The US’ long-awaited Open Banking framework may be headed back to the drawing board, as the Consumer Financial Protection Bureau (CFPB) considers revoking or reworking its newly finalised rule under Section 1033 of the Dodd-Frank Act.
US Open Banking rule under threat
The potential reversal has reignited tensions between incumbent banks and fintech challengers and threatens to undermine years of progress toward consumer data portability in financial services.
Open Banking Rule
The CFPB’s Open Banking rule, finalised only months ago, mandates that financial institutions must share consumer-permissioned data — such as deposit account and credit card information — with authorised third-party providers at no cost to the consumer.
Designed to empower users, foster competition, and catalyse innovation, the rule embodies principles long championed by open market advocates: consumer choice, data autonomy, and a level playing field between established banks and fintech disruptors.
However, the CFPB — currently under internal and political strain — is now signalling that it may vacate the rule.
Such a move would create a regulatory vacuum in a space that has already absorbed substantial industry investment and operational restructuring.
Banks have long expressed concern that mandatory data sharing increases security risks and legal liability.
Fintechs, on the other hand, have argued that free and standardised data access is essential to offer low-cost, user-centric alternatives in budgeting, payments, lending, and identity verification.
Fragile Regulatory Landscape
Industry observers warn that rescinding the rule would not only reignite disputes over scope and implementation but also inject renewed uncertainty into an already fragile regulatory landscape.
The CFPB faces internal limitations, including budget constraints and reduced staffing, which could slow any attempt to draft a replacement framework — potentially leaving Open Banking in regulatory limbo for years.
The stakes are high.
Over 114 million secure data-sharing connections have already been established between consumers, banks, and fintech firms via APIs, according to the Financial Data Exchange.
The ecosystem that underpins Open Banking — spanning payment innovation, cash flow underwriting, and alternative credit scoring — depends on clear and enforceable data access rules.
A rollback could result in banks charging fees for data sharing or unilaterally limiting access under the guise of cybersecurity, reducing consumer choice and entrenching incumbents.
The damage would be most acutely felt by consumers and small businesses, especially those relying on digital-first financial tools to manage money, access credit, or run operations.
Complicating matters further is the political overlay.
President Trump
The Open Banking initiative was originally set in motion during President Trump’s first term, with the 2018 Treasury report explicitly supporting consumer financial data rights.
In 2024, Trump doubled down on this stance via an executive order aimed at bolstering US leadership in digital financial technology.
Unravelling the rule now would appear to contradict these policy ambitions, weakening the nation’s ability to compete with more progressive frameworks in the UK, EU, and Australia.
Ultimately, the regulatory uncertainty risks stalling innovation and pushing American fintech leadership offshore.
Market participants argue that rather than dismantling the existing framework, the CFPB should use its notice-and-comment process to refine and clarify the rule — addressing specific concerns around liability, standard-setting, and data use limitations.
With consumers increasingly demanding control over their financial data and the infrastructure for Open Finance rapidly evolving, retreating from this rule would be a backward step.
The US must now decide whether it wishes to lead or lag in the next wave of digital financial services.
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