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Navigating the CFPB’s Latest Rulemaking on Personal Financial Data Rights: Lessons from Open Banking and Beyond

Navigating the CFPB's Latest Rulemaking on Personal Financial Data Rights Lessons from Open Banking and Beyond

Last week, the Consumer Financial Protection Bureau (CFPB) released draft rules on Personal Financial Data Rights, a document that is set to reshape the landscape of financial APIs in the United States. As companies that have been deeply involved in Open Banking initiatives, APImetrics and Contxt are uniquely positioned to offer insights into how banks and credit unions can prepare for these new regulations.

The Importance of API Performance and Latency

Section 1033.331(c)(1)(i) of the document underscores the need for reliable and efficient data access. This is where API performance and latency come into play. Testing from multiple points of presence is not just a best practice; it’s a necessity. Financial institutions need to ensure that their APIs are not just functional but also fast and reliable, irrespective of where the consumer or third-party service is located.

The Shift from Screen Scraping to Open Banking APIs

The rulemaking document highlights the urgent need for U.S. banks and fintechs to move away from the outdated practice of ‘screen scraping’ to a more secure and efficient Open Banking API approach. This transition is not just a technical shift but also a cultural one, requiring institutions to rethink how they share and secure data.

Staffing Costs and Developer Efficiency

One of the overlooked aspects of API development is the cost associated with staffing and the time it takes for developers to build to spec. The rulemaking emphasizes the need for tooling that allows developers to check their APIs against specifications during the development phase, thereby accelerating time-to-market and reducing costs.

Shifting Left on API Security

With APIs becoming the new perimeter for financial data, security can’t be an afterthought. The ‘shift-left’ approach to security means integrating it into the development process rather than trying to ‘fix it in post’ with a point API security solution.

Why Traditional Solutions Fall Short

Point solutions and broad Application Performance Monitoring (APM) solutions are ill-equipped to address the specific needs outlined in the CFPB’s latest rulemaking. They lack the integrated approach needed to tackle performance, security, and compliance in a unified manner.

The APImetrics-Contxt Advantage

The combined offering from APImetrics and Contxt is uniquely positioned to meet these challenges. Our newly released ‘Governance’ framework for ‘API Products’ bridges the knowledge gap for developers and API Product Owners. Our monitoring capabilities focus on consumer-relevant metrics, ensuring that you’re not just compliant but also offering a superior user experience. Moreover, our native security functionality is designed to address known vulnerabilities before they hit production, focusing on prevention rather than protection.

Conclusion

The CFPB’s latest rules on Personal Financial Data Rights are a call to action for the financial industry. As we navigate this period of rapid digital transformation, the combined capabilities of APImetrics and Contxt offer a comprehensive solution that addresses the rulemaking’s requirements head-on, ensuring that financial institutions are not just compliant but also competitive.

Written by Contxt CEO & Co-Founder Mayur Upadhyaya

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