Overseas firms looking to get in on the expansion of Open Banking in the US may find life a little more difficult under Donald Trump’s second administration.
The 47th President is a vocal man, that’s for sure. Fiery rhetoric and bold, blunt statements have defined Trump’s image throughout his first term in office (2016-2020) and in campaigning during the 2016, 2020 and 2024 presidential elections.
Regarding finance, some of Trump’s most vocal comments have been around cryptocurrency. He has pledged to put an end to CBDCs, protect private crypto holders and has taken aim at the leadership of the Securities and Exchange Commission (SEC), which has long found itself at odds with the crypto sector.
Open Banking has not received as much attention from the Republican President and businessman, but his policies could still have a deep and longstanding impact. Notably, his enthusiasm for trade tariffs may make US expansion a less financially lucrative prospect for overseas fintechs.
“Tariff is the most beautiful word in the dictionary,” he told Bloomberg News during October campaigning. Though the self-styled Tariff Man’ has largely expressed enthusiasm for taxes on things like European car imports, Open Banking tech providers will still feel the impact.
According to a survey conducted prior to the election by Open Banking Excellence (OBE), a global Open Finance industry network, 90% of companies were eyeing expansion in US Open Banking.
The UK sector, which has emerged as one of the global market leaders, will be no exception to this, but prospective trade tariffs may make some consider their options. On the other hand, Trump’s favouritism towards looser regulation could also bring both positive and negative connotations.
“When the UK’s expertise in Open Banking, having created the blueprint, is combined with the super-sized US market scale, the effect is transformative,” says Helen Child, CEO of OBE.
“It marks the positive shift of the inflection point that the industry has been working towards. For those in the fintech, Open Banking and wider financial services community, all eyes will now be keenly focused on the likely future direction of policy in the US following Donald Trump’s victory.”
As mentioned above, Trump has had a few disparaging comments about the SEC. His views on the Consumer Finance Protection Bureau (CFPB) are not as vocal, and his future relationship with this regulator could be critical for Open Banking’s development.
Last month, the CFPB introduced a new rule around data sharing, the Personal Financial Data Rights Rule. This relates to data sharing across bank accounts, credit cards, mobile wallets, payment apps, and other financial products.
As data sharing underpins Open Banking, this rule could be critical to taking the country’s adoption of Open Banking forward, building on its use by an estimated 100 million Americans according to OBE.
The rule was brought in under Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which the Biden-Harris association had also been enforcing a clampdown on banking ‘junk fees’ under.
Trump’s second presidency will see a new regulatory era and a new regulatory relationship with the likes of the SEC and CFPB. This could define how the country’s Open Banking scene continues to emerge, and the extent to which overseas firms can engage with it.
“Open Banking in the US stands at a critical juncture,” says Pinar Ozcan is Professor of Entrepreneurship and Innovation at Oxford University.
“Despite substantial market-driven advancements, the impending shift to a more regulated landscape promises both advantages and obstacles.
“The decentralised nature of US financial regulation, with its intricate interplay of state and federal laws, coupled with a fragmented market structure composed of numerous smaller banks and credit unions, can complicate efforts to establish a cohesive and uniform Open Banking environment.”
