What I have Learned About Rule 1033, Teller, and Importing Transactions

I have known for a long time that for Finluency to be viable, it would need the ability to import financial transactions. As a matter of fact, I created a GitHub issue on 10/12/2022 to build this feature.

It's a little embarrassing to admit that it's been that long since I raised the issue, and it is still an open item. But that's what happens when you're a solopreneur working on a passion project as a side hustle.

Fortunately, AI and a renewed interest in X have closed that gap.

Let's take a look at what I have learned over the last 3 years.

Financial Data Aggregators

In 2022, I figured I would have to build individual connectors to all the financial institutions, a monumental task that had me very concerned as a solopreneur. Fortunately, after a bit of research, I found that I could use a service provider to import customers' financial transactions into Finluency.

By delving deeper into the process and using AI tools, I have found a range of financial data providers. Like most things, each has its own pluses and minuses, and their pricing structures are more confusing than those of marketing platform providers. I have accepted the fact that it will take more than one provider, since each has a different set of institutional connections, and most customers have several financial accounts spread across multiple institutions.

List of Potential Financial Aggregators

• Plaid – The most widely used aggregator for consumer fintech apps in the US and Canada.

• MX – Focuses on data enhancement and providing tools for banks and larger financial institutions.

• Finicity (by Mastercard) – A major player in credit decisioning and mortgage verification.

• Envestnet | Yodlee – One of the original data pioneers with deep enterprise and global reach.

• Akoya – An API-only network owned by major banks to facilitate secure, non-scraping data sharing.

• Teller – Known for high-performance, direct integrations with bank cores rather than using intermediaries.

• Stripe Financial Connections – Stripe’s native tool for verifying bank accounts and accessing financial data.

While analyzing which financial data aggregator to use, I have learned more than I was expecting.

Dodd-Frank Section 1033 and The Consumer Financial Protection Bureau

I have a feeling that most solopreneurs, especially first-timers, do not put much time into considering how the legal and political climate will impact the development and distribution of their passion project when starting out.

I know I didn't. I just wanted to create a kick-ass financial app to replace the spreadsheet I have been using, and hopefully help others solve the same issue.

Unfortunately, it is not that simple. To create a kick-ass app, it must follow regulations, and I have run into the CFPB Rule 1033.

Section 1033 - Personal Financial Data Rights

In 2010, the U.S. Congress passed, and Barack Obama signed into law, the Dodd-Frank Wall Street Reform and Consumer Protection Act. This law was enacted in response to the 2008 financial crisis and was designed to stabilize the financial system by strengthening oversight of financial institutions, such as banks, and by providing new consumer protections.

One of the consumer protections is the right to access "information in the control or possession of" financial institutions providing a product or service to the consumer. This right is provided in section 1033 of Dodd-Frank, and the bill gave the Consumer Financial Protection Bureau rule-making authority.

From the Dodd-Frank Wall Street Reform and Consumer Protection Act
(12 U.S.C. § 5533)

(a) In general
Subject to rules prescribed by the Bureau, a covered person shall make available to a consumer, upon request, information in the control or possession of the covered person concerning the consumer financial product or service that the consumer obtained from such covered person, including information relating to any transaction, series of transactions, or to the account including costs, charges, and usage data.

(b) Form and manner
The information described in subsection (a) shall be made available in an electronic form usable by consumers, and in a timely manner, subject to rules prescribed by the Bureau.

(c) Exceptions
The Bureau may prescribe rules to provide for exceptions to the requirements under this section, including exceptions to address:Confidential commercial informationInformation collected for the purpose of preventing fraud or money launderingInformation required to be kept confidential for safety and soundness reasonsAny other exception the Bureau determines appropriate

(d) Retention of records
Nothing in this section shall require a covered person to maintain or retain any information for a longer period of time than otherwise required by law.

Even though Dodd-Frank provided the CFPB the power to enforce rules, section 1033 stayed dormant from 2010 until 2024. The CFPB did not act while the Fintech market began to sort itself out. Banks set aside, sometimes begrudgingly, while Fintech aggregators like Plaid and MX used screen-scraping technologies to collect and organize financial data for third-party applications to build tools for consumers. The methodologies were potentially illegal and not necessarily safe. By the early 2020's, the CFPB under President Biden noticed that, without a developed rule, section 1033 was being loosely interpreted by industry players, leaving consumers at risk. They felt it was time to bring some structure to the market through Rule 1033.

