1033 is Here: Where Do We Go Next?

It has been a few weeks since the Consumer Financial Protection Bureau (CFPB) dropped its final Section 1033 rule under the Dodd-Frank Act. Like a stone in a pond, we are starting to see the shape of the ripples it is making. Financial institutions, third parties, and intermediaries across the financial industry are just beginning to unpack what the final 594-page rule means for them. 

At MX, we hosted a live conversation with Jane Barratt, Chief Advocacy Officer and Head of Public Policy at MX, and Ashwin Vasan, Partner at FS Vector and Former CFPB Associate Director, as well as MX product leaders, to discuss its expected and immediate impacts on the financial industry.

Here are some key takeaways from the conversation.

Extended Deadlines Give Time to Do It Right

One of the biggest changes from the proposed rule are the compliance deadlines. The largest financial institutions (those with more than $250B in assets) now have until April 2026 to comply with the rule. But, this doesn’t mean financial institutions should now take their time in implementing secure and compliant APIs and third-party management systems. According to Ashwin, the extension is not extra time to start the process of implementation, because “if you work back from the deadlines, it does not seem like it would slow it down tremendously.” 

Companies will not only struggle to reach compliance in time if they delay, but will also miss out on a competitive advantage by dragging their feet. The statutory provision in the Dodd-Frank Act that gives consumers the right to access their data has been influencing Open Banking in the U.S. for years, says Ashwin. He stated that 1033 creates “clearer rules of the road based on what the market had done to that point.” 

Bottom line: If you see 1033 as the beginning of Open Banking in the U.S., you are behind the curve. Regardless of where you are, Ashwin says if you are aimed at “de-risking consumer data and de-risking the risk of screen scraping, it makes sense to move (to open banking) now anyway.” 

Acting Fast Drives a Competitive Advantage

“The industry has already moved in this direction. If you wait for the regulatory stick, you have missed the competitive carrot.” —Jane Barratt

Jane noted that despite the U.S. having “by far the most complicated financial system,” we have made significant progress towards an open banking system largely through bilateral agreements. The precedent has been set that sharing financial data is beneficial and creates an ecosystem where consumers are best served by tailored products based on their permissioned financial data while financial institutions can drive higher engagement and loyalty. Yes, there are compliance concerns but, more importantly, there are benefits to adopting open banking principles. 

Getting Started: 1, 2, 3

As the final question in our discussion, the panelists were asked to share their recommended next steps for 1033. Jane Barratt gave her answer in three parts: 

1. Get Smart and Build a Strategy:  Whether that is investing in getting up to speed quickly to get a jump on the competitive advantage or waiting for regulation, financial providers first  need to know their goals and plan to achieve them. 
2. Get Involved: The issues and questions being raised around the final 1033 rule are being solved in real time by the industry. The best way to ensure good outcomes for organizations, consumers, and the industry is to get involved.
3. Put Consumers at the Center: Technology will always move forward and it is easy to get distracted by complications. However, ensuring the best outcomes for consumers should always be at the center of what we do. 

Open Banking and 1033 will continue to evolve, and MX will continue to generate guidance for the road ahead. Check out the full replay to hear more from our panel of experts, including how MX’s Data Access can provide secure, seamless data sharing solutions for 1033 and beyond.