JPMorgan Chase wins battle with fintech companies over fees

JPMorgan Chase CNBC has secured deals that ensure it gets its money from the fintech companies responsible for nearly all data requests made by third-party apps linked to customers’ bank accounts, CNBC has learned.

The bank has signed updated contracts with fintech brokers that account for more than 95% of data withdrawals on its systems, including Plaid, Yodlee, Morningstar and Akoya, according to JPMorgan spokesman Drew Pusateri.

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

The achievement is the latest development in a long-running dispute between traditional banks and the fintech industry over access to customer accounts. For years, brokers like Plaid paid nothing to tap into banking systems when a customer wanted to use a fintech app e.g Robinhood To withdraw funds or check balances.

This dynamic appeared to be enshrined in law in late 2024 when the Biden-era Consumer Financial Protection Bureau finalized what is known as the “Open Banking Rule” that would require banks to share customer data with other financial companies at no cost.

But the banks sued to block the CFPB rule from taking effect, and appeared to gain the upper hand in May after the Trump administration asked a federal court to overturn the rule.

Shortly after, JPMorgan — the largest U.S. bank by assets, deposits and branches — reportedly told brokers that it would begin charging up to hundreds of millions of dollars for access to its clients’ data.

In response, fintech, cryptocurrency and venture capital executives argued that the bank was engaging in “anti-competitive, rent-seeking behavior” that would harm innovation and consumers’ ability to use popular apps.

After weeks of negotiations between JPMorgan and the brokers, the bank agreed to lower rates than it originally proposed, while the fintech brokers received concessions on servicing data requests, according to people familiar with the talks.

Fintech companies preferred to ensure data exchange rates were fixed because it is unclear whether the current CFPB, which is reviewing the open banking rule, would favor banks or fintech companies, according to a venture capital investor who requested anonymity to discuss his portfolio companies.

The bank and financial technology companies refused to disclose details of their contracts, including the amount the brokers agreed to pay and how long the deals would run.

These deals represent a shift in the power dynamic between banks, brokers and fintech apps that increasingly threatens incumbents. More banks are likely to start charging fintech companies for access to their systems, according to industry observers.

“JPMorgan tends to be a trendsetter,” said Brian Shearer, director of competition and regulatory policy at Vanderbilt Policy Accelerator. “It’s kind of the leader of the pack, so it’s fair to expect the rest of the big banks to follow.”

Shearer, who worked at the CFPB under former Director Rohit Chopra, said he is concerned that the development will create a barrier to entry for startups and ultimately lead to higher costs for consumers.

Supporters of the CFPB’s 2024 rule said it gives consumers control over their financial data and encourages competition and innovation. Banks, including JPMorgan, said it exposed them to fraud and unfairly burdened them with high costs of maintaining systems that brokers and their clients increasingly exploited.

When Plaid’s deal with JPMorgan was announced in September, the two companies issued a dual press release emphasizing the continuity they offer clients.

But Plaid, the industry group to which it belongs, strongly criticized the development, noting that while JPMorgan won a decisive battle, ongoing skirmishes may continue in the courts and in the public.

“Charging exorbitant fees is anti-competitive, anti-innovation, and goes against a plain reading of the law,” Penny Lee, CEO of the FinTech Association, told CNBC in response to JPMorgan’s achievement.

““These agreements are not the free market at work, but rather big banks using their market position to take advantage of regulatory uncertainty,” Lee said. “We urge the Trump administration to uphold the law by maintaining the current ban on data access fees.”