The news: JPMorgan Chase and Plaid renewed their data access agreement, resolving a dispute that arose when the bank started charging fintechs for access to customer data, per PYMNTS.
The new deal includes a pricing structure but reportedly won't result in new fees for Plaid customers.
Why it matters: JPMorgan said it would start charging fintechs to access customer information, citing that API calls were taxing its systems. And according to JPMorgan’s original fee schedule it circulated, Plaid could have ended up paying $300 million per year in fees to work with JPMorgan, per CNBC. However, it’s unlikely this is what Plaid has agreed to pay.
The resolution between these two industry giants sets a precedent for how future data-sharing agreements might be structured, as banks like JPMorgan seek compensation for the infrastructure and security costs associated with open banking.
Our take: It’s noteworthy that these companies reached an agreement while the Consumer Financial Protection Bureau is still collecting public comments on a new iteration of its open banking rule. The agreement may influence the rule’s final outcome and encourage other financial institutions (FIs) who are considering similar moves.
But it’s possible agreements may look different depending on the weight carried by FIs. For example, the risk of losing access to JPMorgan's estimated 82 million customers would be a financial blow that fintechs like Plaid simply cannot afford, making the bank a must-have partner. But smaller FIs may not be able to command the same level of threat.
Smaller FIs will likely have to continue to offer free or low-cost data access to remain attractive partners. This could create a clear incentive for fintechs to work with smaller FIs, as it may be a more cost-effective and collaborative relationship.
This is our immediate perspective. We’re actively developing this story throughout the day with more research and data from the EMARKETER database. Our in-depth analysis will be included in our client-only Briefings. Non-clients can click here to get a demo of our full platform and coverage.
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