The CFPB Takes 1033 Back to the Drawing Board: 4 Things to Know

The CFPB Takes 1033 Back to the Drawing Board: 4 Things to Know

The future of open banking in the US just hit another curve. Yesterday, July 29, the Consumer Financial Protection Bureau (CFPB) filed a surprise motion to pause the legal battle over its Section 1033 data access rule. The move, which comes the day that final arguments were due in the case, signals that the Bureau plans to rewrite the rule altogether, a dramatic shift that could reshape how financial data flows between banks, aggregators, and fintech apps.

Because this case is a rollercoaster, let’s start from the beginning. In the fall of 2024, the CFPB issued the final rulemaking on Section 1033 of the Dodd-Frank Act. The new rule, issued in the form of a 594-page document, aimed to enhance consumers’ rights, privacy, and security over their own personal financial data. Hours after the CFPB issued the rule, Forcht Bank, the Kentucky Bankers Association (KBA), and the Bank Policy Institute (BPI) filed suit, arguing that the CFPB overstepped its authority and violated the Administrative Procedure Act. They later filed an amended complaint in November, and the CFPB responded in December.

Then, things got even more complicated. After the new administration placed new leadership over the CFPB early this year, both sides agreed to temporarily pause the case and delay the rule’s compliance deadlines. The court granted the pause and extended it again in March. Meanwhile, the Financial Technology Association (FTA), a group that represents fintechs and aggregators, was granted permission to join the case in May. All sides submitted their main arguments to the court at the end of May, and their responses to each other’s arguments were due by July 29, 2025.

The next interesting twist in the story came out yesterday, when the CFPB filed for a motion to “reconsider the rule with the view to substantially revising it and providing a robust justification” because of “recent events.” The recent event the Bureau is referring to is JPMorgan’s announcement to data aggregators that it plans to charge them a fee to access consumer data. This move has sparked multiple heated conversations over who owns consumer data and how many services banks should be expected to provide for free.

Many conversations highlighted the fact that the CFPB’s 1033 ruling stipulated that banks cannot charge third parties for data access. However, now that the CFPB has indicated it plans to revise the rule, some experts are wondering whether the agency is backing away from that stance. Critics fear the Bureau may soften the ban on data access fees in response to pressure from JPMorgan, the biggest bank in the world by market capitalization. Others argue that resetting the rule could allow for broader industry consensus and a more durable framework.

Either way, the move reopens a regulatory debate that many thought was settled. Now that you’re caught up, here are the four highlights of the CFPB’s latest motion:

  1. Plans to rewrite the rule
    In its motion, the CFPB announced that it intends to throw out its current version of the Section 1033 rule and start fresh. The Bureau says it will kick off a new, “accelerated” rulemaking process with an Advanced Notice of Proposed Rulemaking (ANPR) expected within three weeks. The CFPB has decided on a pivot. Rather than defending its original rule in court, the CFPB is acknowledging its change in leadership and “recent events in the marketplace” (which is very likely JPMorgan’s controversial move to charge data aggregators) as the reason it plans to take the rule back to the drawing board. A substantially revised rule could reshape the boundaries around consumer data access and fees.
  2. Requests a pause
    The CFPB is asking the court to pause the current legal proceedings while it works on rewriting the rule. The Bureau reasons that if it is about to replace the rule that’s being challenged, then it doesn’t make sense for the court to keep spending time on the existing version.
  3. Promises communication
    To assure the court that the motion isn’t a stall tactic, the CFPB is promising transparency throughout the rulemaking process. If the court grants the pause, the Bureau will submit status reports every 90 days to update the judge on its progress. This is meant to maintain communication with the court and demonstrate that the agency is moving swiftly.
  4. Cites opposition
    In the motion, the CFPB acknowledges that not all parties are on board. The Financial Technology Association (FTA), which represents data aggregators and fintech firms, does not oppose the pause. But the plaintiffs (Forcht Bank, the KBA, and the BPI), however, do oppose it. They plan to file a formal objection, likely arguing that the pause is a delay tactic and that the rule should be struck down based on the current legal merits.

What happens next will most certainly have ripple effects across the entire financial ecosystem. If the CFPB follows through on its promise to rewrite the rule, we could see a very different version of Section 1033, one potentially shaped by politics, institutional pressure, consumer rights, and innovation. At this point, it is clear that the future of open banking in the US is once again uncertain and very much up for debate.


Photo by Christian Wasserfallen

5 Global Trends That Banks Can’t Ignore in H2 2025

5 Global Trends That Banks Can’t Ignore in H2 2025

With the first half of 2025 behind us, it’s a good time to look forward to what the second half of the year will bring. The first two quarters were packed with change: from the stablecoin frenzy and cuts to the CFPB in the US, to new regulatory crackdowns across Europe and the reversal of Section 1033, reshaping the future of open banking. Meanwhile, banks and fintechs are ramping up their use of AI, navigating new regulatory requirements, and adapting to global momentum around real-time payments and digital identity.

With all of this change, it’s hard to imagine the surprises that the next two quarters will bring. And while I can’t predict all of the surprises, there are five trends that banks and fintechs should not ignore as we move into the second half of the year.

The open banking conversation evolves

In the EU, PSD3 and the Financial Data Access (FIDA) framework are being finalized and the UK is moving forward with Open Banking 2.0 under the Joint Regulatory Oversight Committee (JROC). In contrast, the US is in a period of regulatory uncertainty. The CFPB is pulling back from Section 1033 and JPMorgan revealed to data aggregators that it plans to increase the cost for them to pull consumer data. Banks need to keep a close eye on the evolving conversations around open banking as ripple effects take place across the globe.

