June 2021 Summaries

Data quality is crucial for enhancing fintech experiences. Plaid, a platform that connects with over 11,000 financial institutions globally, focuses on four key factors to ensure data accuracy and timeliness: connection success rate, connection longevity, data freshness, and uptime. Connection success rate refers to the ability to link bank accounts to fintech apps, while connection longevity denotes the average duration of active data connections. Data freshness pertains to how often banks provide transaction updates to apps, with real-time updates being ideal. Uptime signifies the percentage of time a bank connection is operational for data sharing. Plaid aims for 99.99% uptime and continues to work with financial institutions to improve these factors for better user experiences.

In Europe, open banking regulation PSD2 has enabled payment initiation services (PIS) that allow users to initiate payments with a few clicks, making e-commerce transactions safer and easier. PIS services establish a software bridge between the merchant's website and the payer's bank online platform, allowing consumers to authorize payments without needing to be part of traditional card schemes. The concept provides comfort to payees, offering a low-cost solution for both merchants and consumers, and enabling them to shop online even without payment cards. As PIS adoption grows, it is expected to overtake traditional card-based e-commerce transactions by 2023, driven by consumer demand for seamless payment experiences and the integration of open banking enabled solutions.

First Tech Federal Credit Union, serving tech giants like Google and Amazon, has been recognized for its best-in-class user experience. Established in 1952, it provides banking, investment, insurance, and tax services to over 700,000 members mainly in the western United States. Known for technical innovation, First Tech was one of the first financial institutions to offer online banking and an early adopter of omnichannel. In 2019, Forbes named it one of Oregon's best credit unions. However, their new-member onboarding flow lacked innovation in terms of account funding. To address this issue, First Tech chose Plaid to provide a more intuitive and efficient way for customers to fund their new accounts.

Amazon Aurora MySQL is a primary relational database for Plaid. In 2019, they noticed performance degradation on one of their Aurora clusters due to an errant long-running transaction on a read replica. This issue seemed to violate the assumption that read replica load should not impact writer performance. Digging deeper into the design and documentation of Aurora DB, Plaid identified the cause of the degradation and best practices to avoid it. In vanilla MySQL, transactions are isolated using multiversion concurrency control (MVCC), which allows each operation to behave as if it is the only operation running on the database. This is achieved through undo logs that can recreate prior states of rows by undoing updates. Long-running transactions can cause performance degradation for concurrent transactions, especially when querying heavily indexed tables with frequent changes. Aurora MySQL differs from vanilla MySQL in its persistence and replication models. In Aurora, compute (query execution) and storage (durably persisting data to disk) happen on different instances. Persistence and replication are both accomplished using the redo log. Reader and writer instances share a set of undo logs, which can lead to performance degradation when long-running read replica transactions occur. Mitigation strategies for this issue include reducing transaction isolation levels for replica instances, monitoring rollback segment history list length, performing potentially long-running reader queries on binlog replicas, exporting snapshots to S3 as Apache Parquet files, and using a clone to handle long-running reads.

As an engineering manager at Plaid, Yaroslav Korshak is dedicated to organizing his team for efficiency and contributing to the company's mission to unlock financial freedom for everyone. Prior to joining Plaid, he sought a diverse workplace where he could bring his passion for creating positive change. With a background in law, design, and coding, Korshak has navigated multiple career paths to find fulfillment. He advises others to explore various careers, embracing uncertainty and learning from experiences. At Plaid, Korshak is excited to build his team and contribute to the company's impact on making finance more accessible, driven by his determination to leave a positive mark on the world.

Plaid, a company aiming for a fully digital financial system, has announced its partnership with Capital One and the successful migration to the Capital One API. This partnership is part of their commitment to make 75% of their traffic through APIs by the end of 2021. The goal is to create a credential-less ecosystem where consumers can control access to their financial data, including savings, mortgages, and investments. Plaid's integrations with major U.S. financial institutions are designed to ensure secure sharing of financial information with apps powered by Plaid. They also aim to help the industry meet consumer demand for digital finance through initiatives like Plaid Portal, where consumers can manage their account connections.

The revised payment service directive (PSD2) is transforming the financial services industry by giving consumers more options for how they pay, with payment initiation service (PIS) payments gaining traction in the UK and EU. PIS payments use a consumer's bank account to initiate transfers, allowing easy and secure online transactions, including making payments, opening accounts, and paying invoices from an app or website. Consumer protection is at the heart of PIS development, providing greater protection than with cards, where protections only come into force after authorization. Strong authentication is required for PIS payments, which are also secure due to the bank's checks on consumer ownership of the payment account. Additionally, consumers' payment details are not shared with merchants when making PIS payments, reducing the risk of card fraud. The growth of open banking and partnerships like Railsbank enable innovative models that allow consumers to engage with their money on their own terms, providing protection, security, and benefits for consumers.

The European open banking ecosystem has made significant progress, but there are still obstacles that hinder a seamless customer journey. Plaid works to help stakeholders understand the value of a rich third-party provider (TPP) ecosystem and navigate the fragmented landscape. The Second Payment Services Directive (PSD2) aims to facilitate an obstacle-free process, but bank-imposed obstacles such as mandatory redirections or multiple SCAs can interfere with consumer choice and limit success. The European Banking Authority (EBA) has published opinions to remedy access issues, including asking local regulators to take action against banks that impose obstacles for TPPs that restrict open banking and consumer rights. Plaid advocates for increased transparency in PSD2 metrics and API data points to enable TPPs to develop integrations with the best-performing APIs, as well as a dedicated escalation process for TPPs to raise issues, such as local notification processes to capture unplanned unavailability events in a formal manner.

Plaid has restored data access to Charles Schwab accounts and introduced a new co-branded Consent pane for Link, allowing teams to feature their branding alongside Plaid's on the Consent pane. The company has also added webhooks for loan account data notifications and categorized transactions for Assets customers. Additionally, Plaid has fixed a bug that returns 'null' for available balances of credit card accounts in Canada if the credit limit is unknown. The company's YouTube channel now features virtual events, including Tech Talk, and its latest whitepaper discusses the evolution from data access to data control in fintech. Furthermore, Ellevest, a financial learning platform, has seen a 2.1x increase in new customer acquisition after switching to Plaid.