Plaid, which is in the process of being purchased by payments giant Visa for $5.3 billion, announced on Tuesday the launch of a new API exchange to support the development of open finance tools by banks and other institutions.
The Plaid Exchange will provide banks and other financial services firms with API connectivity, enabling them to launch their own API-based data access strategies.
Niko Karvounis, Plaid’s head of institutional product development, explained the Plaid Digital Exchange in a message posted Tuesday to the Plaid Blog.
“As fintech adoption has grown, so have the needs of financial institutions that must now manage unprecedented customer connections across thousands of fintech apps,” wrote Karvounis. “Plaid Exchange gives financial institutions, from banks to wealth management firms, an open finance platform that includes critical tools required to manage the secure and reliable data connectivity their customers’ financial lives demand, today and for years to come. At the heart of this platform is the ability for consumers to maintain control and transparency into where and how their financial information is permissioned and shared, increasingly important as more people rely on a variety of digital financial tools to manage their financial lives.”
Open finance refers to digital tools that enable the sharing of data between consumers, their financial institutions and third-parties responsible for developing products and technologies in hopes of offering consumers greater control over their own data and access to services and products that address their specific needs, while simultaneously driving innovation among both financial services firms and technology providers.
According to Karvounis, Plaid Exchange will allow financial institutions to bring an API solution to the marketplace in “as little as 12 weeks” and with substantial savings in areas like developer testing, implementation and risk management.
With Plaid Exchange, financial firms will be able to:
- Use tokenization to maintain connectivity,
- Optimize infrastructure load,
- Build one integration for all their open finance needs,
- Align themselves with industry connectivity principles and standards and
- Offer tools that give customers more control and visibility over their accounts.
Karvounis said that several firms are already up and running on the Plaid Exchange.
“We believe APIs are the future of open finance, and we want to make it as easy as possible for all financial institutions to incorporate APIs into their broader digital transformation agendas regardless of budget size and resources,” he wrote.