Trade Associations Clash Over Banks' Access Fees for Consumer Data
Commentary by Steven Lofchie
The Financial Technology Association ("FTA") joined by more than 80 Fintech, technology, retail and trade industry organizations, urged President Trump to block large banks from imposing "account access" fees on consumers seeking to allow third parties to access their data. Banking associations responded by rejecting claims that proposed fees would limit consumer data access.
The FTA argued that the proposed fees are an anti-competitive measure by the nation's largest banks that are designed to consolidate market power and limit consumer choice. The organizations asserted that these fees would prevent consumers from connecting their accounts to their preferred financial products and applications and would advance a legal interpretation that limits their right to share account access with authorized apps.
The organizations stated that this action threatens to stifle American innovation in critical areas, including:
- Cryptocurrency: by creating barriers that could sever the connection between the traditional banking system and the digital asset ecosystem.
- Artificial Intelligence: by granting banks control over financial AI assistants that could help consumers manage their finances and find better deals.
- Digital Wallets and Payments: by reinforcing reliance on legacy payment networks and increasing costs for small businesses.
The organizations urged the Trump Administration to affirm that consumers own their financial data and to act swiftly to prevent these fees from being implemented.
The American Bankers Association, Bank Policy Institute and Consumer Bankers Association responded to the FTA letter, accusing data aggregators and Fintech firms of misleading the Administration to protect their profits while seeking to "free ride" on bank infrastructure. They highlighted bank support for crypto and AI innovation, the scale of existing data connections through aggregators and the significant costs of processing billions of monthly data requests from large Fintech companies. The banking associations noted that charging for Application Programming Interface ("API") access is standard practice across industries.
Commentary
One question that needs to be answered is whether it is appropriate for the government to step in and establish prices, as opposed to allowing them to be set by market forces. Or is it the case that market forces can not work here because consumers are the injured third party in the fee dispute and they are not well positioned to enforce their preferences; e.g, by moving their accounts to another bank which charges lower fees? If the government does establish a fee schedule, what is the basis for that schedule, and how would it be adjusted? What happens when there is a problem in the data transfer and a customer loses money?
No easy answers.