Open Banking Fees Threaten Financial Health

Jennifer Tescher is the founder and CEO of the Financial Health Network, which leads a cross-sector movement to equitably advance financial health for all people.

David Silberman is a senior advisor to the Financial Health Network. From 2011 to 2020, he led Research, Markets, and Regulation at the Consumer Financial Protection Bureau.

It is hard to tell these days whether open banking has taken two steps forward and one step back, one step forward and two steps back, or simply done a side shuffle.  But one thing is clear in the face of this uncertainty: allowing bi-lateral agreements between self-interested companies to serve as a proxy for thoughtful federal policy is no way to build an ecosystem that is so important to the financial health of consumers.

Previously on Open Banking

In case you’ve lost track of the moves (which is understandable given all of the twists and turns), here’s the 60-second version. The CFPB issued a final 1033 rule in October 2024. That same day, the Bank Policy Institute sued to stop its implementation. Following the change in Administration in 2025, the CFPB refused to defend the rule. The Financial Technology Association stepped in to defend it. Meanwhile, JPMorgan Chase told aggregators it planned to start charging them to access data on behalf of consumers, which the rule would have forbidden, and PNC indicated it was considering following suit. The resulting uproar, along with pressure from the crypto industry, led the CFPB to do another about-face and announce its intent to reopen the rulemaking. And, just days after Stripe submitted a comment to the CFPB urging the CFPB to take “immediate action…to prevent irrevocable harm” that it said would result from the “exorbitant fees” JPMC was proposing to charge, Plaid – perhaps the largest of the aggregators – reached an agreement with JPMC over a fee schedule.

Why This Matters

Lost in the drama and confusion, we fear, has been an appreciation for the financial health implications of the open banking issue, especially for the tens of millions of families leading financially precarious lives. There is, to be sure, a legitimate discussion to be had about how society should pay for the infrastructure and administrative costs needed to power the open banking ecosystem. But that conversation must happen through the lens of the consumer needs that open banking can fulfill in order to ensure the best outcome. 

It has become increasingly complicated for everyday Americans to manage their financial lives. Baby boomers and even some early GenXers can recall, nostalgically or otherwise, a time when they deposited their paychecks each payday at their local bank, withdrew cash to make day-to-day purchases, wrote checks to pay their monthly bills, and maintained a running balance in their check register by entering each deposit, withdrawal, and check. 

Those days are long gone, as money flows in and out of checking accounts electronically multiple times each day through the use of direct deposit, debit cards, mobile wallets, P2P apps, automated bill payments, and the like. Keeping track of when and where money is moving, and how much is available to spend without incurring an overdraft or nonsufficient funds fee, is increasingly challenging for many consumers, especially since different types of transactions take different times to settle and clear. 

For those of us fortunate enough to have a reasonable cushion in our checking account and a working understanding of the payment system, none of this is terribly consequential. But for the tens of millions of households living paycheck to paycheck and struggling to stay afloat, the challenges are considerable. These consumers have limited bandwidth to deal with their finances, yet, at the same time, little if any slack in their budgets and hence a greater need to stay alert. 

Given this complexity, banks and credit unions are increasingly offering their customers a growing set of tools to help them more effectively manage their finances. Indeed, several of these tools are highlighted in the Financial Health Network (FHN)’s FinHealth Standards for Financial Management Products: Checking Accounts and Credit Cards. 

At the same time, forthcoming FHN research finds that nearly four in ten households own checking accounts at multiple institutions, and an even larger share of households have disparate banking and credit card relationships. Without the ability to aggregate consumer financial data across multiple institutions, bank financial management tools are severely limited in their usefulness.

Enter Open Banking 

The incumbents stand to benefit from the rich data of open banking in myriad ways – improved underwriting models that allow them to say yes to more customers, more personalized sales and marketing opportunities, and more effective financial management tools to help their customers improve their financial health while building loyalty to their bank. The challenge for the banks is that they aren’t the only game in town. 

A myriad of personal financial apps powered by consumer-permissioned data have emerged that both complement and compete with those offered by banks and credit unions. Some apps, for example, identify recurring debits for services that the consumer may no longer be using but has not canceled. Other apps track expenses in defined categories and help consumers establish, and adhere to, a family budget. Still other apps help consumers manage their cash flow, alerting them to upcoming expenses and advising them how much of their checking account balance is safe to spend. Savings apps advise consumers when there is “extra” money in their checking account that can safely be moved into savings. Finally, many personal financial management apps help consumers optimize their finances by helping them find better alternatives to their existing bank account or credit card – something that tools provided by incumbent institutions are unlikely to do.

