A Guide to Open Banking Regulations and Compliance

Open banking enables consumers to securely share their financial data with authorized third parties, and is aimed at promoting competition and innovation in the financial services industry. This results in a number of benefits, including increased control over personal financial data, improved access to customized financial products, and faster transactions. By increasing access to customer data, open banking levels the playing field for both large and small service providers, encouraging a greater focus on service and new ideas.

In October 2024, the Consumer Financial Protection Bureau (CFPB) finalized a rule to accelerate open banking adoption in the U.S. Known as the Section 1033 rule under the Dodd-Frank Act, it requires financial institutions to make consumer data available to authorized third parties upon request. However, the rule is currently the subject of litigation and reconsideration by new CFPB leadership, with implementation originally set to begin in April 2026.

This shift has the potential to be highly disruptive to the banking industry, creating new compliance challenges and sparking a wave of innovation. In that environment, choosing the right technological solutions will be essential, and organizations looking for a competitive advantage will need advanced systems for compliance management. Socure’s Account Intelligence (SAI) platform enables you to accelerate compliance with capabilities such as real-time account validation, ownership verification, and fraud prevention.

Read on to discover more about the open banking regulations and learn the best ways to keep yourself agile and compliant.

What Are the CFPB’s Proposed Open Banking Regulations?

The CFPB’s Section 1033 rule is a set of regulatory requirements that change how financial institutions share data. It was finalized in October 2024, though it is currently the subject of litigation and reconsideration by new CFPB leadership. Despite that uncertainty, organizations should understand what the rule requires and prepare accordingly.

The rule covers data providers, which include banks, credit unions, card issuers, and any other organization that controls data connected with financial products and services, such as checking accounts, credit cards, or digital wallets. Data providers that own or manage these types of products are required to share consumer data upon request from an authorized third party.

In practice, consumer-permissioned data transfers typically flow from data providers (often the depository institutions where consumers hold their primary accounts) through data aggregators that verify the information and connect it to authorized third parties. For example, a consumer with accounts at multiple financial institutions could authorize a fintech app to pull and display that data in one place.

These authorized parties include the consumer who owns the data, as well as any organization or service provider that has been granted permission to make a request. The rule requires the businesses receiving the data to adhere to privacy and security standards to guarantee it’s protected.

As it stands, the regulation would be implemented in phases, with larger financial institutions required to be compliant sooner than smaller firms. The timetable currently allows:

• 6 months for large institutions with assets ≥ $500B or revenue ≥ $10B
• 1 year for medium-sized institutions with assets ≥ $50B or revenue < $10B
• 2.5 years for smaller institutions with assets ≥ $850M
• 4 years for smallest institutions with assets < $850M

The rule requires that financial service providers get explicit consent from consumers before data can be shared. Third parties are limited to collecting, using, and retaining data only so far as it is necessary to provide the requested services. But more data being shared typically means increased security risks, so it will be critical for all parties involved to implement rigorous data security measures to prevent breaches and unauthorized access.

What Are the Implications for Financial Institutions and Fintechs?

Let’s take a closer look at the potential effects the new open banking regulations will have on financial institutions and fintechs.

More Competition, More Innovation

Easier authorized access to consumer data lowers the barrier to entry for new players. That places increased pressure on incumbents to lower prices and deliver better services, accelerating digital transformation and pushing adoption of new technologies.

Challenges for Banks

Banks, as the primary financial institutions, face a number of specific hurdles. They’ll need to invest in developing and maintaining secure APIs to share data with third parties. They’ll also face an expanded obligation to stay compliant with data privacy and security regulations, while upgrading legacy systems that were never designed to support open banking. And they’ll have to confront the potential for lost revenue as competition intensifies.

A Level Playing Field

With the new regime providing improved access to consumer data, less-established firms will be able to expand the range of services and financial products they can offer. That means increased opportunities to innovate and opens the door for partnerships and collaborations with larger institutions.

Data Access Fees Debate

While the regulation requires information to be shared, it does not prevent banks and larger institutions from charging access fees in exchange for the data. Whether data providers should be able to charge these fees is a subject of much controversy. Banks argue that fees are necessary to cover the costs of acquiring, managing, and maintaining the data, while fintechs and consumer advocates claim they hinder competition and innovation. The question will continue to be fiercely debated as the regulatory landscape takes shape.

