JPMorgan Chase wins fight with fintech firms over fees

JPMorgan Chase It signed agreements that ensure payments are made by fintech firms responsible for nearly all data requests made by third-party apps linked to customers’ bank accounts, CNBC has learned.

The bank has signed updated agreements with fintech intermediaries who account for more than 95% of the data pulled from its systems. plaidYodlee, Morning Star and Akoya, according to JPMorgan spokesman Drew Pusateri.

“We have reached agreements that will make the open banking ecosystem more secure and sustainable, allowing customers to continue to access their favorite financial products reliably and securely,” Pusateri said in a statement. he said. “The free market worked.”

The milestone marks the latest twist in a long-running dispute between traditional banks and the fintech industry over access to customer accounts. For years, intermediaries like Plaid have paid nothing to listen to banking systems when a customer wants to use a fintech app like the one below. robinhood to withdraw money or check balances.

This dynamic emerged in late 2024 when the Biden-era Consumer Financial Protection Bureau was signed into law. finalized What’s known as the “open banking rule” requires banks to share customer data with other financial firms at no cost.

But banks have sued to block the CFPB rule from taking effect and appear to have the upper hand after the Trump administration asked a federal court to strike down the rule in May.

Shortly thereafter, JPMorgan, the largest bank in the United States by assets, deposits and branches, hundreds of millions of dollars For access to customer data.

In response, fintech, crypto and venture capital executives called the bank’s “anti-competitive, rent seeker behavior that harms innovation and consumers’ ability to use popular applications”.

After weeks of negotiations between JPMorgan and brokers, the bank agreed to lower pricing than it had initially proposed, while fintech brokers won concessions over meeting data requests, according to people with knowledge of the talks.

Fintech firms preferred the certainty of fixing data sharing rates because it is unclear whether the current CFPB is in the process of being renewed. review The open banking rule would favor banks or fintechs, according to one venture capital investor who asked to remain anonymous to discuss portfolio companies.

The banks and fintech firms declined to disclose details about their contracts, including how much brokers agreed to pay and how long the deals would be in place.

“JPMorgan tends to be the trendsetter. They’re kind of leading the pack, so it’s fair to expect the other big banks to follow,” he said. Brian ShearerDirector of competition and regulatory policy at the Vanderbilt Policy Accelerator.

Shearer, who worked under former CFPB director Rohit Chopra, said he was concerned this development would create a barrier to entry for startups and ultimately lead to higher costs for consumers.

Proponents of the 2024 CFPB rule said it gives consumers control over their financial data and encourages competition and innovation. Banks, including JPMorgan, said this left them exposed to fraud and unfairly burdened them with the increasing costs of maintaining systems that are increasingly tapped by brokers and their customers.

When Plaid’s deal with JPMorgan was announced in September, the companies released a statement. bilateral press release It emphasizes the continuity it provides to customers.

But industry group The company, of which Plaid is a part, harshly criticized the development, signaling that the ongoing conflict could continue in the courts and in public despite JPMorgan winning a decisive battle.

“Imposing excessive tolls is anti-competitive, anti-innovative and contrary to a plain reading of the law,” he said. penny leeIn response to JPMorgan’s milestone, the CEO of the Financial Technology Association told CNBC:

““These deals are not the workings of a free market, but rather large banks using their market positions to take advantage of regulatory uncertainty,” Lee said. “We urge the Trump Administration to support the legislation by continuing the current ban on data access fees.”