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Chase Strikes First With Open Banking Blitzkrieg That Could Upend US Fintech Ecosystem

Chase Strikes First With Open Banking Blitzkrieg That Could Upend US Fintech Ecosystem

"Decacorn" Bilt To Part Ways With Wells Fargo, Wise & Monzo Hit With AML Fines, Fintech Funding and M&A Activity Dip in June

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Jason Mikula
Jul 13, 2025
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Fintech Business Weekly
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Chase Strikes First With Open Banking Blitzkrieg That Could Upend US Fintech Ecosystem
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Hey all, Jason here.

It’s smack-dab in the middle of summer, but that means I’ve already pretty much locked in my fall conference travel schedule. I’ll be hitting the major events, like Finovate in New York and Money20/20 in Vegas, as well as a plethora of smaller, more focused events.

If you’re interested in collaborating on any live podcasts / dinners / happy hours in conjunction with fall conferences, drop me a line and let’s figure something out!

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Chase Strikes First With Open Banking Blitzkrieg That Could Upend US Fintech Ecosystem

Storm clouds have been gathering for sometime over US open banking and, by extension, the broader fintech landscape.

While there are legitimate arguments that the data portability enabled by open banking is supportive of the pro-competition and populist narratives espoused by some stakeholders in the MAGA coalition, those talking points ran headlong into a much more dearly held goal: dismantling a longstanding Republican bogeyman, the Consumer Financial Protection Bureau.

There's a storm coming..." Sarah Connor in The TERMINATOR
Image: Terminator/Orion Pictures

Fears about what a wholesale dismantling of the CFPB could mean for the recently finalized 1033 open banking rule were realized earlier this year when the Bureau abruptly switched sides in litigation brought against it by a small Kentucky financial institution, Forcht Bank, the Kentucky Bankers Association, and the Bank Policy Institute (henceforth collectively referred to as “BPI.”)

In May, the CFPB asked the court to rule in BPI’s favor by asking for summary judgment, essentially agreeing with the trade association, which represents the country’s largest banks, that the CFPB had exceeded its statutory authority and violated the Administrative Procedures Act by acting in an arbitrary and capricious manner in how it developed aspects of the rule.

The Bureau’s motion for summary judgment, if granted, would functionally vacate the finalized open banking rule, though the statutory requirement of a personal financial data right included in Dodd-Frank would remain the law.

Now, the rule hasn’t been vacated yet — a trade association that largely represents non-bank financial technology companies, the Financial Technology Association, was granted the right to intervene in the case and has filed its own motion for summary judgment.

In theory, vacating the rule should merely be a continuation of the status quo.

Open banking rule compliance timeline by institution asset size. Image: DLA Piper

After all, even though the rule has been finalized, the largest banks would not have to comply with it until April 2026, banks with assets between $850 million and $1.5 billion would have until April 2030 to comply, and those institutions with less than $850 million in assets would be exempt from the rule altogether.

Chase’s “Punitive” Fee Proposal Could Cripple Open Banking

JPMorgan Chase, the country’s largest bank, with more than $3.6 trillion in assets, isn’t waiting for a resolution to BPI’s lawsuit challenging the open banking rule.

Word began leaking out last week that US banks had developed a data access fee schedule.

Bloomberg confirmed that mid-day Friday, reporting:

The largest US bank has sent pricing sheets to data aggregators — which connect banks and fintechs — outlining the new charges, according to people familiar with the matter. The fees vary depending on how companies use the information, with higher levies tied to payments-focused companies, the people said, asking not to be identified discussing private information…

The fees — expected to take effect later this year depending on the fate of a Biden-era regulation — aren’t final and could be negotiated.

While specific pricing hasn’t yet been publicly disclosed, Bloomberg reports that JPMorgan Chase’s proposed fees could exceed the revenue some companies generate on a single transaction “by as much as 1,000%,” according to a source familiar with the matter.

JPMorgan Chase and CEO Jamie Dimon haven’t shied away from commenting on open banking and data sharing practices over the years.

In fact, JPMorgan Chase was one of the earliest critics of “screen scraping,” or the practice of using consumers’ banking credentials to virtually login on their behalf and scrape needed data by parsing the web pages served by Chase’s online banking site.

Warning about the insecure nature of screen scraping, JPMorgan Chase was a vocal proponent encouraging the adoption of more secure API-based data sharing.

The final open banking rule substantially progressed the industry towards consensus around sunsetting screen scraping in favor of APIs.

Still, JPMorgan Chase and other large banks have continued to have reservations about the final rule, including around disclosures, how customer data is collected, stored, and used, liability for data breaches, and, yes, costs.

CEO Jamie Dimon used a portion of his 2024 shareholder letter to opine on the topic, writing at the time (spacing adjusted and emphasis added):

Third parties want full access to banks’ customer data so they can exploit it for their own purposes and profits.

