Fintech

Plaid, once primarily focused on fintech, is expanding its enterprise business and now has over 1,000 registered customers

Published

1 year ago

29 June, 2024

Fintech giant Plaid says enterprise growth is starting to outpace the rest of its business

AS Plaid expanded its fintech services and, at the same time, expanded its customer base.

Plaid began as a company that connected consumers’ bank accounts to financial apps, but has since gradually expanded its offerings to include lending, identity verification, credit reporting, fraud prevention and payments.

The 11-year-old company was nearly acquired by Visa for $5 billion before antitrust regulators terminated the deal. Plaid continued to raise funds a valuation of $13.4 billion After the deal fell through and has since worked to diversify its revenue streams.

At first, the fintech giant mainly sold to other fintechs. Subsequently, other banks and financial institutions were added to the mix. Today, its customer base also includes large corporates at large looking to incorporate solutions into their offerings, including a mix of established fintechs and incumbents, such as Venmo, SoFi, Chime, Rocket Money, H&R Block, Western Union, Affirm, Citi and Shopify.

So it’s fitting that earlier this year, Plaid named Jennifer (Jen) Taylor as its first president. Taylor has years of experience at large enterprises, having most recently served as Chief Product Officer at Cloudflare. Prior to Cloudflare, Taylor held senior management positions at Salesforce, Facebook (now Meta), and Adobe and had a two-year stint as a venture capitalist.

“I’ve had the privilege of working at some very large companies that maybe weren’t necessarily that large when I joined and had the opportunity to be part of efforts to, for example, move from single-product to multi-product and from single-market segment to multi-market segment,” he told TechCrunch in an interview.

Plaid’s Growth Beyond Fintech

This expansion into a multi-product company has led Plaid to start seeing real traction beyond traditional fintech customers. In fact, the company says growth from traditional businesses and financial institutions is starting to outpace the rest of its business.

Plaid has expanded its enterprise customer base to more than 1,000, having added hundreds of new enterprise customers in the past year, Taylor told TechCrunch exclusively. The company’s total number of customers is 8,000.

“Our broader suite of products, which includes onboarding, payments, lending and fraud, has opened doors for enterprise companies like RealPage, H&R Block and Western Union that weren’t on the table a few years ago,” Taylor said. The goal, he added, is for Plaid to evolve into “a one-stop shop” for its customers by offering a suite of integrated products that address their broader business needs.

Meanwhile, product lines such as identity, payments and credit are growing “five times faster” than its core account connectivity products, according to the company. In fact, Plaid’s identity product is currently its fastest-growing product line with more than 50% of its customers being non-fintech customers.

“The fact that our new products have gained traction has helped Plaid grow in new markets where it wasn’t present before,” Kevin Young, Plaid’s head of product communications, said in an interview. “And the growth of these new products pushes us into new market segments.”

The startup has also acquired customers in proptech, property management, e-commerce and auto lending. For example, it now counts Zillow, Faire, Carvana and CarMax as customers.

Overall, the company claims to connect to 12,000 banks and financial institutions with 500 million linked accounts.

Why Plaid Launched Layer, Its Onboarding Revamp

On June 18, he revealed his latest offer, Layera new product designed to unify “all critical onboarding steps” for users, from identity verification to bank account linking, “into one secure, instant experience.”

Alain Meier, Plaid’s head of identity, says Layer can cut the time it takes for someone to sign up for an app or service by 90%. In most cases, people who already have their data stored through Plaid simply enter their phone number when they sign up for other accounts and can do things like complete onboarding to apply for a loan or fund their accounts “in just a few clicks.” Customers so far include Possible Finance and Empower.

Meier compared the Layer experience to shopping on Amazon.

“When we go to buy something, we typically default to Amazon. Why do we do that? Because we know our information is going to be safe. They already have our payment method. It’s going to be super fast to check out, and we know what to expect,” he said. “So we said, ‘Wouldn’t it be great if we could have that same kind of experience and that same kind of choice in the consumer experience?'”

Image credits: PlaidImage Credits: Plaid

This increased ease of onboarding can potentially lead to higher conversion rates for Plaid customers, Meier added.

For Taylor, it’s also all part of protecting financial information in the coming world where artificial intelligence multitasks. “The real impact is the differentiation it creates for our network and the products we build on top of it, including subscription and payments.”

Plaid has been open about its plans to go public, though it hasn’t yet set a timeline. But Taylor’s hiring, as well as the hiring of a chief financial officer, underscore those plans.

The company’s strategy of a push into enterprise is familiar, as other large fintechs have also taken this direction. Payments giant Stripe (both Plaid’s partner and competitor) has long been focused on the venture. Expense management startup Brex, while continuing to serve startups, also announced that it was looking to strengthen its corporate customer base.

