Open banking regulation is quickly approaching but financial institutions are asking the Consumer Financial Protection Bureau to extend the timeline for implementation. 

FIs are expected to have an open banking framework in place within six months, according to the CFPB’s proposal.

However, trade groups including American Bankers Association and The Clearing House, are requesting that the CFPB extend the timeline to 24 months, according to a July 17 release from the groups. 

Banks will need more time, Rodney Abele, director of regulatory and legislative affairs at The Clearing House, told Bank Automation News.  

“The ability of banks to comply with a completely new framework will require a lot of work, a lot of planning by banks, before they’re able to meet all of the requirements that the CFPB has outlined in its proposal.” 

CFPB didn’t provide any comment at the time of publishing the story.

While all institutions must comply with the CFPB’s ruling on open banking or Section 1033 this fall, this will be a greater undertaking for larger institutions than smaller institutions, Terry Hickey, chief revenue officer at fintech Zafin, told BAN. 

“It’s probably going to take the larger institutions longer, although they have access to more capital, to be able to make the expenditures,” Hickey said. “The problem is that they have complex infrastructures where it’s not as simple.” 

Tapping tech

While FIs await final rules on open banking regulation, tech providers like Zafin and Plaid have launched solutions they say support the implementation of open banking readiness. 

Plaid, for one, launched its open banking compliance toolkit July 31 that: 

• Helps banks transition to API connectivity;  

• Allows banks to view and manage consumers’ connections in one place; and  

• Manages third-party onboarding at scale. 

“Timing is dependent on institution, but Plaid has worked with financial institutions to set up their own APIs in a matter of weeks,” John Pitts, global head of policy at Plaid, told BAN. “We are still awaiting the final rule and requirements, but Plaid is committed to helping data providers and data recipients to prepare for and comply with open banking regulation.” 

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