Lessons Learned from the EU’s Open Banking Regulations

The Payment Services Directive 2 (PSD2) is a key EU regulation first introduced in 2015. Like the CFPB’s proposed rule, PSD2 was designed to promote open banking and competition and obliges banks to share consumer data with authorized third parties. It covers payment accounts and payment initiation services.

Banks and financial institutions learned some valuable lessons from their implementation of PSD2:

1. Clear guidelines and agreements on standards are essential to help ensure interoperability.
2. Compatible methods for data sharing among different parties are necessary to protect data security.
3. Strong customer authentication mechanisms are needed so organizations can verify that genuine consent has been provided.

Beyond that, EU financial firms ran into challenges reconciling innovation with consumer protection. Balancing compliance with both data sharing and data protection requirements created a pressing need for ongoing dialogue and collaboration among all stakeholders.

What Are the Key Differences Between US and EU Approaches to Open Banking Regulations?

Although the PSD2 is similar to the CFPB’s proposed rule, there are key differences to note.

How Socure Account Intelligence Supports Open Banking Compliance

Socure’s Account Intelligence (SAI) helps organizations stay compliant with open banking regulations through predictive fraud prevention and real-time account validation.

SAI integrates within Socure’s RiskOS® platform to enable single API access across identity verification, fraud prevention, and account intelligence — giving institutions a unified decisioning layer without stitching together separate vendors. This includes Digital Intelligence; Email RiskScore, Phone RiskScore, and Address RiskScores; Sigma First-Party Fraud, Third-Party, and Synthetic Fraud; CIP/KYC; Global Watchlist Screening with Monitoring; Predictive DocV and biometric facial matching; and more.

SAI draws on Socure’s cross-industry consortium intelligence to deliver real-time account status, ownership verification, and fraud signals — all without routing users through a bank login or waiting on microdeposit confirmation. That coverage extends across banks, credit unions, neobanks, and fintechs, giving institutions a verification layer built for how consumers actually bank today.

The integrated Socure ID+ platform taps into a vast consortium of feedback data from more than 3,000 customers mixed with 400+ curated data sources, using predictive machine learning to connect behavioral signals across the network. This enables a 360° view of a consumer’s identity for industry-leading accuracy in assessing fraud risk.

SAI can specifically address different types of fraud, including:

• Identity Fraud: SAI verifies account ownership, ensuring the applicant or user is the rightful owner of the account. This helps prevent identity fraud where bad actors attempt to use stolen credentials to take over accounts.
• Synthetic Fraud: SAI’s integration with Socure ID+ allows customers to use Sigma Synthetic Fraud, which specifically detects complex synthetic identities.
• ACH Fraud: SAI verifies both account status and ownership before funds move, helping identify when a consumer attempts to send money to an account they don’t own. This makes it a critical defense against authorized push payment (APP) scams on outbound ACH transactions.

That supplemental coverage matters for any institution trying to verify the full range of real consumers — including Gen Z applicants, new-to-country individuals, and others who fall outside traditional data coverage, where legacy verification tools routinely fail.

How SAI Helps with Nacha’s WEB Debit Rule Compliance

One of the key regulations impacting digital transactions is Nacha’s WEB Debit Rule — which states that “ACH Originators of WEB debit entries are required to use a ‘commercially reasonable fraudulent transaction detection system’ to screen WEB debits for fraud.” SAI helps ensure compliance with new regulation by helping institutions verify account existence and consumer authorization before processing ACH transactions, reducing the risk of unauthorized transactions and payment returns.

Managing Payment Return Risk with SAI

By providing insights into account status and ownership, SAI enables data-driven decisions on transaction processing and risk management. This puts organizations in a position to mitigate payment return risk, making it easier to distinguish good accounts from risky ones.

The End of Friction-Filled Permissions and Microdeposits

Standard verification processes, such as microdeposits, are slow and provide a poor-quality user experience. By contrast, SAI provides instant verification results that help customers onboard faster. It delivers a frictionless experience that doesn’t compromise security by requesting logins or access to accounts. SAI also offers lower operational costs compared to legacy solutions.

