The lines have begun to blur at Plaid: The API platform and data network provider fintech typically connects financial institutions to apps and other financial services with which consumers wish to share their data — but that’s changing.

Fintechs themselves are using San Francisco-based Plaid to connect their own customers’ accounts and information to other apps and services, and financial institutions have become developers, connecting apps and services using Plaid data.

“Plaid is a network that has traditionally connected financial accounts from financial institutions, traditional institutions, to applications and services that our customers develop,” Ginger Baker, Plaid’s head of financial access, told Bank Automation News. Historically, she noted, those have been fintechs’ apps and services.

“Interestingly, over the course of the last year, especially maybe the last 12 to 18 months, there’s really been this convergence between the two sides of that network,” Baker said. “We have financial institutions — established, ‘Top 10’ banks in the United States — who are now developers of products and services using data from Plaid.”

Along those lines, Plaid this year announced partnerships with $423.4 billion Capital One and $558.9 billion U.S. Bancorp.

And meanwhile, “fintech customers who had originally been using data from Plaid are now moving to the other side of the network, enabling accounts that they hold to be permissioned,” Baker said.

Fintechs seek a bigger slice of the pie

While these shifts have been taking place over the last year or more, Baker noted, lately they have accelerated.

“This increasing momentum has been born from a couple of different things,” Baker told BAN. “One, during the pandemic, people just availed themselves of a wider array of types of accounts that they use to manage their financial lives.”

The COVID-19 pandemic produced a groundswell of consumers turning to different types of digital financial accounts and services, in some cases avoiding or being unable to go to a physical bank branch where they once handled payments and other financial needs.

Another element driving the shift to the Plaid network: Fintechs are looking for a bigger piece of the pie — to become more of a hub or center of their users’ financial lives, rather than just handling a particular slice.

More fintechs are recognizing that allowing customers to connect native accounts to other services they use can drive customer engagement as well as potentially higher spending and account use, Baker told BAN.

Plaid noted in a release today that its network now covers three out of four fintechs and neobanks that its users search for when seeking to connect their own accounts to apps. Plaid also highlighted 15 fintechs new to its network, including:

• Neobank Aspiration;
• Prepaid card provider Card.com;
• Digital banking app Chime;
• Dave, also a digital banking app;
• Financial and card services provider Empower;
• The $4.3 billion “branchless” bank Green Dot;
• Freelancer-focused neobank Lili;
• Personal finance and digital banking app MoneyLion;
• Business-focused neobank NorthOne;
• Financial services provider One Finance;
• Mobile banking app Oxygen;
• Trading app Robinhood;
• Personal finance company SoFi;
• Investment platform Stash; and
• First-timer-focused financial services app Step.

More global inclusivity

Plaid, which was founded in 2013, began with a notion that people have the right to access their financial data and permission it securely to other services they wish to use. During the 2010s, the focus was more on connecting bank accounts to popular apps and services.

“We started our integrations with the industry in the places where people have most accounts and the most desire to permission, so the largest and most established financial institutions,” Baker said.

But that’s not necessarily the case in 2021, as more people are choosing channels other than traditional financial institutions.

“Many of the underbanked people in the United States and other countries start first, increasingly, with a fintech application,” Baker told BAN. They may find a fintech app easier to use or more accessible, she said, or perhaps they don’t face perceived barriers “of being the kind of person that can go to an established financial institution.”

Whatever the case may be, “we want to make sure that these folks can permission their account and use that account across the number of different services that exist in the fintech ecosystem just as freely as the customers who use some of the largest, most established and tech-forward banks,” Baker added.