The open banking war just found itself a middle ground—and it’s coming from a powerful industry voice that doesn’t fully belong to either side.
In a move that could reshape how data is shared in U.S. financial markets, the American Fintech Council (AFC) has filed an amicus brief backing the Consumer Financial Protection Bureau (CFPB) in a high-stakes legal battle against a group of banks and traditional financial institutions. But it’s not a blanket endorsement—the AFC is nudging both sides toward compromise, arguing that consumers, innovation, and common sense can all win here.
A Rule With Sharp Edges and Mixed Reactions
The story dates back to October 2024, when the CFPB finalized a rule meant to unlock the potential of open banking in the United States. It promised consumers more control over their financial data and aimed to bring true portability to bank accounts, allowing people to switch providers with less friction.
But that promise didn’t land smoothly everywhere.
A coalition led by Forcht Bank, the Bank Policy Institute, and the Kentucky Bankers Association quickly sued. Their worry? That the new rule opened the floodgates for data misuse, increased cybersecurity risks, and bypassed critical oversight frameworks. The CFPB, meanwhile, stood by the rule as a necessary leap forward to modernize finance and give consumers a fair shot at better options.
And then came the AFC.
AFC Steps In With a Nuanced Take
Instead of taking sides in the classic fintech-versus-bank standoff, the American Fintech Council is trying something unusual in Washington: nuance. The council represents both tech-forward banks and digital-first fintechs, giving it a bird’s-eye view of the fight.
Their amicus brief supports the rule—but carefully.
For starters, the AFC praised the CFPB’s definition of “consumer” to include authorized third parties. That’s a win for fintechs and aggregators, who help users connect budgeting tools, loan apps, and other digital services to their financial accounts.
The AFC didn’t stop there. It endorsed:
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The rule’s clarity on data security responsibilities
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Its support for consensus-driven technical standards
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The CFPB’s decision not to directly supervise all third-party providers
That last part is important. The council argued that while the rule lays out expectations, it wisely avoided expanding the CFPB’s regulatory net too far. In short, it calls the approach smart, legal, and grounded in reality.
A Legal Tug-of-War That Could Shape the Market
The case, officially titled Forcht Bank, N.A. et al. v. Consumer Financial Protection Bureau, et al., is now in the thick of litigation. The Financial Technology Association (FTA) is also in the courtroom, having filed a motion for summary judgment in support of the rule.
The AFC’s brief supports that motion—again, with caveats.
What it’s not doing is throwing its weight entirely behind fintech interests or cheering for deregulation. Instead, it’s carving out a path that keeps innovation alive but checks it with sensible guardrails. This is, perhaps, a small reflection of how splintered the U.S. financial system has become—banks versus apps, regulators versus startups, and now, even alliances like the AFC treading carefully to avoid alienating their members.
One sentence sums up the brief’s tone: the CFPB’s decision “was a reasonable, pragmatic approach within its legal authority.”
That may not grab headlines, but in a courtroom, reasonableness can go a long way.
Stakes Beyond the Courtroom
The financial services industry knows this case isn’t just about one rule.
If the CFPB’s framework survives, it could unlock a true open banking landscape in the U.S.—one where users can securely port their data between banks, credit unions, budgeting apps, and fintech services. It’s a shift Europe has already made with PSD2, and one that Canada is exploring as well.
But if the banks win? The road to open banking in America could be much slower, or stall altogether.
The AFC seems to understand this balancing act. The brief threads a needle between innovation and consumer protection—two goals that often clash in regulatory debates.
And while the AFC isn’t the final word, its voice could carry weight with the court. After all, the judges won’t just be deciding who’s technically right. They’ll be shaping how data flows—and who controls it—for millions of Americans.
The Broader Landscape of Fintech Regulation
This isn’t the only skirmish happening in Washington right now.
The CFPB’s open banking rule is part of a larger push by regulators to rethink consumer finance in the digital era. Buy-now-pay-later products, AI-driven credit scoring, and cryptocurrency exchanges are all drawing scrutiny, and fintechs are having to adjust quickly.
In that sense, the AFC’s middle-ground play might be a test case for a new kind of advocacy—one where stakeholders push for smart, enforceable rules without triggering an all-out regulatory crackdown.
It’s also a sign of maturity. As fintechs grow up and become embedded in the system, they can’t just call for fewer rules. They need good ones. Predictable ones. Ones that don’t scare off banks, investors, or lawmakers.
Who’s Watching—and Why It Matters
Everyone from Capitol Hill aides to venture capitalists is watching this case.
If the rule survives, expect a flurry of activity in the open banking space: more APIs, better data-sharing protocols, and perhaps even more investment in privacy-first fintech infrastructure.
But if the rule gets struck down? That could chill innovation, delay projects, and keep American banking more fragmented and less consumer-friendly than in other developed markets.
So yeah, the stakes are high.
And in that context, the AFC’s position might end up being more than a legal footnote. It could be a preview of how financial regulation in the U.S. gets shaped: not by extremes, but by careful compromises from those who sit right in the middle of the storm.
