Latest

|

Regulation

Enterprise

|

Call Center Tech

Latest

|

Global Fintech

Enterprise

|

AI in Healthcare

Latest

|

Macro Economy

Latest

|

Consumer Finance

AI

|

Latest LLMs

CX/CS

|

Fintech

Latest

|

AI Infrastructure

Enterprise

|

ROI of AI

AI

|

Ethics & Safety

Latest

|

Politics & Policy

AI

|

Enterprise AI

AI

|

Big AI

Latest

|

Consumer Banking

Latest

|

Fintech Funding

AI

|

AI in Fintech

CX/CS

|

Fintech

AI

|

Health Tech

AI

|

AI Governance

Latest

|

LLMs

Latest

|

Fintech

AI

|

Open Source

AI

|

AI Security

Enterprise

|

Cloud Security

Latest

|

Macro Economy

Enterprise

|

Enterprise Solutions

AI

|

GRC

AI

|

AII Adoption

AI

|

AI Ethics

AI

|

Healthtech

CX/CS

|

AI in CX

AI

|

Quantum Computing

AI

|

Cybersecurity

Latest

|

Healthtech

CX/CS

|

AI Adoption

AI

|

AI

AI

|

Safety and Compliance

Latest

|

Big Tech

AI

|

Consumer Tech

AI

|

AI Ethics and Risks

CX/CS

|

AI

Enterprise

|

Data and Privacy

Latest

|

LLMs

Latest

|

Banking and Blockchain

AI

|

Healthtech

Enterprise

|

AI in the Enterprise

AI

|

AI Risk and Compliance

AI

|

AI Arms Race

Enterprise

|

AI

Latest

|

LLMs

CX/CS

|

Compliance

CX/CS

|

Great CX

CX/CS

|

CS in Blockchain

AI

|

AI News

Enterprise

|

AI

|

CX/CS

|

CX/CS

|

AI

|

CX/CS

|

AI

|

AI

|

Enterprise

|

AI

|

CX/CS

|

CX/CS

|

Enterprise

|

Enterprise

|

Political shifts and legal battles cloud the path for open banking in the U.S.

Lorikeet News Desk

April 30, 2025

Political shifts and legal battles cloud the path for open banking in the U.S.
Credit: Liliana Drew (edited)

Key Points

  • The Consumer Financial Protection Bureau's open banking rule faces uncertainty due to political changes and legal challenges.

  • The rule, finalized in October 2024, aims to give consumers control over their financial data by mandating secure access.

  • A leadership change at the CFPB and a lawsuit from banking groups have delayed the rule's implementation.

The Consumer Financial Protection Bureau's ambitious push for open banking in the U.S. is now caught in sharp political crossfire, throwing the future of consumer data portability into question. A landmark rule finalized just last fall, designed to empower consumers and foster fintech innovation by unlocking financial data, faces significant headwinds following a change in administration, and a subsequent softening of the agency's defensive posture in court.

Rule's original promise: Finalized in October 2024 under former Director Rohit Chopra, the Personal Financial Data Rights rule (implementing Section 1033 of the Dodd-Frank Act) mandates that banks and other financial institutions provide customers with free, secure access to their own financial data, enabling them to easily share it with third-party apps and services. Proponents hailed it as a way to increase competition and give consumers more control over their financial lives, moving away from riskier methods, like screen scraping.

Early implementation steps: The CFPB moved quickly on implementation, recognizing the Financial Data Exchange (FDX) in January 2025 as the first official "standard setting body" under the new rule. FDX, a non-profit consortium including banks, fintechs, and consumer groups, had applied for the role in September 2024, signaling industry readiness to build the required technical framework.

Political headwinds emerge: The landscape shifted dramatically following the January 2025 presidential inauguration. President Trump fired CFPB Director Chopra, appointing Russell Vought as Acting Director, who swiftly ordered major operational changes at the agency. This leadership change immediately cast doubt on the enforcement priorities and the fate of recently finalized regulations like the open banking rule.

Legal challenge intensifies: Even before the administrative shift, the rule faced legal opposition. A coalition of banking groups, including the Bank Policy Institute and the Kentucky Bankers Association, filed suit in late 2024, arguing the CFPB exceeded its authority and that the rule could stifle safer, private-sector data-sharing initiatives. The lawsuit seeks to invalidate the rule entirely.

CFPB signals retreat: Under Chopra, the CFPB had agreed to fast-track the lawsuit. However, following the leadership change, the agency's stance appeared to soften. In February 2025, the CFPB and the banking plaintiffs jointly requested, and were granted, a 30-day stay in the case, which also paused the rule's compliance deadlines, set to begin next year. The parties subsequently sought an additional 60-day tolling period in late March.

Industry pushes back: This perceived pullback prompted the Financial Technology Association (FTA), a trade group representing fintech companies poised to benefit from the rule, to renew its motion to intervene in the lawsuit on March 27, 2025. The FTA argued that the CFPB's agreement to delay implementation deadlines demonstrates the agency can no longer adequately represent the interests of the rule's supporters, making intervention necessary to defend the regulation.

Uncertainty clouds implementation: The confluence of the ongoing lawsuit, the CFPB's apparent shift in defensive strategy under new leadership, and the resulting court-ordered delays leaves the future of open banking regulation in the U.S. in significant doubt. While the rule technically remains on the books and standard-setters like FDX are approved, the political and legal turmoil threatens to stall or even reverse the move toward a more interconnected, API-driven financial ecosystem envisioned just months ago.

One more thing

We know AI chatbots that read your help center and summarize answers back to your customers are dime-a-dozen. The underlying technology is a commodity.

In fact we believe this so strongly, we’ll handle 100,000 FAQ lookup tickets for free.

Blue Sky