October 25, 2022
Access to financial data helps consumers navigate a difficult economy
As we move farther away from the height of the pandemic and face new economic challenges, digital acceleration isn’t showing signs of slowing down. With inflation and market volatility, consumers are relying on digital financial tools more than ever.
Plaid’s 2022 Fintech Effect Report found more than half of Americans (53%) say that their financial stress increased over the past year, and 61% turned to financial technology to weather the storm. With eight in ten using digital financial apps and services, companies can better support their customers by enabling them to connect their accounts together. Fortunately, access to financial data is becoming safer and easier to enable.
During the first wave of the COVID-19 pandemic, fintech adoption skyrocketed as consumers leveraged a broad array of innovative digital finance tools to help them better manage their money. And fintech use isn’t showing signs of slowing down, as eight in ten consumers say this past year made them more focused on their finances (81%) and three-quarters (76%) say they used it more during the last year, up 6 percentage points from 2021. Not only that, but 48% of consumers say fintech has helped them feel in control of their finances.
In fact, fintech has become so beneficial to daily life that the majority of fintech users (78%) cite the ability to connect their accounts to apps and services as their top priority when choosing a bank, and seven in 10 (70%) would consider switching banks if their primary bank did not enable financial data portability.
As fintech adoption continues to grow, financial service providers will play a critical role in helping consumers tap into the benefits of data connectivity, especially during times of economic uncertainty.
Here are three themes to ensure the needs of consumers are met:
1. Expand data access to help consumers lead healthier financial lives
At the core of financial access is data connectivity—the technological infrastructure that allows consumers to port their data from one provider to another. With ten years of infrastructure and thousands of connections, Plaid has paved the way for financial connections to be seamless, safe, and secure.
Plaid's data connectivity solutions Core Exchange and Plaid Exchange help data partners of all sizes—from the largest financial institutions and regional banks to fintechs, neobanks, and digital banking platforms—quickly and securely facilitate data connectivity on behalf of their customers, aligned with the latest, internationally-recognized security standards.
For example, Plaid’s partnership with Wise provides millions of customers access to the data they need to live healthy financial lives. The integration is based on Plaid’s industry-aligned open finance solution, Core Exchange, and provides Wise’s 13 million customers with the ability to move money conveniently and securely across their own accounts. The solution makes moving money easy and efficient, whether it’s sending funds to family members in times of financial hardship, transferring money across accounts, or paying bills. Read Plaid’s recent Q&A with Wise here.
2. Increase transparency for a clearer financial picture
Consumers crave transparency over how their information is used, with 82% saying, “when I choose to share my financial information with fintech companies, I want to know who is responsible for managing my data.” Having a more complete picture can help consumers make more informed decisions, like which bills to prioritize, what investments to explore, or how to budget within tighter constraints. 76% of Americans say they have more trust in financial companies when they convey their privacy practices: Plaid recently launched Permissions Manager as part of its Privacy Controls Suite, which allows financial services providers to build their own privacy portals, so consumers can view and control the list of apps that have access to their account information.
3. Empower consumers to better manage their finances
Consumers can make better decisions with greater visibility and insight. They can securely port their financial data into the financial tools that meet their needs, to enable additional value-added insights or actions.
This compatibility is becoming increasingly important: when asked “Which of the following has the greatest impact on your decision to use a new financial technology app or tool?”, 35% of consumers answered compatibility with the other tools they already use, including their bank account. Connecting their primary accounts can enable consumers to leverage investment apps like Chime to promote financial wealth building.
Fintech-powered services are showing up everywhere, and consumers are increasingly expecting connectivity among the apps and services they use to manage their daily lives. Plaid will continue to illuminate the benefits of enhanced data access, to enable an open and equitable financial system that works for everyone.