As the concerns over data protection are gaining steam, Wall Street giant JP Morgan Chase has decided to ban third-party fintech platforms from accessing the bank account passwords of its customers.
As revealed to the Financial Times by the bank’s head of digital, Bill Wallace, Chase is already working to take its customers’ passwords “out of the system” of third party applications and instead will issue tokens containing data in a secure form.
The bank has already signed multiple partners to partially roll out the new data-sharing initiative. The report outlined that Aggregator Yodlee became the first company to partner with the bank following the new data-sharing terms. At the same time, Goldman Sachs-backed Plaid also began to use tokens on behalf of its financial service provider clients.
Despite the development, the lender has not yet decided on the exact date of the complete ban of its password sharing.
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Data is the new oil
As in the last decade, most services started to rely on data extensively for better customer experience and aggregators are scraping more and more data to fulfill the demand. But when it comes to financial data, the risks become very serious.
The move came three years after the chief of the bank, Jamie Dimon, raised concerns about the consequences of data-sharing, especially when it comes to the banking industry.
In a letter to the shareholders in 2016, Dimon stated: “Many third parties sell or trade information in a way customers may not understand, and the third parties, quite often, are doing it for their own economic benefit — not for the customer’s.”
“Often this is being done on a daily basis for years after the customer signed up for the services, which they may no longer be using.”