• PNC and Plaid have partnered to allow PNC customers to connect to and share their financial data with third party financial applications.
• Plaid will help connect PNC customers to apps, while PNC’s API provider Akoya will ensure that PNC’s customer data is securely shared with third party apps powered by Plaid.
• Today’s announcement comes five years after PNC blocked multiple data aggregators, including Plaid, claiming they circumvented PNC’s security protocol.

Getting a head start on Section 1033 of the Dodd-Frank Wall Street Reform, PNC Financial Services Group announced recently that it has partnered with financial data access company Plaid. The two have signed a data access agreement to enable PNC customers to connect and share their financial data with third party financial applications through Plaid.

PNC will also leverage its API service provider Akoya. Through this partnership, Plaid will help connect PNC customers to apps, while as the API provider, Akoya will ensure that PNC’s customer data is securely shared with third party apps powered by Plaid, without needing to share login credentials.

The collaboration among the three players will ultimately offer a better user experience. That’s because Plaid will help to increase security by eliminating screen scraping and other fraud-prone data collection techniques. The partnership will also allow consumers to access their financial data without having to share their credentials with the third parties themselves. Additionally, Plaid will offer the customer control​ of their own data, allowing them to determine which third party apps may have access to their data.

“Through this new partnership with Plaid, PNC customers will be able to achieve greater data security, privacy, and control while using the third-party financial apps and services they enjoy,” said PNC Executive Vice President, Digital and Payments Natalie Talpas. “PNC’s use of its Akoya-provided API allows for all data recipients, including Plaid, to get connected fast, while also enabling customers to reliably control what financial data they are permissioning without having to share their login credentials with third parties.”

This partnership is notable not just for PNC and its customers, but also for bank customers across the U.S. That’s because PNC’s partnership with Plaid indicates a positive change in attitude toward open banking in the U.S. In the past, PNC has notoriously held a stance against open banking. The bank not only prevented its customers from accessing Venmo in 2019, it also blocked multiple data aggregators, including Plaid, claiming they circumvented PNC’s security protocol.

With today’s partnership, however, the two now appear to be on good terms. “We are pleased to have reached a data access agreement with PNC that further supports their customers securely connecting to applications and services powered by Plaid,” said Plaid Head of Open Finance Partnerships Christy Sunquist. “Moving the industry away from credential-based access is a top priority for Plaid, and our alignment on key principles around security, access and control played a definitive role in establishing this partnership. We look forward to future collaboration for many years to come.”

Photo by Tim Douglas

• Open banking innovator Plaid announced a new initiative to enable lenders to leverage consumer-permissioned cash flow data on prospective borrowers.
• The new entity will serve as a consumer reporting agency that will build solutions that deliver ready-made credit risk insights using this information.
• Founded in 2013, Plaid made its Finovate debut at our developers conference, FinDEVr, in 2014.

Is cash flow data the missing piece of the puzzle when it comes to completing the picture of a person’s creditworthiness? A new initiative from open banking innovator Plaid suggests that the answer is “yes.”

“Lenders and consumers alike know that traditional credit scores don’t tell the full story of someone’s financial life,” Plaid Head of Credit Mike Saunders noted at the Plaid blog on Monday. “Information on savings, income, or on-time rent payments is often left out of the picture, even though this data is critical to understanding someone’s ability to pay back a loan.”

The new entity, announced by Plaid today, will create solutions for customers who want to leverage consumer-permissioned cash flow data to access ready-made credit risk insights. It will serve as a consumer reporting agency, according to Saunders, that will help Plaid’s customers make smarter decisions on risk throughout the lending process.

Plaid is joining a growing cohort of fintechs that have determined that while there remains a place for traditional credit scores, there is much that these scores leave out. This undermines the ability of lenders to serve otherwise qualified borrowers. It also creates hurdles for potential customers – from the “thin-file” recently-arrived immigrant professional to the young adult struggling to rebuild their credit. “Putting cash flow insights to work unlocks opportunities for lenders to grow their business while managing risk,” Saunders wrote. “This fosters inclusion, expands credit access, and serves a broader set of consumer needs.”

