The CFPB is backing down from its Open Banking Rule and it’s honestly a curse disguised as a blessing to the industry.
The blessing is that it puts the power back into the hands of banks and credit unions alike. They are not required to implement open banking, but they may do so if they see fit. And if they do decide to implement it, they may do so on their own terms.
The cons? Well to put it mildly, congratulations, we have just given the large banks the upper hand.
🦹All of them have implemented open banking, so why were they advocating for its dismissal? They don’t want smaller players to have the same competitive advantage as them...
You see their customer base is rapidly growing because people want the ability to share their banking data on their own terms. They don’t understand why their financial institution isn’t listed when they are trying to connect their accounts to their digital experiences. They find no excuse for not being able to have their accounts tied to their digital wallets. Consumers want to be able to seamlessly connect to digital experiences, but their financial institutions are putting up literal roadblocks.
🦵And the kicker? Open banking doesn’t only create a seamless experience for consumers. Financial institutions would be able to mitigate risks easily and effectively.
Open banking could give institutions the ability to fully understand the risk a consumer poses by verifying their banking history and account ownership.
🌈 The benefits of open banking are endless.
But yes, congratulations, you do not have anyone forcing you to implement it. You know get to decide on your own if your institution will still be around in 5 years. You’ll either give consumers and businesses the experience they demand or lose them to the competitors that will.
🗣️If you’re interested in picking my brain on what open banking could mean for you or how you should approach laying out the road map for your institution, don’t hesitate to reach out to me. I’ll always advocate for the sustainability of your institution.