Wise submits Open Banking comment letter to the CFPB

“Open banking” is moving forward in the United States. Well, actually, it’s been happening through industry-driven partnerships for years, but the government will soon produce its first set of regulations.

In October of 2020, the Consumer Financial Protection Bureau (CFPB) announced the start of a rulemaking process to implement section 1033 of the Dodd-Frank Act, which provides for “consumer rights to access financial records.” Stakeholder comments were due last week.

Open banking is the practice by which financial institutions can connect directly via APIs, often through third parties, at the direction of consumers. Open banking is commonly utilized when consumers add money to payment apps, use personal financial dashboards, or aggregate investments with a robo-investor, among other use cases and applications that help people manage their money more efficiently and effectively.

Until now, open banking in the US has been almost entirely industry driven. That stands in contrast to the UK's more prescriptive approach with enforceable unified standards and registration/accreditation requirements for participants. The UK implemented Open Banking in 2018 to induce more innovation and competition into financial services.

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As the US moves towards implementing its first ever regulations, Wise offered comments from its perspective as one of the UK’s largest open banking payments initiators, at one point originating as much as 70% of transactions.

Our recommendations to the CFPB include:

  • Ensure a consumer right to financial data access;
  • Encourage data holders to fully implement and permit authorized data access;
  • Support the development of standards that focus on consumers rights, access, and outcomes, not competitive interests;
  • Include, as within the scope of access, public information on terms, rates, and fees;
  • Consider a future open finance roadmap that includes payments initiation;
  • Provide guidelines that enshrine consumer control and transparency of any data sharing; and
  • Incentivize financial institutions to make consumer control and transparency central to product design decisions to maximize outcomes.

The benefits of authorized data access, and open finance more broadly, are clear. Consumers benefit from increased innovation and competition. This should be a continued priority for US policymakers.

About Wise

Wise is a global technology company, building the best way to move money around the world. With the Wise account people and businesses can hold over 40 currencies, move money between countries and spend money abroad. Large companies and banks use Wise technology too; an entirely new cross-border payments network that will one day power money without borders for everyone, everywhere. However you use the platform, Wise is on a mission to make your life easier and save you money.

Co-founded by Kristo Käärmann and Taavet Hinrikus, Wise launched in 2011 under its original name TransferWise. It is one of the world’s fastest growing, profitable technology companies and is listed on the London Stock Exchange under the ticker, WISE.

16 million people and businesses use Wise globally, which processes £9 billion in cross-border transactions every month, saving customers around £1.5 billion a year.

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