What’s next for Open Banking in the US: expert perspectives on regulation, payments, and inclusion

Brian Tate, President & CEO of the Innovative Payments Association (IPA), unpacks how US Open Banking is evolving through regulation, innovation, and fragmentation – while offering real promise for inclusion and real-time payments.

Could you please tell us a bit about yourself and the Innovative Payments Association? 

I'm Brian Tate, President and CEO of the Innovative Payments Association (IPA). Our mission is to advance the success of the payments industry through thought leadership, education, and advocacy. We represent a broad spectrum of industry players from traditional financial institutions, networks, payment processors to fintechs and program managers, working at the intersection of innovation and regulation. At the IPA, we strive to ensure a balanced and modern payments ecosystem that empowers consumers and promotes economic growth. 

How do you see the CFPB Personal Financial Data Rights rule under Section 1033 transforming the US Open Banking landscape, especially for banks and fintech innovators? 

Section 1033 has the potential to be a catalyst for Open Banking, however, the path forward is not clear in the US.  The CFPB recently said the Open Banking rule is illegal.  But that claim is being challenged in court.  Thus, there is uncertainty regarding whether or not the regulation developed by Director Chopra will be in effect. 

At its core, the rule is intended to promote consumer access to their financial data, something that aligns with innovation, transparency, and competition. For banks and fintechs, this can open the door to building more tailored, data-driven services.  

Setting aside the litigation, the success on any regulation implementing Section 1033 will depend on clear guardrails around data security, liability, and consistency in how access is granted and managed. A collaborative approach among stakeholders will be critical to ensuring the rule fosters innovation without compromising consumer protection.

Given the fragmented US banking market and regulatory challenges, what are the biggest hurdles and opportunities for payments innovation within Open Banking? 

The US has a dual banking system which is split across federal and state levels.  Depending on the company and product, this kind of regulatory framework can be confusing to new market entrants.  With respect to Open Banking, one of the largest hurdles is navigating the regulatory complexity of the dual banking system, which can deter investments in new technologies and hiring experienced people. However, the very nature of our competitive and decentralised financial system also presents opportunities: innovation can emerge from a wide variety of players. If regulators, industry leaders, and consumers can find alignment on priorities such as data privacy, fraud prevention, and interoperability, the potential for meaningful, inclusive innovation is enormous. 

How can Open Banking initiatives help advance financial inclusion, particularly for underserved groups like gig workers and immigrants? 

First, I think we all have to remember that the consumer should always be at the forefront of any conversation related to financial services, technology, or innovation.  We are in a service-oriented industry.  Open Banking can serve as a powerful tool for financial inclusion when access to data is paired with responsible innovation. Access to real-time earnings, data, coupled with alternative models and underwriting can lead to faster access to funds and credit. For those without traditional credit histories, Open Banking can unlock access to services by leveraging cash flow data or utility payments as credit proxies. But we must also focus on digital literacy, multilingual support, and mobile-first design to ensure these tools truly reach and serve underserved communities. 

Open Banking promises to revolutionise payments by enabling real-time, AI-powered verification and risk assessments. How close are we in the US to seeing these intelligent payment solutions become mainstream, and what barriers remain? 

We’re making progress, but widespread adoption of real-time, AI-enhanced payment tools is still a work in progress. Some larger institutions are piloting these technologies, particularly in fraud detection and customer onboarding. However, mainstream adoption is hindered by three primary factors: inconsistent application of AI technology, uncertainty regarding liability in the event of error or fraud, and a lack of consumer awareness and trust. Overcoming these barriers will require strong industry coordination, more regulatory clarity, and investment in consumer education.

Given the growing importance of real-time payments and Pay by Bank models, how can US merchants and financial institutions overcome adoption barriers to fully capitalise on Open Banking’s potential for faster, cheaper, and more secure transactions? 

The benefits of real-time payments and Pay by Bank models are compelling, but I believe consumers drive adoption.  Consumers need seamless, trusted user experiences. Consumers want options, especially young buyers who have come of age in a cell phone/online world.  Merchants must continue to make improvements to the system and seek out relationships with financial institutions to take advantage of newer technologies to serve their customers. Regulators can play a role in fostering confidence through regulatory flexibility. At the end of the day education and collaboration will be the accelerants that move these models from promise to practice. 

About the interviewee

Brian Tate is President and CEO of the Innovative Payments Association. The IPA is the premier payments trade association focused exclusively on companies involved in providing innovative payment products to consumers, businesses, and federal and state governments. Brian is a graduate of the Howard University School of Law, a member of the US Supreme Court Bar. Brian also has an M.A. from George Washington University, and a B.A. from King’s College. 

 

About IPA

The Innovative Payments Association is a trade organisation that serves as the leading voice of the electronic payments sector, including prepaid products, mobile wallets, and P2P technology for consumers, businesses and governments at all levels. The IPA's goal is to encourage efficient use of electronic payments, cultivate financial inclusion through educating and empowering consumers, represent the industry before legislative and regulatory bodies, and provide thought leadership.