The Consumer Financial Protection Bureau’s (CFPB) Rule 1033, originating from Section 1033 of the Dodd-Frank Act, is set to change how financial data is accessed and shared by financial institutions over the next five years.  CFPB Rule 1033 establishes a consumer’s legal right to access their financial data in a usable electronic format, with the intent of increasing transparency and fostering competition in the financial services industry.  The rule requires financial institutions to make customer-authorized data available to third-party providers (TPPs) via secure and standardized interfaces such as application programming interfaces (APIs).

The rule does make exemption for depository institutions (including credit unions) that meet the thresholds for being a small depository institution under Small Business Administration regulations (currently, those with $850 million or less in total assets) from the obligations that apply to data providers.  It also takes a tiered approach to implementation dates based on the institution’s total assets (only two provided as an example):

• April 1, 2030, for depository institution data providers that hold less than $1.5 billion in total assets but more than $850 million in total assets.
• April 1, 2029, for depository institution data providers that hold at least $1.5 billion in total assets but less than $3 billion in total assets.

Maintaining Customer Trust Through Data Sharing

Smaller institutions often operate with lean IT and compliance teams, which can make implementing standardized data-sharing APIs a significant burden.  Unlike larger banks with dedicated infrastructure and fintech partnerships, smaller banks may struggle to absorb the cost of upgrading systems to align with the technical and legal expectations of Rule 1033.

The rule also indirectly increases third-party and fourth-party risk.  Community banks must enhance their vendor due diligence programs to ensure that data recipients (e.g., fintechs) uphold cybersecurity, privacy, and consumer protection standards.  This heightens the need for contract management, risk assessments, and incident response procedures involving data-sharing partners.

Community banks have traditionally benefited from close customer relationships and trust. Under Rule 1033, maintaining that trust will require educating customers on the implications of data sharing, particularly around privacy and security risks when authorizing access to third parties.  Proactive communication and user-friendly consent management tools will be vital.

Though the CFPB’s initial enforcement focus may target larger institutions, small banks cannot afford to ignore compliance. Regulators may evaluate smaller banks on their readiness, policies, vendor controls, and transparency with customers.  Integration with secure data access frameworks may become a best practice expectation.  Customers may also come to expect this service over time, and those that are exempt, or waiting until they are required to comply, may be at a competitive disadvantage.

CFPB Rule 1033 marks a change in consumer data rights and open banking.  For smaller community banks, the road to compliance will require strategic investment, stronger partnerships, and a customer-centric approach to data access. Those that adapt effectively can not only meet regulatory expectations but also position themselves as trusted, modern financial partners in an evolving digital landscape.