JPMorgan Chase has announced plans to ban fintech apps from using customer passwords to access their bank accounts and data.
The motivation behind the new system comes from security concerns. The bank is working on a system that uses tokens to send third parties a narrower range of data in a secure form. Furthermore, the bank pointed out that the new system doesn’t aim to deter customers from moving to new platforms, according to Chase's head of digital Bill Wallace, cited by the FT. Still, there is no date set for when Chase is looking to completely ban password-based access.
The bank already tested the solution with third parties, and more companies are set to follow soon. Yodlee, an account aggregation fintech, has become the first company to use such tokens for 100% of its interactions with Chase. Additionally, Plaid, a US fintech, signed up to start using tokens to access data on behalf of many third-party apps.
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