How Data Providers Can Compete and Comply: Achieving 1033 Compliance and Gaining a Competitive Advantage

We’re now nearly 60 days out from the final Section 1033 ruling from the Consumer Financial Protection Bureau (CFPB). Like most financial institutions who are considered data providers under the final rule — those who provide covered data under Regulation E or Regulation Z accounts, you’re probably asking several key questions like: 

• What does the final Section 1033 rule mean for me?
• Do we really need to worry about this now?
• Will everything change based on the recent election results?

“…the institutions that adopt Open Banking and compete to deliver the best experience will be more likely to earn consumer loyalty and engagement for the long term.” -Jane Barratt, MX Chief Advocacy Officer

Don’t Wait to Move Forward

At MX, we hear these questions every day and we’re here to help. Bottom line: Don’t wait to move forward on your open finance strategy and get ready for 1033. Here’s why: 

1. Open Finance isn’t about you — it’s about the consumer.

The CFPB states the final rule is meant to enable consumers to “more easily switch to providers with superior rates and services. By fueling competition and consumer choice, the rule will help lower prices on loans and improve customer service across payments, credit, and banking markets.” Consumers have more choice — and more accounts — across different financial providers than ever. This shift encourages everyone in the financial data ecosystem to innovate for consumers, helping attract and retain them as consumers. Offering the best third-party connectivity builds loyalty and helps institutions thrive in a competitive market. 

2. Open Finance can create a clear competitive advantage.

Jane Barratt recently said, “Institutions of any size that think of Section 1033 as a regulatory stick instead of a competitive carrot are at risk of being left behind.” Consumers want their providers to know them. They want personalized products, services, and offers. And, they want a good mobile and digital experience. But, most financial institutions are missing key details on where consumers share data. Open finance data unlocks the door to gain better insights about competitor products your customers utilize and create precise targeting and compelling offers. 

Data providers who start now with Open Finance will be in a better position to deliver on consumer expectations and will have the advantage over those who choose to wait.

3. Political climates may shift but Open Finance is here to stay. 

In light of the results of the recent U.S. election, rumors are circling on what changes may affect the CFPB. Section 1033 has received broad bipartisan support from the start and we should expect to continue to execute against the final rule. And, regardless of regulation, Open Finance and consumer-permissioned data sharing are here to stay. Institutions should focus on how Open Finance can help drive competitive advantages for them and better outcomes for consumers. 

4. API-based connectivity is the future.

Consumer-permissioned data sharing is already widely adopted across the United States. And, it’s clear that the industry is shifting away from screen scraping. This is the only path forward. And, it’s what consumers are asking for from their providers. When asked what they would do if their bank or credit union didn’t support connecting to their favorite fintech apps, 72% said they would switch to one that does. Data providers need to take seriously their responsibility to their consumers to provide secure and reliable connectivity.

5. Open Finance can lead to greater innovation and financial wellness.

The imperative of Open Finance is to connect the world’s financial ecosystem to revolutionize financial wellness for consumers. This will continue to be the drumbeat to which MX marches — and it creates a win-win scenario for both consumers and financial institutions. It helps put the right financial solutions in the hands of the right consumers at the right time while also fueling higher deposits and income for financial providers so they can pour more energy into innovation that moves the industry forward.

Where to Get Started for Data Providers: Your Quick Guide to Key Requirements

We’re making it as easy as possible for you to understand key requirements as a data provider under Section 1033. [Download our full quick guide] and in the meantime, here’s a quick overview of core responsibilities, what to consider for data partners, and where MX can help: 

Core Data Provider Responsibilities 

Under the final rule, data providers are responsible for enabling both consumers and third parties to access data, with key requirements related to: 

• Covered Data: Covered Data: Ensure covered data is available in an accessible electronic format via a performant developer interface (API) for all qualifying third-party requests.
• API Management: Maintain the developer interface at required performance standards, provide advance notice of downtime, and publish API documentation.
• Third-Party Management: Respond to third-party requests with accurate data or a reason for denial, document denials, and provide guidelines for accessing the developer interface.
• Analytics and Reporting: Publish monthly performance data for the developer interface and maintain compliance records.
• Consent Management: While data providers are not obligated to manage consumer consent or to provide consent revocation tools under Section 1033, data providers can choose to confirm consent and provide revocation tools, consistent with current industry best practices. If so, key requirements include developing a system to manage consumer consents, enabling easy revocation of third-party access, and ensuring reauthorization every 12 months.

Evaluating Data Partners

Choosing the right open banking partner is critical for delivering seamless financial experiences. Here are a few key criteria to consider when evaluating potential open banking data partners:

• Interoperability: Choose partners committed to connecting with all data intermediaries and maintaining a robust, open network.
• API Quality: Look for reliable, fast, and well-documented APIs using FDX standards that are easy to integrate.
• Consent: Quality partners use clear, consent flows and, where appropriate, allow data providers to manage consent if they choose to do so.
• Privacy: Choose a partner with strong encryption, compliance certifications, and clear data policies.
• Innovation: Ensure partners can adapt quickly to regulatory changes and market trends.
• Partnership: Find a collaborative partner, not just a vendor, that can offer strong support, customization, and a growth mindset.
• Reputation: Assess a partner’s credibility through client success stories, industry recognition, and reliable reviews.

How MX Can Help 

For more than a decade, MX has been a leader in open finance and consumer-permissioned data sharing. Our Data Access solution combines an API platform that meets FDX standards with built-in analytics that can help you meet your 1033 compliance obligations and provide you with actionable intelligence at the same time. 

Here’s why you should consider MX as your data partner: 

• MX partners with you to build your API. With Data Access, your APIs are translated to FDX standards. Our team guides you through creation, testing, and launch, while our self-serve tools empower you to unlock the full potential of open banking. 
• MX is an intermediary. This allows us to actually test your API with you. We’ve seen this significantly speed up the process to launch your API and reduce any potential errors.
• Data Access scales your APIs across multiple intermediaries. Data Access follows FDX standards which are designed to guarantee interoperability across the ecosystem. This allows data providers to scale APIs and manage all intermediaries effortlessly in a central portal. 
• Data Access delivers real-time analytics on data sharing. Data Access is the leading platform that surfaces real-time reports about all of the data your consumers share. You will better understand your customers’ needs, what products they are utilizing from your competitors, and have the ability to build precise targeting and segmentation for compelling offers. 

See our detailed Quick Guide to 1033 Requirements for Data Providers to learn more about key responsibilities and how MX can help meet and go beyond compliance requirements.