JPMorgan Chase & Co.: Open Banking

JPMorgan Chase & Co. (JPMC), one of the world’s largest banks, was confronting the advent of open banking in its retail banking business. In late 2020, policy makers and regulators were advocating movement toward open banking with growing enthusiasm as a way to stimulate competition in the financial services sector and thus, encourage greater value creation for consumers. JPMC, however, seemed to embrace open banking while also resisting it, aggressively building out the technical infrastructure required for open banking while also blocking some third-party financial services companies from accessing customers’ Chase bank accounts, citing data security and privacy concerns. Open banking seemed fraught with risk, but might it represent new and significant opportunities for banks? In either case, what should the approach to open banking be for an established bank like JPMC?

This case was developed for undergraduate, graduate, or executive courses that focus on the competitive impact of digital technologies. This could include courses on general information technology (IT) management or strategy, as well as more specialized courses on banking, financial services, or digital transformation and digitalized competition. After working through the case and assignment questions, students will be able to<ul><li>understand the concept of open banking and how it might impact competitive dynamics in the financial services industry, and why regulators and policy makers are enthusiastic about the idea;</li><li>become familiar with technologies for sharing data, such as credentialed access (i.e., “screen scraping”) and application programming interfaces (APIs), and their business advantages and disadvantages;</li><li>analyze the competitive dynamics operating between banks and smaller, more agile third-party firms (fintechs) — including financial data aggregators — and, in the background, large and powerful tech platforms such as Amazon.com Inc., Apple Inc., and Google;</li><li>think through the competitive implications for different parties (e.g., banks, fintechs) of different approaches to implementing open banking (e.g., bilateral deals versus industry-standard agreements and APIs);</li></li>make a recommendation on how a major bank might respond in the face of a move to open banking; and</li><li>consider the importance of regulatory frameworks in driving business change and the different means by which regulators might induce change (e.g., encouragement, mandates).</li></ul>

• Financial Services
• Digital Transformation
• Digitalization
• Platforms
• Fintech