EDITORIAL: JPMorgan Chase and Plaid show why Open Banking is more important than ever
Our thoughts on the latest massive development in the crypto and banking worlds.
JPMorganChase and Plaid recently announced a data agreement in which Plaid would pay a fee to JPMorgan to access customer data.
The agreement shocked both the finance and fintech world, as it came in the midst of a major fight over the “Open Banking Rule.” As the Washington Reporter covered in July, the Consumer Financial Protection Bureau’s (CFPB) Rule 1033 — dubbed the “Open Banking Rule” — began under President Donald Trump’s first administration, and gives consumers the ability to control their own data so that they can use tools like Venmo, Coinbase, Robinhood, and others for banking, investing, and financial transactions.
After the Biden administration finalized the latest version of the rule in 2024, big banks like JPMC sued to block the rule, and have more recently announced that they would begin charging fees to companies for accessing customer financial data. As many pointed out, the banks have a long history of political “debanking” and antagonism to financial technology, cryptocurrency, and any innovation they did not strictly control.
On July 30th, the Trump administration’s CFPB called on the courts to pause the litigation against the Open Banking Rule, announcing they would carry out their own rule making process for Rule 1033. The CFPB’s move was lauded by conservatives as a smart move to short-circuit the big banks’ efforts to both circumvent their authority and force anticompetitive, potentially illegal fees on Americans. It likely was also driven by concern that big banks levying their fees or deciding to cut off access to FinTechs altogether would cause major financial disruption.
As both sides submit comment and wait for the results of the CFPB rule making process, the announcement from Plaid and JPMorgan Chase is a surprising development.
A JPMC spokesperson said following the announcement that “JPMorganChase has a long history of working with Plaid and we’re excited that partnership will continue and the open banking ecosystem will continue to thrive.” The announcement, JPMorgan said, “will ensure that our customers can continue to quickly, safely, and securely access their financial data for years to come and stay connected to the products they rely on every day.”
Interesting, just days earlier there were rumors flying through the financial world that JPMorgan was threatening to cut FinTechs off completely from their systems, which would have amounted to the largest debanking incident in history.
As the terms of this deal have been kept secret, we likely won’t know whether they’re more favorable to JPMC or to Plaid. And we have no idea whether they represent a structure that would work for other platforms that require the same customer data JPMC doesn’t want to share (even if the customers the data represent demand it).
It’s fairly obvious why Plaid struck the deal they did — Plaid’s entire business, as well as their customers — the large network of FinTechs, crypto platforms, and other providers that rely on them — would have been catastrophically hurt if JPMC cut off service or decided to levy fees before the CFPB 1033 rule making period was completed.
While Plaid had the ability to negotiate, that might not be true for most fintech or crypto companies. That means there is still plenty at stake for consumers and businesses who have leveraged innovation, rely on open banking, and most of all — benefit from competition. Now, the CFPB needs to ensure the rule is in place to protect the larger ecosystem and safeguard crypto and fintech companies’ ability to continue to flourish in the U.S.
So as the CFPB drafts a new rule, a key consideration will be ensuring clear rules of the road to prevent the kind of anticompetitive behavior JPMorgan Chase has hinted at and threatened throughout this entire debate to ensure nobody is able to choke off competition.