There’s a huge debate about banks and data. Should banks share data or sell data? This has been going on for over a decade. For example, Barclays tried to share and sell customer data back in 2013 and it hit the headlines; ING did the same in 2014 and got into similar issues. Both banks eventually reversed policies and the subject keeps coming back, as I blogged about last year especially as we now live in the age of open banking and data sharing.
By law in many jurisdictions, trusted third parties have access to customer data if the customer consents. This is why, when I make cross-border payments these days, you use the fintech app that then asks for authorisation to the bank app that then requires consent. In some cases, it gets even more confusing when you make a payment, where the merchant transfers you to a third party who refers you to the bank who asks for a text or email OTP code who then sends you back to the third party app and to the merchant. It is incredibly confusing imho. Instead of simplifying banking and payments, open banking has made it more complex. We have gone from a 4-pillar model to a 100-pillar model thanks to open banking. Apps, APIs, analytics and more are demanding data sharing and data access, and it is becoming a complex conundrum of connectivity.
Breaking through that noise is the latest move by JPMorgan. This month, they announced they would charge third parties for data access. This has caused a massive backlash because the people who pay the charges for access are the customers, as reported by AInvest:
JPMorgan Chase has implemented a new policy that requires fintech companies to pay fees for accessing customer account information. This shift marks a departure from the traditional practice of freely sharing data through intermediaries such as Plaid. The move has sparked significant backlash, particularly from the fintech and cryptocurrency sectors, which rely heavily on open banking infrastructure.
Are JPM just repeating the mistakes of Barclays and ING?
Not really, as the world has moved on. Barclays and ING were trying to monetize customer data for profit; JPM are trying to protect customer data, unless the customer really wants it. And this is the key point: why is a bank selling data? Is it to protect the customer or to monetize their data?
Data sharing is a critical component of financial connectivity today – that is unavoidable – and yet it begs the question as to what is the motivation for sharing data? Is it what the customer wants; what the bank wants; what the third party wants; and who gains from such data sharing and in what way? Is it for a better customer experience or purely to get the data for profit?
These questions don’t just apply to banking, but to all services. Take social media, and the fact that nearly all of your updates and posts are driven by data sharing for advertising profit. The difference is, however, that sharing my post about going to a Coldplay concert is very different to sharing my financial information ...
... or is it?
Our 2025 world lives in the age of everyone leveraging our data to make a buck. Should the banking industry be any different?
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...