Launch year: 2012
Country: USA
Funds raised: Series C – $309 million

Plaid – Connecting the Financial Ecosystem

Concept description

Plaid owns a suite of APIs connecting financial institutions with consumers’ bank accounts, thus centralizing a fragmented financial ecosystem.

Specifically, Plaid has 8 key API product offerings:

  1. Authentication: Instantly authenticate bank account information (account & routing numbers) and create ACH transfers
  2. Identity: Verify user identity, with the objective of complementing KYC procedures and reducing fraud
  3. Income: Retrieve consumer income information and verify employment
  4. Balance: Verify real-time account balances, with additional benefits of reducing NSF fees and enabling account pre-funding
  5. Transactions: Access detailed transaction history, both historical and continuous
  6. Investments: Develop a holistic view of user investments, centralizing investment data and developing an understanding of the user’s holdings
  7. Assets: Verify borrowers’ assets, and develop a consolidated summary shareable for audit purposes
  8. Liabilities: Continuously access liabilities data for student loan and credit card applications, with additional benefits of enabling payments

More recently, Plaid has launched Plaid Exchange, a centralized, more secure, and streamlined technology offering targeting traditional financial institutions. The Exchange is intended to centralize both the user experience and the ability for financial institutions to develop additional services within the ecosystem. The streamlined connectivity would allow for easier identification and remediation of downstream/upstream issues.

Plaid is in the process of being acquired by Visa for an estimated $5.3 billion.

Value proposition

Plaid has developed a family of universal APIs with the primary intent of bridging the gap from the traditional financial ecosystem into a more digitally-focused one. The value offered can be considered from both the business and the consumer.

For the business, a centralized ecosystem allowing for secure and efficient connectivity to other financial institutions provides the following key benefits:

  • Faster turnaround time for key processes (authentication, verification, etc)
  • Leveraging customer data available with other financial institutions to assess customer profiles and risks
  • Reducing the burden of legacy IT systems, by creating a digital / centralized API ecosystem

For the consumer, the benefits are:

  • Faster turnaround time for key processes (verification, payments, ACH transfers, etc)
  • More targeted offerings based on consumer’s profile
  • User friendly UI, taking advantage of the digital era
  • Centralization of customer’s financial information into one ecosystem

Illustration (Video)

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