The Wall Street giant has criticized data intermediaries as digital exploiters, but technology firms and consumer rights advocates are pushing back. In late 2024, U.S. regulators concluded a prolonged conflict between banks and tech companies regarding the control of customer financial data by declaring that customers have the right to request, download, and transfer their data at no cost, as mandated by the Consumer Financial Protection Bureau’s groundbreaking open banking regulation. However, less than 10 months later, lawmakers are reassessing their approach, as the nation’s largest bank is set to introduce charges for customer data access, inciting outrage among executives from top fintech companies, cryptocurrency ventures, and retailers.
“I thought we had resolved this issue, yet here we are again,” remarked Leigh Phillips, CEO of the nonprofit SaverLife, which operates an application that utilizes users’ bank data to incentivize savings. If these new fees are imposed on the organization’s hundreds of thousands of predominantly low-income members, she emphasized, “it’s not a trivial matter.” She added, “Our families are already facing significant challenges, so any increase in costs or risk of fees is a serious concern.”
The CFPB disclosed in a recent court filing that it will revisit the open banking regulation, just weeks after Bloomberg reported on JPMorgan Chase & Co.’s announcement to start charging technology firms for access to customer data. This decision, along with PNC Financial Services Group Inc.’s similar intentions, has sent ripples through the digital landscape, which relies heavily on the seamless transfer of information to fuel nearly every consumer financial application available.
In response, developers raced to gauge the impact on their business models, while investors reacted negatively, leading to a decline in shares of major fintech firms by as much as 6.5%. Cryptocurrency advocates from the highest echelons of the Trump administration expressed concerns about the potential stifling of innovation stemming from these developments.
There is a broad consensus across the sector – at least theoretically – that consumers should have control over who accesses their data and when. Nonetheless, in practice, the flow of this information is regulated and requires the upkeep of a digital infrastructure, which banks currently fund. These financial institutions characterize data aggregation services as freeloaders. Companies such as Plaid Inc. and MX Technologies Inc., along with subsidiaries of Stripe Inc., Visa Inc., and Mastercard Inc., provide the digital solutions necessary for transferring customer data from banks to various financial technology applications, a model that banks argue exploits their investments in infrastructure and compliance for profit.
“Data intermediaries access our customers’ information at no cost for 90% of the time, often without any customer request, and then charge third parties for that same data,” stated a JPMorgan representative in an email. However, tech firms and consumer advocates counter that banks have a duty to facilitate the flow of information, similar to how patients can direct their healthcare providers to share medical records with other medical entities whenever needed. JPMorgan is set to impose fees on data aggregators in the coming months. These companies may pass on any increased costs to their clients, who will need to determine how to manage these costs for their users. The cumulative effect across the industry could amount to hundreds of millions of dollars.
“This fee represents the initial step,” remarked Dan Quan, a former CFPB official and current general partner at NevCaut Ventures. “Ultimately, this revolves around control over access.”
Years of contention have marked the relationship between banks and tech companies regarding customer data access. Initially, apps would collect users’ bank or credit card login information, forwarding it to aggregators like Plaid or Yodlee, which would then scrape, organize, and return that data to the app. For consumers and the burgeoning fintech sector, having access to this data paved the way for a myriad of innovative applications. However, banks voiced concerns about the potential fraud risks associated with customers sharing their credentials with third parties. They also recognized that certain fintech services, such as overdraft alerts or high-yield savings accounts, posed a threat to various segments of their businesses.
As technology and the app economy evolved, the banks’ concerns became increasingly outdated. Approximately half of U.S. consumers have interacted with Plaid at some point. In April, Plaid secured $575 million in new funding, achieving a valuation of $6.1 billion. Currently, the bank receives around 2 billion “data calls” monthly, sourced from firms such as Robinhood Markets Inc., Coinbase Global Inc., and Wealthfront, among numerous other fintechs that verify user account balances or monitor transactions. Presently, fintech companies compensate aggregators for each data call, with fees ranging from as much as $1.25 to link a new customer’s account to as little as 5 cents for balance inquiries, according to a July 14 note from UBS analysts. JPMorgan intends to implement a similar fee structure, charging aggregators for each call. The rates and terms appear to be negotiable; the bank has announced plans to provide customers with a direct link to Coinbase, but in at least one instance, the proposed pricing exceeded transaction revenue by 1,000%, as per a source familiar with the situation.
For smaller firms, particularly those offering financial advice or budgeting applications, increased data costs could threaten their viability, Quan warned. “If you’re in that business, you’re finished,” he stated. “You simply cannot sustain that expense.” Many other banks are contemplating whether to follow JPMorgan’s lead. Capital One Financial Corp. has refrained from commenting but previously advocated for the “recoupment of reasonable costs.” A spokesperson for Bank of America Corp. stated that its clients “own their data and should dictate how, when, and by whom it is utilized,” yet did not clarify if they plan to charge for data access. Citigroup Inc. and Wells Fargo & Co. also opted not to comment. Goldman Sachs Group Inc. reportedly has no intentions of imposing charges for access, according to an insider.
In addition to the new costs, many industry players are voicing their discontent regarding what they perceive as JPMorgan’s unilateral attempt to dictate the framework and fee structure for consumer data. “This is egregiously anti-competitive behavior from JPMorgan Chase,” expressed venture capitalist and Trump supporter Ben Horowitz on social media. The crypto community’s concerns have reached the White House, with senior advisor David Sacks and Donald Trump Jr. sharing a post from Tyler Winklevoss, co-founder of Gemini, accusing “the banking elites” of attempting to undermine fintech and cryptocurrency enterprises.
For retailers, the new fees and increased rates for payment inquiries complicate their efforts to develop proprietary applications that allow customers to pay via bank transfer, a method retailers favor as it bypasses the fees associated with credit and debit card transactions. “Fintechs and cryptocurrencies have the potential to fundamentally disrupt the payment ecosystem regarding debit and credit transactions and future payments,” stated Austen Jensen, a spokesperson for the Retail Industry Leaders Association, which counts Walmart Inc., Target Corp., and Home Depot Inc. among its members.
Recently, several organizations, including the Financial Technology Association, Blockchain Association, and National Retail Federation, urged President Trump to uphold the CFPB’s existing open banking regulations and counter JPMorgan’s initiatives in court. “You acknowledge the transformative potential of digital financial technologies and are spearheading efforts to enact and implement digital asset legislation,” they wrote in a letter. “The largest banks are directly opposing your vision of establishing America as the global leader in financial innovation.” The 2024 open banking regulation is now indefinitely paused, with its April implementation deadline suspended by a federal court judge following a request from the CFPB. The agency plans to revisit these matters from the ground up, a process that could span years and traverse multiple administrations before a new rule is established.