CFPB Rule 1033 - Interpreting Section 1033 of Dodd-Frank

The Biden administration was pushing a competition policy that focused on reducing gatekeeper power, lowering switching costs, and enabling consumer choices. It was time for the CFPB to provide guidance on Section 1033 to achieve this agenda. Their interpretation of the rule was to support the following goals:

• Advancing section 1033 from theory to exercisable
• Limit security risks by eliminating credential sharing for screen scrapping
• Define guardrails for third parties use of data collects
  • Explain why you want data to the consumer
  • Minimize the collection of data
  • Keep it secure
  • Stop using it without consumer consent (selling it)
• Prevent banks from charging for access to the data
• Standardize accessability

As in most matters in the legal and political realms, the ruling sparked controversy that has led to lawsuits and backlash. Banks argued that the rule creates an unfair financial burden, as they are not allowed to charge fees to finance the increased infrastructure needed to support standardized accessibility. Others have pointed out that the rule will lead to higher fees and lower interest rates on deposited funds, while financial institutions socialize the rule's costs. Even the parties that seemingly would benefit from the ruling, the aggregators and third-party financial applications, stand on both sides of it. Several would benefit from free access to the data; however, established aggregators fear losing a competitive advantage and their technological edge as data becomes easily accessible through free, standardized means. i.e., Accessing data becomes commoditized, shifting competition from access towards service quality.

Teller: How a conversation has changed my perspective

One of my first exposures to Rule 1033 came from an X post by the Financial Technology Association commenting on a court injunction against the Rule and the CFPB, under the Trump administration, to roll the rule back. At the time, I felt the rule was favorable to consumers and was disappointed in its reversal. After all, I do believe consumers own their financial data and have a right to access it, and with the rules and restrictions on fees, it would be cost-effective to incorporate financial data into Finluency.

In my opinion, the rule was a win-win until I had an X interaction with Stevie Graham, CEO of Teller.

I was expecting Mr Graham and Teller to be in favor of the ruling, since it seemed to favor aggregators and other Fintech applications. I was a bit shocked when the first reply to my statement seemed to contradict my expectations.

This was the first time I heard opposition to the rule. However, I have to say, I really haven't had many conversations concerning the rule to this point. It does not directly affect most people, so there is little concern outside the industry. My perspective was short-sighted and uninformed, so the brief interaction with Mr. Graham was enlightening.

"Nothing is free." I lost this perspective prior to the conversation. I knew there would be costs for financial institutions to provide data, but I felt the cost had already been incurred or would be absorbed by current business expenses. I did not consider banks utilizing the rule as a reason to increase fees or reduce interest rates on deposited funds for all their customers. i.e., socialize the cost. This goes against the spirit of the rule, but organizations protect their profit margins. Obviously, they would not advertise this as a reason, but they have used it in the media to persuade opinion against the rule. It would not surprise me if they haven't already raised fees on their other products to cover the cost of supplying data, while at the same time hoping to charge fees to aggregators or other users of the data.

But for the sake of the argument, I am going to assume the financial institutions have done the right thing and have not socialized the cost to date. With that said, I am not in favor of the many paying for the opportunities of the few. I am not in favor of socializing the cost, and if I want to use the data in a way that differs from others, I should be ready to support the cost. Of course, expenses will be accumulated and ultimately passed to the consumer. Aggregators pay the bank fees, third-party Fintech companies pay the aggregators, and the customers of the third-party Fintech ultimately pay the expense. The cost is passed down to the consumer.

Fair! Capitalism at work.

Teller's unique position and why I find it attractive

So, yes, I can agree with Mr. Graham's position against socializing costs, but it seemed a little strange to me that an organization that should benefit from the rule would argue against it on pure philosophical reasoning. There seemed to be more to the story, so I did a little more research. What I found is interesting.

From my understanding, Teller is built on direct, institution-specific integration that relies on reverse-engineered APIs from financial institutions' internal and private APIs. These systems are used by financial institutions to build their own web and mobile applications. By using this method, Teller has eliminated the controversial practice of screen scraping, which I find appealing. Also, this means they can potentially circumvent any fees banks charge aggregators via publicly available APIs. The fees that the rule was attempting to prevent. The injunction of the rule protects the millions of dollars Teller has invested in their efforts against competitors.

What does this mean to Finluency?

At the end of the day, the rule's future is likely to have minimal impact on Finluency. For it to be a viable application, it must have significant integration into customers' financial data, especially transactions. I cannot imagine a future where customers will accept manually entering transaction data. They will expect to import the information to simplify the process. Without the rule, some of my main concerns are:

• Rising costs of accessing data
• Methods of accessing (credentials vs authorization)
• Banks provide accurate and timely data
• Reliability of data without a single standard

Hopefully, the CFPB can rewrite the rule, address concerns from all parties, and create a stable environment where bootstrapped entrepreneurs like me can compete.

In the meantime, I plan to continue building Finluency into a product I want to use to manage my cash flow and financial situation. This means I will continue to plan to use aggregators until I find out it is cost-prohibitive.