AI becomes an arms race in financial services

AI is quickly becoming table stakes for financial services organizations. AI-native fintechs are setting new expectations around service, automation, and personalization. And firms are no longer stopping at chatbots and GenAI technologies. Instead, banks across Europe, the US, and Asia are increasingly integrating agentic AI, and even hiring AI agents for tasks like underwriting, compliance, and customer service. Expect the second half of the year to bring a continued rise in AI literacy programs and internal tooling as firms upskill teams and reduce reliance on third-party vendors by turning instead to agentic AI.

Tokenization takes over

In the first half of 2025, we saw major pilots for tokenized deposits, treasuries, and real-world assets (RWAs). In the latter half of the year, we can expect to see real world implementations, particularly in wholesale payments, interbank settlement, and liquidity management. Regulatory clarity is also beginning to transpire. Jurisdictions like the EU, Hong Kong, and Singapore are starting to define legal frameworks for tokenized financial products. This may prompt US regulators to clarify the treatment of tokenized deposits and securities.

Identity verification becomes a battleground

With rising fraud, easy-to-create deepfakes, and an increase in embedded finance, financial institutions are shifting from one-time identity checks to continuous, context-aware identity verification. The second half of this year will bring increased adoption of reusable digital IDs, decentralized identity frameworks (DID), and advanced biometrics tied to behavioral signals. As always, the challenge will be balancing a low-friction user experience with high security.

Real-time payments reshape expectations

FedNow is gaining traction in the US, ISO 20022 began rolling out earlier this week, and stablecoin-powered cross-border projects are on the rise. All of these aspects, plus an increase in stablecoin adoption are making real-time payments the norm and are raising customer expectations. Banks that can’t meet those expectations risk losing ground to more nimble players.


Photo by Pixabay

JPMorgan Chase to Charge Data Aggregators for Consumer Data Access: What It Means for US Open Banking

JPMorgan Chase to Charge Data Aggregators for Consumer Data Access: What It Means for US Open Banking

Late last week, news was released that has the potential to disrupt the trajectory of open banking in the US. JPMorgan Chase has been in discussions with data aggregators, telling them that it plans to charge them to access customer data.

Traditionally, data aggregators like Plaid, Finicity, and MX have been able to access consumer banking data at no cost by using login credentials provided through third-party services. Introducing fees for this access raises important questions around consumer data rights, portability, and the future of financial innovation—and could significantly reshape the economics of open banking in the U.S.

In the US, open banking has largely been shaped by the private sector rather than by government regulation. This means that banks, fintechs, and data aggregators have had to create their own frameworks for sharing consumer financial data, often without clear, standardized rules. Yet consumer demand for data connectivity has grown rapidly. With the rise of third-party fintech apps offering budgeting, investing, and lending services, individuals expect these tools to connect seamlessly to their bank accounts and deliver real-time balances and transaction data. To support this, banks have traditionally allowed data aggregators to access account information either free of charge or for a relatively low cost.

JPMorgan’s rationale

While JPMorgan’s decision to charge for data access may not be unreasonable, it did catch many by surprise. The bank argues that aggregators are profiting from its infrastructure without contributing value in return. Citing rising infrastructure and security costs, as well as a desire for greater control over how consumer data is accessed and used, JPMorgan framed the move as a necessary step toward a more balanced data-sharing ecosystem

“We’ve invested significant resources creating a valuable and secure system that protects customer data,” JPMorgan spokeswoman Emma Eatman told Bloomberg, which broke the news. “We’ve had productive conversations and are working with the entire ecosystem to ensure we’re all making the necessary investments in the infrastructure that keeps our customers safe.”

Impact on aggregators

For data aggregators, the news is far from welcome. As one spokesperson noted, their cost of goods sold has essentially been zero. They charge fintechs for data access but haven’t had to pay banks to obtain the data itself. If banks like JPMorgan begin charging for that access, aggregators will likely pass the added costs to fintechs, which could ultimately trickle down to consumers.

Implications for open banking

JPMorgan’s announcement comes at an interesting time for open banking in the US. Section 1033 of the Dodd Frank Act was supposed to be finalized this October, and many were looking forward to the clarity that centralized open banking rules would provide the industry. Earlier this year, however, the CFPB announced plans to rescind 1033.

Regardless of whether or not formal rules are in place, however, the argument centralizes around an age-old question in fintech–who owns the customer data? While many banks claim that the consumer data belongs to them, some advocacy groups and aggregators claim that consumers should be able to do what they want with their data freely.

Introducing new costs to access consumer financial data could have several ripple effects on the future of open banking in the US:

  • It may create barriers for fintechs offering services that consumers can’t get from traditional banks. This could slow innovation and reduce incentives for new entrants to build products that meet unmet financial needs.
  • Consumers may face higher costs as fintechs pass on the fees associated with data access. Services that were once free or low-cost could become more expensive, prompting some users to reconsider their primary financial institution if their bank can’t match the functionality they previously enjoyed via third-party apps.
  • It could accelerate the adoption of more secure, standardized data-sharing protocols, such as those developed by the Financial Data Exchange (FDX), which aim to replace legacy methods like screen scraping with tokenized, API-based access.
  • It might also incentivize more screen scraping, as aggregators seek ways to avoid new costs. While most aggregators treat screen scraping as a last resort, increased financial pressure may push some to lean more heavily on automated tools such as AI agents to extract data through less secure channels.

