Information about consumers, their money, and what they do with it is the lifeblood of the flourishing financial technology (“FinTech”) sector. Historically, highly regulated banks jealously protected this data. However, consumers themselves now share their data with businesses more than ever before. These businesses monetize and use the data for countless prospects, often without the consumers’ actual consent. Understanding the dimensions of this recent phenomenon, more and more consumer groups, scholars, and lawmakers have started advocating for consumers to have the ability to control their data as a modern imperative. This ability is tightly linked to the concept of open banking—an initiative that allows consumers to control and share their banking data with service providers as they see fit. But in the U.S., banks have threatened to block the servers of tech companies and data aggregators—business entities that serve as the middlemen connecting FinTech companies and banks, enabling consumers to get more financial services—from accessing their customers’ data even if the customers agree to it. With no regulation or accepted standards for the ethical gathering and use of data, banks argue that limiting access helps them protect their clients’ privacy, improve their accounts’ safety, and promote consumer protection principles. Banks claim that FinTech apps collect more data than needed, store it insecurely, and sell it to others.

But the motivation of the big banks in advocating for such limitations may not be so pure. Banks do not want to relinquish competitive advantages, lose customers, or be held liable for data or fund losses. Witnessing resistance, tech companies are not sitting idly by waiting for banks to limit their data access. Instead, they are working on ways to outsmart banks’ blocking technology and use data aggregation services as a middleman. They also extended the fight into Washington, where regulators such as the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are noticing how technology impacts consumer data flows and credit reporting issues. Advocating for consumers’ rights to control data, tech companies lobby for open banking.



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