JPMorgan Chase Says Most API Calls Come From FinTechs

JPMorgan Chase reportedly found that most of the application programming interface (API) calls from middlemen received by its systems in June came from FinTech companies.

Only 13% of the data requests were initiated by customers for transactions, CNBC reported Monday (July 28), citing a JPMorgan Chase memo.

The FinTech companies’ API calls were done to help them improve their products, prevent fraud or harvest data for sale, according to the report.

In the bank’s memo, a systems employee wrote that the requests “are massively taxing our systems,” per the report.

JPMorgan Chase is preparing to start charging FinTech middlemen new fees to access its systems as soon as October and is negotiating the fees with them now, according to the report.

API access had been free for years, but the landscape changed in May when the Consumer Financial Protection Bureau (CFPB) came out in support of ending the Biden-era open banking rule, the report said.

JPMorgan Chase has said that under the current arrangement, it bears the cost of maintaining the infrastructure and dealing with elevated fraud claims in transactions that involve data middlemen, per the report.

One FinTech company that uses data from the bank, Plaid, told CNBC that all API calls begin with customers giving permission for them when they sign up for account, that claims of higher rates of fraud are “misleading,” and that the company wants the data sharing ecosystem to benefit consumers, FinTechs and financial institutions alike.

“It is not surprising that the volume of data access is increasing alongside demand from consumers for financial tools that are smarter, faster and more tailored to their needs,” Plaid said, per the report.

JPMorgan Chase CEO Jamie Dimon wrote in an annual letter to shareholders released April 7 that 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,” Dimon wrote in the letter. “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.”