What the Financial Services Industry Can Learn from Telecom

As we inch closer to a final rule from the Consumer Financial Protection Bureau (CFPB) under Section 1033 of the Dodd-Frank Act, Jane Barratt, MX’s Chief Advocacy Office and Head of Public Policy, led a conversation with CFPB Director Chopra on stage at the Financial Data Exchange’s (FDX) Global Summit. 

Chopra shared his prepared remarks on the status of the rulemaking, with particular focus on standard-setting, and dove into key questions from Barratt related to everything from secondary use cases to timelines and more. You can watch the full conversation here. 

One theme that continued to resonate throughout the discussion is how the financial services industry can key learnings from the telecommunications industry when it comes to protecting consumers, fostering the ability to switch, and creating clear standards. 

Here’s our take on a few things that financial services providers can learn from the telecommunications space as we get ready for a final rule in the coming months: 

Enabling Consumers to Take their Number(s) with Them

In a nutshell, the CFPB’s Section 1033 rulemaking hopes to “challenge the financial services industry to compete for customers, protect consumers from excessive surveillance, and help people walk away from bad service.” However, according to the CFPB, “people can become trapped by providers that hold their data, but this proposal would allow them to more easily shift their data to a competitor offering better or lower priced products and services.” 

This echoes the challenge that consumers previously faced when they wanted to switch wireless providers — being forced to give up the phone number that they and their family, friends, and colleagues know. Today, a 2003 order from the Federal Communications Commission (FCC) makes it possible for consumers to take their number with them to a new provider — requiring all local exchange carriers (LECs) to offer number portability in accordance with the regulations of the Federal Communications Commission (FCC).

Multiple Financial Accounts, but not Multiple Wireless Providers

Barrat points out that with telecommunications, people are often locked into a single provider. But, financial services is very different. The average consumer has at least 5 to 7 different financial accounts across different institutions. This makes it difficult and messy for consumers to understand, manage, and control their finances — particularly as the money experience at each institution is likely not the same. 

Imagine if you could only text or call other consumers who have the same wireless provider. Telecommunications has embraced interoperability to ensure that doesn’t happen. An interoperable standard for financial services (such as the standard developed by the Financial Data Exchange) will be critical to ensuring a consistent user experience and the ability for consumers to connect and share their data regardless of where they choose to bank.

Making Access Universal

Charging your phone isn’t a universal experience. Apple vs. Android charging cords. European vs. American outlets and voltage. There’s no “plug and play” option for your mobile device. The same is true today for financial services — adding an external account to your online or mobile banking experience looks different (or isn’t even an option) depending on the financial services provider. As we look ahead to a standards setting organization for open banking, we have an opportunity to learn from the consumer frustration and difficulties we’ve seen when a proprietary plug from a mobile device maker changes or isn’t compatible. 

Safeguarding Consumer Privacy

In the same way that the CFPB aims to protect the safety and soundness of consumer financial data, the Telephone Consumer Protection Act (TCPA) was designed to safeguard consumer privacy by restricting telemarketing communications via voice calls, SMS texts, and fax. It follows  two similar key tenets that we’ll need to apply in the financial services landscape: consumer consent and consumer choice (i.e., the Do Not Call registry). 

That said, many of us still get those telemarketing calls without any awareness that we’ve provided consent to receive them. Financial data providers and recipients have an opportunity to create a more clear, easy consent flow for consumers that balances privacy with ensuring proper consent to enable use cases that will benefit the consumer without contributing to data exhaust that could harm customers.