No matter what the bank says, it's YOUR money, YOUR data, and YOUR choice

The Consumer Finance Protection Bureau (CFPB) has just finalized a rule that makes it easy and safe for you to figure out which bank will give you the best deal and switch to that bank, with just a couple of clicks. 

We love this kind of thing: the coolest thing about a digital world is how easy it is to switch from product or service to another - in theory. Digital tools are so flexible, anyone who wants your business can write a program to import your data into a new service and forward any messages or interactions that show up at the old service.

That's the theory. But in practice, companies have figured out how to use law - IP law, cybersecurity law, contract law, trade secrecy law - to literally criminalize this kind of marvelous digital flexibility, so that it can end up being even harder to switch away from a digital service than it is to hop around among traditional, analog ones.

Companies love lock-in. The harder it is to quit a product or service, the worse a company can treat you without risking your business. Economists call the difficulties you face in leaving one service for another the "switching costs" and businesses go to great lengths to raise the switching costs they can impose on you if you have the temerity to be a disloyal customer. 

So long as it's easier to coerce your loyalty than it is to earn it, companies win and their customers lose. That's where the new CFPB rule comes in.

Under this rule, you can authorize a third party - another bank, a comparison shopping site, a broker, or just your bookkeeping software - to request your account data from your bank. The bank has to give the third party all the data you've authorized. This data can include your transaction history and all the data needed to set up your payees and recurring transactions somewhere else.

That means that - for example - you can authorize a comparison shopping site to access some of your bank details, like how much you pay in overdraft fees and service charges, how much you earn in interest, and what your loans and credit cards are costing you. The service can use this data to figure out which bank will cost you the least and pay you the most. 

Then, once you've opened an account with your new best bank, you can direct it to request all your data from your old bank, and with a few clicks, get fully set up in your new financial home. All your payees transfer over, all your regular payments, all the transaction history you'll rely on at tax-time. "Painless" is an admittedly weird adjective to apply to household finances, but this comes pretty darned close.

Americans lose a lot of money to banking fees and low interest rates. How much? Well, CFPB economists, using a very conservative methodology, estimate that this rule will make the American public at least $677 million better off, every year.

Now, that $677 million has to come from somewhere, and it does: it comes from the banks that  are currently charging sky-high fees and paying rock-bottom interest. The largest of these banks are suing the CFPB in bid to block the rule from taking effect.

These banks claim that they are doing this to protect us, their depositors, from a torrent of fraud that would be unleashed if we were allowed to give third parties access to our own financial data. Clearly, this is the only reason a giant bank would want to make it harder for us to change to a competitor (it can't possibly have anything to do with the $677 million we stand to save by switching).

We've heard arguments like these before. While EFF takes a back seat to no one when it comes to defending user security (we practically invented this), we reject the idea that