Fintech Decacorn Plaid expands beyond its core account link product – its first major expansion since its inception in 2013.
In conjunction with its “Plaid Forum” event, the startup today unveiled a number of “product enhancements and new initiatives,” including its move to identity and income verification, fraud prevention, and the provision of new account financing and payment tools.
The move comes two weeks after payment giant Stripe announced it was invading Plaid’s territory with a new product in itself†
In a blog post titled “Using the Next Phase of Fintech,” Plaid CEO and Co-Founder Zach Perret noted that most of Plaid’s network traffic flows through direct banking APIs powered by banking partnerships and Plaid Exchange, a data access offering offered by more than 1,000 banks and fintechs are used to provide API-based data access to their customers.
But now the company has expanded its data connectivity offering to include: core exchangewhich, according to Perret, offers banks, fintechs or “data partners” another way to “securely” share data when using Plaid.
Alain Meier, Plaid’s Head of Identity, told TechCrunch that account connectivity has always been the company’s core focus. He points out that Plaid has contributed to the connectivity of millions of accounts over the years, especially as more consumers use digital financial services.
Over time, as Perret shares, the company has added more fintech companies to its network, including Chime, Dave, Robinhood, and SoFi. It has also added new types of data connections, such as salary data, so that people can verify their income and work data on things like getting a loan or buying a car.
And as the adoption of fintech has grown in recent years, so has Plaid’s customers’ demand for the company to address more of the onboarding experience.
“This will ultimately help build trust and security for the entire ecosystem as more people embark on new fintech apps and services,” Meier said. “That’s why we’re expanding our platform with identity verification and new tools for quick and easy account funding and payouts.”
The move to identity verification isn’t a surprise at all, as Plaid paid $250 million in January Buy CognitoThat offered ID verification, along with assistance with thorny issues such as KYC rules and anti-money laundering requirements.
“When Cognito joined Plaid, we estimate that about 90% of Plaid customers require some sort of ID verification, so this is a natural extension for Plaid,” Meier told TechCrunch. And Perrett confirms that Plaid’s new identity verification offering does indeed bring Cognito’s products to the Plaid API.
The company has integrated its new verification product into Plaid Link, with the goal of enabling customers to link their accounts and verify their identity in “a single, seamless user experience,” Meier said.
Identity has always been a top priority for Plaid, he claims, starting with an API for confirming account ownership during authentication. In the past, Plaid customers had to work with six to 12 different suppliers to handle all the different aspects of the ID verification and compliance flow, Meier noted.
In addition to those new offerings, in what may be the most surprising new news to come out of the company today, Plaid said it also hopes to turn new users into active customers through account financing, which will give people a way to pay. or are paid, for goods and services.
“Funding an account is the first step a user takes to invest, send money, or start using a digital wallet,” Meier said. “We are working to make account funding and transfers a seamless part of the overall onboarding experience to enhance this critical activation step.”
Finally, the company believes it now offers risk-based tools designed to reduce risk and fraud in account financing and transfers through ACH. For example, the new Signal (transaction monitoring) offering uses machine learning to analyze more than 1,000 risk factors and provide scores and insights that Plaid says “provide more assurance that a transaction is completed” so that a company can control access to those funds. accelerate without increasing risk. Early customers, Plaid claims, have seen “significant reductions” in unauthorized returns and NSF fees.
Plaid raised a $425 million Series D in April 2021 with a valuation of $13.4 billion. The nine-year-old company made headlines last year when the deal it had struck to be acquired by consumer credit giant Visa for $5.3 billion fell through amid regulatory concerns — an event many say turned out to be a blessing in disguise. to be before start-up.
Identity Verification is an increasingly crowded and well-funded space. Socure, a company that uses AI and machine learning to verify identities, raised $450 million last November for its Series E round led by Accel and T. Rowe Price. Persona, a startup focused on creating a personalized identity verification experience “for any use,” which says it helps businesses customize the identity verification process — and beyond — through its no-code platform, has raised $50 million in May. secured in a 2021 Series B funding round. And last August, a few early Affirm employees raised $70 million for SentiLink, an identity verification startup.
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