Data, Podcasts

Plaid’s Lowell Putnam: ‘Liabilities gives student lenders access to a whole new set of data points’

  • Fintech activity is heating up to address the student debt crisis in the U.S.
  • Plaid's new product gives needed data points to players in this market.
close

Email a Friend

Plaid’s Lowell Putnam: ‘Liabilities gives student lenders access to a whole new set of data points’

Tearsheet has been covering the data aggregation industry because it’s our contention that getting this right is one of the underpinnings of modern finance. Sharing clean data between banks and apps may be somewhat of a boring business but it’s an important one.

Plaid recently launched Liabilities, a product that gives PFMs and student loan providers and refinancers access to the liabilities side of their potential clients’ balance sheets. This is a very active area of fintech and should help to propel things forward.

Plaid’s Lowell Putnam joins us on the podcast to talk about the new product and how clients are using it in their applications. Lowell was also the founder of Quovo, a data aggregation competitor with strength in the investment industry that Plaid acquired earlier in 2019. He talks about the combined entity and provides some insight into the product roadmap the company plans to execute on.

SubscribeApple Podcasts I SoundCloud I Spotify I Google Podcasts
The following excerpts were edited for clarity.

Launching the Liabilities product

We've always lived with a very accounting-driven mindset. Liabilities is a departure from that core data set into what I'd call metadata, for lack of a better term. Liabilities represents the access to a whole new set of data points that are unique to liabilities financial accounts. The APR on your credit card or student loans didn't traditionally have a home in our database. But we found a lot of companies were coming to us for a data set that was slightly more diverse that we didn't offer.

It made a lot of sense to start with student loan accounts. We have a crisis of student debt in this country. There is a lot of interest in solving the crisis but there hasn't been a lot of ability. There's been a real asymmetry for the demand for products to help people with their student loans and the ability of those products to really be effective. We realized it was a data challenge.

What fintech is doing with liabilities data

Over the past year, the proliferation of high yield savings accounts and debit cards coming out of fintech companies has us all leaning toward a rebundling mindset. I guess the current trend in fintech is to go broad, rather than deep.

In the case of student debt repayment, the breadth story may be a little different. I don't know if the breadth of these new student loan repayment firms includes dropping a high yield savings account. To me, it feels more like one leg of a PFM stool -- helping you manage your overall budgeting life. I can see this more of a feature attached to other savings or PFM features. It's pretty early to tell and it will take a while to see the benefit of student loan consolidation or repayment.

If I had to guess, you might see some of the rebundled incumbents like Acorns, Stash, Betterment or SoFi adding more sophisticated repayment tools as an ancillary product or feature.

The Plaid audience

The folks looking to add a debt management solution onto their existing stack, like MoneyLion, desperately need information about existing liabilities if they want to get people on a path to a better financial life. In this case, they're expanding their product set into a new silo.

Some others can't get to first base on a new product without access to things like APR. Today, it's student loans. But the Liabilities product touches on metadata points like next repayment date, current APR, APR changes over time and delinquency rates. We'll be moving into mortgages and credit cards and other debt classes. That will open a whole new set of products, too.

The combined Plaid and Quovo

There were convergent evolutions of our product sets so that about a year ago, we found ourselves highly competitive. It wasn't like that historically. Plaid grew up in the bank instant authentication space and where it's excelled from the early days. Quovo started doing brokerage account aggregation. We seemed very different back in 2013.

Quovo's wealth clients started pulling us closer to the banking space because of their interest in banking and lending -- this is part of the rebundling effort that you've recently covered. At the same time, Plaid was pulled into much more sophisticated PFM-style use cases.

We woke up and we were real competitors. Zach and I have known each other for a while. 2019 could have gone two very different ways. We could have beaten each other up in the market and pricing probably would have suffered. Or, we could join forces and play to our strengths. We got through the deal in about 50 days from beginning to end.

Commoditization of data

Nobody says I love ConEd. We are in a lot of ways a utility, but the commodity we have is literally the lifeblood of the companies we work with. When you have water and it works, you generally don't think about the quality of the water. We have to do a better job explaining that there is dirty and clean water.

For a fintech starting out, if Plaid gets the data right from a small credit union in the midwest, it saves you a support ticket you would have otherwise gotten from another aggregator. That has ripple effects. There are hidden costs to poor data quality.

The product roadmap

Everything we're doing here -- at its core -- is providing the raw data or first-order derived data that a fintech needs to really make an impact. The Liabilities launch is a good example of that: There was no place in our dataset to put an APR, but we had demand from customers for these data points.

I would expect to see a lot more from us over the next year, listening to our customers, and adding in data points they want but we don't have. We'll add them in in an expandable, replicatable way. We're not just going to get one student loan -- one element -- for you. If we can't cover eighty to ninety five percent of the market, we're not very useful. So, adding breadth as well as depth will be part of our product roadmap. You'll be seeing more liabilities asset classes later this year, including credit cards, mortgages, HELOCs.

The work we've done on investments which came from rolling in a lot of the Quovo technology -- that's already been initially launched this year. We need to keep doubling down on it because investments are probably the most complicated of any account type we work with. So, we're really just at the tip of the iceberg for investment assets.

Whatever that one data point you need, we want to be able to source that one piece of insight you need to service your customers.

0 comments on “Plaid’s Lowell Putnam: ‘Liabilities gives student lenders access to a whole new set of data points’”

Outlier OpinionsMakers

Partner, Podcasts

‘Getting the model right’: How Regional Finance balances customer-centricity and fraud prevention in digital lending

  • In this episode of the Tearsheet Podcast, Regional Finance explores credit modeling in the digital lending landscape, focusing on the balance between serving customers and preventing fraud.
  • We speak with Chris Martin, head of product management at the $1.5 billion consumer lender, and with Argyle's Matt Gomes, who leads the firm's data and tech efforts in banking and lending.
Zachary Miller | September 21, 2023
Podcasts

Evolving Regulations, Evolving Payroll: The future of Earned Wage Access with Clair CEO Nico Simko

  • In this episode of the Tearsheet Podcast, join us as we delve into the evolving landscape of Earned Wage Access with Nico Simko, CEO of Clair.
  • Nico walks us through the changing regulatory environment, defensible distribution strategies, and his vision for a full-service frontline bank for hourly workers.
Zachary Miller | September 19, 2023
Partner, Podcasts

Navigating the future of digital banking: A conversation with Deloitte’s Nick Cowell

  • Join Nick Cowell, Deloitte Partner, as he discusses the digital banking landscape in North America and how traditional banks are adapting to meet evolving consumer demands.
  • Explore the changing dynamics of the banking industry and learn about the rise of digital neobanks, evolving customer expectations, and the critical success factors for incumbent banks in a digital-first world.
Zachary Miller | September 14, 2023
Modern Marketing, Podcasts

Marketing financial services to Gen Z with Step’s CJ MacDonald and Visa’s Ruben Salazar

  • FIs are beginning to wake up to the importance of Gen Z as an emerging customer. But they don't necessarily know how to reach them and what to say.
  • We speak with Visa's Ruben Salazar and Step's CJ MacDonald about what's working in marketing to the young generation as part of our podcast series on Gen Z.
Zachary Miller | September 12, 2023
Partner, Podcasts

How Checkr uses modern data in background checks to promote fairer hiring practices

  • Today's hiring requires speed and efficiency from employers and sensitivity to applicants' privacy. Checkr does that with its background checks.
  • Tearsheet editor Zack Miller is joined by Checkr's Scott Melman and Argyle's Justin Stolzenberg to talk about how top firms accelerate hiring through technology.
Zachary Miller | September 07, 2023
More Articles