HOST: J.P. Nichols
GUESTS: Phil Goldfeder (American FinTech Council), Penny Lee (Financial Technology Association)

What Is Section 1033 and Why Is It Creating Industry Tension?

HOST: Let’s start with the core of today’s discussion. Section 1033 of the Dodd-Frank Act has become the epicenter of the open banking battle. Finalized in October 2024 by the CFPB, the rule confirms consumers’ rights to permission their financial data. But almost immediately, large banks challenged it legally.

PENNY LEE: Within hours of finalization, the Large Bank Trade Association sued in Kentucky. After a series of legal stays, the rule is now in effect as of May 2025. Despite its imperfections, we believe it’s essential to safeguard consumer choice.

PHIL GOLDFEDER: Ironically, both Penny and I support a rule issued by Director Chopra. At its heart, this is about consumer data access and ensuring innovation isn’t stifled by legacy institutions.

Why Are Big Banks Pushing Back?

HOST: Why would banks resist this rule?

PHIL: They argue they’re investing in infrastructure and fraud prevention, so they deserve compensation. But the reality? Consumers already pay for these services via account fees and overdrafts. Charging again for data access is like double taxation.

PENNY: Plus, FinTech aggregators have also built sophisticated infrastructure. They clean and format messy bank data to deliver meaningful financial tools.

QUOTE: “This is essentially a double dip on the consumer who’s already paying for banking services.” — Phil Goldfeder

What Changed at JPMorgan Chase?

HOST: JPMorgan Chase, once an API leader, suddenly introduced sky-high fees for data access. Why the about-face?

PENNY: They’re capitalizing on regulatory ambiguity. Their new fees are exorbitant and attempt to reclaim losses from poor internal investments. It’s a strategic shift but anti-consumer.

PHIL: They’re asking FinTechs to subsidize their legacy mistakes. Meanwhile, consumers are shifting to Robinhood, Acorns, and neobanks. Chase should compete for that loyalty, not stifle access.

QUOTE: “Chase is losing the battle for the next generation consumer… and they know it.” — Phil Goldfeder

What Are the Real Security Concerns?

HOST: Banks claim data access increases fraud risk. Is that valid?

PENNY: It is a concern, but this rule actually strengthens fraud prevention. It mandates guardrails and encourages secure APIs over risky screen scraping.

PHIL: Every responsible innovator cares about security. FinTech is not the Wild West anymore. Many firms are regulated and forward-thinking.

QUOTE: “We’re not anti-regulation. We’re asking for clarity so we can innovate responsibly.” — Phil Goldfeder

Are All Banks Aligned Against Open Banking?

HOST: Is this resistance universal among banks?

PHIL & PENNY: Not at all. Many community and regional banks embrace open banking. They see collaboration with FinTechs as a growth opportunity.

PHIL: 25% of AFC’s members are community banks innovating through partnerships. They recognize evolution is essential.

PENNY: Even some large banks are partnering with FinTechs quietly. The ecosystem isn’t monolithic.

Could This Hurt Small Businesses Too?

HOST: How does this affect businesses?

PENNY: Small and mid-sized businesses rely on consumer data for cash flow underwriting and tailored financial services. If access is blocked, they lose.

PHIL: Without this rule, we regress. Businesses and consumers will revert to insecure, outdated data-sharing methods.

QUOTE: “Without data portability, small businesses lose the ability to compete. That’s bad for everyone.” — Penny Lee

What Can We Learn from International Models?

HOST: Europe adopted open banking years ago. Any lessons?

PENNY: Europe, Singapore, India, they’re ahead. Payments are faster, safer, and more transparent. The U.S. must not get left behind.

So, Is Open Banking Dying or Growing Up?

PHIL: We’ve been debating this for 14 years. Let’s start somewhere. The current rule isn’t perfect, but it’s a foundation.

HOST: Final thoughts: is open banking on its way out?

PHIL: It’s maturing. Resistance is part of innovation. But FinTechs and consumers will push it forward.

PENNY: Consumers won’t let it die. They’ve seen the benefits. They’ll demand choice and access.

QUOTE: “Innovation doesn’t stop. Open banking isn’t dying. It’s just growing up.” — Penny Lee