Dive Brief:

• Large banks, data aggregators and fintechs are wrestling over the costs of customer data sharing for a system of open banking as the issue plays out in federal court and with financial regulators.
• Aggregators’ large data draws are “a huge tax” on JPMorgan Chase’s infrastructure, said Kate Prochaska, a managing director at the largest U.S. bank said Tuesday in a panel discussion about open banking and the bank’s decision to impose data-access fees. The banking event was sponsored by a bank trade association and The Hill, a Washington news outlet.
• JPMorgan’s access fees now cover all of the digital data requests the bank receives from companies in the open banking ecosystem and apply to each call as opposed to a monthly cost, Prochaska said.

Dive Insight:

JPMorgan led the industry earlier this year in adding new fees for aggregators, such as Plaid and MX Technologies, that collect consumer data they provide fintechs for a range of financial apps and services, including payment processing.

Amid the market players’ fee debate, the Consumer Financial Protection Bureau is reworking an October 2024 rule from the Biden administration on open banking, which drew a lawsuit from the BPI in a federal court in Kentucky. 

The CFPB told a federal court in July that it would revamp the rule shortly after JPMorgan surprised and alarmed some in the industry with the new access fees. The Financial Technology Association won permission to intervene in the lawsuit, and has lobbied the CFPB not to allow banks and other providers to assess fees as part of the rule.

However, the future of an open banking rule seems uncertain given the CFPB faces an uncertain future, noted Adam Rust, director of financial services at the Consumer Federation of America.

“Who is going to enforce (the rule), if it happens?” Rust said during the panel discussion. “There are many reasons to be concerned that it will immediately be relitigated in courts, especially if there's a fee that comes out of the reconsideration rule.”

The CFPB’s acting director, Russell Vought, has spoken publicly about shuttering the bureau and has declined to request funding for the agency’s operations in 2026.

The CFPB’s open banking rule aims to spur greater competition among banks and other financial services companies, including neobanks, other fintech startups and those that enable payments. Giving consumers direct access to their financial information – and where they send it – can also reduce prices across the industry and improve customer service, the bureau said when it formulated the rule.

In terms of data volume, some aggregators were collecting as much as 50% more customer information from JPMorgan than they needed for fintechs, Prochaska argued. The bank’s APIs are “pinged” for data two billion times per month, up from one billion in 2023, Prochaska said. The bank serves 11,000 apps, up from 5,000 two years ago, she said.

“Once we announced our intention to start actually charging, people are more judicious and thoughtful about it,” Prochaska said, adding that the bank had “learned a lot” from its negotiations with data collectors. “Once people actually have to pay for things, they start thinking about, ‘Well, do I need to ping this often?’”

Angelena Bradfield, the FTA’s head of policy, said that open banking has evolved without fees. It was only recently that “competitive elements” began to show up with the banks imposing fees, she said.

Consumers also may increase the amount of data that a fintech pulls from a financial institution by checking an app frequently, with the amount of data collected a function of the user’s experience, Bradfield said.

Natalie Talpas, an executive vice president at PNC Financial Services Group, said “more data is being captured than is expected and it’s being stored and used by unregulated entities.”

A PNC spokesperson declined to comment Tuesday about whether the Pennsylvania-based bank is imposing data-access fees. In July, PNC Chief Executive Bill Demchak applauded JPMorgan’s decision during a quarterly earnings call and said his bank was exploring the issue.

In an Oct. 21 letter to the CFPB, responding to the bureau’s request for comment on the revised rule, a PNC executive advocated for the bureau to allow data providers to charge for access.

“When third party access to consumer data is free and unlimited, third parties have little incentive to minimize cadence, scope, or retention of data they do not need and will not use,” wrote Alex Overstrom, PNC’s head of retail banking.