Since the election, the future of the Consumer Financial Protection Bureau has been called into question. The GOP majority in Congress — which is bolstered by the Trump administration — has been critical of the agency, and wants to repeal some or all of the Dodd-Frank Act, which established the bureau.
Layer on top of that the fact that a U.S. Court of Appeals for the D.C. Circuit deemed the agency’s leadership structure unconstitutional — and there’s a lot to unpack. The next few weeks and months ahead may be a very interesting time for the agency, its staff and its issues.
But regardless of what happens with the politically uncertain CFPB, many of the issues the bureau deals with are not political. Access to a consumer’s financial data falls into that category.
An obscure but critically important area of Dodd-Frank was a provision ensuring consumers’ rights to access their financial account and related data in electronic form. The CFPB recently delved into this issue, issuing a “request for information” from stakeholders on how to implement that provision. Comments by CFPB Director Richard Cordray about some financial institutions looking for ways to limit such access were framed as a tug of war between established financial institutions and emerging upstarts.
To be sure, the notion of this type of conflict makes for a great story, and limits on data access would certainly negatively impact consumers.
But the reality is quite different. Most of the financial technology industry and broader financial services industry rely on the principle that consumers have a right to access their personal financial information and share it with other parties. Most financial companies support such data access being available to help people invest with fair fees, settle debts, set and meet savings goals, and get favorable loans.
Passing viewers might reasonably wonder whether the uncertainty swirling around the CFPB calls into question data accessibility in the financial technology industry. But fintech’s future has never been brighter. Consumers have shown significant demand for the kinds of services that subsist on data access, and the industry is much closer to agreement on key issues than it might appear on the surface. Recent agreements between banks, trusted intermediaries and software developers have opened data access while seeking to strengthen data security.
In the past year or so, the industry has matured considerably. This progress reflects the fact that not only do we actually agree on more things than we disagree on, but that cooperation here benefits everyone. No longer is it a question of whether consumers should control access at all; we agree on that. Now, the question is how best to make sharing data possible.
This is especially true for areas like security, where stakeholders’ interests are closely aligned. In fact, most everyone agrees that ensuring safe and secure data access is the top priority, and the technology exists today to enable secure data access. Questions to the contrary are based on outdated notions of how the industry works.
Regulation can be helpful in this area. No doubt, it could have a big impact, and we would welcome additional thoughtful engagement from regulators and policymakers. Regulation would give teeth to the principles we all agree on and set standards for the principles where there is still daylight between us.
In a few weeks, stakeholders big and small across the industry will submit responses to the CFPB’s RFI on the topic of data access. I expect we’ll find affirmation of this newly collaborative reality, just as we saw with the CFPB’s Project Catalyst, which convened everyone from seasoned bank executives to entrepreneurs seeking to address potential barriers to innovation. This collaboration has led to progress and mutual understanding among all those working to continue to encourage the evolution of this crucial and growing industry.
Healthy engagement on issues has not only brought recognition that the best future for consumers — and every stakeholder — depends on building an inclusive financial ecosystem, but it has also paved the way for workable solutions. Banks want freedom to choose the best approach for their business. With the advent of new rails in the form of trusted intermediaries, the resulting benefits have led to compromise and collaboration, not concession or conflict.
Zach Perret is CEO and co-founder at Plaid.