Index
CATEGORY

CFPB News

FDX: CFPB Recognizes New Regulatory Body for Open Banking

FDX: CFPB Recognizes New Regulatory Body for Open Banking

FDX: CFPB Recognizes New Regulatory Body for Open Banking

FDX: CFPB Recognizes New Regulatory Body for Open Banking

FDX: CFPB Recognizes New Regulatory Body for Open Banking

CATEGORY

FEATURED

0 Min Read
Index
Index
CATEGORY

FEATURED

The Consumer Financial Protection Bureau (CFPB) has approved the Financial Data Exchange (FDX) as a recognized standard-setting body under its Personal Financial Data Rights rule.

According to the CFPB, the purpose of FDX is to, "to develop, improve and maintain a common, interoperable standard for secure consumer and business access to financial records."

Why Recognize FDX as a Standard-Setting Body for Open Banking?

With this recognition, FDX is authorized to issue standards that financial institutions can adopt to comply with the CFPB's data-sharing requirements. This comes on the heels of the CFPB's much debated 1033 Final Rule, which established new guidelines for open banking in the consumer-permissioned era of data sharing, transparency, and access. The Final Rule received mixed feedback for its lack of specific instructions or guidance for how banks are expected to comply with the Final Rule.

FDX, comprising over 200 member organizations, operates in the U.S. and Canada, and will focus on creating interoperable standards for secure consumer and business financial data access.

The Financial Data Exchange (FDX) will play a significant role in shaping how community banks operate within the open banking framework. It may impact current practices in community banking, new standard operating procedures, and introduce new CFPB and FDX defined responsibilities for banks:

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.

CONSUMER PERMISSIONED DATA PLATFORM

Demo SOLO's Data Collection and Activation Platform

The introduction of FDX standards provides a framework for community banks to adopt open banking practices securely and efficiently. However, it will prompt a number of required changes in technology, security, and operational transparency for banks, lenders, data sharers, and financial institutions.

FDX is expected to provide valuable interoperable frameworks for complying with CFPB rulings. However, community banks may absorb the heavy lifting now required in modernizing their systems, educating their workforce and customers, and collaborating with industry partners to ensure compliance and competitiveness in the open banking era. Efficient adoption will be required in order to remain compliant with CFPB 1033 Final Ruling and the technical standards enacted by FDX in the coming days.

SOLO is a data collection platform transforming how consumer-permissioned credit data is collected, activated, and managed over time for community banks and their customers. Request a free consult to learn more about SOLO's solution for managing customer data.

Turn Data Collection from Cost to Asset

Terms

Privacy

Cookie setting

Turn Data Collection from Cost to Asset

Terms

Privacy

Cookie setting

Turn Data Collection from Cost to Asset

Terms

Privacy

Cookie setting