Behind Finastra’s integration of Plaid to simplify the banking experience for end users

Consumers are using various mobile banking apps to help them manage and control their personal finances far more than they did three years ago, according to a recent survey from Chase.

People prefer having an overview of their finances – using their app to see across multiple current and savings accounts. Financial app providers like Venmo, Coinbase, and Robinhood have integrated aggregation tools like Plaid into their apps to enable customers to link their bank accounts to these apps and other digital services. Plaid acts as a bridge between banks and fintech apps that consumers want to use to send and receive payments, borrow, build a budget, invest, or do business.

Core banking software provider Finastra recently integrated Plaid into its Fusion Digital Banking platform, enabling banks and credit unions to deliver a simplified banking experience – account verification and authorization – to their end customers through Plaid Link. 

Plaid Link is an end-user interface that links their accounts to Plaid and allows external financial apps to access their accounts via the Plaid API. Plaid Link also deploys account verification tools to ensure data security including credential validation, multi-factor authentication, and error handling for each institution that Plaid supports.

Fusion Digital Banking is Finastra’s cloud-based digital banking platform and is delivered via APIs. Combined with Plaid's API, financial institutions using Fusion Digital Banking can incorporate credential-less integrations and easier user interactions. 

“Fusion Digital Banking is built to ensure a smooth user experience across all devices, with open APIs to make for easy cloud integrations,” said Peter Longo, VP of product management, universal banking, at Finastra.

Credential-less integrations add an additional layer of security. These are supported by open authorization (OAuth), which is required in all Plaid integrations that connect to financial institutions. 

Rather than storing usernames and passwords, third parties can now use an OAuth token. This token is tied to the specific application and user, eliminating the need for passwords to be exchanged between parties – limiting data exposure. 

“The integration between Plaid and Finastra, supported via OAuth, ensures that all of Finastra supported institutions have a no-cost and no-technical lift access to API coverage,” said Aly Yarris, financial access partnerships at Plaid.

Without OAuth support, end users cannot connect accounts from institutions that mandate OAuth tech, which includes many large US banks, including Chase, Bank of America, Citibank, and Wells Fargo.

For OAuth, end users temporarily leave Link to authenticate and authorize data sharing using the institution's website or mobile app instead. They are then rerouted back to Link to complete the Link flow and return control to the third-party application.

Currently, Plaid’s network supports more than 8,000 apps and services -- accessible to over 200 financial institutions offering Fusion Digital Banking.

“In partnering together, Finastra and Plaid have been able to onboard net-new financial institutions to the Plaid ecosystem, increasing not only Plaid’s institutional reach but most importantly consumer access,” said Yarris.

Although improvements in data authentication tools help, data breaches still can come in different forms leading to financial losses. And while the shift to digital financial records, mobile banking, and heavy reliance on cloud services enables faster connectivity, it also presents new opportunities for bad actors to exploit the sensitive financial information of companies and their clients.

Fraud will continue to grow as more consumers transition to digital banking to manage their money. But companies can simultaneously invest in modern anti-fraud technology and techniques to combat an evolving fraud landscape.

“Open finance or the adoption of APIs to support connectivity between financial accounts and apps and services - is a cornerstone to this imperative. Additionally, industry groups like OFDSS to establish standards that accommodate for the way consumers are using the digital financial system are also critical,” said Yarris.

“The established approach to detecting and mitigating fraud will simply not stand up to a modern era of fraudsters; investing in new and different solutions to get ahead of fraud trends will be crucial,” she added.