Since Donald Trump took office on Jan. 20, the Consumer Financial Protection Bureau has seen significant transformation.

Actions by the Trump administration have roiled the Consumer Financial Protection Bureau (CFPB), reducing its headcount, rolling back lawsuits against major FIs and placing a freeze on new regulation. 

One regulation that may be revisited is Section 1033, the open banking rule, which states that consumers can transfer their own financial data between financial institution providers at no cost, using the framework for secure payments and comparing financial services at different organizations. 

The “industry wants to make some changes” to the rule, James McCarthy, founder and chairman of financial consulting agency McCarthy Hatch and a founding member of the CFPB, told Bank Automation News. 

“What the CFPB is going to do is they’re going to open it up for a public comment period, and then they’re going to rewrite it,” McCarthy said. “So, when they rewrite it, they can neutralize it, so they could push the date out as long as they want.” 

READ MORE: Open banking: Decoding Section 1033 

Potential amendments, he said, could include:  

• Allowing banks to monetize data access;  

• Changing the timeline of open banking adoption; and 

• Limiting banks’ liability for data breaches. 

The initial compliance deadline is April 1, 2026, for institutions with at least $250 billion in total assets, April 1, 2027, for intuitions between $10 billion to $250 billion and April 1, 2028, for institution between $3 billion to $10 billion, according to the CFPB. 

The Bank Policy Institute raised concerns about gaining clarity on data breach liability in a lawsuit filed on Oct. 22, the day the ruling was announced, as previously reported by BAN. 

The CFPB will go the judiciary route, McCarthy said. He predicted the agency will obtain a court order to reopen changes to the rule for public comment but will find it difficult to scrap the rule altogether. 

Industry push 

Congress and the financial services industry want to see Section 1033 move forward, McCarthy said, adding that it will keep the rule in place, albeit a “watered-down one.” 

While speaking at Finovate Spring in San Diego on May 7, he emphasized the critical role of financial leaders in “choosing to do the right thing, even in the absence of external pressure.” 

Many industry players are moving forward with open banking regardless of uncertainty around regulations. 

“Regardless of the uncertainty surrounding the CFPB’s Section 1033 rulemaking, the momentum behind the open banking ecosystem continues to accelerate in response to both consumer demand and industry innovation.”

—Phillip Rosen, global chief technology officer at cross-border payments company MoneyLion

The financial services industry also sees the benefits of open banking, like achieving a “more accurate view of consumer creditworthiness,” Rosen said. “This expanded lens is especially critical for underserved populations who have historically been excluded from mainstream lending due to more narrow or incomplete data.” 

While regulatory clarity would help standardize data-sharing practices across institutions, a delay won’t halt progress, Rosen said. “Ultimately, the more consumers are empowered to understand and use their own data, the better financial decisions they can make.”