The new initiative is still being fleshed out. But Plaid is confident that it can make a significant difference with cash flow data in two specific ways: availability and usability. With regard to making consumer-permissioned cash flow data available, Saunders pointed to Plaid’s existing relationships with lenders and property management companies like Mission Lane and Funnel, respectively. These firms have leveraged Plaid’s technology to source clean income and assets data on prospective borrowers.

Usability, the ability of businesses to integrate data into their decision models, is the second component. And this is where the new entity in particular comes in, building solutions that enable lenders to leverage cash flow data for credit risk insights. “Many lenders simply don’t have the time, money, or technical resources to develop insights on top of this detailed, transaction-level data by themselves,” Saunders wrote.

The company admits that it is still “in the early innings” of what Saunders called “the future of cash flow underwriting.” To this end, Plaid presently is offering its new cash flow insights as part of a limited release via the consumer reporting company.

News of Plaid’s new entity comes just days after the company reported that it was working with European payments company Adyen. The partnership will enable Adyen to introduce its pay-by-bank offering in North America by early next year. Last month, Plaid announced partnerships with cryptocurrency infrastructure platform Zero Hash and fraud and risk intelligence specialist Riskified. Plaid also introduced its first Chief Financial Officer last month: former Expedia CFO and Chief Strategy Officer Eric Hart.

Photo by Pixabay

• Plaid released updates to its digital identity verification tool it launched last fall.
• The update taps into the scale of the Plaid network to offer faster identity verification and a deeper risk insights.
• Plaid’s overhaul also expands the types of identity documents it accepts, adds front-end support for more languages, provides a fake ID risk score, and improves the document capture experience.

Financial infrastructure fintech Plaid is updating a feature it launched last year that tackles one of the most pressing topics in fintech– digital identity.

At launch, Plaid’s identity verification tool offered consumers a one-click identity verification product that standardized a “verify once, verify everywhere” approach. As a result, users could authenticate themselves faster and with less friction, and organizations could remain KYC compliant.

And on the business side, these efficiencies are paying off. Companies using Plaid’s identity verification are reporting an average of 50% improvement of identity verification success rates.

Today’s update makes a handful of improvements on the current offering.

First, the upgrade enables Plaid Identity Verification customers to benefit from the scale of Plaid’s network. By leveraging its network, Plaid is able to offer faster verification experiences for end users while providing the organization with a more complete view of a user’s risk via their identity, financial account, and transactions.

“Now, when a user verifies their identity and links their accounts with Plaid, we detect if your customer is linking a bank account that belongs to them,” the company explained in a blog post. “We match onboarding data from identity verification with the financial institution information on file for an added layer of security.”

Next, Plaid has added a new score that indicates the likelihood that an identity has been stolen, fabricated, or manipulated. The company has also expanded the ID document types it accepts to include green cards and temporary ID cards like B1/B2 visas, and now supports front-end support for more languages including Spanish, Portuguese, Japanese, and French. In addition, Plaid has improved its document capture experience to increase conversion by guiding the user’s capture window, optimizing image file sizes, and supporting more devices.

Plaid’s identity verification service is crucial for financial services firms and third-party providers. While these entities excel in their respective subsectors, they may lack a seamless identity verification solution. However, such a solution is essential not only for creating a pleasant user experience but also for meeting regulatory KYC requirements. Plaid’s service acts as a lifeline, bridging this gap and providing the necessary identity verification capabilities.

With $734 million in funding, Plaid helps 12,000+ financial institutions offer their customers access to its network of 7,000 third party financial services via a suite of APIs that connects consumers, financial institutions, and developers. The company also offers a suite of analytics products that provides further insights into transactions. Plaid was founded in 2013 and is headquartered in San Francisco, California.