Who regulates open banking?
Open banking regulations already are in place in Europe. Regulation has not yet arrived in the U.S., but it may be on the way.
Open banking regulations already are in place in Europe. The European Union's Second Payment Services Directive (PSD2) regulates electronic payment services and payment service providers. This law–which began to make an impact in 2018–is intended to make payments secure and help banks adapt to new technologies.
In the wake of PSD2, third parties gained access to bank infrastructure. The hope is that the legislation will increase competition and innovation as it integrates the payment market.
Regulation has not yet arrived in the U.S., but it may be on the way. Last October, the Consumer Financial Protection Bureau issued an advanced notice of proposed rulemaking asking the public to weigh in on how consumer access to their own financial records should be regulated. This marks the first step toward creating formal open banking regulations similar to those established in Europe.
Some experts say the lack of regulation has made financial institutions reluctant to take the leap into open banking. If the U.S. introduces formal federal open banking regulations, it would standardize rules for all players in the open banking space. That likely would help to quell disputes that have arisen in recent years between banks and data access providers, experts say.
