Impact of Financial Data Exchange (FDX) on Community Banking:

1. Defined Data Sharing Standards under FDX for CFPB Rulings:

   FDX will set technical standards for secure and interoperable data sharing, which enables community banks to participate more effectively in open banking.

   A clearly defined regulatory body focused on this aspect of open banking policy should offer some clarity for how banks are expected to move forward and remain in compliance with the law.

   This may help smaller banks compete with larger financial institutions by offering more specific guidance, best practices, and policy to aid in understanding how banks should provide consumers better control over their data and improved financial services.

   
   

2. Open Banking Collaboration Opportunities under FDX:

   FDX membership provides access to a consortium of over 200 organizations, fostering collaboration and aligning community banks with industry-wide best practices. With the CFPB's reported standards to ensure fairness and openness through FDX, community banks main gain access to industry wide best practices with greater efficiency, clarity, and peer adoption.

   This may help community banks stay competitive in a rapidly evolving landscape while providing consumers better access and transparency over their rights to personal financial data.

   
   

Expected CFPB and FDX Changes to Standard Operating Procedures at Community Banks:

• Technical Standards for Implementation of Open APIs:

  Banks may need to adopt standardized APIs (Application Programming Interfaces) to securely share consumer data with third-party providers. If banks are not already in the practice

  This represents a shift from traditional, proprietary systems to more open, interoperable ones. If banks are not yet familiar with this model of data sharing, they must move towards adoption under the FDX defined standards.

  Request a free consult to learn more about SOLO's solution for implementing best practices in Open APIs.

  
  

• Technical Standards for Stronger Cybersecurity Measures:

  FDX standards emphasize strong security protocols, requiring community banks to reassess and potentially enhance their cybersecurity practices to meet these benchmarks.

  
  

• Operational Transparency for Adoption, Efficiency, and Results of FDX Defined Standards:

  Starting in Q1 2026, FDX will submit quarterly reports to the CFPB on market adoption of its standards, listing entities with proper access to its consensus standards. This reporting requirement will be waived if FDX provides a public transparency tool that allows entities to disclose their use of the standards and their certification status, if applicable.

  Community banks may need to revise procedures to ensure compliance with transparency and consent requirements.

New Responsibilities for Banks Under FDX, CFPB's New Standard Setting Body:

1. Compliance with FDX Standards:

   Banks are responsible for aligning with FDX standards, which may involve updating IT systems, training staff, and adopting new practices for data security and sharing. FDX may be valuable in providing critical standard operating procedures, infrastructure tools, and interoperable systems but banks must act on adoption efforts.

   
   

2. Consumer Education for Data Sharing and Open Banking:

   Community banks must educate their customers about their data rights under open banking, including how to consent to data sharing and the benefits of doing so.

   
   

3. Risk Management for Open Banking

   Banks must monitor and mitigate risks associated with data sharing, such as unauthorized access or data breaches, while ensuring compliance with regulatory requirements.

   
   

4. Data Accuracy and Quality:

   Ensuring that the shared data is accurate and up-to-date is critical, as errors could lead to compliance issues and loss of consumer trust, countering the mission of CFPB's open banking agenda.