December 21, 2023

An Update on our Open Finance Strategy

Cecilia Frew

Over the past decade, a strong foundation of consumer financial data rights have underpinned an open finance ecosystem that drives competition, choice and inclusion for hundreds of millions of people today. This trend will only continue as more consumers move their financial lives online. In fact, the average consumer uses between 3-4 fintech apps and services. 

To support rising consumer demand and financial service’s digital transformation, Plaid has built a network that ensures consumers have the right security and protections in place as they continue to rely on these solutions. Core to our existence as a company is the belief that consumers should have safe and reliable access to their financial data, and be able to share it with the tools and services of their choice, no matter where they bank. Today, this value underpins a thriving global open finance ecosystem. 

In support of this, Plaid continues to establish new partnerships and innovations with key industry partners who want to participate in an open financial ecosystem - ranging from large financial institutions to auto companies and fintech tools. 

Financial institution updates

Today many banks recognize the critical benefits their customers get by being able to connect their accounts to different products or services. To this end, some of the most innovative businesses in financial services - such as American Express and TD Bank - have signed data access partnerships with Plaid to ensure their customers can plug into Plaid’s network via secure and reliable API integrations. 

But it isn’t just about responding to customer demand – many institutions turn to Plaid as a resource for continued innovation and development within their own products. Open finance can unlock better products and outcomes for consumers across a range of use cases, particularly around payments and lending. At Money2020 this year, our CEO Zach Perret sat down with Citi COO Anand Selva to discuss how Citi uses Plaid to power their PFM solution for their Digital Wealth platform, as well as meet rising consumer expectations for secure and reliable connectivity. The conversation demonstrated how Plaid’s partnership with financial institutions can lead to new and personalized use cases for their customers. We are excited to continue this work with Citi and the many other financial institutions who see the value of Plaid products for their digital products and solutions. 

Our financial institution partners are an integral part of an open finance ecosystem. We value their collaboration as we work together to provide customers with a competitive and dynamic digital financial marketplace. 

Growing our Core Exchange and platform partnerships 

An open financial ecosystem is made up of institutions that vary in size, shape, and location. In order for open finance to truly succeed, it’s critical that institutions of all sizes are able to offer their customers API based access. To address this, we created Core Exchange, our Financial Data Exchange (FDX) aligned, out-of-the-box solution to offer API connectivity to credit unions, community banks, and small and regional sized institutions. Most recently, we’re proud to formally welcome Finastra, Fiserv, and Alkami to the Plaid network. With the addition of these platform partners, we now have more than 7,000 credit unions, community banks, and institutions that are able to access Plaid’s APIs. Regardless of a financial institution’s footprint, they should be able to offer API connectivity to their consumers - Core Exchange solves this and we’re excited to see its continued adoption. 

Open finance product offerings and updates 

Privacy remains a steadfast focus. In 2022 we launched Permissions Manager, an API product that allows Data Partners to build a consumer permissions portal. Permissions Manager gives customers (end users) greater visibility and control over their data sharing connections made through Plaid. This year, we continued to enhance Permissions Manager so it includes a historical log of activity spanning application connection, disconnection and data deletion; this will be critical to enhancing privacy controls on behalf of consumers. 

Additionally we’ve continued to make it easier for consumers to exercise even greater control over where and how their data is being shared. Our Data Transparency Messaging facilitates a clear articulation of what information an app is receiving in order to provide the desired use case when a consumer permissions their data via Plaid, such as transaction history to better manage a budget in real time or manage account balances. This level of granular transparency is aligned with the direction of proposed Open Banking regulation and to our core principles around consumer data rights. 

As part of our efforts to equip financial institutions with the tools they need to protect their customers, we’ve also begun developing new solutions that empower financial institutions with the ability to gain insight into where their customers are connecting and disconnecting their accounts to various apps or services. This drives uniformity across privacy controls across the ecosystem. 

Our efforts to foster an API based ecosystem bolster opportunities and outcomes for consumers and businesses. We are pleased to see the CFPB taking steps to formalize a scheme in which open finance can foster innovation while having the means to protect consumers. Looking ahead we will continue to partner with financial institutions and fintechs to unlock the power and potential of open finance by reimagining what it can do for products and customers. If you’re interested in working with us, please reach out.