Data sharing

Without a rule standardizing data sharing standards, the Consumer Financial Protection Bureau risks the creation of a patchwork system of privacy standards as consumers seek the benefits of an open banking ecosystem.

Codat, a software startup that connects small businesses with financial institutions, raised $100 million in an equity funding round led by JPMorgan Chase’s growth-equity arm.

Widespread sharing of financial and other data creates enormous privacy risks for consumers, many of whom have no real understanding of the danger.

The company, which enjoys a large market share as a data aggregator to fintechs and banks, is adding account onboarding, identity verification and fraud detection to the array of services it offers.

A clear, cross-agency regulatory framework is needed to help the industry embrace the promise of this new financial services paradigm.

The data aggregator and challenger bank have formed a partnership to let customers of Green Dot’s mobile banking app use any of the 6,000 fintech apps in Plaid’s ecosystem.

The Consumer Financial Protection Bureau is in the early stages of developing a rule that could give bank customers far more say in how their information is being accessed by fintechs and data aggregators. What the final rule looks like will depend on how much consumers already know about the way their data is collected, stored and sold.

The Consumer Financial Protection Bureau is more than a year away from issuing a proposal on consumers’ right to control the flow of their data between banks and third parties such as fintechs, according to people familiar with the bureau’s thinking. Many previously expected a plan to arrive this spring.

The data aggregator assembled a group of technology companies that has developed a set of security standards for startups. It is open for comment ahead of an anticipated implementation in the second half of next year.

Even with an industry-driven standard in place, some institutions still resist parting with client information.