Addressing Privacy and Security Concerns

Without strong privacy and security measures, financial institutions will find it challenging to maintain consumer trust and confidence in the new open banking ecosystem.

Socure’s Account Intelligence addresses these concerns with strong data protection capabilities, including tokenization and data obfuscation techniques. It adheres to industry standards and best practices, including compliance with the Gramm-Leach-Bliley Act (GLBA), helping maintain a high level of data protection. Integration with Socure ID+ adds multi-layered identity verification and authentication along with real-time fraud detection and prevention.

AI and machine learning are what allow SAI to continuously sharpen its risk models — getting more accurate over time, reducing false positives, and catching fraud patterns that static rules would miss entirely. By harnessing Socure’s patented AI and ML platform, SAI can continuously improve its risk assessment and decision-making processes. The AI-driven approach ensures accurate customer data matching, verifying that the account belongs to the actual customer in question, and reduces false positives and manual reviews. As AI and ML models become increasingly sophisticated, continuous refinement allows smarter decisions, preventing fraud losses and enhancing efficiency while preserving a frictionless customer experience.

With these capabilities in place, financial institutions can protect sensitive data while taking full advantage of the opportunities that open banking presents.

The Future of Open Banking in the US

The trajectory of open banking in the United States depends in part on the outcome of ongoing litigation and CFPB reconsideration of the Section 1033 rule. Regardless of the timeline, the direction is clear: consumer demand for data portability and personalized financial services will continue to grow. If and when the CFPB expands its mandate to cover a broader range of financial products, including loans, mortgages, and investments, consumers will gain even greater control over their financial data. The CFPB may also extend data sharing requirements to non-banking financial institutions, further leveling the playing field and stimulating competition in the financial sector.

A more open data environment creates a genuine opportunity for providers willing to act on it — personalized financial products, faster credit decisions, and payment experiences that don’t require customers to jump through hoops. With access to comprehensive financial data, providers could offer personalized financial advice and wealth management solutions tailored to individual needs and goals. Instant credit decisioning and loan origination could become a reality, streamlining the borrowing process and improving access to credit for consumers. On top of that, open banking is expected to make cross-border payments and remittances faster and more cost-effective.

To fully realize the potential of open banking, ongoing collaboration among key stakeholders is key. Regulators, financial institutions, and fintechs must engage in dialogue to address challenges, share insights, and drive progress. Developing industry-wide standards and best practices will be essential to ensure a consistent and secure open banking environment. Moreover, promoting a culture of innovation and customer focus will be integral to developing financial products and services that truly meet the rapidly changing needs of consumers.

Socure’s Account Intelligence already delivers the account verification, ownership validation, and fraud prevention capabilities that open banking will demand at scale. By helping organizations share data securely and stay compliant, SAI builds the digital trust required for new open banking use cases to succeed. It helps financial institutions and fintechs stay ahead of regulatory requirements while boosting inclusive access to financial services, particularly for young consumers and new-to-country individuals, by providing a 10-20% incremental lift in coverage.

As the open banking landscape continues to develop, embracing innovation, collaboration, and a customer-first approach will be key to harnessing its full potential. With the right regulatory framework, technological solutions, and industry collaboration, open banking has the power to reshape the financial services sector, ultimately benefiting consumers and businesses alike.

Stay Informed in the New Open Banking World

The CFPB’s proposed open banking regulations are set to shake up the US financial services industry, requiring institutions to share customer data upon request. The institutions that move now — building compliant infrastructure, layering in real-time risk intelligence, and treating identity as a foundation rather than a checkbox — will be the ones positioned to grow when the landscape shifts.

Assess the impact of these regulations on your business. Socure’s Account Intelligence can help you share data securely, stay compliant, prevent fraud, and manage payment return risk, all without adding friction to the consumer experience.

To discuss your organization’s specific needs and objectives, reach out to our account verification experts to run a live trial of SAI. Socure has already helped thousands of institutions verify more accounts, stop more fraud, and meet compliance requirements without slowing onboarding. The same infrastructure that powers that performance is available to you now.