- Plaid enables fintechs like Chime, Robinhood, and Venmo to access banking data, serving as the layer between the two sides.
- The startup offers third-parties API-based access to banks’ account data, both through bilateral agreements with banks and via Plaid Exchange, it’s API-in-a-box solution for smaller financial institutions.
- Sitting in the middle of the highly regulated financial services industry and the fintech space, Plaid is front and center to discussions around open finance and data access.
- In January, Visa announced plans to acquire Plaid for $5.3 billion. The DOJ sued Visa in November over the deal, citing antitrust concerns.
- Meet the 14 people at Plaid, from legal to design to engineering, leading key initiatives and executing on their executives’ vision.
- Visit Business Insider’s homepage for more stories.
Fintech has been given a big boost this year as consumers embrace digital-first habits when it comes to their personal finances. From digital-only banks like Chime to roboadvisors like Betterment and apps like Venmo, consumers are embracing financial offerings outside of the major banks. And growth in fintech is slated to continue.
Behind the scenes sits Plaid, which helps to connect new and traditional players.
Plaid serves as the behind-the-scenes piping, linking third-party apps to banks and enabling access to financial data needed for consumers to link bank accounts and move money.
Despite serving as a critical layer between fintechs and banks, Plaid has traditionally been largely unknown to most consumers. But increasingly, Plaid is coming into the public eye.
Many fintechs display Plaid’s logo when consumers set up their accounts. And Plaid is currently in beta with a consumer-facing data management portal that allows users to review and monitor their live data connections, and even switch connections off and delete stored data.
This all comes as consumers’ awareness of data access and privacy is at an all time high.
The startup, which was founded in 2012 and has raised over $300 million from investors including Andreessen Horowitz, Index Ventures, and Kleiner Perkins, was further pushed into the spotlight following Visa’s $5.3 billion bid to acquire it in January. The deal, however, has come under the scrutiny of regulators.
In November, the Department of Justice sued Visa over the planned acquisition, citing antitrust concerns. According to the DOJ, Plaid is a potential competitor to Visa, well-equipped to build a direct-to-bank payments system that would threaten Visa’s debit card market share. In December, Visa responded in a filing, pushing back on the DOJ’s claims. Visa said that Plaid is not a competitor, rather the two operate in “complementary spheres,” and that Plaid’s payments-related R&D does not constitute a competitive offering.
To be sure, Plaid isn’t the only player looking to connect fintechs with banks.
Finicity is another Plaid competitor. In June, Visa rival Mastercard announced plans to acquire Finicity in a deal worth $825 million. The DOJ cleared the proposed bid, and it is expected to close by the end of the year. And Akoya, backed by 12 financial institutions including Citi, JPMorgan, and Wells Fargo, just signed US Bank as its first data-sharing bank partner. There’s also Evestnet Yodlee, which, like Plaid, has data-sharing agreements with the major banks.
Plaid sits front and center to the industry’s move toward open finance
Banks haven’t always been keen to share their data with startups like Plaid. And there are a number of reasons for that: risk, security, and competitive concerns, to name a few.
“When I first joined, there was a little more resistance to the concept that consumers really own their data,” Brandis Anderson, product and regulatory counsel at Plaid told Business Insider. Anderson joined Plaid in 2017.
But with the now-undeniable scale of fintech, and regulators’ increased attention on data privacy, larger industry players are more open to the idea of collaborating with fintechs when it comes to data sharing.
A consumer’s right to access their financial data was stipulated in the Dodd-Frank Act, the federal law established in the wake of the financial crisis, but the terms are vague. Federal regulators haven’t issued specific data sharing standards when it comes to banking data — at least not yet.
In October, the CFPB announced plans to issue rules based on Dodd-Frank when it comes to financial data that moves between banks, third-party fintechs, and the pipes that connect the two. That means players like Plaid, among others, will spend the next year answering the CFPB’s questions and helping structure proposed industry standards for data sharing.
“It could not be a more exciting time for open finance and open banking,” Anderson said.
Open banking refers to access to bank data like account numbers and balances. Open finance is broader, including more pieces of consumers’ financial lives such as payroll, insurance, credit cards, and investments.
Plaid, for one, has layered more than just bank-account data into its application programming interfaces. During the SBA’s Paycheck Protection Program rollout, Plaid built a new API for the payroll data small businesses needed to apply for the loans. Plaid also has APIs for investments and credit data.
And open finance can lead to more accessible financial tools for all consumers, especially un- and underbanked populations.
“The fintech ecosystem has opened up a whole breadth of new use cases and new tools for consumers. But I think there’s still a lot of work left to be done there,” Katie Neal, outreach and advocacy manager at Plaid, told Business Insider.
“So one of the things that Plaid is thinking a lot about is how we foster development of products for consumers that are not traditionally engaged with the financial ecosystem,” Neal added.
Tech bros need not apply
Plaid’s has nearly 600 employees, around 200 of which were hired in 2020, alone. And as is often the case with a fast-growing company, scaling headcount presents its own challenges to building and maintaining company culture.
“We incorporate our company values and principles in the hiring process, so people that we bring into the company typically align with our mission and values from the beginning,” recruiting manager Erin Symons told Business Insider.
As startups scale, it’s often hard to maintain the same company culture from the early days. But employees said that Plaid still shies away from the “tech bro” culture of Silicon Valley.
“Plaid is really conscientious about making sure that we’re not like the traditional bro-y tech company, for lack of a better word,” Neal said.
Kira Booth, an engineering manager who built out Plaid’s Salt Lake City office, echoed Neal’s comments.
“I think that we have built one of the best engineering cultures in Salt Lake, and have provided a real opportunity for people who don’t want to be part of the tech bro culture of Silicon Slopes,” Booth said.
From hosting women in tech events to “plairings” (where employees are randomly paired with a colleague and given $20 for an outing), Plaid invests in its employees and its culture.
And thoughtful hiring is crucial for a work culture that expects all employees to contribute new ideas and strategies.
“We have a very bottom-up engineering culture across the board,” Booth said. “All of the engineers contribute to our [objectives and key results]. They help set strategy. They can give feedback directly to the head of engineering, and he takes it very seriously.”
Meet Plaid’s breakout stars: Here are the 14 people leading initiatives across the $5.3 billion fintech that’s looking to make financial data more accessible
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