Two critical considerations that have yet to be resolved — regulations and fees for data access — are, arguably, causing friction between big banks and FinTechs.
The latest salvo came this week, as a broad coalition of FinTechs and other stakeholders, including enterprises, sent a letter to President Donald Trump, saying he should push the Consumer Financial Protection Bureau to “ask the court to affirm that consumers, not big banks, control their financial data and have the right to access and share it with companies of their choice at no cost.”
The so-called open banking rule is being examined in the courts, where the CFPB has filed briefs indicating that the rule is unlawful and should be struck down.
Looking at a July 29 Deadline in the Courts
The government is due to file a brief in the lawsuit by Tuesday (July 29), and the letter — signed by the American FinTech Council, the National Retail Federation and others — asks Trump to move against the biggest banks.
“These large, incumbent banks are taking aggressive action to unwind the recent progress achieved under your administration by moving to charge exorbitant fees for access to FinTech and crypto apps,” the letter said. “These actions risk debanking Americans from the financial services of the future, all to protect big banks’ competitive advantage.”
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In an example of the direct appeal to Trump, the letter added: “You have always stood for individual freedom and against entrenched interests that limit opportunity. Protecting consumer financial data rights is a direct extension of that vision.”
The CFPB’s rule would be implemented in stages, applying to big banks by the middle of next year and to smaller banks with additional data-sharing deadlines through 2030.
The PYMNTS Intelligence report “Consumer Sentiment About Open Banking Payments” found that 46% of consumers would be “highly willing” to use open banking for bill payments and financial services. Just 11% of consumers in the United States, however, have used open banking payment options in the last year.
The explicit mention in this week’s letter of fees came after JPMorgan said it would start charging fees on data aggregators for data access. PNC Financial Services seems to be mulling fees, too. During its second-quarter earnings call with analysts this month, CEO Bill Demchak was asked about how the bank was thinking about data access fees.
“We’re in discussions on it,” Demchak said. “I applaud what JP[Morgan] did. I think they’re exactly right. I think there’s a big cost to keeping this data secure and producing it in a form that’s readable for our clients. So, we’re thinking about it.”
For banks, access via APIs means investments in IT and security to facilitate that access. The sheer volume of API calls can be staggering. The United Kingdom provides a read across, given stats that showed about slightly less than 2 billion calls monthly in May and June.
On his own firm’s conference call with analysts this month, as second-quarter earnings results were announced, JPMorgan CEO Jamie Dimon said: “So, forget pricing for a second. We are in favor of the customer, but we think the customer has the right to if they want to share their information. What we ask people to do is … do they actually know what’s being shared? What is actually being shared? It shouldn’t be everything. It should be what their customer wants. It should have a time limit because some of these things went on for years. It should not be remarketed or resold to third parties… And then the payment, it just costs a lot of money to set up the APIs and … to run the system’s protection. So, we just think it should be done and done right. And that’s the main part.”
