4 Perspectives for FIs to Note in the Industry's Data-Sharing Debate
Source: American Banker
With consumers increasingly using online banking and mobile apps, and agreeing to share their financial information without necessarily realizing what they are signing up for, the data-sharing debate is becoming more intense.
Here are some perspectives on how the industry is responding to the challenges and opportunities inherent in open finance.
A principles-based approach to data sharing is favored by industry experts
A consumer's right to access their own bank account and transaction data, as detailed in the data sharing provisions of the Dodd-Frank Act, is soon to be up for discussion and rulemaking by the CFPB.
Industry experts suggest the best way to approach this would be to follow CFPB Director Rohit Chopra's advice to abandon "highly complicated rules" in favor of a principles-based approach that leverages the core principles of data access.
Problems loom on the horizon if data sharing rulemaking sees further delay
The CFPB's advanced notice of proposed rulemaking on data sharing has long since passed and now the agency's anxieties over data privacy look likely to result in further delays.
In the drive toward data sharing, banks need to be mindful of the risks, too
Open banking offers greater efficiency and improved functionality. But while sharing highly confidential bank and credit card transaction data with everyone may deliver speed, convenience and efficiency, it also increases the risk of execution failure and third-party fraud.
Regulation is the way to the promised land of open finance
With data access reaching a key inflection point, experts suggest it's becoming clear that regulation spearheaded by the CFPB is going to be crucial if the industry is to move forward.
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