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.