err){ console.warn("cannot init player", err); } });

Highlights of the CFPB Proposed 1033 Update

Known as the Required Rulemaking on Personal Financial Data Rights, the CFPB proposed 1033 update enables consumers to access and download their financial transaction data and other information from credit unions and banks.

With their consent, consumers can share their data with authorized third-party apps and services. In this data exchange, organizations are required to disclose the methods by which they collect, use, and share consumer data. The most important elements of this suggested rule revolve around ensuring security and establishing standardization.

“A part of this proposed rule is that banks and credit unions will have more visibility into what their customers are doing and who they’re sharing data with,” Hughes said. “It’s about being able to control the scope of data for aggregators in this community.”

According to Gaughan, the CFPB is providing standardization, which is needed. “These rule changes will bring consistency to the industry and make it easier for banks across the board to utilize some of these different data solutions and not rely on some of those less secure options like screen scraping,” he said.

How the Rule Could Affect Banks and Credit Unions