May 2021 Summaries

Plaid has adopted a new definition of "Going Dutch" in North America and Europe, shifting from splitting bills to building on a well-established fintech ecosystem that empowers consumers with access to their financial data. This approach is aligned with the EU's open finance movement, which aims to give consumers greater control over their financial lives. Plaid powers over 4,000+ fintech applications globally, enabling various use cases such as supporting renters in the housing market. The company prioritizes data security, user autonomy, and privacy protection, mirroring the core responsibilities of financial services providers in the European Union. Through public-private partnerships, Plaid aims to drive meaningful dialogue with the industry while expanding its presence in the Dutch and European markets.

LendingTree, a leading online lending marketplace, aimed to increase user engagement by offering a more comprehensive view of users' finances, which would encourage them to return to the site more frequently. To achieve this goal, LendingTree expanded its services beyond loans and needed a way for users to securely share their financial data with the company. Plaid was chosen as the solution to facilitate this data sharing, enabling LendingTree to provide users with a more holistic view of their finances.

Plaid and Square have partnered to give US merchants a better ACH payment experience, providing a lower-cost alternative to credit cards. Merchants can now easily process ACH debits through Square Invoices and developers can enable ACH payments through the Square Web Payments SDK. The partnership uses Plaid's tokenized check system to allow customers to securely connect their bank accounts for payments. This allows merchants to collect large transactions online at a low cost without worrying about bank authentication, compliance, or managed payment complexities. With this integration, businesses can reap rewards from a growing customer base accustomed to new ways of paying, and Square offers fee-free refunds on ACH payments to make acceptance even easier.

The evolution from data access to data control is a key aspect of Plaid's mission, with the company aiming to give people more control over their financial information by building new experiences and infrastructure that prioritize security and privacy. This shift is driven by the diversity of use cases in digital finance, which creates an obligation for companies like Plaid to build safe and secure technologies. The latest white paper "Data controls: The next evolution in financial privacy" outlines Plaid's vision for the next set of technologies that can empower people with their data, while keeping them safe and secure as they move through the digital financial system.

Plaid has introduced a new architecture for its Link SDK, which is used by developers to connect their apps with users' bank accounts. The original design of the Plaid Link SDK contained all user interface (UI) and business logic for the user experience and called internal backend endpoints to fetch localized data, authenticate users, and ultimately return a public token for the customer application to use with the Plaid API. However, as the number of features and fixes increased, this design became an impediment to velocity, quality, and ease-of-integration. To address these issues, Plaid rebuilt the foundation behind the Plaid Link SDK by moving all logic to the backend so it could be shared across Web, iOS, and Android. More importantly, they moved all user experience logic into a no-code directed graph data model and transformed the client-side SDK into a focused rendering engine. This new architecture is called "Flexible Link" or "Flex Link". The goals of this project were to provide a better product experience for customers while increasing velocity for Plaid's internal teams, making things easier for customers, better for end users, faster for Plaid, and safer & more reliable. The team used strong boundaries as their guiding principle when designing Flex Link, which directly combats the tendency of code to become complex over time. The benefits of this new architecture include improved observability and reliability due to a single source of truth on the backend, reduced complexity, and higher confidence in end-to-end testing because there is no more experiential logic in the SDKs themselves. The team also learned valuable lessons about choosing constraints carefully, investing in tooling, always having a customer, and ensuring safety during large re-architecture projects.

We have improved the payments experience in the UK by introducing a new Payment Initiation experience in Plaid Link, which is optimised for a seamless user experience. We also introduced QR code authentication to remove friction from the Plaid account linking desktop experience and enabled users to authenticate and make payments quickly and securely. To further enhance the user experience, we now offer Modular Link, an integration option that allows customers to customise their user interface without the challenges of front-end integration complexities. Modular Link offers a fully whitelabelled solution for consumer transparency, easy integration and maintenance, and optimises the open banking user journey. Plaid customers like Paysend are already using Modular Link, which keeps costs low and improves the user experience, resulting in more money flowing to people's pockets whenever they want it.

The global privacy landscape is evolving rapidly, with policymakers, regulators, and industry participants working to address concerns around consumer rights, data protection, and security. In the United States, a comprehensive federal privacy law is being considered, which could provide additional protections for consumers and regulate companies handling their personal data. Meanwhile, states such as California and Virginia have already passed their own comprehensive privacy laws, while Canada is updating its 20+ year-old federal privacy law to include strong consumer rights and data mobility features. The United Kingdom's Open Banking framework is expanding access to financial information, but regulators are also highlighting the need for updated privacy regulations to manage risks associated with data misuse and security. Fintech companies are being encouraged to partner and collaborate on advancing common goals, including ensuring transparency and control for consumers while keeping their information safe and secure.

The partnership between Railsbank and Plaid aims to make it easier for companies outside of financial services to tap into the embedded finance opportunity, estimated to grow from £16 billion in 2020 to £164 billion in 2025. Through this strategic collaboration, Railsbank customers in the UK will gain access to Plaid's Payment Initiation API, enabling instant bank payments directly within their app or website. This partnership offers added benefits such as increased conversion and higher confidence through instant payment confirmation, reducing friction and improving customer loyalty. Companies like ikigai, a challenger bank leveraging the power of Railsbank and Plaid, have seen significant improvements in account opening processes and reduced operational hurdles, enabling them to focus on growth while offering seamless experiences to their clients. The partnership marks a significant milestone in Plaid's journey to provide access to financial products and services that leverage open finance benefits.

Clear Books is an online accounting software designed for small businesses to simplify their financial management. Founded in 2008, it has assisted over 10,000 microbusinesses in managing their finances. The platform's key feature is bank feeds, which import users' financial transactions. Prior to integrating with Plaid, Clear Books used screen scraping for this purpose, but the UK prohibited this practice in early 2020. Consequently, Clear Books sought a new solution and partnered with Plaid to enable users to share their financial data while also expanding its range of supported banks.

Plaid has launched a new returning user experience (RUX) for Link that simplifies the flow for consumers who have previously linked a financial institution with Plaid, resulting in a +3% lift in conversion on average. The company has also introduced a new Item Debugger and improved Institution Status, making it easier to find known issues in the Dashboard. Additionally, Plaid is recommending updates to the iOS and Android SDKs to access new features and bug fixes. The company is committed to building a better customer experience by conducting more customer interviews and implementing improvements based on feedback. Furthermore, Plaid has introduced additional enhancements to institution search messaging in Link and is launching its Accelerate program, which supports early-stage fintech startups that are working to simplify payments and improve financial wellness for all.