Plaid expands reach with Jack Henry partnership

The shift toward API-based data sharing is gaining momentum. Data aggregator Plaid announced today it is partnering with core provider Jack Henry to make Plaid Exchange, an API-based data-sharing platform for banks, available through Jack Henry’s Banno. [caption id="attachment_186958" align="alignright" width="300"] Image via Plaid[/caption] “I don’t want open finance to be a theoretical exercise. I want it to be a reality,” said Niko Karvounis, head of Plaid Exchange. “That means getting the technology right and building the connections, scaling them, rolling out the features, iterating and making it live in the market.” As San Francisco-based Plaid pushes for more banks and fintechs to adopt its data-sharing solution, scoring a partnership with a major core provider is a victory. Jack Henry’s Banno, a suite of digital tools for banks, counts more than 350 bank and credit unions as clients. Banno clients can access Plaid Exchange for free. Plaid introduced Plaid Exchange in May to put secure, API-based data sharing into the hands of more banks and credit unions. According to Karvounis, instead of creating one-off solutions to connect lenders and fintechs, Plaid Exchange allows the data aggregator to move its product upstream by providing the ready-made solution directly to lenders so their customers can easily connect with a host of fintechs. He added that Plaid has improved Plaid Exchange this year with better data updates and spending categorization to help with budgeting services. The financial services industry is steadily moving away from credential-based data sharing, or “screen scraping,” as it adopts API-based data sharing, which is seen as more accurate and secure. The Financial Data Exchange (FDX), a nonprofit consortium trying to create an industry technology standard for data sharing — similar to what Bluetooth has done for wireless — announced in June it has moved about 12 million consumers away from screen scraping. If more core providers were to offer an API-based solution, end consumers and smaller banks, many of which rely on core providers for their tech stack, could move away from screen scraping. Don Cardinal, managing director of FDX, said that while he could not comment on specific partnerships, “the core providers are key to ensuring that the transition from screen scraping to APIs is a tide that lifts all boats.” FDX’s members include big banks like JPMorgan Chase and Bank of America, as well as fintechs like PayPal, Blend and Plaid. Plaid made headlines in January when it was acquired by Visa for $5.3 billion, but the Justice Department sued Visa earlier this month to stop the deal due to antitrust concerns. Monett, Mo.-based Jack Henry, meanwhile, has about 8,700 clients nationwide. Earlier this year, the company rolled out a digital solution called BankAnywhere that allows clients to launch digital banking brands in 90 days. According to March data from FI Navigator, Jack Henry owns a 19.3% market share of banks among core providers, second only to Fiserv’s 40.9%. See also: Jack Henry, NuData beef up security with behavioral analytics In addition to banks, Plaid works with big-name fintechs like Acorns, Chime and Venmo. The data aggregator aims to have 75% of its volume come through APIs by the end of 2021. “There’s some larger banks that are resourced like it’s an entire tech company within a bank,” Karvounis said. “There’s a whole lot that aren’t resourced that way. They’re looking for partnerships. They’re looking for guidance. They’re looking for acceleration. Their end users are trying to connect their bank accounts to apps and services the same way the end user of an enormous FI is.”

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