A federal judge has paused the Consumer Financial Protection Bureau’s (CFPB) open banking rule, marking a major win for banks and throwing the future of U.S. open banking into uncertainty. The move deepens the divide between traditional financial institutions and fintechs that rely on consumer data access to operate.

The Court’s Decision: A Win for Banks

U.S. District Judge Danny Reeves issued an injunction blocking enforcement of the rule “until the bureau has completed its reconsideration.” The decision means the CFPB cannot move forward until it issues a revised version.

Banking groups including the Bank Policy Institute, the Kentucky Bankers Association, and Forcht Bank welcomed the ruling, saying it prevents unnecessary spending on a rule already under revision.

• The lawsuit was filed in October 2024.

• The CFPB began its formal rulemaking process in August 2025.

• The timeline for a revised rule remains unclear.

Why the Rule Matters

The open banking rule aimed to give consumers more control over their financial data, allowing them to securely share it with third-party apps and fintechs. Supporters said it would drive competition and improve access to fairer financial products.

Banks, however, argued that the rule was too broad and could compromise data security. The CFPB initially echoed those concerns, calling parts of the rule “unlawful” before reversing course and asking for time to revise it.

Fintechs Push Back

Fintech trade groups criticized the court’s decision, arguing it slows innovation and restricts consumers’ ability to manage their own financial data.

The Financial Technology Association (FTA) said it is “exploring all options, including an appeal.” CEO Penny Lee noted, “Most Americans rely on open banking connectivity to access apps and services, a foundational right in today’s digital age.”

The American Fintech Council (AFC) also disagreed, saying the ruling delays progress toward a system that gives consumers secure, open access to their financial information.

CFPB Leadership Turmoil

Uncertainty within the CFPB adds another layer of confusion. Acting Director Russ Vought recently hinted that the agency could be shut down within months, saying on The Charlie Kirk Show, “We want to put it out and we will be successful probably within the next two, three months.”

Vought’s push to downsize the CFPB raises doubts about whether a revised open banking rule will ever be finalized. Legal experts warn that leadership instability could freeze progress indefinitely.

What’s Next

The injunction does not have immediate effects, since compliance deadlines were originally set for June 2026. However, analysts say it could still influence how banks and fintechs approach data-sharing in the meantime.

Potential impacts include:

• Banks delaying investment in open banking infrastructure.

• Aggregators possibly facing new fees for data access.

• Extended uncertainty for fintechs that depend on real-time consumer data.

“The litigation will grind on, leaving the market to address the policy issues in bilateral agreements,” said Adam Maarec of McGlinchey Stafford.

Conclusion: Open Banking on Hold

The injunction highlights the ongoing power struggle between banks seeking regulatory caution and fintechs pushing for innovation. With CFPB leadership in flux and no clear timeline for a revised rule, the future of open banking in the U.S. remains uncertain, caught between legal delays and shifting political priorities.