Questions around the timeline to implementation and what an open banking style of framework would look like under the Consumer Financial Protection Act have swirled, making Chopra’s speech in Las Vegas today a highly anticipated communication to the industry.

“While not explicitly an open banking or open finance rule,” Chopra noted that the rule will move the country closer to open banking, by requiring financial institutions to share consumer data upon request. Chopra stated that the CFPB will launch the process to activate a “dormant authority” under Section 1033 of the Act that he expects will accelerate the shift to a more “decentralised and neutral consumer financial market structure [that] has the potential to reshape how companies compete in the sphere.” He added that not only will this rule reduce the ability for incumbents to “build moats and for middlemen to serve as gatekeepers,” it will increase competition resulting in better products, service quality and rates across the industry. In addition to emphasising the desire to move away from an industry dominated by incumbents toward a more decentralised market through this financial data rulemaking, Chopra’s speech also canvassed the desire to improve security around personal finance, and increase and incentivise account switching. Chopra explained that the Bureau expects to propose requiring financial institutions offering deposit accounts, credit cards, digital wallets, prepaid cards, and other transaction accounts to set up secure methods (such as APIs) for data sharing. The CFPB will also consider ways to keep incumbents from improperly restricting access when consumers seek to control and share their data, safeguard and prevent monopolisation by one or a handful of firms, and requirements to limit misuse and abuse of personal financial data. “When a consumer permits their private data to be used by a company for a specific purpose, it is not a free pass for a firm to exploit the data for other uses, no matter what the legal mouse-print may say,” Chopra said. The provisions provide for personal financial data rights and will only have teeth after the CFPB defined the specifics through rules. The Bureau must convene a panel of small businesses that represent their markets to provide input on its proposals before issuing a proposed rule. The CFPB will release a discussion guide for small firms to weigh-in on this week. Responses to the guide will be published as a report in Q1 2023, informing a proposed rule to be issued later in 2023. The Bureau hopes to finalise the rule in 2024 before moving to implementation. Responding to Chopra’s comments regarding data privacy, Plaid’s head of policy, John Pitts told Finextra: “Plaid is excited to see the CFPB move forward with this essential rulemaking that will provide additional transparency and greater protection of consumer financial well-being. We look forward to supporting the bureau in this historic initiative and extending those benefits to consumers and small businesses across our network.” Chopra concluded: “Financial services are an essential part of our economic plumbing, and we will be working to let the market expand and develop new ways to help Americans live their lives to the fullest. A more open ecosystem that is broadly inclusive of both consumers and businesses holds great promise. Our rulemaking will not turn on a switch, but I hope it will move us in that direction.”

Finextra is on the ground at Money20/20, reporting on the event’s biggest updates and announcements. You can keep up to date with our coverage on Finextra’s Live@ page here.