Lindsay Davis Feb 12, 2021 4 min read

How payroll data is empowering millions of consumers to access financial services

Regulation is a moat. Financial services companies often misinterpret regulation as a barrier, believing that compliance is complex, costly, and cripples innovation. However, there is a unique commentary period during rulemaking in which companies can proactively get ahead of compliance and contribute guidance on how regulators should implement a final rule.

Why consumer’s payroll information is financial data

In November, one of these unique windows opened when the Consumer Financial Protection Bureau called for comment on its proposed rule, Consumer Access to Financial Records.  Atomic embraced the opportunity to advocate on behalf of consumers that rely on their payroll information to access fair, transparent, and competitive financial products. Consumers are the central tenet in Atomic’s comment letter submitted as part of the Advance Notice of Proposed Rulemaking (ANPR) on data access rights for consumers.

How Atomic is advocating for consumers

A decade in the making, the rules were authorized by Congress under Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Unhampered by specific regulatory requirements, the industry experienced a Cambrian explosion of fintech companies collecting and utilizing consumer data. However, the CFPB identified some emerging market practices that are not reflected in the access rights described in Section 1033 and initiated the ANPR to close the gap.

Atomic is among these pioneers, building proprietary payroll APIs to enable fintech companies to access consumer payroll data. In our comments, we encouraged the CFPB to consider several key points during its rulemaking:

Key takeaways

-Accessing payroll information impacts millions of “thin-file” and “credit invisibles.” By including access rights to a consumer’s payroll information, the bureau would be breaking down barriers for consumers who deserve fair prices for credit- and deposit products, but whose financial data is unfairly omitted from the financial ecosystem.

Payroll information produces concrete advantages for consumers. Allowing ready access is a key measure to enable the consumer to direct funds from his or her paycheck, which can be crucial to give the consumer better access to financial products and services.

The CFPB is authorized to regulate a payroll-services provider. Because the performance of payroll processing activities unquestionably constitutes engaging in financial data processing activities, which are permissible for a bank holding company, the bureau is authorized by the CFP Act and other laws to regulate the offering or provision of consumer financial products and services that flow from payroll processing activities.

In the rule for 1033, the bureau must 
—Define “consumer financial data” to include “consumer payroll information”
—Define the “covered person” to include a “payroll-services provider”
—Define “Direct Access” to include a consumer’s use of credentials for any system made available by a “payroll-services provider.” 
—Adopt anti-retaliation sanctions to protect consumers exercising their rights under Section 1033.

Accomplishing our shared mission

By leveraging financial data, including payroll information, fintech is changing the lives of millions of consumers. Atomic supports the bureau’s efforts to protect consumer’s data access rights and urge the bureau to implement an initial, final rule this year. 

We look forward to opportunities to partner with industry peers and the bureau to accomplish our shared mission of making financial services more accessible and affordable for all consumers.

Read our full response here or get in touch to request a demo.

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