Open Banking at an Inflection Point: Why Banks Must Act Now

The End of Screen Scraping and the Beginning of Accountability

For years, North American financial data-sharing has relied on mechanisms that were never intended to serve as long-term infrastructure. This is not a question of fault; it is a matter of systemic lag. We say that not as a criticism of banks, but as an observation of a system that was never designed for the world we live in today. Consumers share their financial data with dozens of apps, budgeting tools, and payment platforms, often without truly understanding what they've agreed to or who is seeing what. Much of this data sharing relies on screen scraping, a method where third-party apps access a customer's bank portal by using their login credentials to collect available information. It is, frankly, a workaround masquerading as an ecosystem.

The risks of screen scraping were recognized years ago in markets like the UK, the EU, and Australia. In response, these regions have built regulatory frameworks that put consumers in control, standardized how data is shared, and created clear rules for every participant in the chain. North America watched, debated, and largely waited.

That wait is ending. Open banking regulation has arrived in the United States and Canada, and while the timelines are still evolving, the direction is irreversible. For banks and credit unions, the question is no longer whether to prepare; it is how quickly they can get ahead of what is coming.

The Regulatory Landscape: Where Things Stand

Before institutions can act, they need clarity on the direction of travel. While the United States and Canada are taking slightly different approaches, both markets are moving toward formalized open banking frameworks. The timelines, pace, and structure may vary, but regulatory momentum in both countries is unmistakable.

The United States: Delayed, Not Derailed

The CFPB's Personal Financial Data Rights rule, created under Section 1033 of the Dodd-Frank Act, was introduced in October 2024 and represented a clear inflection point in U.S. data-sharing policy. For the first time, banks and credit unions would be legally required to give authorized third parties access to consumer-consented data through secure, standardized APIs. No more screen-scraping. No more inconsistent access policies. A real framework, with real accountability.

Regulatory review does not equal regulatory reversal. Banks that treat this as a strategic pause—not a reprieve—will be better positioned when enforcement resumes.

Then came a change in administration, and the rule was put under review. While some may interpret this as a sign that open banking regulation in the U.S. is fading, we think that interpretation is dangerously wrong.

The problems that Section 1033 was designed to solve have not gone away. Consumers are still sharing credentials with third-party apps. Banks are still applying inconsistent, sometimes arbitrary standards for data access. The risks inherent in screen scraping are still very real. Regulation is not retreating; it is being revised. And banks that use this pause to begin their readiness work will be in a far stronger position when the reissued rule lands, which, by most indications, is expected sometime this year.

Canada: A Phased Plan With Real Deadlines

Canada, to its credit, has been more deliberate in its approach and more transparent about its roadmap. Budget 2025 formalized two things: the designation of the Bank of Canada as the primary regulator for open banking and the alignment of the framework with the Real-Time Rail (RTR) payment system. This is a smart policy. By tying open banking to the RTR, Canada is building a coherent, integrated infrastructure for the future of financial data and payments, not bolting them together as an afterthought.

The timelines are specific and, in our view, ambitious:

• 2026: Read-only use cases go live. Consumers will be able to share account data, including balances, transaction history, and account details, with authorized third parties on their terms.
• 2027: Write access is enabled. Payment initiation, account-to-account transfers, and automated financial management become possible at scale.

Canada’s roadmap is no longer conceptual—it has dates attached. Institutions that wait for finalized documentation before acting risk compressing multi-year transformations into months.

Detailed standards are expected imminently, potentially as early as next quarter. Banks that wait for the final rules before planning will find themselves in a very uncomfortable position very quickly.

Why Waiting Is Not a Strategy

While we understand the instinct to wait. Regulatory timelines shift. Standards evolve. Why invest now when the goalposts might move? Here is why that logic fails in this case: Open banking readiness is not a project you can sprint at the end. It requires changes to core banking infrastructure, API architecture, consent management platforms, data governance frameworks, and partner onboarding processes. These are not quick wins. Banks that start now will have time to do this properly, to test, iterate, and build resilience into their systems. Banks that wait will be forced to do it quickly, which means doing it expensively and, in many cases, as a stopgap arrangement.

There is also a competitive dimension that often gets overlooked. The open banking ecosystem is about positioning, not just compliance. Early movers have the opportunity to become preferred data providers for the third-party applications that consumers are increasingly relying on. That is a meaningful competitive advantage. Being known as a bank that shares data securely, reliably, and on clear terms is becoming a differentiator, not just a regulatory checkbox.

And for consumers, frankly, this moment is long overdue. Greater control over their financial data, stronger security, and access to better products built on that data are things people deserve. Banks that embrace this shift will build deeper trust. Those who resist it will find themselves on the wrong side of an accelerating tide.

What Banks Actually Need to Do

Preparing for open banking means building real capabilities, not just checking compliance boxes. In our view, the priority areas are:

• API management: This is the foundation. Adopting open, industry-standard APIs is non-negotiable. Banks need secure API gateways, developer portals, and sandboxed testing environments. These are the pipes through which the open banking ecosystem runs, and they need to be built for reliability, auditability, and scale.
• Consent management: Regulators in both markets are placing explicit consumer consent at the heart of their frameworks. Banks need platforms that give customers granular, real-time control over who can access their data, for what purposes, and for how long, with clear, accessible options to revoke that consent. This is not a back-office function; it is a front-line customer experience.
• Data governance: Open banking significantly expands the surface area of data exposure. Strong classification frameworks, access controls, and audit trails are essential both to manage risk and to demonstrate compliance to regulators who will be watching closely.
• Core system readiness: Many institutions are still running legacy infrastructure that was simply not designed for API-driven data sharing. Assessing and, where necessary, modernizing core banking systems, cloud infrastructure, and integration layers is a prerequisite for open banking at scale.
• Partner ecosystem management: As the universe of authorized third parties grows, banks need structured frameworks to manage onboarding, agreements, monitoring, and, importantly, monetization. Data sharing is not just a compliance obligation; it can also be a revenue opportunity for institutions that approach it strategically.

Open banking capability is an architectural transformation, not a compliance checkbox.

Where Tech Mahindra Comes In

We have been working with banks and credit unions on exactly these challenges, and we bring both the regulatory understanding and the technology depth to help institutions move from awareness to action. Whether that means off-the-shelf solutions or bespoke development built around a specific institution's architecture, we can support the full journey:

• Regulatory compliance: Translating applicable mandates into concrete, actionable roadmaps.
• Technology readiness: Assessing and optimizing core systems, security infrastructure, cloud environments, and integration layers.
• API management: Designing and deploying standards-aligned APIs, building developer portals, and managing testing environments.
• Partner ecosystem management: Structuring third-party onboarding, managing agreements, and building monetization frameworks.

The open banking era in North America is here. The regulatory frameworks being built today will fundamentally reshape how financial data flows, how consumers exercise control, and how banks compete. The institutions that move now, build deliberately, and partner with the right expertise will not just survive this transition. They will lead it.