The intersection of open banking, data aggregation, personal consent and privacy protections were at the cornerstone of the testimony given by Finicity CEO Steven Smith before the U.S. House Committee on Financial Services FinTech Task Force on Tuesday (Sept. 21).
Smith pointed to open banking “powered by data aggregation” as being the game-changer that flipped the data experience to “one that empowers consumers and small and midsize businesses with access control and the consented use of their data.”
Data privacy is about consent, he said, noting that if consumers are enabled to provide “clear and explicit consent,” they will be in control of where their data is used and for what purpose.
Prior to open banking, he said the data and analytics tools that big businesses leveraged were not available to individual consumers and smaller companies. This “technological shift,” however, is “still very much in the early innings,” Smith said.
“As it emerges and matures federal policymakers will play a meaningful role in the direction and pace of this transformation by providing clarity on data protection expectations, data privacy requirements, and consumer data rights.”
He further emphasized that it’s paramount to protect and safeguard consumer data throughout the access and sharing process. The safeguarding of data is also “foundational to accelerating innovation, while protecting the consumers from data theft.”
A regulatory framework is needed, Smith said, in order to secure and proceed with open banking in the U.S.
“That is why we’re encouraged by the CFPB [Consumer Financial Protection Bureau] … and moving forward on a rulemaking under Section 1033 of the Dodd Frank act,” he said.
Smith was one of several speakers called before the House Committee on Financial Services Task Force on Financial Technology to discuss the rights of consumers to access their own financial data. The discussions focused on the concerns framing the gathering, usage and protection of consumer’s financial information.
Other speakers included Tom Carpenter, Director of Public Affairs, Financial Data Exchange; Raúl Carrillo, Associate Research Scholar, Yale Law School, Deputy Director, Law and Political Economy Project; Kelly Thompson Cochran, Deputy Director, FinRegLab; and Chi Chi Wu, Staff Attorney, National Consumer Law Center.