Jamie Dimon, Chief Executive Officer of JP Morgan Chase & Company, on Thursday, October 24, 2024 during the annual meetings of IMF and World Bank at Washington, DC, US in the Institute of International Finance (IIF).
Kent Nishimura | Bloomberg | Getty images
JPMorgan Chase Fintech Middleman said – Companies that have helped a new generation of financial applications to join traditional checking accounts – flooding the bank’s system with unnecessary data requests.
An employee of JP Morgan Systems wrote last week in an internal memorandum for retail payments heads last week, “Agurgators are reaching customer data several times daily, even when the customer is not actively using the app,” a JP Morgan System employee wrote in an internal memorandum for retail payment chief last week. Melissa Feldsher. “These access requests are taxing our system extensively.”
Among the 1.89 billion data requests from middlemen killing JP Morgan’s system in June, only 13% was introduced by a customer for transactions, according to the memo, which was seen by CNBC.
Most of the data bridges known as API calls were for objectives to help improve fintech companies or to prevent fraud for other efforts, including data harvesting for sale, a person with a man with memo said that it was refused to be recognized between talks between JPMORAN and Fintech.
JP Morgan is the largest American bank by property, Preparation The middlemen to charge new fees for access to those systems that say that it is rapidly expensive to maintain it. Negotiations are going on between JP Morgan and Fintech middlemen, but the new fees may begin in October, people with knowledge of the matter said.
The bank’s move may cause upheaval in the fintech ecosystem, which thrives as aggregators Plain And Board Conventional banks with new arrival. The use of API was free for years, which provided benefits to the middlemen from selling connectivity to Fintech, which in turn offered accounts without fee or offered accounts with trading services.
The situation changed in May after the Consumer Financial Protection Bureau filed a proposal In support of One banking industry trial Demand to abolish the so -called “open banking” rule.
That rule was finalized by the Biden-era CFPB in the vanning months of that administration, Mandatory That banks had to provide data to the authorized parties for free. A week after the rule was passed, JP Morgan’s CEO Jamie Dimon Bankers called “Counter -attack“What he said was unfair rules.
Growing volume
This month is reported that JPMORGAN was planning to charge for customer data, First reported by Bloomberg, Venture led to allegations from Capital Investors and Fintech and Crypto officials that JP Morgan was engaged in “anti -anti -“, Fare Behavior “by putting Paywalls for customer data.
But JP Morgan says that it tolerates the rising cost by maintaining the infrastructure required for the increase in volume, as well as the fraud claims related to the payment made in the fintech ecosystem are also increased.
According to Memo, the total amount of API calls received by JP Morgan has exceeded double in the last two years.
According to the memo, the electronic ACH transactions were sent to the transaction sent, which is likely to be fraudulent claims as a result of fraud claims.
Memo said that JP Morgan saw about $ 50 million in claims of fraud from ACH transactions launched through Agrigeters, a person expects triple within 5 years.
Among the 13 fintech companies tracked in the bank memo, all came from the same company, more than half of the June activity with 1.08 billion API requests. Although the firms are not named, CNBC has learned that the biggest player represented in the data is Plain,
JP Morgan’s data suggests that only 6% of the plaid API calls were started by customers.
Plaid co-founder William Hockey and Zach Part
Source: Plade
Reach
Plade said in a statement to CNBC that the figure “incorrectly presents how data access works” because all activity begins when customers allow fintech companies when they sign up for accounts. Of course, many customers do not read the “terms and conditions” pages closely, with data-sharing revelations before opening new accounts.
Plade told CNBC, “Calling a bank’s API When no user is present, once they authorize a connection, there is a standard industry exercise that is supported by all major banks, so that consumers are supported to receive important alerts for overdraft fees or suspected activity,” Plad said.
Plad also stated that high fraud claims between JP Morgan’s aggregators were “misleading”, although it was not detailed.
“It is not surprising that with the demand of consumers for financial equipment, the amount of data access is increasing, which are more clever, faster and more sewn for their needs,” said by Plad.
“To be clear, we believe that it is necessary that the data sharing ecosystem works for all, including consumers, fintech developers, and financial institutions – many of which take advantage of open banking in their own products,” the company said.
The proposed fee schedule broadcast by JP Morgan may result in plaid payment as a result $ 300 million According to a Forbes report, in the new annual fees.
The rest of the companies tracked in the JP Morgan document are very small institutions; Only four other middlemen registered more than 100 million monthly API calls.
Bidding spread
If the biden-era “open banking” rules are killed by the courts, the main question is not whether middlemen will have to pay for data, but how much they will have to pay.
The back and forth between JP Morgan and middlemen, which spreads to the public view, to reach a new reality is acceptable to all.
JPMorgan has a productive interaction with many data aggregators who admit that they pull the data, if it is no longer free, they can change the method that according to a person, according to the knowledge of talks.
“I think both sides perfectly accept that they are things they can do for the right size call volume,” this person said.