The big question is how his approach will be received by investors when the company finally goes public.

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Plaid, once primarily focused on the fintech sector, is expanding its enterprise business and now has over 1,000 registered customers

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Fintech

US Agencies Request Information on Bank-Fintech Dealings

Published

11 months ago

30 July, 2024

FinCrypt Staff

Federal banking regulators have issued a statement reminding banks of the potential risks associated with third-party arrangements to provide bank deposit products and services.

The agencies support responsible innovation and banks that engage in these arrangements in a safe and fair manner and in compliance with applicable law. While these arrangements may offer benefits, supervisory experience has identified a number of safety and soundness, compliance, and consumer concerns with the management of these arrangements. The statement details potential risks and provides examples of effective risk management practices for these arrangements. Additionally, the statement reminds banks of existing legal requirements, guidance, and related resources and provides insights that the agencies have gained through their oversight. The statement does not establish new supervisory expectations.

Separately, the agencies requested additional information on a broad range of arrangements between banks and fintechs, including for deposit, payment, and lending products and services. The agencies are seeking input on the nature and implications of arrangements between banks and fintechs and effective risk management practices.

The agencies are considering whether to take additional steps to ensure that banks effectively manage the risks associated with these different types of arrangements.

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Fintech

What changes in financial regulation have impacted the development of financial technology?

Published

11 months ago

30 July, 2024

FinCrypt Staff

Exploring the complex landscape of global financial regulation, we gather insights from leading fintech leaders, including CEOs and finance experts. From the game-changing impact of PSD2 to the significant role of GDPR in data security, explore the four key regulatory changes that have reshaped fintech development, answering the question: “What changes in financial regulation have impacted fintech development?”

PSD2 revolutionizes access to financial technology
GDPR Improves Fintech Data Privacy
Regulatory Sandboxes Drive Fintech Innovation
GDPR Impacts Fintech Data Security

PSD2 revolutionizes access to financial technology

When it comes to regulatory impact on fintech development, nothing comes close to PSD2. This EU regulation has created a new level playing field for market players of all sizes, from fintech startups to established banks. It has had a ripple effect on other markets around the world, inspiring similar regulatory frameworks and driving global innovation in fintech.

The Payment Services Directive (PSD2), the EU law in force since 2018, has revolutionized the fintech industry by requiring banks to provide third-party payment providers (TPPs) with access to payment services and customer account information via open APIs. This has democratized access to financial data, fostering the development of personalized financial instruments and seamless payment solutions. Advanced security measures such as Strong Customer Authentication (SCA) have increased consumer trust, pushing both fintech companies and traditional banks to innovate and collaborate more effectively, resulting in a dynamic and consumer-friendly financial ecosystem.

The impact of PSD2 has extended beyond the EU, inspiring similar regulations around the world. Countries such as the UK, Australia and Canada have launched their own open banking initiatives, spurred by the benefits seen in the EU. PSD2 has highlighted the benefits of open banking, also prompting US financial institutions and fintech companies to explore similar initiatives voluntarily.

This has led to a global wave of fintech innovation, with financial institutions and fintech companies offering more integrated, personalized and secure services. The EU’s leadership in open banking through PSD2 has set a global standard, promoting regulatory harmonization and fostering an interconnected and innovative global financial ecosystem.

Looking ahead, the EU’s PSD3 proposals and Financial Data Access (FIDA) regulations promise to further advance open banking. PSD3 aims to refine and build on PSD2, with a focus on improving transaction security, fraud prevention, and integration between banks and TPPs. FIDA will expand data sharing beyond payment accounts to include areas such as insurance and investments, paving the way for more comprehensive financial products and services.

These developments are set to further enhance connectivity, efficiency and innovation in financial services, cementing open banking as a key component of the global financial infrastructure.

Sebastian Malczyk

General Manager, Technology and Product Consultant Fintech, Insurtech, Miquido

GDPR Improves Fintech Data Privacy

Privacy and data protection have been taken to another level by the General Data Protection Regulation (GDPR), forcing fintech companies to tighten their data management. In compliance with the GDPR, organizations must ensure that personal data is processed fairly, transparently, and securely.

This has led to increased innovation in fintech towards technologies such as encryption and anonymization for data protection. GDPR was described as a top priority in the data protection strategies of 92% of US-based companies surveyed by PwC.

Arid Islam

Financial Expert, Sterlinx Global

Regulatory Sandboxes Drive Fintech Innovation

Since the UK’s Financial Conduct Authority (FCA) pioneered sandbox regulatory frameworks in 2016 to enable fintech startups to explore new products and services, similar frameworks have been introduced in other countries.

