JPMorgan's Data Fees Will Break Your Favorite Financial App

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What’s in the News?

JPMorgan Chase & Co’s (JPMC) recent fee announcement could cost some financial technology (FinTech) companies 1000% more than they earn per transaction. If you’re building in the space or have ever connected a bank account to an app, you’ll want to understand the impact of these fees.

How Your Financial Data Moves Between Apps

Before diving into the announcement, let’s review who’s involved with the access and aggregation of a person’s financial data.

The Key Players

It starts with you - the consumer. You have a few accounts across a few financial institutions, and you want a convenient way to access that information. Maybe you want to connect investment accounts into tax filing software. Maybe you want to look at your credit cards and bank accounts to get a sense of your overall spending. Whatever the case, there are multiple financial institutions that hold your data.

Financial apps exist to give you different ways to interact with your financial data. If you’ve ever used an app to budget or send money, that’s FinTech. The problem is, these institutions require individual integration: there’s no common protocol for exchanging consumer’s financial information nor requirement by law to do so. FinTechs would need to create bespoke technical connections for and contracts with thousands of financial institutions.

Enter data aggregators. These companies - like Plaid, Finacity, Yodelee, and MX - handle the direct integration with financial institutions and expose a consolidated integration point to other FinTechs. FinTechs still need to work out contracts and technically integrate with individual aggregators, but most integrate with one to three - still a much simpler option than thousands of direct integrations. Some FinTechs integrate with multiple aggregators to increase institution coverage and reliability, since there are institutions accessible to some aggregators but not others.

Integrations in Production

When I worked at a neobank, we used Plaid to make real-time balance checks when customers funded their accounts. This helped mitigate non-sufficient funds (NSF) fees for our customers and fraud risk for our operations team. Surprisingly, there’s no native way to verify account balances in real-time for standard bank-to-bank transfers. Without this check, we’d only discover the lack of funds after the ACH failed days later. We also used MX to enhance the transaction descriptions and categories we received from our card issuer. This process takes a raw network description like SQ *COFFEE SHOP and turns it into Coffee Shop with category Food & Dining.

At Sabal Finance, we use Plaid to continuously sync customer accounts to their collaborative workspace. This lets families see real-time transaction histories, balances, investment positions, and credit card details - then connect that data to non-financial information like contacts and custom reports. Without aggregator access, customers would need to manually update account information and enter every transaction.

Current Revenue Models

FinTech apps make money from consumers through some combination of ads, fees, subscriptions, and institutional partnerships. Data aggregators charge these apps per end-user connection and offer add-on services, like the aforementioned transaction categorization and description enhancement. The contracts are typically structured as a fixed platform fee and a variable cost based on customer and feature usage.

Today, Financial institutions have several ways to monetize their customer relationships:

• Service fees - charging monthly maintenance, ATM, and overdrafts fees
• Float - lending out your deposits and profiting from the interest
• Interchange - taking a percentage of every card transaction from merchants
• AUM fees - taking a percentage of investment accounts based on their current value
• Cross-selling - offering mortgages, loans, insurance products

JPMC wants to add a sixth revenue stream: charging for access to customer data.

JPMC’s New Fees

JPMC started talking about adding fees back in June and recently put those plans into action. In a July 11th article, Bloomberg reported that JPMC sent FinTechs pricing sheets for accessing customer data. These fees, which will allegedly take effect later this year, will vary based on their intended use. The largest fees will be applied to payment-focused companies.

In his 2024 Annual Report, here’s what JPMC CEO Jamie Dimon had to say about the fees:

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.

When banks utilize third party data, they will be, and in most cases already are, subject to these same obligations.

What Dimon says sounds reasonable: data protection costs money and transparency matters.

However, aggregators already address these concerns. People are shown the data they’re sharing (ex. account balances, transaction history), and FinTechs are required to show a message describing how that data will be used within the app. The aggregation industry is increasing its adoption of OAuth, a standard in the tech industry for data authorization. If you’ve ever signed into an application with Google, you’ve already used OAuth. Chase actually pioneered this approach with Plaid, and now more than 10 major institutions support OAuth with more sure to follow.

Adopting OAuth to access financial data is a huge win for consumers. Customers have direct control over data access and revocation, allowing them to remove an app’s access from the information provider - in this case, the OAuth-supporting financial institution. It also enables more reliable data updates, leading to a better customer experience.

OAuth support is an example of the protections FinTechs and their institutional partners already have in place. It’s also worth noting that FinTechs already operate under strict federal data protection requirements through the Gramm-Leach-Bliley Act, specifically its Safeguards Rule.

So, what’s the big reason for the fees? The pricing details give you a sense of Dimon’s intent.

According to the Bloomberg report, the fees JMPC intends to charge on a single transaction could exceed 1000% the revenue generated on the same transaction by FinTechs. Dimon has stated that FinTechs are a threat to financial institutions, so charging disproportionately more for the data than the amount of revenue FinTechs are able to generate with it could be construed as an attempt to build a moat.

Steve Boms, the Executive Director of the Financial Data and Technology Association of North America, thinks so. He’s quoted in the article calling the fee changes “an arbitrary and punitive tax on competitive offerings” that “curtail[s] innovation and undermine[s] a stronger American financial system”.

What’s Next for FinTechs and Consumers

Accessing a customer’s financial information through data aggregators is a significant part of a FinTech app’s customer experience and unit economics. These fees will likely propagate to the customer, increasing the cost of FinTech services - especially those that use multiple aggregators.

To compensate for the increased unit cost, FinTechs have three options:

1. raise their prices,
2. introduce ads, or
3. attempt to avoid the fees through manual data entry (ex. uploading statements).

All of these make apps worse.

For now, JPMorgan is the only company pushing these fees, but other banks - like PNC - are looking to follow suit. There’s a sense that FinTechs are profiting from infrastructure banks built without contributing financially and that the massive volume of requests institutions receive from aggregators are incurring substantial operational costs. A reasonable fee to cover infrastructure costs could make sense - but that’s not what we’re seeing here.

Here’s the thing though: it’s the customer’s data - not the institutions. If this were really about the technical problems JPMC cites, we’d solve them with technology. OAuth adoption is already improving integration security and privacy. Financial institutions could push data updates instead of forcing aggregators to repeatedly request updates. Standardized APIs, caching specifications, and structured formats like ISO 20022 all exist today and would make the entire system more efficient for everyone involved.

Instead, JPMC chose to impose fees that can exceed 1000% of what FinTechs earn per transaction. That suggests to me this isn’t about solving technical inefficiencies - it’s about extracting revenue from perceived competitors who depend on consumer data.

The technology solutions exist; the desire to implement them does not.

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