The CFPB’s open banking proposal and pay-by-bank developments

Scaling an open finance future 

Fintech usage has climbed 17% since 2020 as consumers seek greater financial stability and opportunity in 2023 and beyond. While the average US consumer uses 3-4 fintech apps, 13% of consumers—a 4% increase since 2021—now use six or more apps to manage their finances. Some of this growth is fueled by the demand for online payment services, used by 74% of Americans. 

We expect continued growth in fintech apps and services to be reinforced by regulatory changes. In late October, the Consumer Financial Protection Bureau (CFPB) proposed its 1033 rule to accelerate the industry’s shift to open banking and establish strong consumer financial data rights. The proposal would reinforce the move away from screen scraping and require banks and other data providers to allow consumers to access and share financial data through safe, secure, and reliable developer interfaces (APIs). 

We know that banks are actively thinking about how they accelerate API strategies to support an open banking future and we are here to help. Plaid’s Open Finance Suite, which includes Core Exchange and Permissions Manager, makes it easy for all types of financial organizations to create products that deliver the secure, seamless data access their customers expect.

In this newsletter, we discuss some of the ways Plaid is accelerating API adoption, innovating in payments, and helping leading financial services providers do more for their customers, without allocating additional resources. 

Expanding API coverage with new partnerships

Since our newsletter last quarter, we’ve doubled the number of organizations that have access to API connectivity with Plaid from 3,200 to over 6,300 institutions. Key partners have gone live with their integrations including Michigan First Credit Union, Aion Financial, Fiserv, and Alkami, accelerating API access for millions of consumers. 

To bolster this momentum, we’ve doubled down on our investment in the Partner Dashboard so that organizations of all sizes can onboard and launch API connectivity with Plaid even faster. 

Latest industry insights 

We just released our annual 2023 Fintech Effect report! Every year, Plaid conducts a survey via The Harris Poll to identify key trends across the financial services ecosystem. This report offers key insights – whether you’re expanding your open finance roadmap, looking for a way to drive consumer adoption, or want to understand the most important usage trends. Read the full 2023 Fintech Effect report to learn more. 

Supporting bank-based payments

At Plaid, we see incredible promise in transforming payments in ways that improve the conversion of new users to apps, reduce the previously accepted costs of credit and debit card transactions, and fight against user fraud in new and effective ways. Our payments solution facilitates real-time payments and we’re on track to power more than two billion bank payments in 2023—double our 2022 volume.

Plaid Transfer supports multi-rail bank payment systems (ACH, RTP, FedNow) with a single API. Transfer uses a complex algorithm to make sure payments get to the right bank at the right time on the right rail. We’re also helping a wider range of businesses enable bank-based payments through partners, like Adyen. 

Leveraging credit risk insights 

Announcing Plaid’s new CRA entity

On Nov 6, we announced that Plaid has formed a new entity that will build solutions for customers who want ready-made credit risk insights from consumer permissioned cash flow data. This new entity will operate as a consumer reporting agency and help our customers make smarter risk decisions throughout the lending process. 

Lending smarter with cash flow data on-demand  | Virtual Tech Talk

Watch our recent Tech Talk to hear industry experts discuss the latest innovations in the credit space, how lenders are incorporating cash flow data into their existing credit models, and how this shift is impacting consumers and lenders alike. Watch on demand.