What’s next?

While JPMorgan was the first to notify aggregators that it plans to begin charging, we can expect more financial institutions to make similar announcements. And while the CFPB seems unwavering in its decision to rescind the open banking rule as it was stipulated in 1033 last October, JPMorgan may shape or pressure new regulatory frameworks moving forward.

If more banks adopt similar policies and create uncertainty for fintechs and aggregators, we may see renewed momentum for a revised version of 1033, especially under a new administration. As consumers, banks, fintechs, and aggregators all begin to seek greater clarity and consistency, the US could shift toward a more structured, regulated model of open banking.


Photo by Altaf Shah

Will the One Big Beautiful Bill Act Be a Boon (or a Bust) for Fintech?

Will the One Big Beautiful Bill Act Be a Boon (or a Bust) for Fintech?

Now that the “One Big Beautiful Bill Act” is the law of the land, is there anything in there that fintechs and financial services companies need to be ready for?

There are two little-discussed items in the 900+ page statute may be of interest to the fintech and financial services industries One is a bit of a bankshot, the other represents a potential new hurdle for fintechs involved in payments, including cross-border transactions and micropayments.

Let’s start with the bankshot. The OBBBA includes a requirement that the Federal Communications Commission (FCC) and the National Telecommunications and Information Administration (NTIA) auction 600 MHz of spectrum behind 1.3-10 GHz by the year 2034. Why is this important? For one, the government stands to earn as much as $88 billion from the proceeds. At the same time, telecoms like T-Mobile and AT&T stand to gain bigly from greater access to a mid-band spectrum that represents the foundation of not just 5G but also future 6G networks, as well.

“Wireless spectrum acts as the invisible backbone for our digital economy,” Shane Tews, Nonresident Senior Fellow at the American Enterprise Institute, wrote last month. “Every smartphone call, streaming service, autonomous vehicle communication, and Internet of Things (IoT) device depends on this limited resource. As we approach widespread deployment of 5G and look ahead to 6G, the availability of commercial spectrum becomes increasingly vital to maintaining America’s competitive edge in the global technology race.”

While the biggest and most direct winners will be the telecoms who are able to buy the additional bandwidth, faster, low-latency connectivity will be a boon to fintechs and financial services companies when it comes to delivering current solutions faster, as well as offering new products and services that can take advantage of modern networks. Everything from account updating to more sophisticated anti-fraud technology to high-definition video banking could be positively affected by more robust 5G/6G connectivity. The broader network coverage could also support financial inclusion by making it easier for financial institutions, including regional and community-based financial institutions, to reach un- and underbanked communities in their vicinities.

The other aspect of the OBBBA that relates to fintech and financial services is the repeal of the de minimis tariff exemption. The de minimis tariff exemption allowed packages valued at less than $800 to enter the US duty-free and with less restrictive customs screening. The exemption came under fire from critics who feared a wave of low-value shipments from China and Hong Kong that would take advantage of the exemption.

Unlike much of what happens in Congress, there was actually bipartisan support for repealing the exemption; repeal also helped sync Senate and House versions of the legislation. The repeal is slated to take full effect by July 1, 2027—though partial implementation for Chinese imports has already begun.

How might this little-discussed feature of the OBBBA impact fintechs and financial services companies? Greater complexity in payments and cross-border transactions is one potential outcome as previously exempt transactions become subject to new tariff calculations. Along with this there are likely to be additional—and often more complex—compliance steps that firms will need to take including more extensive documentation, enhanced duty calculation functionality, and more. Companies will also have to explain and deal with the impact of higher prices on customers, who have become increasingly cost-conscious in recent years.

That said, there may be opportunity in this development for fintechs in the regtech space in particular. Firms with talent and technology in trade compliance, logistics, as well as tools to help automate new and complex regulatory requirements, will be ideal partners for fintechs, banks, and other companies as they navigate a world with far more dynamic trade and tariff policies than we’ve experienced in a long time.


Photo by Sebastian Pichler on Unsplash

Tokenized Deposits vs. Stablecoins: What’s the Difference and Why It Matters

Tokenized Deposits vs. Stablecoins: What’s the Difference and Why It Matters

At this point, if you’ve been working in the financial services industry since January, you’ve likely heard of stablecoins, and you may have heard of tokenized deposits. What may still be unclear, however, are the differences and similarities between the two.

Blockchain-powered financial infrastructure is on the rise, and it’s important for banks, fintechs, and regulators to understand new developments in the space, what’s possible, and what’s next. Here’s a brief overview of where stablecoins and tokenized deposits intersect, where they are different, and where they may be most useful.

Stablecoins

Stablecoins are digital assets that are issued by private companies or protocols and pegged to fiat currency. Some of you may be familiar with are Circle’s USDC, Tether’s USDT, and PayPal’s PYUSD. It is important to note that stablecoins are backed one-to-one by off-balance-sheet returns, such as fiat cash or Treasuries. Unlike fiat held at a traditional financial institution, however, they are not FDIC-insured.

Tokenized deposits

In contrast, tokenized deposits are bank-issued digital representations of fiat deposits, recorded on a blockchain. The deposits sit on the bank’s balance sheet, are fully integrated into the bank’s infrastructure, and are minted and backed by regulated banks.

