JPMorgan Chase is working on tools to let customers control which third-party apps can access their data

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In JPMorgan Chase’s Q4 2019 earnings call held earlier this week, CEO Jamie Dimon and CFO Jennifer Piepszak said that the firm is working on controlling third-party apps’ access to customer data and will eventually give customers the ability to determine what data is and isn’t shared.

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Chase is looking to secure agreements from third-party apps to only access customer information by using Chase’s application programming interfaces (APIs), according to Piepszak. She also noted the firm will make it “super easy” to allow customers to choose what data they give third parties acc

ess to, and that it will develop tools like a dashboard to do so.

The comments come soon after Chase said it will ban fintech apps from using customers’ passwords to access their bank accounts. Third-party fintech services rely on access to users’ bank account data: For example, personal finance management apps need user account access to categorize their spending.

Instead of having customers add their bank account passwords to give these apps access, Chase plans instead to use tokens to convey a narrow range of data to third parties in a secure form and get customers’ passwords “out of the system,” per Bill Wallace, Chase head of digital.

The bank hasn’t set a target date for completely doing away with password-based access, but Wallace doesn’t think the new approach will bar apps’ ability to engage with Chase customers. Meanwhile, data aggregation platform Envestnet Yodlee recently signed an agreement with Chase to become the first company to use a 100% token-based approach in its interactions with the bank.

Chase’s initiatives are part of a broader discussion over US banks’ data-sharing practices.

The absence of open banking regulations in the US puts the onus on banks to determine what data to share with third-party apps. Banks in the UK and European Union are mandated by open banking regulations to facilitate third-party access to their data and systems, which has allowed them to collaborate rather than compete with fintechs. Meanwhile, banks that are and aren’t subject to those regulations often cite security concerns as reasons for limiting fintechs’ access to customer data.

Banks need to evaluate how to grant data access to third parties to satisfy customers’ needs without jeopardizing their sensitive data. 

PNC made headlines late last year for preventing Plaid, an account aggregator that connects fintechs to banks, from accessing customers’ account and routing numbers, after “multiple different aggregators” attempted to get around its security protocol, leaving customers abruptly disconnected from their Venmo accounts.

Chase’s proposed token solution is seemingly a middle ground between shutting out third parties altogether and giving them open access to customers’ sensitive bank data. Further, creating a dashboard for data sharing puts the control in consumers’ hands by allowing them to tailor their data sharing to meet their specific preferences. This could ultimately preserve customers’ access to third-party apps while also boosting transparency around Chase’s data-sharing practices.

Facilitating data sharing will become increasingly necessary as more consumers seek third-party financial apps. A large base of US mobile banking users likely already rely on these services — Chase counts 37.3 million active mobile banking users, and Venmo, for example, counts 40 million users — so cutting off access to them could have negative consequences for banks.

The widespread popularity of third-party apps could further pressure banks to share the necessary data with aggregators: If a bank limits a customer’s access to sharing data with a third-party fintech app, it’s possible that customers could abandon that bank and seek out other providers instead. 

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