Local opinion: Financial tech is outpacing the rules and putting families at risk

Serving as a state legislator taught me to recognize when systems claim to help people but actually exploit them. Right now, millions of Arizona families are being taken advantage of by a financial technology system they don’t understand, never truly consented to, and in many cases, don’t even know exists.

Everyday apps like Venmo, Cash App, and other tools promise to make managing money easier, and so we hardly think about them. But behind the scenes, an industry of middleman companies has turned access to our bank accounts into a surveillance and data-selling operation. The rules governing financial technology haven’t kept pace with how these systems actually work and families everywhere are paying the price.

Here’s how it works. When you connect an app to your bank account, you’re rarely connecting directly to the bank. Instead, a data aggregator handles the link. Most people haven’t heard their names, but these companies sit at the center of the digital financial world.

The idea behind aggregators was sound: create specialized companies that could securely connect banks with new financial tools. But what began as a solution has morphed into a problem. These aggregators now control vast troves of consumer financial data and in today’s economy, data equals money.

Many aggregators operate on a simple premise: the more data they collect, the more products they can build and sell. Your transaction history, spending patterns, and financial habits have become a commodity. Most people assume giving an app permission to access their bank account simply allows it to check balances or process payments. In reality, these companies pull data continuously dozens or even hundreds of times a month whether or not you open the app. They’re watching while you work, sleep, or simply live your life, often without your knowledge.

If that sounds like surveillance, that’s because it is financial surveillance disguised as convenience.

And this isn’t just a privacy issue. It’s also a serious security risk. The more companies that can access your accounts, the more doors there are for bad actors to slip through. Banks report that transactions routed through aggregators show significantly higher fraud rates than direct transactions, some even 69% more likely to result in fraud.

Policymakers must step in to set clear boundaries that protect consumers while still allowing innovation. The window to act is narrow, and the financial technology industry is lobbying hard to preserve a profitable status quo. Fortunately, the Consumer Financial Protection Bureau (CFPB) has begun regulating open banking with a new rule, so now is the time to ensure consumers come first.

The solution starts with genuine informed consent and the ability to revoke access instantly. Data collection should be proportional to the service provided, with real penalties for companies that exceed those limits. Regulators should ban outdated practices like “screen scraping,” where aggregators log into accounts using your credentials and copy far more data than necessary. Selling consumer financial data to third parties should be prohibited unless users give explicit, separate consent. Using a budgeting app should never mean agreeing to sell your spending patterns.

Arizona families are smart and hard-working, and they shouldn’t need to be cybersecurity experts to use basic financial tools. Downloading an app shouldn’t mean surrendering financial privacy. Families deserve technology that helps them without exploiting them and that’s exactly what strong, sensible regulation can deliver. It’s imperative that the CFPB finalizes rules to protect our financial data and that our members of Congress ensure these protections are put in place.