rewrite this title JPMorgan on Data Access Agreements: “The Free Market Worked” – Finovate

In July, JPMorgan Chase (JPMC) began notifying fintech data aggregators that it intended to begin charging significant fees for access to its customers’ bank account information. The shift triggered concern among aggregators about their business models, stirred interest among other banks eyeing similar moves, and raised red flags with regulators concerned about the broader economic fallout. Now, nearly five months later, the bank and its fintech partners have struck a deal on those fees, according to CNBC.

JPMC spokesperson Drew Pusateri said that the bank has updated contracts with aggregators that make up more than 95% of the data pulls on its systems, including Yodlee, Morningstar, and Akoya. Plaid was the first player to mutually agree on a new data access contract, inking a deal in September.

“We’ve come to agreements that will make the open banking ecosystem safer and more sustainable and allow customers to continue reliably and securely accessing their favorite financial products,” Pusateri said in a statement. “The free market worked.”

In this “free market” that Pusateri referenced, JPMC ultimately agreed to charge data aggregators a lower and more predictable price than what was initially proposed in July. While still a paid model, the fact that the terms were negotiated within four months indicates that market pressure, bargaining power, and competitive dynamics shaped the final outcome without the need for regulation.

While the parties declined to disclose specific details regarding the price, as well as the term of the agreements, it is clear that the revised agreements preserve commercial viability for the aggregators while allowing JPMC to monetize the data access.

By agreeing on reasonable terms, aggregators are able to operate with certainty when it comes to data sharing and open banking as the formal agreement brings clarity to open banking operations at a time when the CFPB has paused to revise Section 1033 of Dodd-Frank.

Importantly, today’s announcement marks a sea change in financial services. JPMC, which has historically been a leader in many aspects of banking, has signaled to other firms that they can generate a new revenue stream by leveraging their consumers’ financial data. And given JPMC’s scale and market influence, the move to charge fees will not be an isolated event. Other major banks are now positioned and incentivized to adopt comparable fee structures.

Regardless of the time frame it takes others to adopt a similar strategy, the potential of a new revenue stream will reshape the economics of US open banking over the next 12 to 24 months.

Photo by Savvas Stavrinos

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