Differences

There are key differences between stablecoins and tokenized deposits. First, let’s look at the issuer. While not always the case, most stablecoins are issued by private, non-bank companies. Even though some banks have issued “coins,” as in the case of JPMorgan’s JPM Coin, they are considered tokenized deposits and are usually used internally for payment settlement, not open to the public, and are not tradable on public blockchains.

The backing structure of stablecoins and tokenized deposits is also different. For example, stablecoins are not held on the bank’s balance sheet and represent a one-to-one reserve of fiat currency. In contrast, tokenized deposits are held on a bank’s balance sheet. This is useful when a firm wants to maintain liquidity to support lending and credit creation, and ensure that customer funds are protected in a regulated financial institution.

Speaking of regulation, FDIC insurance is a key differentiator between stablecoins and tokenized deposits. Stablecoins currently operate in a developing regulatory environment and, importantly, they do not offer deposit insurance such as FDIC. Tokenized deposits, on the other hand, are both insured by the FDIC and regulated.

Another key differentiating factor between the two blockchain-based payment tools is that they have opposite effects on liquidity. Stablecoins remove liquidity. That’s because when consumers exchange their fiat currency in exchange for stablecoins, their fiat currency leaves their wallet and sits in reserves, generally in the form of safe, passive assets like US Treasuries or custodial accounts. This reduces the money multiplier effect and may even weaken bank balance sheets over time. In contrast, tokenized deposits stay on the bank’s balance sheet, making the funds usable for lending, investing, and general liquidity management.

Use cases also differ between stablecoins and tokenized deposits. While stablecoins are best known for their use in cross-border payments, programmable payments, and in DeFi. Tokenized deposits are useful for domestic real-time payments, B2B payments, and treasury automation.

Similarities

But though they differ in all of these aspects, there are also a handful of similarities between stablecoins and tokenized deposits. First, both are programmable, blockchain-based representations of fiat currency. However, it is important to distinguish that, while stablecoins are backed by dollars (fiat currency), tokenized deposits are actual, digital representations of dollars.

Next, both can be used to enable payments and reduce settlement times. Because they take place on the blockchain, transactions in both stablecoins and tokenized deposits can take place in near-real-time. This eliminates the delays associated with traditional clearing and settlement systems, which can take up to three business days. Whether it’s a purchase, B2B payment, or interbank transfer, blockchain-based transactions allow for faster value exchange.

Additionally, both can be used in smart contracts, programmable payments, and embedded finance applications. And while tokenized deposits aren’t commonly used in the DeFi economy at the moment, that may change once regulated or institutional DeFi networks become more common.

Finally, stablecoins and tokenized deposits alike are useful for modernizing payment rails. Already in their infancy, both are acting as gateways to more advanced financial infrastructure. By enabling real-time, programmable payments on blockchain networks, they help move the financial system away from slow, batch-based legacy systems like ACH or SWIFT.

The future of both

Looking ahead, it is possible that stablecoins and tokenized deposits will coexist, as they both serve different niches. No matter which structure reigns supreme, however, we will certainly see traditional financial institutions and private DeFi companies increase their focus on interoperability and shared infrastructure. As regulatory clarity is enhanced on both sides and new pitfalls are discovered, the industry will likely converge on a hybrid model that blends the safety of traditional finance with the speed, transparency, and programmability of decentralized infrastructure.

The GENIUS Act Passes: 4 Things This Means for Banks and Fintechs

The GENIUS Act Passes: 4 Things This Means for Banks and Fintechs

The GENIUS Act passed in the US Senate yesterday with a 68 to 30 vote. The bill now moves to the House, where it’s up against the STABLE Act. This means that the House will need to choose between passing the GENIUS Act at face value or passing and reconciling the STABLE Act. 

For financial services, the GENIUS Act is a big deal. That’s because it is not only the first stablecoin legislation to gain real bipartisan traction, but it will also serve as a foundation for the US to begin a digital asset ecosystem. Overall, there are four major implications the bill has on banks.

Stablecoins gain legitimacy and clarity

As a decentralized finance tool, stablecoins have long been grouped together with their crypto cousin bitcoin. Because of this, many traditional financial institutions in the US have shied away from associating themselves with stablecoins.

The GENIUS Act, however, offers both banks and fintechs a clearer legal framework to issue and use stablecoins since it outlines requirements for licensing, reserves, and oversight. Having regulation on their side reduces regulatory uncertainty and will encourage financial institutions to adopt the new payments tool and leverage stablecoins for new use cases. Reducing ambiguity around compliance and risk will also benefit firms exploring tokenization.

Banks may face new competition from Special Purpose Depository Institutions

The Senate version of the bill includes a controversial provision allowing Special Purpose Depository Institutions (SPDIs), such as Kraken, to operate across US states without the approval of each host state’s banking regulator.

If the bill is successful, it will allow fintechs with SPDI licenses to gain a regulatory shortcut because they do not need to comply with capital and liquidity requirements. This may erode the role of traditional banks in certain payment and custody markets and may not be a positive change.

“That is a pretty significant expansion of special purpose depository institutions,” Klaros Group Partner Michele Alt told American Banker. “I would ask, what else could you create as a special depository institution? How could this be used?” 

Notably, however, even though the bill has passed through the Senate, the House’s version of the stablecoin bill doesn’t include a similar provision. This means that if the bill does pass through the House, the House and the Senate will need to convene for a conference to come to an agreement. 

