Salt Lake City, Utah — Thank you all for joining us in Salt Lake City. We have a special moment right now to peer into the future and see what we can learn. And we have a great opportunity to begin to discuss how we can help shape the future in ways that support and protect consumers.
We are here today to talk about the new opportunities and challenges being created through digital financial records. Whenever consumers make deposits, withdraw funds, or make payments using their various financial accounts, they leave a digital trail that becomes part of their financial record. This data yields enormous insight that can empower consumers to make decisions and improve their financial lives. The digital aspect of these records can enable great efficiencies. Whereas once upon a time consumers might have brought a shoebox full of paper to a financial advisor or loan officer, now consumers can accomplish the same thing just by providing access to their digital financial records. This is a world full of new promise, where consumers have the chance to gain the tremendous benefits of ease, speed, convenience, and transparency.
Where consumers can exert control by giving their permission for specific companies to access their digital financial records, they can access a growing number of services from a wide range of providers. Established financial institutions and startup FinTech companies are pushing forward aggressively to create websites and mobile applications that offer consumers a variety of innovative services.
Some sites help consumers monitor relationships with multiple financial institutions in one place. Others help consumers make spending decisions and manage their money while on-the-go. By looking at a consumer’s transactional history across their credit cards, bank statements, prepaid cards, and other sources of spending, websites or mobile apps can offer trend analysis that helps consumers understand their spending habits. Some people may not realize how much they are spending each day on certain categories of items, and these services can help them cut back and start saving for larger goals.
Similarly, access to digital financial records can help consumers become better shoppers and make markets more competitive. Many consumer financial products, such as credit cards and prepaid cards, charge fees for different uses, which means the cost of the product can vary based on what people do with it. Consumers are often not very good at predicting their usage or even understanding their usage after the fact. But if consumers are able to access their digital financial records, then new applications can help them identify the provider whose product best serves their needs.
Access to digital financial records can be especially important to consumers who want to borrow money but lack enough credit history to generate a credit score or whose score may not accurately reflect their current creditworthiness. By allowing a prospective creditor to access the consumer’s transaction account, the creditor may be able to extend the credit needed at a fair price. These are just a few examples of services that already exist, and the future possibilities are vast.
The existence of these products and services often depends on whether consumers can authorize access to their digital financial records. Companies that collect this information from other providers are often called “data aggregators” or “account aggregators.” Many of us have little or no idea how this actually works. If you pay your taxes online through a commercial website, for example, you may be giving a third party access to your financial records. Or you may pass on access to your investment accounts so a commercial tax website can pull information about your retirement contributions for the year. This saves you time and effort because you no longer have to input all the information manually on your tax forms.
Access to digital financial records is critical. As with your student records or medical records, your financial records tell an important story about you. With health care, for example, if you are able to see your records, it is easier to participate in your care and treatment. You can review what you were told, ask tough questions, and consider other options. You can be a better advocate for yourself. The same can be said for your financial records. This is all about taking control and becoming a more active participant in your own financial life.
As we see the world changing all around us at a rapid pace, Congress has recognized the growing need for consumers to be able to obtain and use their digital account information. Congress provided for the right to do so in the Dodd-Frank Act, which states that information relating to a consumer’s transactions, including “costs, charges and usage data,” shall be made available in an “electronic form usable by consumers” upon request. Rulemaking authority over this issue lies with the Consumer Financial Protection Bureau, which also has the responsibility to pursue the statutory objective of ensuring that consumer financial markets “operate transparently and efficiently to facilitate access and innovation.”
The technology around digital financial records continues to develop, and so far there are many unanswered questions about how the information is being shared, by and to whom, and how safely. As with any emerging industry, we are hearing about some bumps in the road. Both FinTech companies and financial institutions, as well as consumer groups, are describing to us the various challenges, risks, and technological obstacles to further progress in this area.
So today we are launching an inquiry to learn more about consumers’ access and use of their digital financial records. Specifically, the Consumer Bureau wants to know more about three things. First, we want to be aware of what is happening right now, especially the extent to which consumers who are authorizing access to their financial records can choose how their records are being shared. Second, we want more insight into the process for sharing financial records, whether it is or can be made safe, and what assurance consumers and providers will have that it can be done securely. Third, we want to learn about transparency and how much control consumers have over their own financial records. Our main goals are to encourage innovation that promotes opportunity and to protect consumers as these new and promising technologies continue to develop.
To begin with, the Bureau wants to know to what extent consumers can authorize data aggregators to access their digital financial records on their behalf and to share those records in accord with the consumer’s instructions.
Consumers are usually able to see their transaction histories when they receive their monthly account statements or log in to their accounts online. The Bureau believes that both consumers and their authorized third parties should be able to access their records in digital format and to make sure the records can be passed on to new providers of products or services of their choosing. Once again, we can see this as the modern equivalent of consumers who used to bring in their cardboard shoebox full of information and offer it to any provider they wished. Yet we have been hearing a range of concerns about consumers’ ability to access and share their account information electronically. We are concerned that some financial institutions have threatened to cut off the flow of information to some websites and mobile applications. We also hear of financial institutions that make consumers jump through so many hoops to access or authorize access to their own financial records that they are discouraged from even trying.
