Banks Say CFPB Needs to Beef Up Security in Open Banking Plan

The Consumer Financial Protection Bureau faced a key challenge in its long-awaited open banking proposal: allowing the free sharing of customers’ financial data while boosting security.

Banks say the agency came up short.

The open banking proposal the agency released Oct. 19 calls for banks and credit unions to allow customers to easily share their financial information with third-party fintech apps like Wealthfront or Venmo. Typically, that’s done through data aggregators such as Plaid and MX that serve as a bridge between financial institutions and fintechs.

Traditional financial institutions could ultimately file court challenges to block a final open banking ...