This article indicates that Plaid is introducing Plaid Exchange, a bank product that will enable banks to expose APIs to a range of trusted fintech developers. Banks that utilize Plaid Exchange will also gain visibility into which 3rd parties have access to customer accounts and be able to communicate that to the customer and turn connectivity on and off. Other API suppliers to banks might want to consider a similar network implementation both for a central point to apply fraud management solutions but also to identify and control access from fintechs. The article does not identify how Plaid Exchange helps those banks that are only accessible via screen scraping.
Also not mentioned in this article is the role Plaid might take in vetting 3rd party fintechs that want access to bank accounts. A potential roadmap for Plaid might be Mastercard’s multiple Open Banking API offerings Open Banking Connect, Open Banking Protect, and Open Banking Resolve. Mercator looked at Open Banking solutions in our report “The Emergence of API Platforms: Open Banking and Payments Drive New Business Models.”
“With Plaid Exchange, Plaid can help banks when it comes to implementing an API. It should be more secure and reduce load on the servers.
Banks that choose to work with Plaid to build their API would then have a modern token-based system for their customers. For instance, just like on a social network, customers would be able to see if they have connected their bank account with a third-party service and disable those connections.
Financial institutions could also leverage Plaid Exchange to build new services that connect directly with your main bank account through the API. Companies would be able to see if connections are working fine, which would make it much easier to identify issues with the infrastructure.”
Overview provided by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group.