JPMorgan Chase is putting pressure on FinTechs to transition to a more secure method built on its application programming interface (API) technology.
The bank, which spends $11 billion in technology each year, has given FinTechs a July 30th deadline to sign data access agreements with the bank. The agreement would stop FinTechs from using customers’ passwords to access all their financial data. Instead, they will connect to a set of bank programming code known as an API, that grants access only to limited account information authorized by the consumer.
A JPMorgan spokesman confirmed that letters were sent out to FinTech companies in late January, requesting that they agree to a “concrete plan” to transition to the new method. If not, the firms will lose all automated access to the data.
“We’ve been working on this with aggregators and fintechs since 2016 because our secure API is the best way to help our customers make smart money decisions more easily and safely,” Paul LaRusso, managing director of digital platforms at Chase, said in a written statement to Reuters.
The spokesman added that the bank has already received agreements covering more than 95 percent of data access requests.
While open banking has been embraced in Europe and Asia, the United States still hasn’t jumped on board, preferring to take a wait and see approach. There has been some movement, though, with the Clearing House announcing last year an initiative aimed at connecting FinTech firms to users’ financial data — in a data sharing agreement between The Clearing House, its 25 financial institution owners and FinTech firms.
JPMorgan’s deadline comes as reports have surfaced that JPMorgan is in talks with London regulators about launching its own digital bank in the U.K. by the end of the year. The bank will likely offer savings and lending products, with the company appointing ex-regulator, Clive Adamson, to lead the launch.
Adamson was a former head of supervision at the Financial Conduct Authority until 2015, and has since worked other capacities for JPMorgan, chairing its international business between 2016 and 2019. He now serves as a non-executive director at the JPMorgan Securities PLC, one of its European legal divisions.