This has reduced the “crippling effect on innovation” caused by a “one size fits all” regulatory approach, which would also require machines to be built to complete regulatory compliance before any testing. Successful applications within sandboxes give regulators the confidence to move forward and address gaps in laws, regulations, or supervisory approaches. This has led to widespread adoption of new technologies and business models and helped channel private sector dynamism, while keeping consumers protected and imposing appropriate regulatory requirements.

George Blandford

Co-founder, UK Linkology

GDPR Impacts Fintech Data Security

A big change in financial regulations that has had a real impact on fintech is the 2018 EU General Data Protection Regulation (GDPR). I have seen how GDPR has pushed us to focus more on user privacy and data security.

GDPR means we have to handle personal data much more carefully. At Leverage, we have had to step up our game to meet these new rules. We have improved our data encryption and started doing regular security audits. It was a little tricky at first, but it has made our systems much more secure.

For example, we’ve added features that give users more control over their data, like simple consent tools and clear privacy notices. These changes have helped us comply with GDPR and made our customers feel more confident in how we handle their information.

I believe that GDPR has made fintech companies, including us at Leverage, more transparent and secure. It has helped build trust with our users, showing them that we take data protection seriously.

Dr. Rhett Stubbendeck

CEO & Co-Founder, Leverage Planning

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Fintech

M2P Fintech About to Raise $80M

Published

11 months ago

30 July, 2024

FinCrypt Staff

Application Programming Interface (API) Infrastructure Platform M2P Financial Technology has reached the final round to raise $80 million, at a valuation of $900 million.

Specifically, M2P Fintech, formerly known as Yap, is closing a new funding round involving new and existing investors, according to entrackr.com. The India-based company, which last raised funding two and a half years ago, previously secured $56 million in a round led by Insight Partners, earning a post-money valuation of $650 million.

A source indicated that M2P Fintech is ready to raise $80 million in this new funding round, led by a new investor. Existing backers, including Insight Partners, are also expected to participate. The new funding is expected to go toward enhancing the company’s technology infrastructure and driving growth in domestic and international markets.

What does M2P Fintech do?

M2P Fintech’s API platform enables businesses to provide branded financial services through partnerships with fintech companies while maintaining regulatory compliance. In addition to its operations in India, the company is active in Nepal, UAE, Australia, New Zealand, Philippines, Bahrain, Egypt, and many other countries.

Another source revealed that M2P Fintech’s valuation in this funding round is expected to be between USD 880 million and USD 900 million (post-money). The company has reportedly received a term sheet and the deal is expected to be publicly announced soon. The Tiger Global-backed company has acquired six companies to date, including Goals101, Syntizen, and BSG ITSOFT, to enhance its service offerings.

According to TheKredible, Beenext is the company’s largest shareholder with over 13% ownership, while the co-founders collectively own 34% of the company. Although M2P Fintech has yet to release its FY24 financials, it has reported a significant increase in operating revenue. However, this growth has also been accompanied by a substantial increase in losses.

Source

Fintech

Scottish financial technology firm Aveni secures £11m to expand AI offering

Published

11 months ago

30 July, 2024

FinCrypt Staff

Aveni, Investment Management, AI, NLP, UK

By Gloria Methri

Today

To come
Aveni Assistance
Aveni Detection

Artificial intelligence Financial Technology Aveni has announced one of the largest Series A investments in a Scottish company this year, amounting to £11 million. The investment is led by Puma Private Equity with participation from Par Equity, Lloyds Banking Group and Nationwide.

Aveni combines AI expertise with extensive financial services experience to create large language models (LLMs) and AI products designed specifically for the financial services industry. It is trusted by some of the UK’s leading financial services firms. It has seen significant business growth over the past two years through its conformity and productivity solutions, Aveni Detect and Aveni Assist.

This investment will enable Aveni to build on the success of its existing products, further consolidate its presence in the sector and introduce advanced technologies through FinLLM, a large-scale language model specifically for financial services.

FinLLM is being developed in partnership with new investors Lloyds Banking Group and Nationwide. It is a large, industry-aligned language model that aims to set the standard for transparent, responsible and ethical adoption of generative AI in UK financial services.

Following the investment, the team developing the FinLLM will be based at the Edinburgh Futures Institute, in a state-of-the-art facility.

Joseph Twigg, CEO of Aveniexplained, “The financial services industry doesn’t need AI models that can quote Shakespeare; it needs AI models that deliver transparency, trust, and most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, and reviewed by financial services experts for specific financial services use cases. Generative AI is the most significant technological evolution of our generation, and we are in the early stages of adoption. This represents a significant opportunity for Aveni and our partners. The goal with FinLLM is to set a new standard for the controlled, responsible, and ethical adoption of generative AI, outperforming all other generic models in our select financial services use cases.”