I agree. "Write access", which they call PISP over there would change a lot, but the banks would furiously resist. One often overlooked difference between there and here is that PISP is only permitted for certain regulated intermediaries. Not every end fintech can do it for themselves. There are special purpose charters required to get PISP permission.
If we followed the same pattern, you would have to have a "Fintech Charter" for the aggregators and bigger Fintechs (like PayPal & Stripe) that wanted to do this for their customers. Those licenses would come with all kinds of rules that the intermediaries might not like so much
Ryan -- thanks for the input. While their language is confusing, the JPM fees don't actually seem to touch the actual payments (generally ACH). They might impact the balance check that some A2A providers do before submitting the ACH Debit. The aggregators already charge for the balance check, so whatever JPM adds will be on top of those fees. I suspect that aggregators can simply avoid the balance checks as they learn more about their customers -- a high-balance DDA may never need a balance check while a low-balance DDA always will. Again, it comes down to how much JPM charges and how well Fintech's can use risk modeling to reduce their volumes.
As I understand it, the bulk of Open Banking today is for either Identity checking or to grab the account number. The third biggest is balance checks. So I agree, it is more to reduce onboarding friction at Fintech's than any real product innovation.
Got it, very helpful clarification - thank you! And yes, most of OB and corresponding regulation thus far (esp. in the US) seems focused around read-access use cases; I suppose it somewhat remains to be seen whether write-access will necessarily drive more innovation or not (but it still seems unclear - e.g., from looking at the UK where OB is more mature)
Pay-by-Bank is somewhat interesting as a use case – despite its own fair share of adoption challenges, I wonder if there are niche or specific use cases / verticals (e.g., mobile-first, QSR) where it could eventually (at least partially) disrupt credit / debit. However, I feel that the value of Pay-by-Bank is at least in part contingent on lower acceptance costs. If these proposed JPM fees set a precedent which drives Pay-by-Bank costs up materially, I wonder if that would be enough to kill any potential innovation on this front.
Open Banking broadly is a very intriguing topic – there seems to be a fair bit of buzz around it but it’s unclear to me whether it represents an opportunity for true disruption or not; many use cases thus far seem focused on incremental improvement for things like personal finance management, credit decisioning, etc. I’d be very interested to read your perspective there (if you haven’t already written a post on it)!
Great summary Andrew; Thank You. This “JPM charging for data”news has been a polarizing issue pitting Bank proponents against Fintech advocates, but your summary presents a balanced analysis.
I agree. "Write access", which they call PISP over there would change a lot, but the banks would furiously resist. One often overlooked difference between there and here is that PISP is only permitted for certain regulated intermediaries. Not every end fintech can do it for themselves. There are special purpose charters required to get PISP permission.
If we followed the same pattern, you would have to have a "Fintech Charter" for the aggregators and bigger Fintechs (like PayPal & Stripe) that wanted to do this for their customers. Those licenses would come with all kinds of rules that the intermediaries might not like so much
Ryan -- thanks for the input. While their language is confusing, the JPM fees don't actually seem to touch the actual payments (generally ACH). They might impact the balance check that some A2A providers do before submitting the ACH Debit. The aggregators already charge for the balance check, so whatever JPM adds will be on top of those fees. I suspect that aggregators can simply avoid the balance checks as they learn more about their customers -- a high-balance DDA may never need a balance check while a low-balance DDA always will. Again, it comes down to how much JPM charges and how well Fintech's can use risk modeling to reduce their volumes.
As I understand it, the bulk of Open Banking today is for either Identity checking or to grab the account number. The third biggest is balance checks. So I agree, it is more to reduce onboarding friction at Fintech's than any real product innovation.
Got it, very helpful clarification - thank you! And yes, most of OB and corresponding regulation thus far (esp. in the US) seems focused around read-access use cases; I suppose it somewhat remains to be seen whether write-access will necessarily drive more innovation or not (but it still seems unclear - e.g., from looking at the UK where OB is more mature)
Pay-by-Bank is somewhat interesting as a use case – despite its own fair share of adoption challenges, I wonder if there are niche or specific use cases / verticals (e.g., mobile-first, QSR) where it could eventually (at least partially) disrupt credit / debit. However, I feel that the value of Pay-by-Bank is at least in part contingent on lower acceptance costs. If these proposed JPM fees set a precedent which drives Pay-by-Bank costs up materially, I wonder if that would be enough to kill any potential innovation on this front.
Open Banking broadly is a very intriguing topic – there seems to be a fair bit of buzz around it but it’s unclear to me whether it represents an opportunity for true disruption or not; many use cases thus far seem focused on incremental improvement for things like personal finance management, credit decisioning, etc. I’d be very interested to read your perspective there (if you haven’t already written a post on it)!
Great summary Andrew; Thank You. This “JPM charging for data”news has been a polarizing issue pitting Bank proponents against Fintech advocates, but your summary presents a balanced analysis.