JPMorgan to Share Customer Data With Fintechs It Once Scorned

(Bloomberg) -- JPMorgan Chase & Co. won a data-sharing agreement with Plaid Technologies that will allow its customers to more easily push banking data to outside apps for managing finances.

Plaid Technologies, which connects banks with financial-technology applications, will access JPMorgan customer data through the lender’s application programming interface, or API. That means Plaid will be able to download the data without storing customer user names and passwords.

Key Insights:

  • JPMorgan Chief Executive Officer Jamie Dimon has complained that fintechs will take more data than they need and continue to siphon information long after a customer stops using their services. His bank is trying to address that: Customers are able to see the fintechs that have permission to collect data on the bank’s website and mobile app, and will be able to later block that access.
  • Plaid allows consumers to send data to fintech companies such as Betterment LLC, PayPal Holdings Inc.’s Venmo and Coinbase Inc. so those firms are able to see bank balances and authenticate accounts. Banks want startups to use their API, which give lenders more control over what data is distributed and how it is released. Fintechs say those restrictions sometimes prohibit them from fulfilling certain services.
  • If a fintech doesn’t use a bank’s API, it can find other ways to scrape financial data, such as by requesting user names and passwords. Banks are working to cut off these back doors: JPMorgan announced Monday that it’s begun blocking high-volume traffic from computer addresses it doesn’t recognize and can’t validate.
  • JPMorgan’s deal with Plaid -- which has tussled with some banks in the past -- represents a compromise in the long-running battle for access to data. “Customers can see who is using their data and how, and they can also control it,” Paul LaRusso, JPMorgan’s head of digital data sharing and aggregation, said in a telephone interview. “It achieves the goal of giving customers a way to safely share their data with third party apps.”

Know More

  • “This represents a major evolution in the way Chase thinks about working with fintech,” Plaid CEO Zach Perret said in a telephone interview. “This agreement is a really big step forward from one of the largest banks in the country saying fintech is a really good thing for the consumer and they want to support it.”
  • Read Dimon’s commentary from 2016 about customer data.

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