Killing the Open Banking Rule Undermines Trump’s Vision for Digital Financial Leadership

Jason Rosen is Founder and CEO of Prism Data, a cash flow underwriting infrastructure and analytics platform powering the next generation of risk scoring. Prior to founding Prism, Jason was Co-Founder and CEO of Petal, a fintech credit card company on a mission to expand access to financial opportunity. Jason served on the Consumer Advisory Board of the Consumer Financial Protection Bureau, sat on the Small Business Regulatory Enforcement Fairness Act panel for the Open Banking rulemaking, and is a member of the OCC’s Project REACh. Jason previously practiced law at Sullivan & Cromwell and Gunderson Dettmer, where he represented financial institutions, technology companies and venture capitalists. Jason holds a JD from Harvard Law School.

Noah Gold is the General Counsel and Head of People & Public Policy of Prism Data, a cash flow underwriting infrastructure and analytics platform powering the next generation of risk scoring. Previously, he was the General Counsel of Petal, a fintech credit card company on a mission to expand access to financial opportunity. Before that, he was the Assistant General Counsel of a leading e-commerce software platform, and prior to that Noah practiced law at Paul, Weiss, Rifkind, Wharton & Garrison LLP.

The Consumer Financial Protection Bureau may seek to vacate the recently finalized open banking rule under Section 1033 of the Dodd-Frank Act, which codifies consumers’ rights to freely access and share their financial data with trusted and authorized third-party services. Doing so would eliminate a key framework for open access to financial services and cutting-edge fintech innovation, subverting President Donald Trump’s past accomplishments and current agenda for American leadership in digital finance. 

Contradicting Trump’s Digital Financial Technology Plan

As we observed recently in an op-ed for American Banker, the President recently issued an executive order, titled “Strengthening American Leadership in Digital Financial Technology,” which called for open access and innovation-friendly regulation in digital finance. It directs agencies to promote “fair and open access to banking services for all law-abiding individual citizens and private-sector entities alike” and to provide “regulatory clarity and certainty” for emerging technologies, “supporting a vibrant and inclusive digital economy and innovation.”

Those principles align squarely with the CFPB’s open banking rule, and this is no coincidence—President Trump initiated the rule during his first term. His 2018 Treasury report, titled “A Financial System That Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation,” championed a consumer’s right to freely access and use their own financial data, and acknowledged that this right extends to their chosen fintech providers. In 2020, President Trump’s CFPB officially launched the open banking rulemaking. 

Nullifying the rule now would undercut the President’s vision for American global leadership in digital financial technology. Open banking is the foundation for many of the most promising new financial technologies that have emerged in the market in recent years: AI-based financial management, stablecoins and other blockchain-based payments and financial infrastructure, alternative payment options like pay-by-bank, and next-generation credit scoring using cash flow underwriting, among others. These innovations promise to make financial services cheaper, more convenient, and more freely accessible for millions of Americans. 

The current open banking rule represents a common-sense approach to enabling these technologies and leveling the consumer financial data playing field between large banks and innovative fintechs. Scrapping it would freeze innovation, reduce competition, de-bank hardworking Americans, and entrench the largest banks and legacy product offerings at a time when established open banking frameworks around the world may enable foreign competitors to surpass U.S. businesses. Specific issues—such as removing provisions relating to recognizing standard-setting agencies, removing limitations on secondary uses, and clarifying limitations on data provider liability—can be addressed through notice-and-comment rather than tearing down a bipartisan and cross-market effort years in the making. 

A Policy of Competition and Consumer Choice

We should remember why the open banking rule exists and how it aligns with conservative principles like competition, choice, and individual rights and autonomy. The rule gives people control of their financial data—for example, letting a consumer share their banking records with another bank or lender to obtain a loan through cash flow underwriting, or with a fintech app to get better budgeting tools. This kind of data portability forces financial services providers to compete on product quality and terms rather than attempting to keep customers captive. The rule also ensures consumers can share their data at no cost, opening the market to new entrants and driving down prices through competition.

Open banking upholds property rights, free enterprise, and the ability of consumers to vote with their feet. It also acts as a critical safeguard against de-banking, making financial histories portable and empowering Americans to easily switch financial service providers if they’re denied service or mistreated.

Risks of Scrapping the Rule: Loss of Choice, Uncertainty,  and Stalled Innovation

What happens if the open banking rule is vacated? Consumers and small businesses would bear the brunt. Banks that resisted data-sharing would have free rein to throttle or block third-party access to data under the guise of “security,” or to charge prohibitive fees for access that is guaranteed under the law, in either case effectively shutting out competitors. That means fewer choices and higher costs for Americans and American small businesses. Popular fintech services used by millions for payments, personal finance, and credit could be hobbled.

Just as troubling, killing the rule would create major market uncertainty. Financial service businesses in the open banking ecosystem have been negotiating this rulemaking and preparing for compliance for years. Even if the CFPB intends to re-issue a new rule, any such process will likely take years. A return to open banking uncertainty will stall product roadmaps of innovative companies and prevent American consumers and businesses from accessing the financial services of their choice and benefiting from innovative new ones. In the meantime, other countries will press ahead on open banking while America risks forfeiting its fintech edge.

Keep America First in Fintech

Abandoning the open banking rule now would undercut President Trump’s goals for American leadership in digital finance, stripping American consumers of choice and autonomy and depowering a critical engine for U.S. advancement and leadership in digital financial technology. Rather than axing this pro-innovation and pro-competition framework and starting from scratch, the administration should work to streamline and strengthen it, consistent with the President’s own call for open access and clarity.

The opinions shared in this article are the author’s own and do not reflect the views of any organization they are affiliated with.

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