A consortium of fintech companies have formed a new industry group to advocate for allowing consumers to share their financial data with chosen third parties.
The Consumer Financial Data Rights group consists of several well-known names in the fintech industry, including Affirm, Betterment, Digit, Envestnet-Yodlee, Kabbage, Personal Capital, Ripple and Varo Money. Many of the member companies provide consumers with personal financial management or wealth management tools, and rely on their users to share their bank data with the firms.
The debate about sharing financial data has grown louder, with banks and fintech firms often on opposing sides. Even the Consumer Financial Protection Bureau has weighed in on the matter. Typically, these third parties have relied on the practice of screen scraping -- getting authorization from customers to log in to their online banking accounts on their behalf to obtain data, such as transaction history. Banks argue that the practice is risky and can lead to identity theft and fraud, while data aggregators have claimed that banks simply are trying to stave off competition.
But the new lobbying group says its focus is on promoting the sharing of data via open application program interfaces. It said its first action will be the submission of a joint comment letter in response to an advance notice of proposed rulemaking on Enhanced Cyber Risk Management Standards issued by the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. The submission will encourage the regulators to establish a risk hierarchy with regard to cybersecurity risk in the fintech industry and will note the importance of continuing to allow consumers to access secure tools that enable their financial well-being, the group said in a press release.
"Consumers and small business owners need to be able to view their entire financial picture to make decisions that are truly in their best interests,” Kabbage co-founder Rob Frohwein said in the release. “The ability to freely access financial data empowers customers to take actions to improve their financial lives, whether it’s accessing capital to grow a business or better understanding their income streams."