Plaid Policy Pulse: greater data control for consumers

Welcome to the Plaid Policy Pulse. In this quarterly series, we provide our perspective on public policy developments impacting consumer access to their data.

The big idea 💡

Policymakers want consumers to have greater control over their data, but how to provide it is the question.

As the amount of data we generate and share grows, policymakers are pondering how to promote both innovation and good stewardship of personal information.

Across the board, there is growing consensus that we need to give consumers increased control over their data.

This debate has huge implications for fintech. Our take? The conversation is too abstract: control is the goal, but the potential mechanisms for achieving it need greater attention. We see an opportunity for Plaid and our customers to help.

Here are some of the moving pieces Plaid is watching:

What do consumers want? 🤷

In a national survey commissioned by Plaid and conducted in late 2018, we found that American consumers overwhelmingly believe they should have more control over their financial data.

70 percent believe they should have the right to access their data, or give permission for someone else to access their data, without paying a fee - but only 33 percent believe they currently do have that right.
64 percent of respondents believe they should have the right to give access to their financial data to anyone they want, without restriction - but only 39 percent believe they currently do have that right.
71 percent of respondents believe they should have the right to share the rates and fees they are paying on a credit card or other financial products with competitors to see if they can get a better rate - but only 42 percent believe they currently do have that right.
73 percent believe they should have the right to withdraw consent of a company to access their financial data with the push of a button - but only 38 percent believe they currently do have that right.

The survey also found that while consumers across the board are concerned about data breaches, greater control over their financial data is positively correlated with increased consumer confidence.

Takeaway: consumers overwhelmingly believe they should have more control over their financial data. They believe that the government and fintech companies are better positioned than others to create a framework for increased control.

What’s happening in Canada? 🍁

Plaid expanded to Canada last year, and we’ve been impressed with the thriving fintech community there.

Our customers offer many of the most popular and frequently used consumer finance products in Canada, such as Mylo, Wave, and Wealthsimple. But we’ve been working in a market without much policy guidance.

That’s about to change. Finance Canada, the country’s finance ministry, released a consultation paper in January seeking thoughts on the benefits and risks of open banking. You can read our full comment letter here.

In their consultation paper, Finance Canada asks “whether” to recommend an open banking framework. However, they’re now talking about “how,” and control is going to be a central part of the solution. We expect Finance Canada to release a report on their consultation soon.

Plaid is looking for ways to share our experiences and insights from our data to help inform these conversations and would like to partner with our customers in this effort.

Takeaway: open banking is coming to Canada, and now is the opportunity to inform what it will look like. The needs of consumers and the fintechs that serve them should be the center of that discussion.

Congress looks at data and consumer control 👀

The Senate Committee on Banking, Housing, and Urban Affairs recently sought feedback “on the collection, use and protection of sensitive information by financial regulators and private companies.”

They were addressing growing concerns among Americans “about how their data is collected and used, and how such data is secured and protected.” In response, we provided our perspective on the data ecosystem and explain how companies like Plaid that rely on consumer permissioning are different from legacy data players like data brokers and credit bureaus.

We point out that at least two factors are important in assessing and differentiating among these stakeholders: (1) whether a consumer consents to the collection of data and (2) whether a consumer’s data is shared with organizations with whom they have no direct relationship.

We believe Plaid represents a new approach enabled by modern technology that helps consumers access their own data only when they chose to do so, and share it only with the companies they select. In this consumer-permissioned model, consumers control what they do with their data. You can find our letter here.

Takeaway: Watch this closely. Through this effort and others, Congress is exploring what the future of data governance should like. Even if you aren’t a company directly in their spotlight, new laws could impact many types of companies that interact with consumer data.

Congress considers data privacy legislation 🔏

The Senate and House kicked off the 116th session of Congress with hearings on data privacy.

Everyone agreed that consumers deserve more control over their data. There was broad agreement that protecting privacy and fostering innovation doesn’t have to be a zero-sum game. Across the board, policymakers and witnesses alike said there was a need to promote simplicity and transparency.

Takeaway: Behind the scenes, the only real question is whether Congress will preempt California with a federal law. Congress has tried to enact privacy legislation before, but so far has been unsuccessful. If something does happen, it will most likely be turning California’s Consumer Privacy Act (CCPA) into a national standard that includes carve-outs for fraud and data subject to the existing Financial Modernization Act.

Welcome to the Plaid Policy Pulse. In this quarterly series, we provide our perspective on public policy developments impacting consumer access to their data.