Preserving the Right of Consumers to Access Personal Financial Data

Chairman Lynch and Ranking Member Davidson, thank you for the opportunity to submit this statement for the record for the hearing titled “Preserving the Right of Consumers to Access Personal Financial Data.”

The topic of today’s hearing is a timely one that is getting increasing attention. As consumers access novel financial services offerings, it is critical to ensure they retain the protections they have come to expect from their bank. The American Bankers Association (ABA) and our members are working hard to ensure that consumers remain protected when they choose to share their financial data.

Technology has facilitated the creation of a tremendous amount of consumer financial data. The unprecedented proliferation and availability of this data have enabled the development of new financial innovations that stand to benefit customers. However, the inherent sensitivity of this data and the discussion around the appropriate role of large technology companies in banking highlight the timeliness of this issue and the need to ensure that financial data are handled appropriately and securely.

We believe that responsible innovation in financial services will continue to benefit customers as it has throughout the history of banking. The use of data plays a critical role that can help promote competition and financial inclusion, make it possible to extend credit to many more borrowers, and give customers improved transparency into the financial products they use every day.

As banks innovate, they do so within an established regulatory framework, backed by strong supervision and oversight that ensures robust customer and data protection. Innovation is also taking place outside of banking. Technology-focused startups are building consumer facing products that rely on access to financial data. As a result, the demand for consumer financial data has increased dramatically, creating a complex market for these data.

We believe that if handled appropriately, access to these data can benefit consumers. This is why ABA and our members fully support their customers’ ability to access and share their financial data in a secure, transparent manner that gives them control. Today, banks and technology companies are collaborating to build tools that facilitate access to financial data in a way that protects and empowers consumers.

However, sharing financial information is not without risks. Consumer financial data are extremely sensitive and must be protected appropriately. Accordingly, Congress has recognized the sensitivity of financial information and has provided protections for it under the Gramm-Leach Bliley Act of 1999 (GLBA), which creates a legal framework for protecting consumer data, and for sharing that data with third parties. Banks take very seriously their responsibilities to their customers to maintain the highest level of privacy, security, and control over their financial assets and transactions. Today, consumers trust that their financial data are being protected and handled appropriately. This trust is critical to the functioning of the financial system and is the reason banks dedicate significant resources to safeguarding financial data.

Consumers understand the importance of protecting their financial data and are skeptical about the safety of their data when shared outside of the bank. This was highlighted by recent data from a Morning Consult survey that showed “U.S. Adults Among the Most Concerned With Data-Sharing Fraud.” In the survey 63% of respondents believed that more sharing of data between financial services companies will lead to more fraud. [16% disagreed] The survey also highlighted privacy concerns, with 48% of respondents reporting that they are unwilling to “share their financial information with a provider that I do not currently use if it meant they would offer me a personalized financial management services.” [34% were willing]

There is significant work underway to ensure that consumers can share their financial data while maintaining these critical protections. In 2017, under then Director Richard Cordray, the Consumer Financial Protection Bureau (CFPB) released a set of guiding principles that has served as the bedrock for industry collaboration. Since then banks, data aggregators, and other technology companies have worked together to invest in technologies that move away from less secure methods of data sharing like screen scraping to more secure Application Programing Interfaces (API) based standards that give consumers transparency and control when they share their financial data.

This work has been highlighted recently by the Executive Order on Promoting Competition in the American Economy, and is currently on the CFPB’s rule-making agenda for April 2022.4 As the CFPB considers next steps to encourage the development of a data ecosystem that protects consumers, we believe it should focus on supporting market developments that are already well underway. Overly prescriptive standards risk undermining the progress that has been made and if not well crafted, may leave consumers exposed. While we believe that continued industry collaboration is the best way to accomplish our shared goal, there are several regulatory clarifications and other recommendations that would help facilitate the continued development of a responsible data sharing ecosystem.

Given the critical role of the CFPB in this process, the remainder of our statement will make the following recommendations for the CFPB as it looks to encourage the development of this important market consistent with the rights outlined in Section 1033 of the Dodd Frank Act.

• Banks support consumers’ right to share their data as outlined by the CFPB’s principles;
• The industry has made tremendous progress since the CFPB released its principles;
• Prescriptive frameworks would be counterproductive to implementing Section 1033; and
• There are areas where the CFPB can provide clarity to allow the market to continue to develop.

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