Contrary to what you may read, we have no problem with data sharing but only if it is done properly: It must be authorized by the customer — the customer should know exactly what data is shared and when and how it is used; third parties should pay for accessing the banking system and payment rails; third parties should be restricted from using the customers’ data for purposes beyond what the customer authorized, and they should be liable for the risks they create when accessing and using that data.

Still, in his 2024 shareholder letter, Dimon leaves the obvious part unsaid: consumers leveraging open banking to move data from their JPMorgan Chase account to third-party fintechs represents a legitimate competitive threat to the bank.

Dimon has, though, made clear he views fintechs as a competitive threat with, at times, colorful language. He memorably once said on an analyst call that JPMorgan Chase should be “scared shitless” about the threat posed by fintechs, even taking aim specifically at open banking data stalwart Plaid in remarks on that call.

Payments may be the area Dimon and JPMorgan Chase are most concerned about, based on how sources familiar with the proposed fee structure described it.

JPMorgan Chase has long been aware of the potential for account-to-account payments, also referred to as pay by bank, to undermine card payment revenue.

In the US market, open banking has been a key enabler of pay by bank, simplifying the process by which users share the necessary payment credentials, typically bank routing and account number.

Rather than needing to remember and type in this information manually, users can use an open banking service to share this information — a process that consumers are increasingly familiar and comfortable with.

In addition to the routing and account number, open banking services can also allow payment providers and merchants to mitigate fraud and credit risk, particularly for slower ACH payments, by analyzing account information, such as current balance and how long the account has been open.

Charging even a moderate fee could make the pay by bank use case uncompetitive to traditional card rails.

And, sources familiar with the proposed pricing told Fintech Business Weekly, the fee structure JPMorgan Chase put forth is “punitive,” in general, and particularly for payments-related API calls.

Increased Costs Could Upend Unit Economics of Open Banking Use Cases

The implications of a per API call fee are manifold.

Accessing big banks’ consumer data has never really been “free,” per se.

The overwhelming majority of companies that ingest consumer banking data do so via “aggregators,” like Plaid, MX, and Finicity, rather than by building and maintaining their own connections to the nearly 10,000 banks and credit unions in the United States (not to mention countless other non-depository financial institutions.)

Companies do pay the aggregators for accessing consumer data and, increasingly, for value-add products and services derived from consumer data, such as credit scores based on cashflow underwriting, identity verification services, and payments-related capabilities.

This intuitively makes enough sense. First and foremost, firms are paying the aggregators for their infrastructure: for building and maintaining the ability, including, as needed, commercial and contractual relationships, to access consumers’ data held at financial institutions.

But, historically, these aggregators have not paid the banks for this data.

If aggregators are forced to begin paying banks on a per data access basis, those costs will inevitably be passed along to aggregators’ fintech customers, and, presumably, those fintechs’ end users.

How fintechs respond to any increased cost of accessing consumer banking data via aggregators is likely to depend heavily on how and why they’re using that data and what alternatives, if any, there are. Some examples:

Obtaining and/or verifying bank routing and account number: there are a multitude of reasons why a fintech (or bank, for that matter) may need to obtain or verify a user’s bank account information.

Perhaps the most common use case is linking a new app or service, like Venmo or Cash App, in order to enable the transfer of funds from the linked bank account. Linking an account should typically be a one-off event, so perhaps having a higher cost to do so is unwelcome, but not overly burdensome, especially vs. the fallback of asking a user to manually input their routing and account information — data points most consumers do not know off the top of their head.

Another reason to obtain or verify account ownership information is as a fraud prevention measure in consumer lending. Verifying the name on the account that funds are being disbursed to matches the borrower’s name is a common precaution. There are a multitude of ways of doing this, but leveraging open banking is an increasingly common one. Should the economics of using open banking for this change, firms could prioritize other digital mechanisms, like checking Early Warning Systems (which also costs money and has uneven coverage), or revert to more manual and less reliable methods, like asking users to upload images of checks or bank statements.

Enabling “instant” ACH: one of the many nearly invisible conveniences made possible by open banking data is the mirage of seemingly real-time payments on traditional ACH rails.

While it has long been possible to transfer funds instantly via card network rails, doing so is relatively expensive, with companies often charging 1% or 2%, typically up to a fixed cap.

As an alternative, many apps where speed is desirable will allow users to deposit or transfer funds via ACH, but make them available instantly — even though the funds may not settle for several days.

Popular apps like Robinhood and Wise offer this capability. In doing so, they are functionally taking a short duration credit risk by fronting funds to their users before their ACH debit clears.

Services underwrite this credit risk by using open banking data to assess the account from which a user is depositing money: how long has it been open? Do they have enough money in the account to cover the transaction they’ve initiated? What is the average/high/low balance in the account?

Increasing the cost of the data necessary to do this analysis may impact to what users and in what circumstances this convenience is made available.

Underwriting credit with cashflow data: perhaps one of the most impactful use cases of open banking data is cashflow-based underwriting.

While consumer credit decisioning has always tried to answer two questions — does the applicant have the ability to repay? and do they have the willingness to repay? — traditional credit bureau data presents an incomplete answer to these questions.

