The long-promised era of open banking is arriving, but perhaps not in the way many expected. Without a finalized rule from U.S. regulators, the market is writing its own playbook. JPMorgan Chase & Co.’s reported move to charge the data sharing company Plaid for access to customer data could leave smaller banks and credit unions wondering how to compete in a landscape where data now has a price tag.
“Smaller institutions can’t necessarily copy Chase’s playbook — they’re not the thousand-pound gorilla in the room,” says Chris Miller, senior director with Cornerstone Advisors. “Chase has leverage because fintechs need their data. Community banks aren’t in the same seat. But if Chase normalizes this, smaller institutions may get included in some smaller aggregator agreements.”
Even if smaller and mid-sized banks and credit unions are included in broader aggregator agreements, Miller notes that “they’ll be price-takers, not price-setters.”
Currently, on their own, smaller financial institutions simply don’t have the scale to start charging for data access, says Adam Neiberg, global banking senior marketing manager in SAS, a data analytics and AI company.
“With that kind of market share, the industry giants are in a position to mostly set the terms, particularly in today’s regulation-friendly environment,” says Neiberg. “If [smaller banks] want a real say in how data gets shared or priced, they’ll need to work together through groups like the [Independent Community Bankers of America] to build a stronger, collective voice.”
Furthermore, regional banks and larger banks have better resources to upgrade technology. “[Open banking] probably benefits regional banks more than community banks, in that they have the infrastructure and more capacity to deal with more data access requests from fintechs,” says Myra Thomas, a banking analyst with EMARKETER.
‘Regulatory Whiplash’
The CFPB’s final rule open banking rule, known as 1033, issued in October 2024, mandated that financial institutions provide consumers with the ability to access and transfer their financial data to authorized third parties at no cost. However, it has since faced legal challenges and potential revisions. In August of this year under a new presidential administration and leadership, the agency sought comment for a new proposed rulemaking on issues related to data privacy, security and costs, leaving open the possibility that banks could recoup those costs.
“It seems the current administration is leaning towards open banking, and eventually we’ll get there, but how it all plays out is still unknown,” Thomas says.
That could make it hazardous to spend a lot of time on a fee structure that is overruled in the future.
Miller, of Cornerstone, says smaller financial institutions need to be aware of “regulatory whiplash.” “If regulators decide these fees are anti-consumer, small banks may have wasted time and resources chasing a fee model that gets outlawed,” he says.
Strategic Plays for Community Banks
Even if the data fee model created between Chase and Plaid is not replicable for smaller financial institutions, there are still opportunities for smaller banks and credit unions to make strategic plays in this new world.
One way is that they can position themselves as the “easy to work with” partner for fintechs, says Miller. “Expect fintechs and customers to expect more secure, reliable [application programming interfaces],” he says. “If you don’t have modern data-sharing rails, you risk looking irrelevant,” he says.
Banks can make better use of the data they already have to create more personalized experiences, Neiberg says. “What matters more right now is that they keep evolving to offer more modern experiences and make better use of the data they already have,” he says. “Community banks’ real strength has always been local decision-making and personal relationships, and that’s still their sharpest edge against national and regional banks.”
Miller suggests banks and credit unions could offer better relationships for fintechs, too. “If you’re trying to integrate with Chase, you might have to pass through 15 toll gates just to get access,” he says. “You need to get sign-off from a dozen different departments within their organization. With a community bank, it can be a simpler agreement, an easier conversation, and no hidden agendas.”
That kind of accessibility can become a competitive differentiator. Smaller institutions can use clean, reliable APIs not as a profit center but as an entry point to deeper relationships, such as embedding their products in fintech experiences or winning new commercial accounts through partnerships.
Miller says that positioning also gives community banks a chance to shape the public narrative around data ownership. “They can say, ‘We believe your data is yours, and we make it easy to use.’ That message resonates if consumers start feeling squeezed by the big banks,” he notes.
Still, flexibility is key. “Build your infrastructure so you could charge for access if it becomes standard, but don’t close the door on openness,” Miller adds. “Keeping your options open is the smart hedge.”
Neiberg, of SAS, says instead of trying to charge for data access, smaller institutions might find more opportunity in partnering, whether that be with fintechs, data aggregators and even one another, to create more customer-friendly ways to use and protect data.
“Such data sharing partnerships could help them stay relevant and competitive while also allowing them to remain true to their community-centric values and protect the trust they’ve rightly earned,” Neiberg says.
At the end of the day, whatever approach they take, community banks should be preparing for a world where customer-permissioned data sharing becomes the standard.
“That kind of proactive readiness could help protect them from getting boxed out once regulation finally catches up,” Neiberg says.
Ultimately, a key takeaway for banks and credit unions is make the bank more nimble in an open banking world. “Don’t expect Plaid to cut you a check tomorrow,” Miller says. “The play here isn’t toll collection, it’s positioning. Show up as fintech-friendly, invest in secure APIs, and be ready to pivot depending on where regulation lands.”
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