CFPB's open-banking plan likely to ignite new legal battle

The CFPB is finalizing a rule that will change how your customers share their financial data with lenders and apps. This 'open banking' initiative aims to give consumers more control over their personal data. It makes it easier for them to switch banks or qualify for financing by letting them instantly share their transaction history. For retailers, this could mean faster approvals and more accurate credit decisions at the point of sale. However, the rule is facing serious legal threats before it is even released. Traditional banks are worried about the costs and risks of handing over this data. Fintechs are worried that banks might charge them high fees to access it. If the final rule allows banks to charge high 'screen scraping' fees, fintech lenders may see their costs rise. This could lead to higher rates or fees passed down to your customers. Conversely, if fees are banned, banks argue they won't have the incentive to keep the data pipes secure. Expect a long legal battle that could delay these improvements to the financing landscape. For now, operators should watch for how this affects the integration of BNPL and other digital financing tools into their checkout processes.

Source: American Banker — Top News

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