The battle over the CFPB’s open banking rule is heating up again and this time, fintechs are taking the offensive.
After a year of regulatory back-and-forth, the American Fintech Council (AFC) has urged a federal court to deny a request by bank trade groups to delay implementation of the Consumer Financial Protection Bureau’s (CFPB) open banking rule while litigation is pending.
The Rule at the Center of the Fight
Originally finalized in 2024, the CFPB’s open banking rule, authorized under Section 1033 of the Dodd-Frank Act, was designed to give consumers greater control over their financial data. The rule:
Banks Sue. CFPB Flips. Litigation Paused.
In early 2025, bank trade groups, including the Bank Policy Institute, Kentucky Bankers Association, and Forcht Bank, filed suit arguing the rule exceeded the CFPB’s authority and raised data security concerns. The CFPB initially supported these claims but later reversed its position.
By late July 2025, the CFPB made an abrupt shift. Under new leadership, the agency:
• Asked the court to pause litigation
• Announced plans to rewrite the rule through an accelerated rulemaking process
• Opened a 60-day public comment window beginning August 21, 2025
Fintechs Warn Delays Threaten Competition
Enter the American Fintech Council (AFC). In a strongly worded legal brief, AFC urged the court to reject banks’ request for further delay, arguing that:
“Prolonged litigation undermines regulatory clarity and harms consumers who deserve safe, cost-free access to their financial data.”
AFC and others fear that momentum is shifting away from consumer-first innovation and toward bank-friendly cost structures, especially after JPMorgan Chase announced earlier this year its plans to charge fintechs for data access.
What Comes Next?
The CFPB is now in an active comment period on key issues like:
• How to define “consumer representatives”
• Whether banks can recoup costs
• What security protocols should apply to data sharing
Meanwhile, fintech advocates like AFC are working to ensure the core principles of open banking including consumer control, no-fee access, and healthy competition are preserved in the final version.
Why This Matters to Community Banks
While much of the focus is on fintechs and the largest of the banks, Community Banks have a big stake in how the final rule takes shape. Open banking isn’t just a compliance issue. It’s a competitive one.
If the rule tilts too far toward limiting access or adding friction, it could:
• Undercut third-party integrations that improve consumer experience
• Preserve legacy barriers that inhibit product innovation
• Shift the compliance burden without delivering clear benefits
Our Final Take
✅ The fight over open banking isn’t just about data. It’s about who controls the customer relationship in a rapidly evolving financial ecosystem.
✅ The CFPB has promised a rewrite. The courts are watching. Fintechs are pushing back hard against efforts to delay.
✅ At iKinetiq, we’ll continue monitoring every turn because the rules of engagement are being rewritten in real time and could greatly change Community Bank strategy.