If financial institutions that house digital financial records make it difficult or impossible for consumers to authorize access or share their information, that blocks opportunities for consumers to benefit from this information. The result could be to thwart new entrants from entering the market with consumer-friendly products and services, even those not currently being offered by the financial institutions themselves. For example, perhaps a consumer’s bank does not alert its customers about how much of their existing balance they can safely spend, given anticipated bills that will come due over the month. If they are able to share their financial records more easily, another company may devise a way to help them monitor their spending and send them an alert when they get close to the amount they need to cover their upcoming bills. But that service will not be available if the company cannot access the consumer’s records.
Impeding access to digital financial records not only blocks innovation from new entrants, it also reduces the incentives for financial institutions to innovate. Without new companies introducing consumer-friendly products or services into the market, established companies are likely to feel less pressure to compete in this manner. And authorizing access to their financial records can make it easier for consumers to shop for an alternative provider with more favorable pricing, given the consumer’s usage patterns. To be clear, it is unacceptable for financial institutions to block access to consumer information as a means of gaining a competitive advantage in the marketplace.
Of course, many companies use customer information to help retain their existing customers and serve them more effectively. In fact, we want markets where companies are finding ways to use the unique information they have about their customers to identify new needs or to offer more opportunities to improve the financial welfare of their customers. But these natural benefits of incumbency are very different from special advantages that stem from restricting the flow of information to competitors. No company should be able to hoard customer information as a way to deprive consumers of the benefits of fair market competition.
We have heard that banks, credit unions, and others that house this information have operational concerns about when and how they are supposed to share the information with third-party providers. We want to learn more about this. Does the sharing of financial records impose burdens on staff time or other resources? Are there legitimate concerns that the number and frequency of these requests could overwhelm the servers at financial institutions?
We want to understand how the market is functioning right now. In today’s Request for Information, the Consumer Bureau is seeking to learn about the incentives that would facilitate or discourage people from accessing and using their own digital financial records. We are requesting more information about competition between established financial institutions and prospective entrants to offer new financial products and services. We want to know what obstacles – technological and otherwise – must be addressed to facilitate access and use of digital financial records. And we seek to know more about technological developments that are changing how consumer records are accessed and shared, as through the automated program interfaces or APIs that some financial institutions are starting to make publicly available.
Our second area of concern is that access and use must be safe. Customers should be able to have confidence that their financial records are secure and that they will not fall into the wrong hands. Financial institutions that share information likewise should be confident that they will not be exposed to unauthorized or fraudulent transactions resulting from efforts made to access customer information.
It would be problematic for everyone involved if granting access to third parties were to compromise consumer privacy or put consumers’ funds and account relationships at risk. Some financial institutions have suggested that providing third-party access to account information can create significant operational risks to them and could undermine account security. There may also be complexities around privacy protection and the assumption of liability for breaches that can occur whenever data is being shared.
It is also worth noting that not all third-party service providers that use consumers’ financial records are created equally. Some companies have more robust safeguards to protect consumer information than others. These differences may create difficult challenges for financial institutions. Scammers and fraudsters who try to gain improper access to consumer information pose problems here too, as they do in virtually every market.
Our inquiry today seeks more information about how financial records are obtained, stored, and used by third parties. We want to hear from all relevant stakeholders – including consumers, financial institutions, information users, data aggregators, and technology providers – about options to ensure that consumers can safely access, use, and share their digital financial records. One thing we know for sure is that the technologies are developing rapidly, and it seems likely that workable solutions will emerge (if they do not already exist) to enable information transfers to occur smoothly and safely. Through our inquiry, we are aiming to understand this process better and to prod it along as we can.
Third, the Bureau wants to make sure that the access and use of financial records is transparent and that consumers can direct the sharing and use of their personal financial data. It is not enough simply to have safe access to financial records; consumers also need to be able to control how each company that accesses their records will use that information to improve their lives.
Specifically, if consumers give third parties access to their accounts, they should be able to dictate exactly what that access means. They should be able to say what information will be shared, how often access can be had, and how long that access will last. When consumers want to end their relationship with a company, they should be able to do so on their own terms.
So in today’s inquiry, we want to know to what extent consumers can control how data is used by companies authorized to access it. This includes the ability to request that these companies delete their records, or if the records are automatically deleted, when and how that happens.
As we address these issues today, the Consumer Bureau wants to understand better just what is happening here and now. But make no mistake that our sights are set firmly on the future. We are not content to sit passively by as mere spectators watching these technologies develop. We intend to keep an eye out to protect consumers, even as we encourage providers to innovate and open up more opportunities that benefit consumers. And although the natural reaction for many financial institutions may be to bolster fortresses around customer information, significant business opportunities may emerge from helping consumers by sharing information more readily with new financial innovators.
In the end, we are looking for a marketplace that is fair and works well for all participants – consumers, FinTech, big banks, community banks, and credit unions alike. We believe we must get to a place where consumers are able to access and share their financial records with trusted third parties, without undue restrictions. We are confident that financial institutions and other companies can develop technological solutions to maintain and transfer these records safely and securely. And we believe we can achieve transparency in the use and distribution of financial account records by consumers who can control how to initiate, manage, and terminate access to their information.
We recognize there are real tensions around many of the issues discussed today. But we believe there is a promising path forward. Our goal is to put consumers first and help providers find practical ways to improve their lives. Let us work together to do that. Thank you.
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit www.consumerfinance.gov.