Money20/20: New regulations will empower customers in the financial services market

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Consumers will have more power over their financial data

By way of comparison, he cited the Federal Communications Commission a mobile number portability rule, now nearly 20 years old, that has made it easier for consumers to switch mobile operators by allowing them to take their phone numbers with them.

“It brought more competition back into the market,” he said. “These and other successful examples of regulation that decentralize market power are guiding the development of our financial data rights rules.”

Under the new rules, financial institutions would be required to share consumer financial data, at the request of data consumers, with third parties and with consumers themselves. This often happens today, for example, when consumers sign up with so-called “aggregators” such as the personal finance service mintbut data availability and timeliness vary by financial institution, as some institutions are “playing games,” Chopra said.

If new rules can make existing institutions behave more consistently, consumers will gain bargaining strength. “This will lead to increased consumer purchases, both because they have the power to walk away and because they will have access to more personalized products and services,” Chopra said.

RELATED: Find out how the cloud can help financial institutions manage regulatory compliance.

Switching banks will become easier and start-ups will benefit

Today, a consumer who switches banks loses all his account history, which strongly discourages him from doing so. But imagine if your checking account history could be as portable as your cell phone number. “Americans often use their deposit account history as a living record. It’s a written record that keeps track of payments and deposits, which can be useful for taxes, for disputes with merchants or insurers, and for other purposes,” Chopra said. “By allowing consumers to transfer their registry to a new institution, the rule could make it easier to switch institutions.”

The new rules would benefit start-up financial services firms, including fintechs, which are trying to woo customers with new services, Chopra argued. Fintechs at Money20/20 seemed to agree.

“I actually see that as a very positive thing,” said Salman Syed, COO of Fidel API, a company that enables businesses to create “programmable experiences,” such as rewards and loyalty programs, whenever a transaction occurs on a payment card. Syed was speaking at a separate panel on open banking. “There are a lot of details to work out on how the CFPB wants to go, but it is important that they trigger this.

To find BizTechit is full coverage of the event here. Follow us on Twitter at @BizTechMagazineand join the conversation using the hashtag #Money2020USA.

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