More individuals and businesses than anticipated are turning to FinTechs for their financial needs, as the demand is possibly accelerated by the coronavirus pandemic. As financial institutions (FIs) scramble to meet the rising demand for digital, Plaid is releasing a new solution to help banks manage and secure customers’ financial data.
“Digital transformation that was expected to take years is now predicted to take place over a matter of months,” Niko Karvounis, product lead at Plaid, said in a company statement on Tuesday (May 19). “Now, financial institutions everywhere must be prepared to meet their customers’ rising demand for digital connectivity.”
The company is launching Plaid Exchange, an API platform that is specifically intended to help FIs tap consumer-permissioned data. Some 44 percent of banking executives said in an Accenture survey that connecting legacy systems with newer FinTech applications is a central challenge.
To make the transition easier, Karvounis said Plaid is working with numerous integration partners such as Kunai and Core10. There are currently more than 2,600 apps on the Plaid network.
“We believe APIs are the future of open finance, and we want to make it as easy as possible for all financial institutions to incorporate APIs into their broader digital transformation agendas regardless of budget size and resources,” he said.
Using Plaid Exchange, FIs can economically launch an API solution in just three months. Banks can also use the solution to leverage tokenization to maintain connectivity. Bi-directional Plaid Exchange integration makes scheduling data updates smarter, the company said.
“Plaid Exchange is a solution for the digital financial ecosystem stakeholders; it’s open finance in a box, so financial institutions can integrate with multiple data partners,” Karvounis said, adding that the platform is an active member of FDX and other standards bodies.
In January, Plaid agreed to be acquired by Visa for $5.3 billion in a deal that was slated to close by July. Visa had previously invested in Plaid as part of a $250 million 2018 funding round.