The 411 on 1033: What the New CFPB Regulation Means for You

You may have noticed a lot of excitement around the big news in the financial world. Have you tried reading the articles and still have no clue what’s up? The regulation isn’t even released yet and you are already confused? 

You’ve probably seen some headlines along the lines of the following: “The Consumer Financial Protection Bureau (CFPB) is rolling out a new regulation called Section 1033”. If you’re a lender, financial service provider, or even a consumer, this change is going to impact how financial data is shared and accessed. Here’s everything you need to know about Section 1033 and what it means for you and or your business. Don’t worry—we’re breaking it down in plain English that we can all understand.

Section 1033 is part of the Dodd-Frank Act, which was created to protect consumers after the 2008 financial crisis. The regulation is all about making financial data more accessible and giving consumers more control over their personal financial information. Think of it as a “right to share with only the people and companies you want to” law for your banking and credit info. Which obviously is something every consumer wants.

Under Section 1033, consumers will have the legal right to access and share their financial data with third-party providers—like budgeting apps, loan services, or credit analysis tools. This means consumers can give permission to a financial app to access their bank account information without having to go through clunky, manual processes. So not only can you share with who you want to and not share with who you don’t want to, you can also access your own data. Cuz really why should it be so hard to have access to your own data? 

This also means you have the right to remove access and choose to no longer share your data with anyone at any time. 1033 is putting more control back in the consumers hands (where it should be, don’t you think?). 

Right now, many financial services (like loans or account verifications) rely on outdated methods for pulling consumer data. Think about the back-and-forth requests, paperwork, and time it takes to verify a bank account or financial history. Section 1033 simplifies this by giving consumers and service providers fast, secure access to their own financial data in real time via digital services like APIs. An API also known as an “Application Programming Interface” is like a messenger that allows two different computers talk to each other. 

This is where DecisionLogic comes in. With a focus on instant account verification, we’ve already been leading the charge in streamlining how financial data is accessed. We pull banking data directly from the financial institution utilizing the highest security standards to keep your data protected at every step of the process. The new regulation will only strengthen this process, ensuring data is shared faster, more securely, and with greater transparency.

Open Banking is one of the processes DecisionLogic has implemented to help make these processes faster, and more secure. It is a process where banks send data digitally via API directly to companies like DecisionLogic for processes used by lenders for underwriting, and tenant verification companies who grant housing rental agreements. Up till now only really big banks were sending information this way. 1033 will require all financial institutions to start using this process. So even if you bank with a little tiny credit union, they will be required to use the same secured digital processing as the huge financial institutions. 

1.     Empowering Consumers
Section 1033 puts consumers in control of their own financial information. Instead of being tied to a single financial institution’s systems, consumers can now use third-party apps or services to manage, review, and share their data however they see fit. This increases competition and fosters innovation in financial technology (fintech).

2.     Increased Transparency
Have you ever applied for a loan and felt confused about where your financial information was going or how it was being used? Section 1033 is designed to make that process much clearer. Consumers will know exactly who is accessing their data and why.

3.     Better Financial Products
By enabling faster and more accurate data sharing, Section 1033 will encourage the development of more personalized and competitive financial products. For lenders, this means having access to real-time data that leads to more precise credit risk assessments and faster loan processing.

For lenders, Section 1033 is a game-changer. It reduces the friction in accessing verified financial information, which speeds up the decision-making process. Plus, with consumers more easily able to share their data, there’s potential for reaching new customer segments, particularly in the subprime lending market. As financial data becomes more accessible, products tailored to individual needs can be developed, which means less reliance on traditional credit scores.

At DecisionLogic, we’re excited about the opportunities this brings. Our instant account verification solutions already align with what Section 1033 sets out to achieve: fast, secure, and reliable data sharing that benefits both consumers and lenders. If you’re in lending, this regulation is your chance to streamline operations, improve customer experiences, and gain a competitive edge.

While the exact implementation date for Section 1033 is still being finalized, businesses should start preparing now. This means getting familiar with the technology and processes that will allow you to seamlessly access and verify consumer financial data. If you’re not already using a cloud-based, instant verification service like DecisionLogic, now’s the time to get on board!

Section 1033 is all about creating a more transparent, consumer-friendly financial ecosystem. With greater access to real-time data, businesses can improve their offerings and consumers will gain more control over their financial future. At DecisionLogic, we’re ready to help you navigate this new landscape with our industry-leading verification services.