CFPA’s Section 1033 is Reshaping Digital Banking—Are You Prepared?

The Consumer Financial Protection Bureau’s (CFPB) Section 1033 Final Rule, issued in October 2024, is more than just another regulatory requirement—it’s a fundamental shift in how financial institutions handle, store, and share consumer financial data. For Chief Data Officers (CDOs) and Chief Information Officers (CIOs), this rule presents a two-sided challenge: ensuring compliance while modernizing the banks’ data infrastructure, security, and API ecosystems.

At the same time, Section 1033 brings major benefits to consumers. Granting them greater control over their financial data makes it easier to compare services, switch providers, and access more personalized banking experiences. As customer expectations for convenience, security, and customization continue to rise, banks that embrace these changes will meet compliance standards and strengthen customer loyalty.

This is why, for forward-thinking organizations, Section 1033 is an opportunity - by rethinking data accessibility, enhancing security frameworks, and building a more agile IT environment, financial institutions can turn compliance into a competitive advantage. Those that successfully integrate these changes into their digital strategy will be best positioned to maintain their customers’ trust and unlock growth opportunities.

The New Reality of Data Availability

One of the most significant changes introduced by Section 1033 is the mandated availability of consumer financial data. Banks and financial institutions must now provide secure, real-time access to consumer details, including account balances, transaction history, and payment data, to both consumers and their authorized third parties. This requirement forces CIOs and CDOs to reassess how data is shared and managed, particularly as many legacy banking systems were not built to handle real-time data exchange.

Compared to previous regulations like the Gramm-Leach-Bliley Act (GLBA), which primarily focused on data privacy and protection, Section 1033 shifts the focus to real-time access and data standardization. While GLBA requires banks to secure consumer financial information and limit unauthorized sharing, it does not mandate institutions to proactively provide customers with direct, standardized access to their own data. Section 1033 changes that by requiring financial institutions to facilitate seamless, API-driven integration, making data instantly available to consumers and authorized third parties. For financial leaders, this transition goes beyond compliance. It’s a critical step toward remaining competitive in an open banking landscape where customers expect instant, secure, and frictionless digital experiences.

Meeting these new data availability requirements demands a strategic overhaul of existing technology. Banks must ensure their data architecture can handle increased volumes of real-time data requests without compromising security and compliance. At the same time, investments in API development are needed to enable a framework for standardized and secure data exchange. The challenge is balancing accessibility with security—ensuring that data is both readily available and fully protected against breaches.

For many banks, this level of technical transformation is difficult to manage internally, especially when working with legacy systems. This was the case for a U.S. bank that recently partnered with Accedia to ensure compliance with Section 1033. Facing limitations in its existing infrastructure, the bank needed to modernize its data architecture to support secure, real-time consumer access. By redesigning its data management systems, Accedia helped reduce data retrieval times by 65%, significantly improving both operational efficiency and compliance. Crucially, this transformation was achieved without disrupting the bank’s daily operations.

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The Third-Party Access Dilemma: Balancing Compliance & Risk

Section 1033 doesn’t just affect banks and other financial institutions; it also introduces strict rules around third-party access to consumer data. Under the new regulation, third parties must obtain explicit consumer consent before accessing financial data. They need to adhere to stringent data privacy and security protocols, ensuring transparency in how consumer data is stored and used.

This adds another layer of complexity. Financial institutions must implement robust consent management systems to track and verify approvals while maintaining compliance. However, security responsibilities extend beyond access—banks remain responsible for overseeing third-party providers and ensuring their compliance with regulatory standards. While financial institutions must ensure that third parties adhere to security and privacy requirements, liability for data misuse depends on the institution’s due diligence and compliance measures.

Managing these risks requires a multi-faceted strategy. Banks must implement a structured approach to managing consumer consent, ensuring that approvals are verifiable and aligned with federal guidelines. They can, for example, create automated consent verification frameworks that track and log approvals, ensuring compliance with Section 1033. They must also conduct thorough security audits to vet third-party providers and assess whether their data protection measures align with regulatory expectations.

Why Standardized Data Formats Are No Longer Optional

One of the biggest technical challenges posed by Section 1033 is the CFPB’s push for standardized data formats. Historically, financial institutions have used proprietary systems, creating inconsistent data structures across different platforms. The CFPB encourages financial companies to improve data interoperability by adopting industry-wide standards. While there is no single mandated format, aligning with recognized frameworks—such as Financial Data Exchange (FDX) standards and Open Banking API protocols, and ISO20022—can facilitate compliance and improve data portability. Many existing systems are not equipped for these standards, requiring a transformation of data formats, back-end integrations, and security protocols.

Updating legacy systems to comply with banking data compliance requirements is a complex process that calls for data mapping, system upgrades, and rigorous compliance testing. A 2024 survey revealed that 55% of banks cite legacy systems as a key obstacle to digital transformation, highlighting just how widespread this challenge is. Outdated infrastructure slows down real-time data sharing, complicates API integration, and increases security risks. This is where technology consulting expertise becomes critical. Companies like Accedia, specializing in developing secure, scalable IT architectures, can help financial institutions achieve compliance efficiently without major operational disruptions.

The Compliance Timeline: Why Action Is Needed Now

Unlike some regulatory changes that allow for gradual implementation, Section 1033 comes with strict deadlines that cannot be overlooked. The largest data providers must comply first, with a tiered approach ranging from April 2026 to April 2030 based on institution size. Notably, companies with less than $850 million in assets are exempt—a key change from the draft rule to the final regulation.

Delaying compliance efforts could lead to regulatory fines, reputational damage, and operational disruptions. Beyond the immediate risks, failure to act quickly also creates a competitive disadvantage. Banks that proactively modernize their systems, partnering with fintech innovators, on the other hand, will improve customer trust and naturally expand service offerings. Those that wait until compliance deadlines are near may find themselves rushing to implement costly, last-minute fixes while competitors move ahead with fully integrated, compliant systems.

Are You Ready for Section 1033?

Financial firms that start preparing today will be the ones leading the industry tomorrow. By embracing compliance as a strategic opportunity, institutions can stay ahead of the regulatory curve, enhance customer experiences, and position themselves for growth in the evolving financial landscape.

Navigating Section 1033 compliance requires the right technology, expertise, and planning. Partnering with a trusted financial technology advisory firm can ensure a streamlined and cost-effective transition, allowing banks to focus on long-term growth.