Open banking – two words that just may change your life and this change is coming at you, ready or not.
In late October the CFPB finalized a rule that made open banking a must have for the nation’s biggest financial institutions by April 1 2026 – and by April 1 2030 the bigger credit unions will have to comply too.
Don’t ask me to explain the choice of April 1. It’s a rather infelicitous choice but open banking is nonetheless a good thing, for FIs and their customers/members.
Here’s what CFPB has to say about it: “Too many Americans are stuck in financial products with lousy rates and service,” said CFPB Director Rohit Chopra. “Today’s action will give people more power to get better rates and service on bank accounts, credit cards, and more.”
The Bureau goes on: “Today’s rule ensures consumers will be able to access and share data associated with bank accounts, credit cards, mobile wallets, payment apps, and other financial products. It aims to address market concentration that limits consumer choice over financial products and services. Consumers will be able to access, or authorize a third party to access, data such as transaction information, account balance information, information needed to initiate payments, upcoming bill information, and basic account verification information. Financial providers must make this information available without charging fees.”
Right now, radio silence about open banking prevails in credit union land – AI has sucked up almost all of the industry’s tech energy – but that will change as calendar pages flip us closer to the deadline for compliance.
Yes, it’s true that the vast majority of credit unions will never have to comply. FIs with assets under $850 million are exempt.
But choosing to ignore open banking may be signing an institution’s death certificate as members and prospective members grasp how open banking is in their best interest.
But here’s the deal: on the show today is Lisa Arthur who tells why embracing open banking is in the best interests of just about every credit union. She also tells how open banking already is well established in many countries – the US is a laggard – and what’s involved in climbing aboard this train.
