Data aggregator Plaid today announced via Twitter a new beta product designed to help banks improve account funding by automating direct deposit switches.

Plaid, which also offers an open banking platform for FIs, recently made headlines when Visa backed out of a planned $5.3 billion acquisition due to a U.S. Justice Department lawsuit to block the deal.

“Deposit Switch” will connect a consumer’s payroll or employer account directly through Plaid Link, a client-side interface that links to Plaid’s API. Plaid Link provides credential validation, multifactor authentication and error handling.

Deposit Switch is designed to integrate into a bank’s onboarding and account funding flows, company spokesperson Isabelle Lacombe told Bank Automation News in an email. The solution allows consumers to switch their direct deposit from one bank to another, or allocate a portion of their paycheck to a second bank or investment service, she added. Plaid has spent the past 18 months developing the product.

In its blog post about the beta, the San Francisco-based company stated Deposit Switch will make it easier for customers to change where they bank.

“With a paper-based process, there’s little to no clarity around when their paycheck will start flowing to the new account, which can leave the consumer feeling anxious and perplexed,” the post stated. “For financial institutions, high-friction onboarding experiences can lead to consumer drop-off and inactive accounts — and can ultimately prevent banks from becoming a consumer’s primary financial institution.”

The proprietary solution connects a consumer’s payroll or employee account directly through Plaid Link to provide instant account funding.

“By automating direct deposit account funding, banks can optimize their account funding flows, and ultimately increase customer lifetime value,” the post said.

Plaid, which has raised $309.3 million in four rounds of funding, according to Crunchbase, is now taking applications from banks for the beta.

Green Dot recently told BAN that it integrated Plaid’s new functionality into its newly launched digital banking app, GO2bank. And Plaid in its blog post referenced two other businesses that have already tested the tool — Lili, a New York-based bank that markets itself to freelancers, and Yotta, an app that works with banks to encourage customer savings. Both praised the tool.

“Plaid Deposit Switch is helping us streamline the account funding process, which will give customers a better experience and should also benefit our customer acquisition and retention,” Lili CTO Liran Zelkha said in the post.

Bank Automation Ignite, taking place March 2-3, 2021 as a virtual experience, is the event for inspiring automation initiatives and investment in financial services. Formerly the Bank Innovation Ignite conference, this new focus creates an event where financial services professionals can discover new use cases and technologies that are accelerating automation in banking. Learn more and register for the event at www.BankAutomationIgnite.com.