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by masterjack 2407 days ago
What is Plaid's long-term competitive advantage? It made sense when scraping was the only solution (albeit an extremely dangerous one) but now banks are launching their own APIs, which is allowing some competitors to come in with free bank account linking. A few simple features address most of the needs of a typical fintech, and I don't think anyone is happy with having to integrate Plaid's SDK nor pay their rates.
2 comments
manacit 2407 days ago
It might be a few simple features, but it's a few simple features for every single bank in the USA (or in the EU), which is an absolutely huge number of them.

It's a marginal amount of work to link against a few big banks that have solid APIs, but once you get to the BECUs and the SESLOCs of the world, this gets much more difficult. Imagine doing this globally, and I think it's an even taller task.

The EU has been working on PSD2, which might make this less valuable, but there's still a long run way (IMO) where Plaid can quickly become the default choice for anyone who wants to link against banking APIs.

Beyond that, the network effect means that Plaid will likely eventually get to broker individual relationships with banks and be able to move into dictating more of the market in the long run, putting them in a position of strength.

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hidiegomariani 2407 days ago
bank's APIs are extremely limited as of right now. Fragmentation is also very high. It is also true that this may change in the future, but not very soon
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masterjack 2407 days ago
Fragmentation is definitely high. Although if you can seamlessly fall back to other services, a handful of bank integrations can get you ~80% of the customers.

I haven't worked with Open Banking, how is it? In the US, for bank transfers, NACHA files are fairly easy to work with, as long as you can access and verify bank account numbers (ideally get balance and identity information too). I think all the APIs support this, eg: https://developer.wellsfargo.com/apis/payments/account-valid...

It's hard to tell how quickly things will change and improve. Banks should have an incentive to work on this, since it will give them more control of their data and logins, potentially lowering liabilities and hack potential.

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