Banks Challenge CFPB's Open Banking Rule in Court

The lawsuit against the Consumer Financial Protection Bureau highlights tensions between innovation and data security in open banking.

The Consumer Financial Protection Bureau's new rule mandates that banks share consumer financial data with third-party providers, sparking legal action from several banking associations.
The lawsuit claims the CFPB's rule exceeds its authority and poses risks to consumer data security by mandating data sharing without sufficient oversight of third parties.
Proponents of the rule argue it will increase competition and consumer control over financial data, potentially lowering costs and fostering innovation in financial services.
Critics, including the banking industry, express concerns about increased risks of fraud and identity theft, as well as the financial burden of implementing secure data-sharing protocols.
The rule is part of a broader effort to standardize data sharing in the U.S., following successful models in the U.K. and Europe.