US moves on banking data rules, but portability could take years to facilitate

US moves on banking data rules,
but portability could take years to facilitate

Rules around portable account history
could be years in the making

The US Presidential Executive Order encouraging the Consumer Financial Protection Bureau (CFPB) to “issue rules allowing customers to download their banking data and take it with them” from bank to bank, could take a number of years to enable.

“Allowing customers to download their data was not mandated in Dodd Frank… it could take several years to facilitate,” says David Schroeder, senior vice president, federal governmental relations, at the Community Bankers Association of Illinois (CBAI).

The CFPB is currently reviewing comments received in response to an advanced notice of proposed rulemaking (ANPRM) regarding the issue of data access by users and aggregators, for use in assisting consumers in a variety of different computer applications.

Neither the ANPRM nor Dodd-Frank mandated data portability, as suggested in the president’s order. The issue of portability may require clarifying legislation which will take time to pass, and involve a full rulemaking process - ANPR, comment period and final rule - which could be years in the making.

Aside from being an arduous rulemaking process, US consumers are not motivated by the need to port their entire bank data as there is little information on such as process as yet, says Schroeder.

“This idea that customers will be able to download and taking their bank account data and give it to a different institution to facilitate the change in account is not really on the radar right now with consumers,” he says.

“The fact that data portability, similar to what consumers have in the UK, is not widely known in the US, and there has not been strong consumer demand for it, we think that will be a separate process from data access.”

The ANPRM and comment submissions currently under review with the CFPB relates to section 1033 of Dodd-Frank, which stipulates that banks should “make available to a consumer, upon request…information relating to any transaction, series of transactions, or to the account” and “in an electronic form that can be used by computer applications.”

Little movement happened with section 1033 until November last year when the announcement of the ANPRM signalled the initiation of the rulemaking process. By February this year, 99 fintechs, banks, and industry bodies had submitted comment letters to the CFPB, which in June announced it would be assessing next steps.

Besides the rules, aggregators – such as Plaid and Finicity - now exist that use software that allows consumers to share account data and transaction history with fintechs and other financial services providers in order to offer better products. In the past, banks large and small have raised concerns over cybersecurity risks in sharing customer data with third parties.

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