As the fate of Rule 1033 hangs in the balance, the message to banks is clear: don’t let uncertainty stall progress on open banking or pay-by-bank innovation.

Even as the Consumer Financial Protection Bureau (CFPB) prepares to ask a federal court to rescind the open banking rule later this month, industry experts say the momentum behind API-driven data sharing and real-time payments isn’t slowing down — and financial institutions should take note.

Legal wrangling around Rule 1033, including lawsuits and shifting procedural tactics, may drag out for months. But the underlying demand for pay by bank is growing fast, particularly among large merchants eager to reduce payment processing costs. Several are expected to launch pay-by-bank options for consumers as soon as the 2025 holiday season, with broader adoption anticipated in 2026.

According to regulatory experts, the rise of instant, frictionless payment expectations — shaped by everyday digital experiences — is outpacing the legal system’s ability to keep up. Regardless of how the courtroom drama unfolds, businesses and consumers are moving ahead.

Yet, not all elements of Rule 1033 are sitting well. Annual data reauthorization requirements, for instance, have been flagged as an unnecessary burden for users, especially those who rely on recurring financial tools like tax software or budgeting apps. Missing these reauthorizations can disrupt services and even impact credit scores.

Despite these challenges, experts caution against abandoning the rule altogether. API-based data sharing remains one of the most secure and consumer-friendly ways to manage financial information. And in a market where speed and personalization are key, banks need to be building APIs that serve modern customer preferences.

The shift to pay by bank is already underway — driven not by regulators, but by market demand. As one industry executive noted, nearly every major brand is exploring the option, and those not already issuing RFPs are in active conversations about future rollouts.

Ultimately, banks that lean into API development and open banking infrastructure will be best positioned to meet consumers where they are — on mobile, in real-time, and expecting seamless experiences. Whether or not Rule 1033 survives legal scrutiny, the direction of the payments industry is already set.

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