Rising expectations for real-time money movement

While consumers already expect many things in real-time, the GENIUS Act adds more pressure for banks and fintechs to deliver faster, more programmable payments. The bill will enable regulated stablecoins and essentially facilitate real-time settlement, 24/7 money movement, and programmable financial interactions.

This method of funds transfer won’t rely on traditional rails like ACH, wires, or even FedNow. If end users and businesses get accustomed to real-time, programmable payments, their expectations may be permanently shifted, requiring banks to keep up.

This adjustment would be tricky for banks, as many would need to invest in infrastructure that supports tokenized payments, smart contracts, and on-chain compliance.

Banks need to stay agile

If the House does not pass the GENIUS Act, it can advance its own bill in the form of the STABLE Act or negotiate a compromise. Either way, regulatory change is clearly in motion. Banks and fintechs should closely monitor the developments and begin scenario planning now. Whether it’s the GENIUS Act, the STABLE Act, or a hybrid outcome, stablecoin regulation is on the horizon. Those who prepare early will be best positioned to compete in a tokenized financial future.


Photo by Andrew George on Unsplash

4 Companies Bringing Agentic AI to Checkout

4 Companies Bringing Agentic AI to Checkout

Agentic AI agents, autonomous agents that act on behalf of users with minimal input, are not just coming to financial services. They’re already here. One of the most compelling use cases for Agentic AI is at checkout, where commerce, AI, and payments converge at the point where consumers make their purchase decisions.

In the past few weeks, three Agentic AI shopping and checkout announcements from major payments and technology players have made news headlines. So far, Google, Visa, and Mastercard are leading the Agentic AI payments charge, with PayPal and Perplexity not far behind. Here’s a look at what each company is doing.

Google’s AI-powered shopping agents

Google announced its AI Shopping Mode yesterday, a new online shopping experience that allows users to browse 50 billion product listings and buy the item they want using Google’s new agentic checkout at a price that fits their budget. Shoppers set their preferences by selecting “track price” on a preferred product listing and set the right size, color, and the amount they want to spend. If the item’s price drops into the user’s pre-selected price range, they receive a push notification and can have the agentic shopping agent buy the item for them with the push of a button.

Google is embedding an AI assistant into every step of the purchasing process, from browsing to payment, and is making the checkout experience hyper-personal, with less friction.

Visa’s intelligent commerce and agentic AI

Visa unveiled its Visa Intelligent Commerce tool last month. The new initiative will empower AI agents to deliver personalized and secure shopping experiences for consumers at scale. The program will equip AI agents to seamlessly manage key phases of the shopping journey, from product discovery, to purchasing, to post-purchase product management.

Unlike Google, Visa will offer APIs and SDKs that will provide third parties a suite of payments tools, including tokenization, authentication, and transaction controls, to embed into their own apps. In this sense, Visa is not just planning to launch a new checkout tool, it is building infrastructure for a world where the AI agent is the end customer.

Mastercard’s agentic payments through Agent Pay

Mastercard announced Agent Pay, a payment framework for agent-driven commerce, 24 hours before Visa’s agentic AI announcement hit the wires. Mastercard’s tool aims to make payments smarter, more secure, and more personal by embedding them directly into the product recommendations generated by GenAI platforms.

When paired with Mastercard’s tokenization technology, Agent Pay will not only add security, but will also help retailers identify and validate customers to offer a more meaningful and consistent shopping experience. Overall, Mastercard is pioneering a payment model where AI, not the consumer, initiates the purchase.

Perplexity x PayPal

Earlier this month, GenAI-powered search engine Perplexity partnered with PayPal to enable in-chat shopping. Shoppers will be able to check out instantly with PayPal or Venmo when they ask Perplexity to find a product, book travel, or buy tickets. The entire process will be powered by PayPal’s account linking, secure tokenized wallet, and emerging passkey checkout flows, which could eliminate the need for passwords.

While it is not a formal “agentic” platform, the move shows that large language models (LLMs) are starting to transact directly and the partnership is a good example of how chat interfaces are evolving into commerce platforms. The announcement serves as a preview of agentic commerce where LLMs initiate and complete purchases in a single conversational flow.

Overall, these announcements signal a major shift in ecommerce. The online point-of-sale is moving from a consumer-initiated process to an AI-initiated transaction. At the outset, regulation, identity, fraud, and explainability will be a large challenge. Still, the shift to agentic commerce is well underway, and the companies building today’s infrastructure are setting the rules and structure for how agentic AI commerce will work in the future.

Pinpointing Regulation Amid Uncertainty

Pinpointing Regulation Amid Uncertainty

FinovateSpring wrapped up earlier this month, and one of the main discussion topics I heard repeatedly was how to proceed during an era of economic uncertainty combined with regulatory freedom. The US is taking a vastly different approach to regulation than Europe, which seems to be tightening its grip on compliance.

In the US, there are four major moves that have indicated the new administration’s stance toward regulation in banking and finance. Among the regulations that are shifting are:

The Consumer Financial Protection Bureau (CFPB)

The key rulemaking activity of the CFPB has been paused. Employees have been instructed to stop work on regulations involving overdraft fees and open banking.

Crypto enforcement actions

The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have pulled back on enforcement actions in crypto, giving more clarity on stablecoin classification and providing more room for decentralized finance projects to operate.

