By Steve Boms, Executive Director, FDATA.
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In the United States, competition in financial services has long been driven by innovation. From ATMs to remote check deposit and peer-to-peer payments to cash-flow underwriting, new technologies have expanded consumer choice and convenience. The next phase of financial innovation, however, depends on a more fundamental issue: whether consumers can securely access and permission the sharing of their financial data.
That right is essential to competition. When consumers can easily move their data, financial institutions must compete on price, quality, and service—not on exclusive control over consumers’ financial information.
Despite significant fintech growth, consumers still face friction when switching providers, comparing products, or adopting tools better suited to their financial lives. That friction often stems from fragmented data access practices that raise switching costs and reinforce incumbent advantage. Open finance offers a clear, consumer-centric path forward.
At its core, open finance is grounded in a simple principle: consumers should have the right to securely access and share their financial data with trusted providers of their choosing. In the U.S., that principle is already enshrined in law. Section 1033 of the Dodd-Frank Act grants consumers the right to access their personal financial data and to authorize third parties to access it on their behalf. The challenge over the past decade has been implementing that right in a way that is secure, scalable, and capable of delivering real competitive impact.
Competition Requires Enforceable Data Rights
Healthy competition in financial services depends on consumers’ ability to compare options, switch providers, and engage with new entrants on fair terms. Today, inconsistent data access can limit those dynamics, constraining choice and dulling competitive pressure.
Today, those constraints are compounded by long-term consolidation in the banking sector. The Congressional Research Service reported that since the 1980s, the number of U.S. commercial banks has declined from more than 18,000 institutions to fewer than 5,000 today, reducing the baseline level of competitive pressure in many markets.
The Consumer Financial Protection Bureau’s work to implement Section 1033 will determine whether open finance becomes a practical engine of competition or remains largely theoretical. When done right, open finance shifts competition away from data control and toward value creation—lower fees, better functionality, and more responsive service.
In practice, this competitive shift shows up across everyday financial services. Consumer-permissioned data access enables tools that let users compare accounts and fees in real time, switch providers without re-entering months of information, port payment credentials, manage subscriptions, and verify balances instantly to avoid overdraft or late fees. These use cases reduce switching costs and introduce real price pressure, requiring providers to compete on transparency, pricing, and service quality rather than customer lock-in.
This shift matters in a market where consumer choice is often constrained not by a lack of available products but by the practical ability to use them. Research from the Federal Reserve shows that many U.S. households are highly sensitive to costs and disruption, making it difficult to switch providers even when better options exist.
International experience reinforces this point. An OECD assessment of competition, fintech entry, and open banking in Latin America and the Caribbean highlights how clearer data-access frameworks can reduce reliance on incumbents’ exclusive control of customer data and help open markets to new entrants. In that region, the fintech ecosystem expanded from 703 firms in 2017 to 3,069 in 2023, illustrating how competition can accelerate when digital infrastructure and pro-competitive rules lower barriers to entry.
The lesson is clear: competition improves when consumer data rights are clear, enforceable, and widely usable; switching costs fall; new entrants scale faster; and incumbents face sustained pressure to lower fees and improve service.
Inclusion Is a Competition Outcome
Financial inclusion is often framed as a product challenge. In reality, it is closely tied to competition and data access.
Millions of Americans—particularly gig workers, sole proprietors, and consumers with irregular income—are poorly served by traditional financial products not because they lack financial capability, but because existing systems fail to reflect their financial realities. When consumers can access and share their own financial data, those gaps begin to close.
In the credit context, consumer-permissioned data is one example of how competition can expand access responsibly. Cash-flow information and records of on-time rent, utility, and telecommunications payments can improve underwriting accuracy and expand credit visibility for thin-file or credit-invisible consumers. Federal Reserve research shows that incorporating this type of data can improve credit outcomes without weakening standards.
These benefits are not separate from competition—they are what competition delivers when consumers can move their data and providers must earn their business.
Regulation Enables Responsible Growth
Open finance is sometimes mischaracterized as a deregulatory effort. In practice, the absence of clear rules has created uncertainty for consumers and firms alike.
Regulatory clarity under Section 1033 can replace fragmented practices with consistent expectations around security, consent, oversight, and accountability. For fintech companies, clear rules support long-term investment and innovation. For incumbents, they create a level playing field. For consumers, they build trust.
These outcomes are not in conflict—they are mutually reinforcing.
A U.S. Opportunity
Open finance is not about favoring fintechs over banks. It is about ensuring that competition in financial services works as intended—for consumers.
As data access becomes standardized, value will shift from who controls information to who uses it responsibly and effectively. Section 1033 presents a generational opportunity to make that shift real in the United States.
The question is no longer whether open finance is coming, but whether it will be implemented in a way that delivers on its promise of stronger competition, broader inclusion, and sustainable fintech growth.
About the author
Steve Boms is Executive Director of FDATA, the trade association advocating for consumer-permissioned access to financial data across the United States and Canada. He has more than 20 years of experience working on financial services and technology policy across government, trade organizations, and the private sector, and has testified on financial policy matters before the U.S. Senate, the Canadian Parliament, and the OECD.