While access to consumer banking data has been a key driver in innovation over the last decade, payroll aggregation is the next step in the evolution of financial account connectivity. More than 93% of US workers get paid via direct deposit, meaning that the payroll systems that sit at the top of the financial stack are essential to painting a holistic view of a consumer’s financial life. While for some of us, payroll data only adds to our existing financial picture, for the over half of Americans who are credit invisible or credit damaged, payroll data may be the most valuable and even the only information source that can be used to access better, fairer financial products and services.
That’s why we have been advocating for payroll data to be explicitly covered among the data that consumers have the right to access as the Consumer Financial Protection Bureau (CFPB) evaluates regulation to permit open financial data access.
According to the Dodd-Frank Act Section 1033, the CFPB has the authority to write regulations that would allow consumers to access their financial data and make decisions about how they would like to share it. Last year, the CFPB put out an advanced notice of proposed rulemaking asking for guidance from the industry on the list of principles for this data access and sharing.
On September 21, the House Financial Services Committee held a hearing on “Preserving the Right of Consumers to Access Personal Financial Data,” with the goal of providing input to the CFPB in their rulemaking process. Pinwheel was excited to participate in the Congressional process by submitting a Statement for the Record.
Pinwheel’s Statement focused on the following topics:
- We believe that payroll data constitutes consumer financial data. Information about how much you earn, the taxes you pay, and where you work is core to your financial identity, and as such we believe it is covered under the definition of financial data in 1033. The CFPB's rulemaking process has the opportunity to clarify where consumer permissioned data (including data provided by aggregators like Plaid and Pinwheel) fits into the 1033 framework and what rules will apply (e.g. whether the Fair Credit Reporting Act or FCRA applies to aggregators).
- The CFPB must include payroll data explicitly under the definition of consumer financial data in the new rulemaking. This would enable consumers to continue to use their payroll data to access better and cheaper financial products and services.
Enabling access to one’s financial data (including one’s payroll data) is a topic that regulators and policymakers have been grappling with for over 10 years. We were encouraged by the consensus of views at the recent Congressional hearing and to see both regulators and policymakers aligned on the value such data access can have to improve one’s financial life. At Pinwheel, we build secure connections to payroll providers for our customers (banks, lenders, and other financial institutions), allowing them to use the data and functionality in those systems to build better, more innovative products and services. We look forward to continuing to work with policymakers as they move forward on this important policy issue in service of achieving our mission of empowering innovators to build a fairer financial future.