Open banking lurches onward

Core Insights - The U.S. open banking landscape faces challenges due to a blocked rule in court and potential agency shutdowns, yet data sharing between banks and fintechs is expanding [1][2] Group 1: Open Banking Developments - The trend of open banking, which allows consumers to share financial data more easily, is gaining traction globally, especially in Europe [2] - Approximately 1,000 data providers, including banks and fintechs, are currently sharing customer-permissioned data using API standards from the Financial Data Exchange (FDX) [3] - API connections between companies have surged by 50% in the past year, reaching about 114 million, and have more than tripled since 2022, indicating robust growth in the open finance ecosystem [4] Group 2: Regulatory Challenges - A federal judge issued a preliminary injunction preventing the Consumer Financial Protection Bureau (CFPB) from enforcing a new open banking rule until it completes its reconsideration [7] - Banks have raised concerns about the compliance costs associated with the rule and the lack of clarity regarding liability for fraud and misuse of consumer data [6] - The CFPB is currently reviewing around 14,000 comments collected over the past two months to inform revisions to the final rule [7] Group 3: Security and Compliance - Open banking is reportedly functioning at scale without significant disputes or high-profile data breaches, suggesting effective security measures are in place [5] - Legal experts indicate that the absence of major security incidents reflects positively on the current implementations of open banking [5]