February 2022 Summaries

The European Commission is reviewing PSD2 with an academic study and there are several changes that could be made in the next iteration of this legislation. While PSD2 has opened up the financial sector, increased competition, and provided better consumer outcomes through choice and user experience, it's not perfect. Key areas for improvement include broadening the scope of PSD2, aligning incentives across the ecosystem, strengthening enforcement powers, and improving supervision and implementation of PSD2/3. Open banking has enabled many societal benefits such as new payment options, increased e-commerce participation, and better financial decisions for the financially underserved.

The Plaid company has released a new transaction data categorization taxonomy for fintech apps to provide personalized spending insights to users. The new taxonomy includes 16 primary categories and 104 detailed categories, with the goal of simplifying categorization and reducing ambiguity. The new taxonomy is designed to be intuitive, convey the intent behind purchases, and accurately identify one correct category for each transaction. Plaid collaborated with several customers, including LendingTree and Bright Money, to test and refine the new taxonomy. The update aims to improve the accuracy of categorization predictions and provide better insights into user spending behavior.

BlueVine is a fintech lender that offers 4x faster loan decisions compared to traditional banks. Founded in 2013, it provides digital banking and financing services for small and medium-sized businesses. The company uses Plaid's efficient financial data aggregation solution to speed up the application process while maintaining user privacy. This approach has helped BlueVine attract market share from traditional banks, which often overlook smaller businesses.

Plaid has implemented a comprehensive process for ensuring consistency in their APIs as they scale. The primary method is the API Review Council (APIRC), which consists of rotating members from various teams across the company. The council created an API Style Guide to codify style decisions and ensure new APIs are consistent with older ones. Additionally, a checklist for reviewers and submitters helps maintain consistency with the style guide. Changes to the Plaid API must be approved by the APIRC, which uses Jira for tracking and GitHub for setting up blocking reviewership in OpenAPI specifications. The council also sends out a monthly newsletter to increase awareness of resources for developers changing the API.

Wethos, a New York-based startup, has developed a platform for independent contractors to manage their finances, but found that integrating with banks was too complex and time-consuming. To address this issue, they partnered with Unit + Plaid to embed business banking services into their platform, resulting in a 6x increase in user retention. The integration allows Wethos users to easily manage cash flow and finances without the high fees and complexity associated with traditional banking methods. By partnering with Unit + Plaid, Wethos was able to launch this banking-as-a-service solution quickly and scale with demand, providing its users with a better financial management experience.

Plaid has made several product highlights available in February 2022, including timestamps for transaction data, the general launch of Plaid Portal US, and an additional entry point to the Manual Micro-Deposit (MMD) flow. The company also updated its End User Privacy Policy and Privacy Statement, providing a preview of the new terms while striving to explain them simply. Additionally, Plaid introduced "Link with account numbers" in institution DOWN prompt for MMD customers, improved institution health messaging, and explored ways to enhance transaction data categorization. Users will soon be able to access robust enrichment for their branded accounts, and there's an upcoming update to Plaid Link that includes a new Account Select pane beginning April 1. Furthermore, users are encouraged to upgrade to the latest Link SDKs and attend virtual events such as Tech Talks, which discussed fintech trends and featured companies like Zirture and Financial Gym.

In 2022, Plaid plans to focus on improving data security standards and expanding universal data access in the open finance ecosystem. The company recently acquired Cognito, an identity verification and compliance platform, to support these efforts. Key product updates include the launch of Plaid Portal US, a privacy tool for consumers; beta testing of Onboarding Registry, which enables FIs to gain insight into third-party apps connected to their ecosystem via the Plaid network; and collaboration with industry leaders on the Financial Data Exchange (FDX) Notification Framework. Additionally, Plaid's executives have been sharing insights at various events and podcasts regarding consumer demands, inclusivity, and fintech predictions for 2022.