As the Consumer Financial Protection Bureau crafts rules around consumers’ rights to access and share their financial information, fintech Pinwheel is pushing for payroll data to be included in the agency’s definition of consumer financial data.
Pinwheel, which provides a tool for banks and fintechs to allow consumers to connect their payroll accounts to any app, has built its platform around the notion that consumers can improve their credit scores by leveraging their income data.
Like checking account or lending data, a consumer’s payroll data provides insight into their financial life, and should be included in upcoming CFPB regulations aimed at protecting consumers’ rights to access information about themselves, said Kurtis Lin, Pinwheel’s co-founder and CEO.
“It really pushes for this idea of account portability, which has kind of been a holy grail in the industry for a long time,” said Lin on the CFPB’s effort to codify financial data rights policies, an authority Congress granted the bureau under Section 1033 of the Dodd-Frank Act in 2010. “We're finally starting to see the CFPB move with some urgency on this, and we're really excited to play a strong role in this.”
Income data can help extend credit to consumers who lack robust credit scores, but would otherwise be good borrowers, Lin said.
“A good number of folks who work in the country today may not have large credit profiles, and so they're barred from access to affordable credit products, even though they may actually be really responsible borrowers,” he said.
In December, the New York-based fintech tapped Raj Date, who served as deputy director of the CFPB from 2010 to 2013, to be an adviser to the firm ahead of the bureau’s upcoming rulemaking.
Date is also an investor in Pinwheel.
Excluding payroll data from Section 1033 would be antithetical to the premise of implementing a rule around open banking, Date said.
“Data about your money and how you get it and what you do with it belongs to you. And you ought to be able to decide the circumstances by which it is shared, if at all,” he said. “And you ought to therefore be able to extract some value from its existence. That’s just as true for payroll data as it is for checking account transaction data. I would be surprised and disappointed if the policy judgments were to land elsewhere.”
Payroll data is something most consumers want to leverage to their advantage and are comfortable sharing with financial apps, according to Lin, who said a survey Pinwheel commissioned last year backs up this claim.
The online survey of more than 2,000 participants found that 80% of consumers were comfortable sharing their income and payroll data if it meant having access to better financial products, he said.
Including payroll data in the CFPB’s open banking rulemaking should be an obvious move, Lin said.
“How could you possibly argue that how much you make isn’t your data?” he said. “From where we sit, it feels like a no-brainer.”
But implementing new policies takes time, Lin said. The CFPB is expected to issue a proposal on the data privacy rule this year, with finalization and implementation planned for 2024.
In the meantime, Pinwheel is focusing on cultivating its open banking-like structure by furthering its partnerships with payroll providers, Lin said.
“This is something we’re hyper-focused on this year, which will help more broadly unlock consumer-permissioned income data,” he said. “This has two benefits. It will give consumers more control over their financial info and enable banks and fintechs to use this data to build more robust offerings.”