Fintech access to bank data faces mounting challenges
Visa has shut down its open-banking operations in the United States, a move signaling the growing divide between traditional banks and fintech firms. The affected unit offered fintechs tools to simplify customer data access, enabling smoother user onboarding and money transfers.
The decision comes as disputes over data-sharing costs intensify. Major U.S. banks, including JPMorgan Chase and PNC Financial, have begun signaling plans to charge fintechs for access to customer information. Fintech companies argue that this information belongs to users and should not incur added fees.
Banks and fintechs clash over data rights and costs
JPMorgan’s proposal to impose potentially steep access fees has already drawn scrutiny. PNC CEO Bill Demchak confirmed similar considerations, citing the need to recover costs associated with data protection. However, fintech executives, including Andreessen Horowitz partner Alex Rampell, have condemned these measures. Rampell likened them to “Operation Chokepoint 3.0”, a term referencing historic efforts to restrict access to financial services.
These developments highlight a broader concern in the fintech sector: the risk that large institutions might limit competition through pricing or gatekeeping.
Visa pivots focus to Europe and Latin America
In a statement, Visa emphasized it is shifting its open-banking strategy to regions with greater regulatory support and growth potential, specifically Europe and Latin America. In those markets, governments have enacted rules requiring banks to share customer data with licensed third parties, fueling innovation and competition.
By contrast, the U.S. still lacks a comprehensive regulatory framework for open banking, relying instead on voluntary agreements between banks and fintechs. That landscape may soon change. The Consumer Financial Protection Bureau (CFPB) announced on Thursday that it has begun revising rules governing how consumers control the sharing of their financial data.
Regulatory clarity may shape future of U.S. open banking
Visa’s decision to exit the U.S. open-banking space was first reported by Bloomberg. It underscores how the absence of clear regulations has made the environment volatile for companies aiming to build solutions in this space. The outcome of the CFPB’s efforts could determine whether open banking can regain traction in the U.S. market or whether fintechs will continue to face roadblocks.
