The Great Rebalancing: How Regulatory Uncertainty is Reshaping Fintech and Payments Investing

In 2025, the financial world watched as , a titan of the payments industry, quietly closed its U.S. open-banking unit. This move, framed as a “strategic retreat,” was not a failure but a recalibration in the face of a regulatory landscape that has become a minefield of uncertainty. The U.S. open-banking initiative, once hailed as a catalyst for innovation, now faces a fragmented legal and economic environment. For investors, this signals a pivotal moment: the era of unbridled optimism around open banking in the U.S. is over, and the next phase of fintech and payments investing will be defined by regulatory agility, global diversification, and the ability to navigate data-access dynamics.

The U.S. Open-Banking Quagmire: A Case Study in Regulatory Whiplash

Visa's exit was catalyzed by the Consumer Financial Protection Bureau's () ongoing reevaluation of Rule 1033, a cornerstone of the Biden-era open-banking framework. Originally designed to mandate free data sharing between banks and third-party fintechs, the rule has become a lightning rod for legal and political battles. The CFPB's August 2025 Advance Notice of Proposed Rulemaking () revealed a stark reality: the agency is now considering fee models for data access, liability frameworks for third-party breaches, and extended compliance timelines. These shifts reflect a broader tension between consumer empowerment and institutional risk management.

The CFPB's ANPR explicitly questions whether the original prohibition on fees for data access aligns with the legislative intent of Section 1033. This ambiguity has created a vacuum where banks like JPMorgan Chase have begun charging fintechs for access to customer data—fees that could reach hundreds of millions annually. For fintechs, this threatens their business models, which rely on low-cost data to offer services like credit scoring, budgeting tools, and real-time financial insights.

Visa's pivot to Europe and Latin America is no accident. These regions offer more stable regulatory environments. Europe's Payment Services Directive 2 (PSD2) and India's UPI system provide clear, interoperable frameworks for open banking, while Latin American markets like Brazil and Mexico are rapidly digitizing with government-backed initiatives. Visa's 2022 acquisition of Tink, a Swedish open-banking platform, underscores its bet on regions where rules are predictable and innovation is incentivized.

The CFPB's Rulemaking: A Double-Edged Sword for Fintechs

The CFPB's ANPR is a critical inflection point. While it seeks to address the legal challenges to Rule 1033, it also introduces new layers of complexity. For example, the agency is considering whether financial institutions should be allowed to charge fees for data access, a move that could either democratize data sharing or create a pay-to-play system favoring large banks. Smaller institutions and fintechs may struggle to absorb these costs, potentially stifling competition.

Moreover, the ANPR's focus on liability frameworks raises existential questions. If banks are held accountable for third-party breaches, they may restrict data access altogether, undermining the very premise of open banking. This tension is already evident in the U.S. market, where banks are pushing back against screen-scraping practices (a method fintechs use to access data) and demanding clearer liability boundaries.

The Investment Thesis: Global Exposure, Regulatory Agility, and Alternative Data

For investors, the lesson is clear: the U.S. open-banking market is no longer a safe bet. Instead, the future lies in companies that can thrive in regulatory gray zones, leverage alternative data, and operate in markets with stable frameworks.

1. Global Exposure: Firms with a presence in Europe, Latin America, and emerging markets like India are better positioned to capitalize on open-banking growth. For example, Mastercard's expansion into Brazil's open-finance ecosystem and 's partnerships in Southeast Asia highlight the importance of geographic diversification.

2. Regulatory Agility: Companies that can adapt to shifting rules—such as those using blockchain for secure data sharing or AI-driven compliance tools—will outperform. Look for firms like (now part of Visa) and Fiserv, which are investing in modular platforms that can pivot as regulations evolve.

3. Alternative Data Solutions: As traditional data sources become costlier, fintechs are turning to alternative data—such as utility payments, mobile phone usage, and social media activity—to assess creditworthiness. Brazil's and India's Policybazaar are pioneers in this space, using non-traditional metrics to expand financial inclusion.

The Road Ahead: Navigating the New Normal

The U.S. open-banking experiment has exposed the fragility of regulatory consensus in a polarized political climate. For investors, the key is to avoid overexposure to markets where rules are in flux and instead focus on firms that can operate across jurisdictions. This means prioritizing global players with regulatory agility, robust data infrastructure, and a commitment to innovation.

The CFPB's rulemaking process will likely take years to resolve, but the damage is already done: the U.S. is losing its edge in open banking to regions with clearer frameworks. Visa's exit is a harbinger of this trend. Investors who recognize this shift early will be well-positioned to capitalize on the next wave of financial innovation—where data is not just shared, but strategically leveraged across borders and ecosystems.

In the end, the future of payments and fintech belongs to those who can navigate the chaos. The question is not whether open banking will survive in the U.S., but who will lead the next chapter—globally.