Trump Administration Eyes Overhaul of Financial Data Privacy Rules, Potentially Reshaping Fintech Landscape

(The Center Square) – The Trump administration is taking initial steps to reassess foundational regulations governing how banks share consumer financial data with third-party technology companies, setting the stage for a potential regulatory shift that could impact millions of Americans who use apps like Venmo, PayPal, and Plaid.

At the heart of the review is Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. This provision, long dormant, was designed to empower consumers by granting them access to their own financial data held by banks, with the right to share it securely with other services. The Biden administration formally activated and codified rules around this section in 2024, aiming to foster competition by making it easier for consumers to switch financial service providers and use fintech apps.

"This isn't just a technical rule change; it's about who controls the financial narrative of the average consumer," said Paul Watkins, managing partner at Fusion Law. "The 1033 provision, once activated, became the bedrock for a more portable and competitive financial identity. It allows someone to use their banking history seamlessly to secure a mortgage or a line of credit elsewhere, unbundling services from a single institution."

However, the Biden-era rules have drawn criticism from some quarters for being either too narrow or creating new vulnerabilities. Critics argue the definitions within the rules—particularly what constitutes an "authorized third party"—are ripe for reinterpretation.

Todd Zywicki, a law professor at George Mason University, warns of a dual risk: overreach that stifles innovation, and under-protection that leaves data exposed. "There's a legitimate concern about large banks leveraging their data monopolies," Zywicki noted. "Without sensible guardrails, like potential government oversight on data access fees, banks could charge exorbitant sums to fintechs, costs which ultimately trickle down to consumers. If the cost is too high, people will seek riskier, less secure alternatives."

The Trump administration's review signals a potential pivot toward a different regulatory philosophy, one likely to emphasize industry flexibility and reinterpret the boundaries of consumer data authorization. The outcome could either reinforce the open banking framework established by the previous administration or significantly roll it back, altering how fintech startups and traditional banks compete.

Voices from the Public:

"Finally, someone is looking at this with a practical eye. The Biden rules felt rushed and created more red tape for small fintechs trying to innovate. Security is paramount, but we can't let perfect be the enemy of progress in financial tech." – Marcus Chen, Fintech Startup Founder, San Francisco, CA

"This is terrifying. It sounds like a backdoor gift to big banks so they can lock in our data and kill competition. We just got the right to easily control and move our financial information. Now they want to take it away? It's pure corporate favoritism disguised as 'review.'" – Rebecca Shore, Consumer Advocate & Blogger, Chicago, IL

"The focus should be on clear, consistent standards that protect data without picking winners and losers. Regulatory whiplash every four years is bad for everyone—businesses can't plan, and consumers lose trust. Let's hope this review leads to stability, not just another reversal." – David P. Miller, Former Bank Compliance Officer, Richmond, VA