Open banking under pressure: What new data access models could mean for mortgage verification

Navigating the complexity of access models

Open banking was built on the idea of consumer empowerment, allowing individuals to control their financial data and permission access across platforms. Aggregators have long facilitated that access by serving as the bridge between financial institutions and fintech platforms, including mortgage verification tools.

At the same time, financial institutions are reassessing how data is accessed and by whom, especially in light of the operational, security and compliance investments required to maintain that infrastructure. Some argue that if a platform provides value to consumers using data from another institution’s environment, then shared responsibility should extend to both the technical and financial aspects.

This reframing does not dismiss the open banking model. Rather, it emphasizes the need to balance innovation with infrastructure accountability. Still, many in the industry are concerned that if access becomes fee-based or more selectively governed, smaller fintechs could face new hurdles. These concerns focus less on assigning blame and more on preserving competition and equity as financial connectivity becomes foundational to the borrowing process.

Some stakeholders see this evolution as inevitable. As consumer data access matures, reviewing the supporting business models and stakeholder responsibilities is a logical next step. However, this evolution should be guided by broad collaboration, not isolated decisions.

Why mortgage should pay attention

The implications for mortgage lenders are tangible. The income, employment and asset verification tools that lenders use—particularly those aligned with Fannie Mae’s Day 1 Certainty and Freddie Mac’s Asset and Income Modeler (AIM)—depend on fast, reliable access to consumer-permissioned data through open banking connections.

Many platforms rely on aggregator-bank connections to reduce borrower friction, speed up verification and improve completion rates. These performance benefits depend on well-maintained, transparent partnerships between technology providers and financial institutions.

It’s important to recognize that this use of consumer bank data is fundamentally different from how other fintechs use open banking access. While some fintech companies use consumer-permissioned data to offer products that compete directly with banks, like peer-to-peer payments or money transfers, mortgage verification tools serve a complementary role. Banks do not perform automated verification of income, employment or assets on behalf of consumers applying for a mortgage. These tools allow consumers to leverage the data held at their financial institution to qualify for credit and complete a process that the bank itself does not facilitate.

In that light, applying a uniform fee model to all fintech use cases may overlook important distinctions. Charging for data when it powers a competing service may be justifiable. But charging to enable a service that enhances—not replaces—bank functionality raises new questions, especially when that cost could ultimately fall to the consumer.

If access costs rise, verification providers may not be able or willing to absorb those increases. The same goes for lenders. That means the cost of permissioned data access could ultimately fall to the borrower, either through added fees or higher loan costs. This risks undermining efforts to streamline the loan process and make homeownership more accessible, particularly for low- to moderate-income applicants.

The regulatory wild card: Section 1033

A central element in this landscape is Section 1033 of the Dodd-Frank Act. It tasks the Consumer Financial Protection Bureau (CFPB) with finalizing rules that ensure consumers have clear rights to access and share their financial data.

However, the future of 1033 is anything but settled. The CFPB is operating under intense political and legal pressure, with renewed efforts from Trump administration officials to roll back its regulatory authority. Ongoing legal battles, including those targeting the Bureau’s funding structure, only add to the uncertainty. Most notably, the CFPB recently signaled it may revise or even scale back its original 1033 proposal after receiving over 71,000 public comments, a development that adds even more uncertainty to the timing and scope of final rules.

Without a firm federal rule, the future of data portability could be shaped more by private contracts than by public consumer protections. This raises the possibility of inconsistent data practices across the industry, creating challenges in underwriting, verification and fraud detection.

If federal enforcement weakens, states may step in to fill the regulatory gap. New York, California and others have already taken steps to oversee consumer data usage and digital privacy. A state-driven approach could create a patchwork of compliance requirements, especially for nationwide lenders. Lenders may need to adapt workflows based on how different jurisdictions interpret consumer consent, data retention and permission artifacts.

A crossroads with real stakes

This is not a rejection of innovation. But it is a signal that a core piece of the digital mortgage infrastructure may be changing in ways that affect cost, coverage and compliance. The industry should engage in transparent dialogue about how permissioned data is accessed, how its value is distributed and how infrastructure is funded. This includes recognizing the role financial institutions play in maintaining security while also considering how rising access costs and inconsistent regulation could impede borrower choice, industry efficiency and fair competition.

If broader access fees are applied to all permissioned data use cases without distinction, fintech providers and lenders that support—not compete with—banks may be disproportionately impacted. Over time, that could alter their operating models. And if those costs shift to borrowers, the long-term result could be higher loan expenses, reduced product accessibility and a digital divide in mortgage readiness.

This is a time for collaboration and thoughtful policy discussion that considers how access models affect all participants in the lending ecosystem. Without clear and enforceable rules that prioritize fairness and transparency, the principles of open banking may give way to a less equitable system built on fragmented access and cost burdens that fall to those least equipped to bear them.

Brian Francis is the head of AccountChek at Informative Research.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

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