CFPB Seeks Free Flow of Digital Financial Records

By Jeff Bater

Nov. 17 — A banking industry group is urging the Consumer Financial Protection Bureau to avoid new regulation as the agency opens an inquiry about the shared use of consumers’ digital financial records.

The CFPB is investigating the obstacles that consumers face sharing their online banking information with third parties—such as apps or websites that provide budgeting or tax advice. The agency has expressed concern that banks are blocking the flow of information that consumers agree to share, such as account balances and transaction history.

“If financial institutions that house digital financial records make it difficult or impossible for consumers to authorize access or share their information, that blocks opportunities for consumers to benefit from this information,” CFPB Director Richard Cordray said at a field hearing Nov. 17 in Salt Lake City. “The result could be to thwart new entrants from entering the market with consumer-friendly products and services, even those not currently being offered by the financial institutions themselves.”

Robert Morgan, vice president of emerging technologies at the American Bankers Association, said in prepared remarks that regulation could stifle innovation. He suggested banks and their technology partners be allowed to keep working on protocols and methods of securely sharing data.

The CFPB holds field hearings to solicit comments as it prepares to write rules. But the hearing and the launching of the inquiry come a week after Republicans took control of the White House and Congress, a chilly sign for the CFPB and any rulemaking it might do in 2017. Congressional Republicans have tried in the past to push through legislation that would curtail the agency's independence, and Donald Trump’s victory in the election could facilitate their agenda.

Morgan said banks are working to ensure their customers have the ability to safely share and control their data.

“This is not as easy as flipping a switch, as some have suggested,” he said. “There is a lot of coordination that needs to go on between our nation’s 6,000 banks, their technology providers, data aggregators and their customers.”

Cordray, in his remarks, said no company should be able to hoard customer information as a way to deprive consumers of the benefits of fair market competition.

“We have heard that banks, credit unions and others that house this information have operational concerns about when and how they are supposed to share the information with third-party providers,” he said. “We want to learn more about this. Does the sharing of financial records impose burdens on staff time or other resources? Are there legitimate concerns that the number and frequency of these requests could overwhelm the servers at financial institutions?”

To contact the reporter on this story: Jeff Bater in Washington at

To contact the editor responsible for this story: Michael Ferullo at

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.