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”

Outlier OpinionsMakers

Data, Lending

The Financial Data Evolution: Unraveling lending in open finance with Akoya’s Rishi Kapadia

  • As part of Tearsheet Talks: Lending x Credit, Data, Rishi Kapadia, product manager at Akoya, discussed "The Financial Data Evolution: Unraveling Lending in Open Finance."
  • Kapadia sees open finance facilitating an evolution in the whole user experience in the lending process.
Tearsheet Editors | October 31, 2023
Data, Lending

Best practices for fusing internal and external data to enhance credit decisioning for SMB lending with Stripe’s Yaakov Erlichman

  • Learn strategic and tactical best practices for maximizing the fusion of internal and external data to enhance credit decisioning and risk management for SMB lending.
  • Stripe's Yaakov Ehrlichman, head of capital and SMB risk, covers both conceptual and implementation considerations for reconciling data sources tailored to the unique needs of the SMB market.
Tearsheet Editors | October 26, 2023
Data, Partner

How payments providers can tap into the growing SMB market 

  • The POS market continues to grow, driven by digitalization and new vertical offerings, but there's a lack of available data around SMB revenue, growth trends, and other metrics to help capture these businesses as customers.
  • Data firm Enigma provides comprehensive data about the identity and financial health of millions of businesses, enabling visibility into real revenues and financial trends across this growing market.
Enigma | August 24, 2023
Data, Keeping the bad guys out

The network approach to fighting fraud

  • With fraud evolving, prevention and detection mechanisms are changing as well.
  • FIs and technology providers are turning towards approaches where critical data about fraudulent activities can be shared with FIs and businesses in the ecosystem via a network approach.
Rabab Ahsan | July 05, 2023
Data

As tides shift against screen scraping, complications abound for smaller FIs

  • Screen scraping is experiencing increased scrutiny from regulators and competition from API-based solutions. The practice may finally be on its way out.
  • But what would an API-based data sharing environment look like? How will the transition away screen scraping occur and would it be fair to all institutions?
Rabab Ahsan | June 09, 2023
More Articles