Plaid

Plaid offers white-label and full-stack FinTech infrastructure for financial institutions, wealth managers, and other enterprises to embed banking, payment, financial advice, and lending solutions to their FinTechs. Its core product is a screen scraper that accesses user bank account data (after login credentials are provided), scrapes it, and enables data querying through APIs. Accordingly, its APIs support onboarding, information, money movement, payroll, and fraud prevention, among others.

The platform initially focused on white-label account linking services, but eventually transitioned to a consumer brand, with its logo residing inside FinTech apps in the bank linking experience. Plaid has a three-sided network, comprising ~500 million customers (accounts), 11,000 banks, and 2,600 FinTechs (as of May 2022).

The company continues to expand its FinTech infrastructure product range. It added several crypto exchanges , including Binance.US, Gemini, Robinhood, and SoFi, to its network in July 2022, to allow developers to access and incorporate cryptocurrency asset data. This followed the “pay-by-bank” solution launching in October 2021, to enable the US and European merchants to accept payments directly from user bank accounts. In February/March 2021, the company also launched income verification product “Simply Income,” along with “Deposit Switch,” which enables users to switch direct deposits to a different bank account.

Plaid also launched a biometric identity verification tool in May 2022, to prevent fraud by leveraging KYC and AML capabilities. This came just four months after Plaid acquired the identity verification and compliance platform Cognito for USD 250 million. The solution can reportedly verify identities in less than 30 seconds, and can also analyze email, phone, IP addresses, and device IDs.

As of July 2022, its infrastructure connected enterprises to over 12,000 financial institutions (FIs) across the US, Canada, the UK, and Europe. Although Plaid connects user bank accounts with the FinTech apps, it is not directly involved in transferring money from the bank accounts. Instead, it has signed up more than 50 partners across the US and Europe (such as Square, Stripe, Silicon Valley Bank, and Galileo) to do so.

Plaid charges its users in three main methods: 1) a per-request fee for transactions through Plaid, 2) a one-time fee when apps utilize Plaid to access customer bank accounts, and 3) a monthly subscription fee.

Key customers and partnerships

The company noted that its customer base grew by around 60% year-over-year (YoY) in 2020 and reached over 5,500 clients as of January 2022, including PayPal, Robinhood, Google, and Microsoft.

Plaid announced that it aims to commit 75% of its traffic to APIs by the end of 2021, and in line with that has entered a series of open banking partnerships with leading FIs including Capital One (in June 2021) and US Bank (in May 2021). Through these partnerships, the FIs customers can connect their accounts to third-party apps on Plaid’s network.

Funding and financials

Plaid forecast its revenue to total USD 225 million in 2021. The company agreed to pay USD 58 million in a class action lawsuit settlement in August 2021, over claims the company used banking login credentials to share data to third-party firms without prior consent.

In January 2020, Visa attempted to acquire Plaid for USD 5.3 billion; however, the deal was called off in January 2021, due to a potentially long and complex litigation process. In April 2021, Plaid raised USD 425 million Series D funding at a USD 13.5 billion valuation which was supported by pandemic-led user growth (up 44% YoY over March-May 2020).

The company also received an undisclosed amount of funds from JP Morgan Private Capital Growth Equity Partners and Amex Ventures, in August 2021, as an extension to its Series D round. Plaid intends to invest the funds in expanding globally, developing new products and tools, increasing its workforce by 50% in 2021, and scaling its platform to meet increased demand from FinTechs.