Data

What Plaid Direct means for the fintech ecosystem

  • Plaid released a new product last week.
  • Plaid Direct accelerates the Plaid integration process for fintechs and FIs.
close

Email a Friend

What Plaid Direct means for the fintech ecosystem

Last week, Plaid launched Plaid Direct, which allows banks and fintech applications to easily become a data source in the Plaid network.

What is Plaid Direct? Plaid Direct allows fintechs and FIs to be proactive about delivering customer data to other apps and FIs. “It makes it easier for these apps and services to become a supported institution on the Plaid network, so their users can connect their accounts among thousands of applications built on Plaid,” said Plaid’s head of product, Baker Shogry.

As outlined in our data aggregation buyer’s guide, there are a variety of ways data agg companies collect data, some less seamless than others. So instead of collecting data through subpar methods, like screen scraping, Plaid Direct enables FIs to deliver their data to fintechs via Plaid. It’s sort of like Chase’s API agreement with Plaid, just more scalable.

Why Plaid decided to create Direct: Plaid Direct gives developers a way to integrate their products into the financial ecosystem. “Developers building these applications were the ones really asking us for it,” said Shogry.

How it works: “It’s a simple API that neobanks, digital wallets, brokerages, and even traditional banks can integrate with very quickly, on their own terms, and it’s free for them to do so. Once they have connected, they will be a supported institution on the Plaid platform,” said Shogry.

How Plaid Direct affects the fintech ecosystem

  • Fintechs: Using a simple API, Plaid Direct makes it easier for fintechs to connect to the Plaid network. This enables them to deliver a better and more secure user experience.
  • Consumers: Because of the direct connection, the end user will experience faster connection times, improved security, better data, and more supported institutions. Once a fintech or FI has integrated via Plaid Direct, end users can select an institution or app in Plaid Link and connect their accounts with personal financial management apps, like Drop and Qapital. Consumers can also use their accounts as a funding source for other services, like Acorns and Coinbase.
  • Traditional banks: Most smaller banks do not have the resources to build a dedicated API to directly connect with other apps and institutions. Plaid Direct gives them a simple way to connect their institution to the larger fintech ecosystem. Plaid’s seen steady inbound interest from fintech apps to more traditional FIs.

How this fits into Plaid’s overall strategy: This is all about Plaid sticking to what it sees as its main mission: Building an inclusive financial ecosystem. “By giving innovators the best tools possible to build great apps, Plaid enables their users to access and control money wherever it lives,” Shogry said.

Making data aggregation safer, cleaner, and more reliable: Plaid Direct builds upon Plaid’s existing product set and it’s a step forward for open banking in the United States. It’s also a clever way to get better and more reliable data right from the source. By making it easier for banks to connect to Plaid, banks and consumers both benefit from less screen scraping, more secure connectivity and reliability.

0 comments on “What Plaid Direct means for the fintech ecosystem”

Data, EarlyStage

‘There are 400 million people in sub-Saharan Africa that don’t have formal credit files’: Pngme’s Brendan Playford

  • Africa is seeing the launch of a lot of new financial services and fintech.
  • That provides an opportunity for companies like Pngme to standardize and support financial data sharing.
Zachary Miller | January 05, 2021
Data, Member Exclusive, Podcasts

‘A network problem needs a network answer’: Akoya’s Stuart Rubinstein

  • 11 major banks, plus Fidelity and The Clearing House, have invested in Akoya.
  • The new financial data network expects to have half the deposit accounts in the U.S. connected to the platform next year.
Zachary Miller | December 14, 2020
Data, Member Exclusive

Pandemic-induced hardships are boosting demand for credit monitoring, counseling and repair

  • Dovly offers consumers the opportunity to maximize credit scores through their automated software.
  • The company has increased its customer base by 160 percent this year.
Rimal Farrukh | December 11, 2020
Data, Member Exclusive, Podcasts

‘A Cambrian explosion of products and services’: The rising importance of payroll data with Plaid’s Ben White

  • Data aggregation is the underpinning of the modern financial experience.
  • The industry's focus is moving to payroll data to get a fuller picture of a consumer's financial life.
Zachary Miller | December 08, 2020
Data, Member Exclusive, Podcasts

‘With Boost, we had to break things’: Experian’s Gregory Wright

  • Credit bureaus are moving along the value chain.
  • Experian's chief product officer joins the podcast to talk about lessons the firm has learned from Silicon Valley.
Zachary Miller | November 23, 2020
More Articles