Biden Launches Rocket to Open Banking

Written by Di Princell

August 11, 2021

A little knowledge that acts is worth infinitely more than much knowledge that is idle – Kahlil Gibran

Open banking just got a giant goose from the President of the United States. In an executive order, President Biden strongly suggested that the Consumer Financial Protection Bureau (CFPB) endorses guidelines forcing banks to loosen their grip on consumers’ bank data. Time for banks to “give it up” to the actual account owners so they can download their banking information and share it with other banks and 3rd party service providers. Wow, this is big!

Giving authentic ownership and accessibility to account holders for their bank transactional information shines a spotlight on the future of financial data sharing in our country, opening doors to innovative apps that will benefit consumers and banks. Data portability is the essence of the open banking model that is resounding all through Europe. The CFPB’s focus on portability will accelerate the current U.S. movement towards open banking and fire-up service providers to create innovative, value-added services for consumers and banks.

The president added “Even where a customer has multiple options, it is hard to switch banks partly because customers cannot easily take their financial transaction history data to a new bank, and it increases the cost of a new bank extending credit to customers.” According to the White House administration, the executive order will make it easier and cheaper for consumers to choose the most effective, economical, and secure providers of their bank transactional data.

Competition, the cornerstone of American business, has finally arrived in the banking world. It will be a new era for banks anxious to serve their customers by meeting consumer needs on a more insightful, holistic scale. Third party service providers will dramatically raise the bar for consumer expectations and demands. Doors will fly open for more players to jump into the arena investing in research, improvements, innovation, execution, and security. Service providers and banks will be seeking their competitive edge and consumer demand will rule who jumps to the forefront. Product bells and whistles will flourish and many will benefit!

Shawn Princell, CEO of RIBBIT.ai says “Open banking is the gateway to open finance – where consumers control their own data and improve access to quality financial services. RIBBIT.ai is on a mission to make sense of open banking data so lenders and fintechs don’t have to rely exclusively on credit systems. Our advanced technology, supported by data science and artificial intelligence, relies on bank transaction data, turning banking attributes of consumers into evaluated intelligence for assessing risk and making loans. A win-win for the borrower and creditor.”

Storing a consumer’s financial footprint wields an enormous responsibility, putting a target on provider products, unfortunately inviting hackers drooling with anticipation, to a data dinner. Trust and security will be strong components of the competitive advantage, who has it, who doesn’t. When it comes to execution of information, specific sharing will require consumer permission, all related to what a provider will do with the data. Consumers will be looking for solutions to store their bank data, plus applications that simplify and connect the information to their everyday financial lives.

Stay tuned . . .

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