Bureau data speaks effectively, though not comprehensively, to the liability side of a consumer’s balance sheet and P&L and to their repayment history, but does a rather poor job of speaking to the assets and income of an applicant.

This hasn’t been a major challenge for underwriting prime and super-prime borrowers, but for those with a less-than-prime credit history and especially for thin-file and no-file borrowers, relying primarily on bureau data has often meant they have fewer, more expensive borrowing choices, or none at all.

Cashflow underwriting, made possible at scale and in an automated fashion via open banking, has helped boost inclusion and access to affordable credit for non-prime borrowers.

Increasing the cost for lenders to pull this data seems likely to reduce consumer access to credit, at least at the margins.

While there arguably are alternatives, like asking applicants to upload copies of bank statements, these are higher friction, more susceptible to fraud, and may not necessarily be any less expensive.

Overdraft avoidance, personal finance management, portfolio servicing and collections: in a per API call fee regime, use cases that require ongoing access to a user’s bank account, as opposed to a one-off pull, are most likely to have their business model and unit economics disrupted.

For example, personal financial management and so-called “overdraft avoidance” apps monitor users’ bank account transactions and balances in an ongoing manner. Some lenders leverage open banking data as part of their portfolio management, line assignment, servicing, and collections strategies, which also require ongoing monitoring and analysis of how users are managing their bank accounts.

But these use cases require repeatedly pulling users’ bank account data — daily, or potentially with even greater frequency.

A substantial increase in data access costs could dramatically impact the unit economics and business models of companies that have come to depend on open-ended access to users’ bank account data.

This may be particularly true for companies serving lower-income and lower-credit score consumers, who tend to be more difficult to serve profitably to begin with.

Consequences Will Take Time to Come Into Focus

At this point, it’s impossible to know exactly how this will play out. The only bank publicly mentioned as intending to start charging fees is JPMorgan Chase. But you can be sure if Chase is successful in doing so, others will follow suit.

The lawsuit seeking to vacate the 1033 rule hasn’t yet been decided, meaning there is still a chance — albeit one that feels increasingly small — that the judge in the case will side with the Financial Technology Association and preserve the final open banking rule as is. Though the judge’s recent rejection of amicus briefs from other groups seeking to support FTA’s position doesn’t bode well.

Still, even if the FTA prevails and preserves the rule (for now), there is an undeniable sense that battle lines have been drawn and that the winds have shifted in banks’ favor.

How data access fees impact aggregators’ business model — Plaid, MX, Finicity, et al — and the fintechs that depend on them will take time to come into focus.

As described above, there may be open banking-supported use cases where the unit economics no longer make sense.

Facing fees that could effectively make open banking as it exists today uneconomic for many use cases, some have suggested aggregators could simply shift back to screen scraping approaches that were used prior to the development of more secure APIs.

But the volume of open banking activity today is multiple orders of magnitude greater than it was in screen scraping’s heyday — meaning, if those screen scraping activities are originating from a handful of aggregators, banks will be able to more easily detect and block them, should they desire to do so.

There’s an alternate and perhaps scarier scenario: with the explosion of AI tools and “vibe coding,” rather than rely on aggregators to access consumers’ banking data, whether that’s via an API or screen scraping, fintechs could choose to develop their own screen scraping capability internally.

With the estimated number of fintechs in the US exceeding 10,000, if even a fraction decide to jerry-rig their own screen scraping capability, the potential for security risks to consumers and misuse of their data could be massive.

As prior regulatory shifts have amply shown — yes, I’m thinking Durbin amendment — recalibrating the economics across financial services stakeholders nearly always has unintended consequences, causing ripple effects that play out over years or even decades.

Many fintechs in the US meet the needs of consumers that established financial institutions have done a poor job of serving.

Key value propositions, especially in fintech banking and payments apps, have included minimizing friction and lower or no fees vs. products and services offered by incumbent banks.

Should open banking data access costs rise substantially, fintech apps may end up facing a set of tradeoffs that include reverting to more manual, friction-filled processes, deprioritizing serving customer segments that generate less revenue, and/or passing costs along to consumers by adding or increasing pricing, fees, and/or penalties.

Though, to be fair, continuing along the status quo path also wouldn’t be without consequences. While covered institutions would be required to make consumer data available, doing so isn’t without cost to those entities.

Creating, securing, and maintaining data access APIs isn’t free. How covered institutions end up compensating for those increased costs — higher minimum balance requirements? increasing overdraft and non-sufficient funds fees? — is unknown and will only become clearer in retrospect.

What is clear now is that, in banking as in life, there is no free lunch.

Bilt, Now A “Decacorn,” Will Part Ways With Wells Fargo

Will Wells Fargo’s loss be First Electronic Bank’s and Cardless’ gain?

While most attention has been focused on the loyalty and rewards network and credit card startup’s $250 million fundraise — valuing the company at a massive $10.75 billion — there was some other interesting news tucked into Bilt’s announcement last week.

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