Open Banking likely difficult to accomplish in U.S.
The United States is behind many other countries in the world when is comes to Open Banking, CUNA Senior Director of Advocacy and Counsel Lance Noggle told a World Council of Credit Unions webinar Wednesday, and any progress in the arena will likely be through private companies. Noggle was part of a panel of worldwide credit union leaders, including Australia and Canada, that discussed the state of Open Banking around the world.
Open Banking is a practice that provides third-party service providers open access to banking, transaction, and other financial data from financial institutions through the use of application programming interfaces (APIs).
“Open Banking would likely be very difficult to accomplish in the U.S., mostly due to multiple state and federal regulators overseeing financial institutions, and the question of who would be in charge,” Noggle said. “It would need to start with a piece of legislation getting passed by Congress, the enacted into law, then it would go to regulators for the development of a rule.”
There are no defined Open Banking standards at the government level in the U.S., though many private entities are examining the idea, and “kicking the tires,” on what a standard would look like, Noggle said.
He added that the Consumer Financial Protection Bureau’s look at the concept of data ownership, as required by the Dodd-Frank Act, is likely the closest thing happening now.
Noggle also added that, since the U.S. does not have in place a national data privacy and security framework, there are many privacy, security, and legal issued that would need to be addressed.
Australia is currently in the early phases of multi-state Open Banking launch, while the Canadian government and financial services providers, including credit unions, are working on shaping an Open Banking framework.