Capital requirement rollbacks

Capital requirement rollbacks have reduced regulatory pressure on traditional banks. Key elements, like the supplementary leverage ratio and stress testing thresholds, have been softened or delayed, especially for regional banks. These rollbacks are designed to free up capital for lending and investment, but critics argue they increase risk by removing safeguards that were put in place after the 2008 financial crisis.

Basel III changes

Discussions of finalizing Basel III, which aims to require banks to maintain sufficient capital buffers and improve liquidity management, are still ongoing. However, lobbying has delayed its final implementation and resulted in a watered down version of some of its core provisions. A return to Basel II-style flexibility would prioritize bank competitiveness and profitability over strict capital adequacy.

While the current regulatory environment may give companies more room to innovate, most of the fintechs and banks I spoke with at FinovateSpring emphasized that they are still operating well within traditional regulatory boundaries, many of which are more stringent than today’s US standards. In fact, with AI now playing a major role across financial services, one compliance specialist noted that it’s increasingly common for firms to involve data scientists early in the compliance process to ensure new technologies meet regulatory expectations from the start.

Another focal point was third-party risk management, especially in today’s BaaS-driven banking environment. During my conversation with Christina Tetreault, Deputy Commissioner, Officer of Financial Technology Innovation at the California Department of Financial Protection and Innovation, she made it clear that bank-fintech partnerships are more than just IT projects. If the fintech’s technology fails, the bank will be held responsible for the issue.

As fintechs and financial institutions navigate this evolving landscape, the message from regulators and industry leaders is clear: regulatory freedom does not equal regulatory absence. Even as rules shift or stall, expectations remain high, especially when it comes to emerging technologies and third-party partnerships. In today’s environment, staying ahead means embedding compliance into innovation from the start of the project, proactively managing risks, and recognizing that regulatory clarity is still a moving target.


Photo by Gül Işık

4 Reasons Why Credit Unions are Top Fintech Adopters

4 Reasons Why Credit Unions are Top Fintech Adopters

Credit unions are entering a new era, fueled by a combination of necessity, opportunity, and partnership. As the pace of the digital world accelerates, these community-focused organizations have increased their willingness to lean in and adopt new technologies. They are no longer simply seeking to compete with banks, but they are instead seeking to deliver the personalized, community-driven service that has always differentiated them. New fintech partnerships are helping credit unions modernize operations, meet rising member expectations, and stay resilient in a rapidly evolving financial landscape.

This collaborative approach isn’t new to credit unions, rather, it’s part of their DNA. “Credit Unions have always been collaborators,” said Ami Iceman Haueter, Chief Research and Digital Experience Officer at Michigan State University Federal Credit Union. “We’ve had to be creative and scrappy to stay relevant and competitive in a crowded market. Fintech partners are a natural fit for this collaboration. Many allow us to personalize our service or products to our members and create a custom mix of solutions to go all in for our members. That’s what we do best. Having partners that are equally committed to that vision is invaluable. It’s what will carry us forward as an industry allowing us to continue showing up for our communities.”

The environment today is ripe for credit unions to take full advantage of this collaborative mindset. The combination of heightened member expectations, accessible new technologies, and a fintech community eager to partner has created a unique moment of opportunity. Below, we’ve highlighted four key reasons why credit unions have become some of the most active adopters of fintech innovation.

Tech integration is now compulsory

Credit unions now have to engage because involvement in certain technologies has become table stakes in the banking world. Over the past few years, the baseline expectations for banking services have shifted dramatically. Real-time payments, mobile-first experiences, and frictionless, digital onboarding are no longer differentiators, they’re requirements. If credit unions want to remain competitive and retain younger members, they must adopt similar digital tools that big banks and fintechs have. In 2025, falling behind on technology isn’t just a risk to growth; it’s a risk to survival.

More credit union-specific fintechs

The fintech ecosystem has matured immensely since the first bank launched online in 1994. Today, many providers are now creating solutions designed specifically for the unique needs of credit unions. From specialized digital lending platforms to member-centric financial wellness tools, fintechs are recognizing credit unions as an important, underserved market. This tailored approach makes partnerships more attractive and accessible, helping credit unions stay up-to-date on the latest tech trends.

Embedded finance is the ultimate enabling force

Embedded finance has made it easier for credit unions to leverage third-party technologies without needing in-house technical expertise. Gone are the days when integrating new technology required a complete overhaul of a credit union’s core system. Today’s embedded banking models allow credit unions to “plug and play” fintech solutions into their existing infrastructure. Because of this, these smaller players can offer services like buy-now-pay-later, upgrade their digital account opening workflows, or launch a new mobile app with a fresh look. Overall, embedded solutions allow credit unions to deliver tech-forward experiences without the burden of in-house development.

Regulatory clarity has eased pressure

Regulatory clarity and eased regulatory scrutiny has reduced barriers to forming partnerships with fintechs. As regulators have become more familiar with fintech partnerships, clearer guidelines and frameworks have emerged to support innovation in the credit union space. New charters, sandbox programs, and cooperative frameworks help credit unions explore partnerships more confidently. With better guidance in place, credit unions can engage with fintechs without facing the regulatory uncertainty that once made these partnerships seem too risky.

All of these aspects, and more, will be on full display at FinovateSpring, which takes place May 7 through 9 in San Diego.

If you’re attending next month’s event, don’t miss a special session designed exclusively for your credit union. The Credit Union Spotlight: Closed Door Session will take place on Wednesday, May 7, from 3:20 to 4:50, and will offer the opportunity to meet companies that are building technology specifically for the credit union ecosystem. Each company will provide a short introduction, followed by roundtable discussions where you can dive deeper into their solutions. If you’re interested in joining, please email [email protected]. Please note that space is limited and subject to approval.

