The hopes and limitations of consumer data services in the US

Thursday 23 February 2023 14:36 CET | Editor: Vlad Macovei | Interview

Morningstar’s Brian Costello shares valuable insights into the latest consumer financial data moves in the US, and the future of data sharing and embedded finance.

Morningstar’s Brian Costello shares valuable insights into the latest consumer financial data moves in the US, and the future of data sharing and embedded finance.


What are your thoughts on the CFPB outlining suggestions to Section 1033 of the Dodd-Frank Act?

We applaud the Consumer Financial Protection Bureau (CFPB) for taking an important next step in setting clear rules of the road for financial data aggregation. Consumers have been using consumer-permissioned financial data-powered services for more than twenty years. For many investors, they have been engaging with their advisors for personalized financial planning and advice by allowing access to their data. Since Dodd-Frank passed in 2010, investors and the advisors that serve them have been waiting for guidelines from the CFPB to provide uniform access and protections for these services they have come to rely upon. Advisors in particular use data aggregation services to serve their clients more efficiently and effectively, so they can uphold their fiduciary duty. Morningstar ByAllAccounts submitted several suggestions to improve the Proposed Rulemaking as a part of the response to the Outline for Proposals and Alternatives. Our key recommendations for the CFPB:

  • Make the rule clear that financial advisors – both broker/dealer representatives and registered investment advisers – should be able to act as authorised agents of an investor in aggregating financial data. This is not only consistent with the definition of ‘consumer’ in Dodd-Frank, but it will also help streamline enforcement of the rules by the Bureau, data providers, and aggregators. 

  • Allow screen-scraping under certain conditions based on objective considerations of the data provider (e.g., size), the volume and types of data to be consumed, and the type of consumer of that data (i.e., unregulated vs. regulated recipient).

  • Consider expanding the scope of the rule by coordinating with other agencies such as the Department of Labor and SEC to include more account types in a coherent, harmonised regulatory structure. Furthermore, including all financial account types in a set of harmonised rules is necessary to ensure consumers have the opportunity for financial stability by making investment decisions that are right for them.


What timelines can you share about the development of consumer finance and financial services based on data aggregation in the US?

Timeline for data aggregation, the industry, and the Dodd-Frank Act Section 1033:

  • ByAllAccounts founded in 1999 focused on investment data aggregation

  • Mint launched first direct to consumer non-bank PFM (Personal Financial Management) in 2006

  • Bank Branded Personal Financial Management (PFM) tools launched 

  • The Dodd-Frank Wall Street Reform and Consumer Protection Act (effective in July 2010)

  • FS_ISAC Aggregation Working Group 2015 – 2017 (Industry consortium of banks and aggregators with the goal to come together with a specific focus to build a commercial framework for consumer protection.)

  • CFPB Publishes Principles for Consumer-Authorized Financial Data Sharing and Aggregation in 2017

  • Financial Data Exchange (FDX) Founded 2018

  • FDATA (Financial Data & Technology Association) North America founded in 2018 

  • CFPB Published Advanced Notice of Proposed Rule Making – issued October of 2020, Comments Closed Feb 4, 2021

  • CFPB published an Outline of Proposals and Alternatives in preparation for a Small Business Advisory Review Panel (SBREFA) – issued October 27, 2022; comments close January 25, 2023; panel convened in February 2023

  • CFPB is expected to issue a proposed rule in 2023

  • CFPB final rule is expected in 2024.


What are the most attractive embedded finance use cases you see for businesses in 2023?

In general, we are excited about the potential for embedded finance applications that help consumers achieve positive financial outcomes with little-to-no effort or sense of loss (e.g., rounding up savings). 

In the Morningstar ecosystem, the most attractive embedded finance uses cases are those that encourage consumers to save and invest easily, safely, and effectively. In many cases, this includes identifying for them new opportunities to work with investment and wealth management professionals. 

In the current macroeconomic environment, it is vital that industry and government are aligned in enabling and protecting consumers in their savings and investment activities. Investing should be accessible to all consumers, and one way to generate positive investment outcomes is via personalised advice from competent and authorised financial advisors. 

Robust financial advice incorporates each consumer’s financial assets, liabilities, income, demographics, and preferences to craft and implement personalised strategies and plans to balance risk and opportunity to deliver positive outcomes. Financial advisors act as stewards and guides for their clients and have legal obligations to act in their clients’ best interests. Connecting consumers with advisors is an essential aspect of preparing for what comes next in each investor’s life journey.


What are the main regulatory challenges faced by businesses and investors in the US?

A main challenge is fragmented regulations for financial services. The US does not have overarching privacy regulations. Rather, federal privacy laws are sectoral (e.g., GLBA, HIPPA) and states are enacting privacy protections for their citizens to fill the gap. These regulations are generally heavy on protection and enforcement rather than consumer rights of data access and portability. The gaps are also being used by some incumbent actors to position their anti-competitive behaviors as consumer protection, highlighting the lag between innovation and regulations.


What is the future of data sharing for better financial services in the region?

Consumers engage in multiple financial behaviours every day: spending, saving, borrowing,investing, and protecting. Many consumers also engage in charitable giving, while othersreceive the benefits of subsistence programmes. In all these behaviours, consumers use, create, and influence financial data about themselves that can relate to the outcome of the behaviour. Access to this data by the consumer should be a basic right, as should the ability for them to share the data with the parties the consumer has selected as best suited to help them manage their financial activities and performance. For these reasons, Morningstar wholeheartedly agrees with the bureau’s efforts to establish and enforce these rights for the consumer, especially where it can best benefit the consumer in their persona as an investor.

Financial data aggregation can promote competition by helping investors see exactly what they are getting (and paying for) across their financial accounts. Investors today are faced with an almost overwhelming choice of investment options across stocks, bonds, currencies, commodities, and alternative asset classes. While these investors seek to maximise their positive outcomes and minimise their risk, they also look for their investing behaviours and choices to align with their values and preferences. Financial data aggregation tools promote competition and facilitate personalised investing, spurring innovation and competition.

About Brian J. Costello

Brian Costello is the head of Data Aggregation Strategy, ByAllAccounts, Morningstar Wealth. Costello is leading ByAllAccounts Open Banking strategy and governance programmes to continue delivering on the company's mission of empowering investor success. Costello is a highly experienced and credentialed global expert in data strategy, risk, and governance. He brings unique insights in the use of Open Data platforms to empower customer access, foster responsible use of data as well as provide customer and market protections. He is a strategist for complex solutions ranging from identity management, user experience, consent frameworks, ethical standards, and verifiable trust frameworks. Costello has been a trusted advisor and idustry thought leader to US, UK, and Australian regulators, policymakers, and standards organisations. 

About Morningstar Wealth

Morningstar Wealth offers an integrated suite of products for advisors and investors that combines Morningstar’s renowned research data and insights with investment products, powerful technology, and workflow solutions—all designed to empower investor success. To learn more about everything Morningstar Wealth has to offer please email at

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Keywords: Open Banking, data sharing, financial data
Categories: Banking & Fintech
Companies: Morningstar
Countries: United States
This article is part of category

Banking & Fintech


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