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What Does Section 1033 Mean for Open Banking in the US?
- Open banking is becoming a more prominent topic in the US, with many market commentators talking about Section 1033, a revised regulation from the Frank-Dodd Act, and how it might affect the state of the open banking ecosystem in the US.
- According to Visa, open banking is already a big deal in the US financial services market. 87% of account-holding customers use open banking solutions to connect their accounts to third-party solutions.
- The United States open banking market is not standardized enough, and participation varies based on bank size. The “Final Rule” of Section 1033 aims to provide standardized participation framework for the US market.
- One of the most significant changes in Section 1033, finalized on October 22, 2024, is the move towards API standards, both functional and security-related, for the first time.
- The certification of Data Providers for using a 'certified' standard to provide their APIs, and the fact that APIs must be provided at zero cost to the consumer, is crucial under Section 1033.
- There are some aspects of the open banking market in the USA that require addressing, such as a directory of participants, recognized trust anchors, and certification of conformance to standards by Data Providers.
- The implementation of Section 1033 might be impacted by legal challenges and changes in regulations from the incoming US administration.
- Section 1033 is expected to bring about increased standardization in the US open banking market. Still, it remains to be seen whether this makes life easier for ecosystem participants.
- The Nordic APIs blog will keep an eye on what happens next and update the article with any changes.
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