By Ray Birch
WASHINGTON—The CFPB’s new open banking rule brings with it new regulatory requirements, yet it also presents an opportunity to modernize data management systems, strengthen consumer relationships and stay competitive, analysts are saying.
While experts, too, believe those FIs that embrace open banking early will have a competitive advantage, some are concerned over the cost and time that will be required—possibly having to create a new area within the financial institution.
As CUToday.info reported, the CFPB has finalized its Personal Financial Data Rights Rule—which will begin to be phased in during 2026.
“For banks and credit unions, the rule will require the development of secure, real-time systems for data access and sharing,” said Dennis Irwin, chief compliance officer at Alkami, a cloud-based digital banking solutions provider for financial institutions. “While this means upfront investments in technology and security infrastructure, it also opens the door to innovation in product offerings and consumer trust-building. By adopting standardized APIs and implementing robust data protection measures, institutions can stay competitive, particularly as fintech competitors expand their services.”
Adjust Platforms
Digital banking providers will be required to adjust their platforms to ensure compliance with strict security, privacy and API requirements, Irwin noted.
“The rule prohibits screen scraping and imposes limits on third-party data use,” he said. “Financial institutions will require their SaaS providers to enhance data transparency, improve consumer consent mechanisms, and strengthen security, positioning themselves as leaders in compliant digital banking solutions.”
The regulatory framework of the CFPB’s open banking rule places strong emphasis on consumer control, requiring financial institutions and third parties to obtain explicit, informed, consent before accessing data.
“This ensures that consumers are fully aware of the scope of data access and can revoke permissions at any time. By making these processes simple and transparent, organizations can foster greater trust with consumers,” Irwin said.
Additionally, institutions that align early with these regulatory changes can use compliance as a market differentiator, asserted Irwin.
“By showcasing robust security and transparent consent management, financial institutions can not only avoid penalties but also attract consumers who prioritize privacy and control over their financial data,” he said.
A Big Effort
In Massena, N.Y., Scott Wilson, CEO of $787-million SeaComm FCU, said his early thoughts regarding the new CFPB rules are focused on resources.
“Anytime additional regulations are put into place it requires additional resources by the credit union,” Wilson said. “This rule, although it doesn’t apply to us directly today, it certainly may have future implications by the time the final tier compliance date of April 1, 2030, goes into effect for institutions that hold less than $1.5 billion in total assets, but more than $850 million. That said, we will most likely need to add a process and people resources to be compliant…Just one additional burdensome regulation put onto financial institutions. It’s hard to gauge today, initially this may be a hard lift.”
Wilson also raised concerns by others around the ability of fintechs to protect the credit union’s member data.
“The bigger issue is what guarantees by the third-parties will be in place to keep our member sensitive data safe,” he said.
GlobalData, in a report here, pointed out that in the U.K.—which is well ahead of the U.S. in working with open banking—that the financial innovation’s security track record has been good.
Consumers Benefit
WalletHub CEO Odysseas Papadimitriou sees only good things coming from open banking.
“I don't see any drawbacks for consumers, I only see upsides,” he told CUToday.info. “Open banking will help consumers budget and track their financials and identify opportunities where they can make improvements,” said Papadimitriou, whose company offers financial management services for consumers. “They will be better able to track their spending, know what they are spending on necessities versus what they're spending on nice-to-haves.”