Want to know more about what you can expect at FinovateSpring? Check out our blog content, the event agenda, and don’t forget to register and save $200 when you book by April 18, 2025.


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Navigating the Shift: Four Key Financial Policy Changes Under the New Administration

Navigating the Shift: Four Key Financial Policy Changes Under the New Administration

Is anyone else having difficulty keeping up with all of the changes that have taken place since the new administration took office last month? Over the course of the last 18 days, sweeping shifts have reshaped regulations, agency leadership, and key financial policies— creating both uncertainty and opportunity for businesses navigating this evolving landscape.

While many of these changes will have broad implications for U.S. citizens and organizations operating in the country, I’ve distilled the most significant updates on the White House’s website impacting financial services. Below, I break down the four most critical developments that banks, fintechs, and other financial institutions need to watch closely.

Imposing a regulatory freeze

On January 20, President Trump signed an executive order to halt new rulemaking and review pending regulations across federal agencies. It also calls for the withdrawal of any rules that have been sent to the Office of the Federal Register but not published yet. The administration plans to use the pause to reassess both existing and proposed regulations so that they align with its policy objectives.

For banks and fintechs, this makes it challenging to prepare for future regulatory requirements. It may impact firms’ compliance timelines and will likely confuse financial services companies’ strategic planning efforts.

Strengthening hold on digital assets

On January 23, President Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology.” The order prohibits the establishment of US central bank digital currencies (CBDCs). It also establishes a working group to propose a regulatory framework for digital assets within 180 days and allows individuals and entities to access and use open public blockchain networks.

This may present opportunities for banks and fintechs to engage in the stablecoin economy, especially when it comes to cross-border transactions and digital payments. Additionally, governmental protection of an open blockchain may spark the creation of new blockchain-based products and services.

Removing barriers to AI

Also on January 23, President Trump issued an Executive Order titled Removing Barriers to American Leadership in Artificial Intelligence that aims to enhance the US’s position in AI. The order removes existing AI policies and directives that are considered barriers to innovation. Within 180 days, officials are tasked with creating a plan to sustain and enhance America’s global AI dominance.

This emphasis on reducing regulatory barriers may lead to both banks and third party fintechs adopting AI technologies at a faster rate. However, as AI is a double-edged sword, the relaxed regulatory environment may create uncertainty as organizations wait for new guidelines to develop.

Implementing the DOGE workforce optimization initiative

On February 11, President Trump issued an Executive Order titled Implementing The President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative, which intends to streamline the federal workforce and enhance operational efficiency. Controversially, the order gives Elon Musk and his team direct access to data held at the US Treasury Department. As a result, a coalition of more than a dozen US states is planning to file a lawsuit to block access in order to protect the personal data of US citizens.

By reducing staffing at federal agencies that oversee financial institutions, the order may impact the efficiency and thoroughness of regulatory examinations and compliance enforcement. The instability could also cause uncertainty for banks, disrupting strategic planning and compliance efforts.

Other actions

There are two other actions not yet listed on the White House’s official news release page, but each is significant.

Earlier this week, the Associated Press unveiled that the Trump administration ordered the Consumer Financial Protection Bureau (CFPB) to suspend all of its activities. Finovate Analyst David Penn reported on the details of the situation, including what the CFPB can still do and who may take over the agency if it continues to exist.

Today, the Wall Street Journal exclusively reported that the Trump administration is also considering folding the FDIC into the Treasury Department. Experts cited that this is unlikely to transpire, however, as Congress is unlikely to pass such a measure. “This idea would pose an enormous risk of terrifying Americans about the safety of their deposits and triggering bank runs,” Former Federal Regulator Patricia McCoy told CNN.


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3 Fintech Trends You’ll Hear a Lot About in 2025

3 Fintech Trends You’ll Hear a Lot About in 2025

With only a few weeks to go until 2025, it is time to take a look at some of the trends we can expect to see more of in the next 12 months. There are a handful of topics that seem to be dominating the conversation in fintech as we wrap up 2024, and here’s what you’ll need to know as we head into 2025.

Crypto

I have to apologize for this one, because I know that many readers don’t want to hear anything about crypto. It does, however, need to be considered.

Why it’s big: After a dip and many volatile few years, crypto is entering a more mature phase. The conversation is no longer just about Bitcoin and speculative trading. Instead, we’re seeing increased institutional adoption and clearer regulatory frameworks emerging across the globe. With this, major players are poised to enter (or re-enter) the crypto space, which positions crypto as no longer a fringe technology, but a part of the financial ecosystem.

What you need to do about it: If you haven’t already, now is the time to educate yourself and your organization about crypto. Go beyond the basics and evaluate how blockchain technology might be relevant to your own operations. Also, stay informed about regulatory changes, as they are sure to change as crypto continues to evolve.

Stablecoins

This technically fits into the crypto category, but it deserves a highlight all on its own because of the potential. Stablecoins are a type of cryptocurrency pegged to a fiat currency or a commodity, such as gold.

Why it’s big: Stablecoins bridge the gap between the volatility of traditional cryptocurrencies and the stability of fiat currencies. They have been successfully used in cross-border payments, remittances, and payroll for global workforces because they enable instant payouts at rates much cheaper than funds sent via traditional banking rails.

