In September 2024, the CFPB announced the launch of a public comment process for the first application for open banking standard setter recognition, marking an important step towards establishing rules for open banking in the US.
This development comes in the wake of the CFPB’s June 2024 announcement identifying five qualifications to becoming a recognized open banking standard-setting body: openness, transparency, balanced decision-making, consensus, and due process and appeals. According to the CFPB, standard setters are tasked with creating standards to help ensure the open banking framework is “safe, secure, reliable, and competitive.” With the first standard setter application published for comment, the public can now weigh in on whether the organizations seeking recognition as standard-setters are qualified to “develop fair and effective open banking standards that serve the interests of all stakeholders, especially consumers.” Public comment on these applications is especially important given that “‘industry standards can be weaponized by dominant firms in order to maintain their market position, undermining competition…’” The CFPB’s standard setter qualifications, and the public’s role in assessing applications pursuant to these guidelines, help safeguard open banking from the potential dangers of monopolized industry standards.
As the CFPB aims to accelerate the shift towards open banking and open banking becomes increasingly ubiquitous, standard setters will play an essential role in ensuring the industry is fair, accessible, and reliable. The public comment process gives a variety of stakeholders the ability to weigh in on the progress towards this goal.
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