Published on January 4th, 2025
Introduction
The Consumer Financial Protection Bureau (CFPB) has published the final version of the 1033 rule, marking a pivotal moment for open banking in the United States. At just 38 pages, the rule is concise, but it builds on over 600 pages of feedback and consultations. While much of the content from the draft remains unchanged, several key clarifications and adjustments have been made. In this article, we’ll break down the rule’s core provisions, its impact on open banking, and the challenges financial institutions must face as they prepare for implementation.
1. Key Highlights of the CFPB 1033 Final Rule
The CFPB 1033 final rule introduces several critical regulations aimed at enhancing consumer access to financial data and ensuring that open banking practices are secure and reliable. Here are the most important aspects:
Data Rights for Consumers
A primary goal of the rule is to establish clear rights for consumers to access and control their financial data. This long-overdue change will help drive the creation of more consumer-friendly financial services.
Ban on Screen Scraping
The final rule bans screen scraping, a practice where companies collect data by mimicking user behavior on websites. Despite opposition from some parts of the industry, this ban aims to prioritize secure, standardized methods for sharing financial data and minimize risks to consumer privacy.
Performance Metrics for APIs
The rule requires financial service providers to ensure their APIs are available 99.5% of the time, excluding scheduled downtime. Providers will need to track both planned and unplanned downtime to guarantee consistent consumer access to data. This will improve the reliability and trustworthiness of open banking systems.
Removal of Latency Requirement
In the draft rules, the CFPB set a latency limit of 3500ms for API responses. However, the final rule removes this requirement, calling for “commercially reasonable” response times. This change offers flexibility but raises questions about how response times will be defined and enforced.
2. Compliance and Reporting Requirements
Public Metrics
The final rule mandates that providers make their performance metrics public by the end of the month following each measurement period. This requirement boosts transparency and helps build consumer trust by holding companies accountable for their API performance.
Developer Interface Requirements
The rule also requires that financial service providers offer and maintain a developer interface for their APIs. Regular updates and maintenance of this interface are crucial for ensuring ongoing compliance and effective open banking operations.
Timeline for Compliance
Financial institutions have more time to meet the new requirements. The first cohort of companies must be compliant by April 1, 2026—an 18-month extension from the original deadline. This extra time provides institutions with an opportunity to address the necessary changes.
3. Challenges and Considerations for Financial Institutions
Impact on Smaller Institutions
Smaller financial institutions may face difficulties in meeting the new requirements due to limited resources. Although the implementation costs could be high, the consequences of non-compliance—such as consumer dissatisfaction—could be even more damaging in the long term.
Uncertainty Around Standards Setting Bodies
The rule introduces the concept of Standards Setting Bodies (SSBs), which will define open banking protocols. While many expect the Financial Data Exchange (FDX) to play a major role, the rule’s vague language leaves room for uncertainty about the future direction of standards.
Security and Privacy Concerns
Although the rule emphasizes security, it leaves many details about security standards to be determined by the approved Standards Setting Bodies. This may result in inconsistent security practices across the industry, which could create vulnerabilities as open banking continues to grow.
4. Preparing for the 1033 Final Rule
Start Planning for Performance Reporting
Financial institutions should start preparing now to meet the 99.5% API availability requirement. Setting up systems to track both planned and unplanned downtime will be essential for compliance and reporting.
Maintain Developer Interface and API Quality
It’s important to regularly test and update APIs to maintain performance and ensure the developer interface remains functional and compliant with the new standards.
Track Compliance in a Testable Way
Institutions should implement systems to monitor API performance and availability continuously. These systems will be vital for both internal audits and public reporting, as required by the rule.
Conclusion
The CFPB 1033 final rule is a significant step forward for open banking in the United States. It strengthens consumer data rights, introduces strict API performance standards, and sets guidelines for security. However, financial institutions—particularly smaller ones—must navigate several challenges to comply with the new requirements. As the compliance deadline of April 1, 2026 approaches, organizations should begin preparing now to ensure they meet the rule’s demands while tracking performance, maintaining developer interfaces, and ensuring transparency in reporting.
