November 2023 Summaries

Plaid has partnered with PokerStars to enhance the player experience globally by making it easier for users to authenticate their bank accounts and move money in and out of their PokerStars account, allowing them to make payments directly from their bank accounts. The partnership also enables instant withdrawals of winnings via Plaid's Payment Initiation Service (PIS) technology and Faster Payments. Plaid's payment solution simplifies the payment process while enhancing security by keeping sensitive financial information within the bank's secure environment.

Plaid has committed to expanding its presence in the European open finance market, which is seen as a forward-thinking and innovative region with regulators focused on supporting fintech innovation. The company is encouraged by the continued momentum in PSD3 draft and the Financial Data access draft regulation. Plaid supports 18 countries in Europe and has established offices in London and Amsterdam to serve as a transatlantic bridge for fintechs. The company's unique background and tech-first solution meets needs across various use cases, including fintech, lending, and payments. Plaid is excited to announce the appointment of Brian Dammeir as Head of Europe, who will spearhead the company's growth in the region. With a strong product background and experience spanning multiple geographies, Brian will bring a global lens to drive Plaid's mission to unlock financial freedom for everyone.

The fourth-annual Fintech Effect report reveals that nearly two in three Americans want more AI in financial services. Conducted by The Harris Poll, the survey explores how consumers are using fintech and their perceptions of financial services. Key findings include a continued reliance on digital financial tools during economic uncertainty, growing support for supplementing credit scores with consumer-permissioned data, increasing interest in pay-by-bank options, narrowing trust gap between traditional banks and fintech companies, and the desire for AI-driven personalization and automation in fintech apps.

The Consumer Financial Protection Bureau (CFPB) has proposed a rule, known as the 1033 rule, aimed at promoting competition in financial services and accelerating the shift to open finance. This development is seen as a positive step for consumers and the industry, with Plaid, a company that provides secure open finance solutions, welcoming the proposal. The company was founded on the principle of giving consumers control over their financial data and has since developed various features to support this goal, including APIs, Plaid Portal, and partnerships with financial institutions. Plaid has also implemented robust security measures, such as ISO27001 and ISO27701 certifications, and launched a Security Portal to provide transparency into its security practices. The company is committed to further empowering consumers with better transparency and protections in the open finance ecosystem, building on initiatives like data transparency features and tools for financial institutions to view connected applications.

Fintech companies are facing a rising tide of fraud, with 95% of synthetic identities not being detected during onboarding and an estimated 1.7% of annual revenue lost to fraud every year. The complexity of fraud is increasing, with risk leaders dealing with a higher volume, variety, and sophistication of attacks. To mitigate the cost of fraud without overcomplicating their approach, fintechs need to identify where they're experiencing the most fraud and associated costs, such as returns or unauthorized transactions, and implement targeted measures to tackle these issues. This can include using instant risk scoring, identity verification, and ongoing monitoring to detect suspicious activity. By strengthening their risk program with a partner like Plaid, fintechs can stay ahead of threats and lower fraud without hurting the customer experience.

Plaid Link continues to evolve with a new look and feel, designed to improve the user experience while allowing developers to optimize for business outcomes. The updated link components enable faster feature shipping, rigorous testing before deployment, and greater flexibility in delivering patterns and interactions. A major SDK release is also planned, featuring new features and an enhanced Link experience. Developers can expect annual cadence for major SDK releases, with minor updates released monthly. The Link experience will be available on multiple platforms, including Android, iOS, React Native, React Web, and Web SDKs. Additionally, a new Dashboard feature has been introduced to help optimize conversion rates, providing automatic performance tracking, recommendations, and alerts.

The article highlights the growing threat of fraud in fintechs, with synthetic identities being the fastest-growing form of financial crime. Fraudsters are using stolen credentials and dark web marketplaces to steal data, making it easier for them to create fake identities and take over accounts. Fintechs must combat this by expanding their risk assessment signals through a network-based approach, incorporating insights from other sources within the ecosystem. This can be achieved through verifying customer identities during sign-up, monitoring for risky behavior and transactions on an ongoing basis, securing transactions with machine-learning-powered risk engines, and leveraging a connected network to build a safer digital finance ecosystem. By using these strategies, fintechs can fight fraud at scale and protect their customers.

Plaid has formed a new entity to build ready-made credit risk insights from consumer-permissioned cash flow data, aiming to help lenders make smarter risk decisions and expand credit access for underserved consumers. The company recognizes that traditional credit scores don't capture the full picture of someone's financial life, particularly when it comes to savings, income, or on-time rent payments. This new entity will operate as a consumer reporting agency, providing actionable insights from open banking transactions data to better predict a borrower's ability to pay. By tackling the usability problem head-on, Plaid aims to unlock opportunities for lenders to grow their business while managing risk, fostering inclusion and serving a broader set of consumer needs.