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8 Dec 2025

Patricia had seen that look before. Maria Santos, a freelance designer, sat down across from her desk, shoulders slumped. Three banks had turned her loan application down. Too irregular an income. Too thin a credit file. Same story, told again and again.

Patricia, though, had a new tool. Her credit union had begun using cash-flow underwriting.

"Would you mind connecting your bank accounts so we can see your actual cash flow?" she asked Maria.

Twenty minutes later, Maria walked out with an approved loan. Her banking data told the real story: five steady clients, 18 months of growing income, stable expenses and savings that would embarrass most corporate employees.

This is what open banking was built for and why what happens next in the industry matters so much.

The Promise Of Open Data

Open banking isn't a fintech buzzword. It's a structural reform designed to make your financial data truly yours. The principle is simple: If it's your money and your information, you should control where it goes and who can use it to serve you better.

Around the world, regulators have recognized this basic right. The CFPB's section 1033 of the Dodd-Frank Act requires financial institutions to provide consumers access to their financial data free of charge, enabling them to share it with authorized third parties. In Europe, the second Payment Services Directive (PSD2) requires banks to provide standardized API access to payment accounts, making it possible to identify third-party payment service providers securely.

The global experience offers compelling evidence of what's possible. India built its entire digital infrastructure around low-cost data portability, with the Unified Payments Interface now processing over 18 billion transactions monthly with nearly 500 million active users. This helped increase bank account ownership from 35% to over 80% in less than a decade. India achieved this transformation with data transmission costs averaging just 16 cents.

The magic isn't in the technology. It's in treating data portability as infrastructure, not a luxury service.

When Markets Set The Price

Invariably, things get complicated. While regulators mandate data sharing, the commercial arrangements are far from clear. The CFPB's 1033 rule faced immediate legal challenges and has since been stayed as the Bureau pursues new rulemaking.

Into this regulatory vacuum stepped market forces. In July 2025, JPMorgan Chase announced it was going to charge for data access. The math is brutal for smaller players. What costs $2 per loan application could jump to over $20. For credit unions serving working-class members, that's the difference between breaking even and bleeding money.

JPMorgan defends the move, arguing it has "invested significant resources creating a valuable and secure system that protects customer data" and wants to ensure "all parties are making the necessary investments in the infrastructure that keeps customers safe." The bank notes that of 1.89 billion data requests hitting its systems in June, only 13% were initiated by customers for transactions.

Critics see it differently. The American Fintech Council called this "a shameless attempt to further entrench the position of incumbents".

With regulators on the back foot, the largest banks have found a way to turn what was purported to be a public road into a toll road.

Who Really Pays?

And who pays for that? The real bill lands on the people who can least afford it.

Up to 17% of adults earning less than $25,000 annually are unbanked, compared to just 1% of those making $50,000 to $99,999. These are exactly the people cash flow underwriting was designed to help—gig workers, immigrants and small business owners whose financial lives don't fit into neat W-2 boxes or credit bureau profiles.

When Nova Credit uses cash flow data to help immigrants without U.S. credit histories get loans, they boast that they can deliver up to a 15% lift in predictive performance. 

But what happens when that data becomes luxury-priced?

Lenders can easily deliver more credit safely, as long as the transaction costs of additional data don’t break the proverbial bank.

The Infrastructure Choice

This brings us to the heart of the matter. Is financial data sharing a competitive service or public infrastructure?

Europe took a regulatory approach with PSD2, mandating free API access but leaving implementation to market forces. India treated data portability as a public good, enabling citizens to achieve access to the formal economy through verifiable digital identity and secure data sharing.

The United States is taking a path where market forces increasingly determine access costs.

The infrastructure question shapes three critical outcomes:

Reducing Transaction Costs: When data sharing is expensive, the cost gets passed to consumers. When it comes to infrastructure, innovation flourishes, benefiting consumers.

Making Technology Accessible: High API costs favor large players. Low-cost infrastructure lets smaller innovators serve niche markets profitably.

Educating Customers: People need to know they can take their data with them. But this only works if portable data creates real competitive options.

When Patricia approved Maria's loan that Tuesday morning, she proved technology could make lending fairer, more accurate and more human. The question is whether commercial barriers will prevent this transformation from reaching the people who need it most.