Consumer data in a digital economy

The ability of individuals to exercise control over their data should be a defining characteristic of any solutions that emerge to fix the current system.

Matthew Homer works in Policy at Plaid. He focuses on the future of data governance and promoting the ability of consumers to exercise greater control over their data.

Today, more than 100 million U.S. consumers use fintech to manage their money.

The innovation that brought us the apps and services on which so many of us now rely would never have been possible without consumers’ ability to permission their personal financial data.

But as data takes on a more prominent role in our lives, it’s also becoming clear that the data governance frameworks of the past may no longer be sufficient for the realities of today.

As data takes on a more prominent role in our lives, it’s also becoming clear that the data governance frameworks of the past may no longer be sufficient for the realities of today.

A few months ago, the Senate Committee on Banking, Housing, and Urban Affairs sought feedback “on the collection, use and protection of sensitive information by financial regulators and private companies.” They were responding to growing concerns among Americans “about how their data is collected and used, and how such data is secured and protected.” The Committee took the less common but thoughtful step of issuing a request for information (RFI) so that interested stakeholders could provide insights to inform potential legislation.

Given that one in four people with US bank accounts have used Plaid to permission their financial data to apps and services of their choice, we feel it is important to share our first-hand perspective.

Credit bureaus and data brokers collect data on consumers without their permission, often sharing it with entities with whom the consumer has no relationship.

By contrast, Plaid represents a new approach enabled by modern technology, helping consumers access their own data only when they chose to do so, and sharing it only with the companies they select. It’s a consumer-permissioned model, in which consumers control what they do with their data.

Plaid represents a new approach enabled by modern technology, helping consumers access their own data only when they chose to do so.

Fortunately, policymakers are increasingly recognizing the potential of technology to give consumers more control over their financial lives. The Consumer Financial Protection Bureau previously issued non-binding principles for consumer-authorized data sharing, noting that the Bureau “advocates strongly for consumer control of the consumer’s data and transparency.”

Then-Director Richard Cordray noted in a speech “that data access makes it possible to realize the many benefits of competition and innovation.”

A vote of confidence.

These benefits were further acknowledged in the Treasury Department’s 2018 report on nonbanks and innovation.

Secretary Steven Mnuchin identified the need for “a regulatory environment that supports responsible innovation.” The report highlighted the benefits of consumer-permissioned data to consumers and businesses.

Policymakers are increasingly recognizing the potential of technology to give consumers more control over their financial lives.

It suggested that “with sustained commitment to the principle that consumers should be able to freely access and use their financial account and transaction data, Treasury believes that improved approaches to data aggregation that will benefit consumers and financial institutions alike are surely attainable.”

The ability of consumers to exercise control over their data is a non-partisan issue. We hope the Senate and other policymakers will prioritize approaches that put people in control. We further believe that the ability of individuals to exercise control over their data should be a defining characteristic of any solutions that emerge to fix the current system.

Read the full letter.

Matthew Homer works in Policy at Plaid. He focuses on the future of data governance and promoting the ability of consumers to exercise greater control over their data.

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