Plaid Co-Founder Rebuilds NorCal Bank Into ‘Bank of the Future’

The co-founder of $13 billion FinTech Plaid Inc bought California’s NorCal bank for $50 million last year. Now William Hockey, along with his wife, Annie, are overhauling its technology to build “the bank of the future,” The Wall Street Journal reported.

Why would the co-founder of a company that challenges traditional banking’s business model buy a traditional bank? The reason, the Journal reported, is that banks alone are allowed to engage in regulated tasks such as holding deposits and issuing debit cards, and big banks often aren’t inclined to do such things.

So the Hockeys have renamed NorCal bank Column and are building alternatives to technology that can be expensive for small banks to avail themselves of.

Column, the Journal reported, “developed its own banking platform from scratch, complete with a customized direct connection to the Federal Reserve’s payments network.” Then it let FinTech powerhouses including Brex Inc. and Point Up Inc use Column software for free.

The Journal quoted William Hockey, who is 32 years old, as saying, “Everything that you can do at your bank, I want you to be able to do that with three lines of code.”

The Journal recounted a Brex executive as saying one bank wanted to charge Brex $5 per customer wire transfer — transactions for which the Fed only charged the bank less than $1. The spread was $3 or $4 in fees for a technology company, the executive said.

Another advantage William Hockey cited in the Journal article is that Hockey can monitor the way customers use its software, avoiding some of risk taken on by banks that work with other companies on transactions.

Plaid, which William Hockey co-founded as a college senior, “bridged the gulf between banks and fintech apps, allowing companies to plug into bank accounts with consumers’ permission for the purpose of looking up balances and verifying other personal financial information,” the Journal reported. Some 6,000 companies are Plaid customers, according to the news outlet.