Importantly, many of these apps are authorized by consumers to execute payment transactions on their behalf. In some cases, authorization is given on a case-by-case basis; in other cases, the apps are authorized to act based on standing rules or more general permissions. The deployment of agentic AI will dramatically increase this kind of third-party authorization.

To be sure, the potential of an AI bot acting autonomously on behalf of a consumer raises a myriad of prickly questions. But at least this much is clear: In order for an AI agent – or, for that matter, an app using simpler technology – to help consumers advance their financial health, the bots or apps require regular and timely transactional and account balance information to understand a given consumer’s current and anticipated financial situation.

Tollbooth on the Road to Progress

It is precisely for this reason that we are deeply concerned about the potential that unilaterally-imposed fees, even if ultimately agreed upon by aggregators under threat of being blocked from obtaining consumer-permissioned data, can have in discouraging data calls that can enable apps to help consumers more effectively manage their financial lives. Of course, no one favors unnecessary data calls – that is, calls for data that serves no purpose. But necessity, like beauty, may lie in the eyes of the beholder: what to a data holder may seem like a frivolous data call may, in fact, be necessary for a personal financial management app to obtain the information it needs to provide financial advice. 

If the system is being flooded by unnecessary data calls, that issue can best be addressed by a robust open banking rule like the one the CFPB issued, which both imposed strict data minimization limitations on those authorized to access data on a consumer’s behalf and also allowed banks to place reasonable caps on the frequency with which a given app can call data. In the absence of a rule, caps on data calls can – and have been – negotiated through bilateral agreements. Assessing fees on data calls to control data call volume or to discourage certain types of data calls is, at best, a blunt instrument. Moreover, if it is wielded by the wrong hands, it could be used to discourage competition altogether.

For instance, it might be in banks’ economic interests to levy charges for data in order to blunt the increase in pay-by-bank transactions. Pay-by-bank (PBB) is a rapidly growing payment method that bypasses the debit and credit card rails and the associated interchange fees by using a customer’s account number and bank routing information, or a tokenized (or encrypted) account number, to directly pull money from the account using the ACH network. PBB is used by sellers of goods and services to avoid the interchange fees that banks and the three major card payment networks levy, driving increased market competition while threatening massive revenue streams. Indeed, according to published reports, the open banking fees that have been proposed would fall mostly heavily on data calls associated with PBB transactions.

In the immediate term, it is unclear whether banks can actually differentiate between a data call associated with a PBB transaction – for instance, a data call to check on an account balance before initiating an ACH transaction to fund a Venmo payment – and a data call by a personal financial management app seeking to update information about a consumer’s current financial situation. Until the ACH transaction actually is processed, the data calls will look the same to the bank.

But even if it were possible for banks to identify true PBB data calls, those calls are no more costly to respond to than any other data call. To the extent that the PBB transactions result in incremental costs such as higher fraud losses associated with certain “risky” PBB use cases, such as online gambling – or to the extent that debit card network rules provide superior consumer protections – the ACH system is best situated to address those costs. If ACH dispute and chargeback processes are not currently up to the demands of PBB use cases, it would seem reasonable to look to NACHA – whose board of directors is drawn from the banking industry – to develop an appropriate solution. At most, fraud concerns could justify incremental fees on “high risk” data calls – if those can be identified–rather than on data calls associated with PBB writ large.

In the longer term, allowing the dominant players in the industry to negotiate agreements over fees that by default becomes the standard could cripple competition in financial services, among both providers and aggregators. Competition, especially from non-bank providers, has been a boon to the average consumer, in the form of lower costs, more innovative and tailored services, and the power that comes from being able to take one’s business elsewhere. The whole point of 1033 is to empower consumers to leverage their financial data to be able to better manage their financial lives. A data-sharing ecosystem that reduces competition by enabling the largest players to decide the rules of the game defeats the purpose.  

Wait and CFPB

The CFPB has signaled its intent to reopen the issue of fees in its forthcoming 1033 rulemaking. The CFPB’s Advance Notice of Proposed Rulemaking poses a range of questions regarding fee assessments for data calls, including questions designed to understand the fixed costs associated with providing data access infrastructure and the variable costs associated with data calls. If banks are forthcoming in responding to those questions, their responses should help the CFPB answer its further questions as to whether data holders “should be able to recover a reasonable rate for offsetting the cost” of data access and, if so, whether the CFPB should “place a cap on the upper bounds of such rates.” 

In the meantime, while the CFPB and stakeholders consider these issues, the Financial Health Network calls upon financial institutions to preserve the status quo as it has existed for several years now and refrain from assessing or negotiating data call fees unless and until the CFPB establishes appropriate guardrails for such assessments.

The opinions shared in this article are the author’s own and do not reflect the views of any organization they are affiliated with.

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