JPMorgan Chase has negotiated agreements that guarantee it will be compensated by the fintech companies in charge of almost all data requests made by third-party apps linked to consumer bank accounts.
According to JPMorgan spokesperson Drew Pusateri, the bank has amended contracts with the fintech middlemen that account for over 95% of the data pulls on its systems, such as Plaid, Yodlee, Morningstar, and Akoya.
In a statement, Pusateri said, We’ve reached agreements that shall render the open banking system safer and more sustainable and enable customers to continue securely and reliably accessing their favorite financial products. The free market proved to be effective.
Banks Gain Edge in Customer-Data Dispute
The milestone is the most recent development in a protracted conflict over client account access between traditional banks and the fintech sector. For many years, when an individual wanted to use a fintech app like Robinhood to monitor balances or withdraw money, middlemen like Plaid paid nothing to access bank systems.
After the Biden-era Consumer Financial Protection Bureau finalized the “open-banking rule” in late 2024, which mandates that banks share customer data with other financial institutions at no cost, that dynamic seemed to be codified in law.
However, banks filed a lawsuit to stop the CFPB regulation from going into effect, and they appeared to win in May when the Trump administration requested that a federal judge invalidate the rule.
The biggest bank in the United States in terms of assets, deposits, and branches, JPMorgan, allegedly informed the intermediaries shortly after that it would begin charging hundreds of millions of dollars for access to its client data.
Executives from fintech, cryptocurrency, and venture capital responded by claiming that the bank was acting in a way that was “anti-competitive, rent-seeking,” which would hinder innovation and make it more difficult for users to utilize well-known apps.
After weeks of discussions between JPMorgan and the middlemen, the bank agreed to lower pricing than it had initially suggested, while the fintech middlemen secured concessions surrounding the processing of data demands.
As per a venture capital investor who requested anonymity to discuss his holdings of companies, fintech companies favored the safety of locking in data-sharing rates since it is not clear whether the existing CFPB, which is in the midst of modifying the open-banking rule, will favor banks or fintech companies.
This clash mirrors other high-stakes disputes in the payments ecosystem, including the growing pushback surrounding the Visa-Mastercard swipe-fee settlement.
Wider Impact Of This Battle
The agreements represent a change in the balance of power between banks, intermediaries, and the fintech apps that are posing a growing threat to established firms. Industry analysts predict that more banks will start charging fintech companies for access to their systems.
JPMorgan frequently sets trends. Since they are essentially the front-runner, it is reasonable to assume that the other big banks will follow.
Shearer, who worked at the CFPB under former director Rohit Chopra, expressed concern that the change will make it more difficult for up-and-coming firms to enter the market and ultimately raise consumer prices.
The 2024 CFPB rule’s supporters claimed that it promoted competition and innovation while giving customers ownership over their financial data. Banks, notably JPMorgan, claimed it exposed them to fraud and unfairly burdened them with the growing expenses of operating systems that their clients and middlemen were increasingly using.
When Plaid and JPMorgan announced their partnership in September, both businesses released a press release highlighting the continuity it offered clients.
Although JPMorgan has won a clear battle, the protracted conflict may still play out in court and in public, according to the industry body that Plaid is a part of, which has strongly denounced the move.
In reaction to the JPMorgan milestone, Penny Lee, CEO of the Financial Technology Association, said that imposing exorbitant tolls is anti-competitive, anti-innovation, and goes against the plain reading of the law. These agreements are the result of large banks taking advantage of regulatory uncertainty by leveraging their market position rather than the free market. They implore the Trump Administration to respect the law by keeping the current ban on data access fees in place.