Open banking will not be won by moving data faster. It will be won by moving trust.  

As Section 1033 advances, the useful question is not whether information should flow. It is what we move for the customer and who is responsible when others rely on it. 

We often treat data as interchangeable. It is not. Raw account fields identify a person and describe activity, but they do not carry the meaning needed for safe, fair, repeatable decisions. Banks add that meaning through regulated processes that verify identity, screen for sanctions, monitor for AML risks, validate income and assets, adjudicate disputes and manage model risk. Those processes turn raw inputs into information that can be trusted. 

Data serves as coordinates

Raw data is coordinates. Contextualized data is the map. Coordinates tell you a point; the map adds street names and rules of the road. In finance, the map is the lineage: who validated what, how it was validated and when it was last reviewed. Lineage is the difference between copying numbers and moving trust. 

Consider a nonbank lender that receives identity details, payment history and a balance through an API. Helpful, yes. Sufficient, no. Was income verified? Was a large deposit traced and cleared by AML teams? Were prior delinquencies cured, and on what basis? Without lineage, the lender overprices risk or learns the truth through losses and complaints. Consumers bear the cost in slower approvals, inconsistent outcomes and thin recourse. 

This is why compensation and liability sit at the center of 1033. Consumers own their information and should be able to directly access it. At the same time, the verification work that makes information reliable is not free. Aligning incentives means pricing the work rather than the bytes, and making liability follow reliance rather than connection. That balance preserves consumer agency and keeps the system sustainable for those who provide the trust layer. 

Georgina Merhom, chief executive at customer data collection and sharing firm SOLO, expands on why regulation is necessary. 

“Customer data isn’t an asset, it’s a liability until it’s trusted. For Provider B, an account summary from Provider A means nothing unless it can be traced, verified and explained. That’s why regulation matters in banking: it creates a baseline assumption that compliance work — KYC, AML, source of funds — has already been done. The true value of open banking isn’t the raw data, it’s the verification behind it. 

The problem is that verification isn’t portable. Without lineage, every institution repeats the same checks as if the work never happened. And because banks aren’t compensated when their verification is reused, they have no incentive to share it. The result is data hoarded as proprietary, locked away instead of moving through the system. 

With lineage built into data sharing, that equation flips. Verification becomes reusable. Trust moves with the data. And instead of being trapped in silos, trust itself becomes a service, something banks can deliver and be compensated for every time it’s relied on downstream.”

Global lessons learned

Europe reached scale by pairing access with governance. The United Kingdom and the European Union combined technical standards, permissions norms and clear responsibility for misuse. The United States can draw on that playbook while reflecting its own supervisory strengths.  

The goal is simple: Give consumers a remote control over sharing, give institutions a reliable way to reuse context and give supervisors an audit trail that works at speed. 

So, what should move under 1033? 

• Data with provenance;  

• Consent that governs use; 

• Liability that follows reliance; and 

• Pricing tied to verification effort.  

These four principles make portability useful without weakening safeguards. 

Networks that focus on portable trust encode these principles. Banks govern collection standards. Customers govern sharing. Lineage travels with the information so that reliant institutions can trust and time box what they use. This is not a defense of hoarding. It is a plan to make portability safe and useful. 

SOLO’s Merhom emphasizes that governing lineage is critical to the success of open banking. 

“When trust can be portable, because lineage is governed, people can move too: from a payday loan to a mortgage. Open banking made customer data from regulated institutions portable via API, but the real value was never the pipe; it was the implied lineage (and institutional trust) tied to compliance work already done by regulated institutions. When data originates outside regulation, that trust doesn’t travel, and the people who need portability most pay the price.  

The only way to make a customer’s track record usable by both regulated and non-regulated institutions is to govern the lineage: who collected what, how, when, and under whose accountability. With lineage governed, fragments from a credit builder, BNPL or even a payday lender become a trustworthy record everyone can rely on.  

That’s the real bridge to open access: When an individual’s record at a credit builder, BNPL or even payday lender can be carried forward with transparency, it stops being a dead end and starts being a stepping stone into mainstream financial services.”

Human connection

The human reason matters as much as the technical ones. My Aunt Gladys took pride in visiting her bank because she knew where safety lived. The old vault was brick and steel. Today the vault is digital with strong authentication, compliance teams, anomaly detection, reconciliations and audits. Open banking should not bypass that vault. It should let its protection travel with the customer, so customers enjoy the same security, accuracy and recourse wherever they choose to do business. 

If 1033 centers on portable, auditable context, the benefits of competition and switching become real while the guardrails remain intact. Move trust, not just data. That is how open banking can work for consumers, for institutions and for the public interest. 

Jim McCarthy serves as chairman for McCarthy Hatch, which provides data-driven insights for risk management. A founding member of the Consumer Financial Protection Bureau, he is a keynote speaker and fractional CRO/CCO in the financial services industry with more than three decades of experience.