What you need to do about it: Organizations operating in payments should investigate the costs and benefits of integrating stablecoins into their offerings. In particular, if your firm services businesses with international clients or cross-border supply chains, you should explore how stablecoin adoption could help service your commercial clients.

Open banking/ Section 1033

For U.S. readers, open banking made its debut in the form of a CFPB ruling in October of this year. Firms with the largest assets have until 2026 to comply, and those with assets between $10 billion and $250 billion have until 2027. There may be benefits to early compliance.

Why it’s big: The new open banking rule shifts data ownership from the financial institution to the individual consumer. This shift creates more opportunities for innovation, improved transparency, and more personalized services. The U.K. and Australia, which are early leaders when it comes to open banking, have already proven that giving consumers control over their own data is beneficial to multiple parties.

What you need to do about it: Even though some firms have until 2027 to prepare, start preparing now, as you may need to invest in infrastructure upgrades such as developing new APIs. Early compliance could give you a competitive edge by offering you time to create new products and services tailored to your customers.

Honorable mentions

Condensing fintech down into three topics does not capture the widespread nature of the industry, so here are some honorable mentions.

Agentic AI
You may notice I did not include AI, which is a notoriously hot topic, among the top three trends. That is because the industry has finally moved beyond talking about AI as the technology to implement, and now considers it as the enabling technology that it is. Agentic AI, however, has its own role to play, especially in wealth management and back office automation. AI that can act independently to make decisions based on customer preferences or operational needs will play a large role in shaping fintech’s future.

BNPL
With Klarna’s IPO taking place in 2025, we can expect to see interest in the BNPL space surge to new heights. However, it won’t reach 2020 levels because questions about regulation and profitability remain, especially as interest rates vacillate. However, BNPL continues to evolve with new players entering the space and existing ones expanding into adjacent markets like subscriptions and services.

Regtech
The ongoing fallout from the Synapse failure has created a renewed focus on regulatory compliance. Banks are rethinking their regtech strategies, while new regtechs are leveraging tools such as large language models and GenAI to meet demand for automated compliance tools and fraud detection solutions.

Real-time payments
The adoption of real-time payment systems has been gaining momentum across the globe, especially since the launch of the Federal Reserve’s FedNow service in 2023. While more businesses and consumers are slowly becoming accustomed to instant transactions, banks have shown hesitancy to send real-time payments.

Pay-by-bank
In many ways, pay-by-bank goes hand-in-hand with open banking, which is fueling the growth in pay-by-bank. Direct, bank-to-bank payments are popular with merchants because of the lower fees and faster settlement times. Consumers, however, may be hesitant to use pay-by-bank unless they receive a monetary incentive at the point of purchase.


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Could a U.S. AI Czar Reshape Global Fintech?

Could a U.S. AI Czar Reshape Global Fintech?

You may not think of the U.S. when it comes to having a czar in a leadership role. However, Axios reported last week that President-elect Trump is considering naming an AI czar that would be responsible for coordinating policy and governmental use of AI. This is notable because, as of now, the U.S. does not have a central agency governing and regulating the use of AI.

If put into power, a U.S. AI czar would potentially be responsible for unifying the country’s AI strategy across government and private sectors. The AI czar would also be charged with creating regulatory clarity and streamlining regulations for AI development in key industries such as fintech, healthcare, and eCommerce. Given the U.S.’s current role in the global economy, an AI czar could play a role in setting global standards for fintech AI regulation.

Benefits

There are some surprising benefits to a potential AI czar taking leadership in the U.S. First, the leader would have the potential to coordinate AI innovation and guide global efforts. This centralized orchestration could accelerate the development of AI-powered fintech solutions like fraud detection, credit scoring, and personalization strategies. Additionally, for both banks and startups, having clear, government-issued guidelines for the use of AI offers many benefits, including increased investor confidence and faster adoption of AI across subsectors. Finally, having an U.S.-led AI strategy could foster cross-border partnerships and may also be able to influence international fintech standards.

Risks

As with many applications of AI, however, there are potential risks and challenges associated with the crowning of an individual as AI czar. First, there is significant potential for favoritism to shape the role. According to Axios, the AI leader will not require Senate consent. Rather, Elon Musk and Vivek Ramaswamy, who Trump has selected to lead the new Department of Government Efficiency (DOGE), will have input into who is selected for the AI czar role. This raises concerns over potential favoritism and bias. Regardless of who is placed in the potential role or how they are appointed, there are also risks that the use of AI will end up over-regulated and that centralizing control of AI usage could stifle fintech innovation across the globe.

Global impact

U.S. policies created under an AI czar might intensify competition with other countries in the AI-arms race. Specifically, the role may help the U.S. compete with China, which has heavily invested in AI. Creating an AI czar could help the U.S. catch up with China by fostering rapid advancements in AI applications in fintech and related fields. In addition to clarifying regulation around the use of AI, the appointed person could help by coordinating research, funding, and partnerships at a national level. This streamlined approach might also encourage collaboration among U.S. fintech companies, making them more competitive in global markets.

What’s next?

Regardless of what happens (or doesn’t happen) with the AI role, both banks and fintechs should pay close attention while monitoring any U.S. AI policy changes. This applies to both firms that are creating their own AI-driven solutions in-house, as well as to those that leverage AI-driven solutions from third party providers. Everyone is in the AI game– whether they think they are or not– and the decisions made by policymakers will shape the rules of that game.


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