A few months ago, Plaid unveiled Plaid Exchange, a product that helps financial institutions build and maintain an API that other developers can use. The company is iterating on that product and now updates account activity in near real-time.
Plaid is better known for its universal banking API that lets you connect an app or service with a bank account. For instance, it lets you connect your Cash App account with your bank account to retrieve bank account information.
With Plaid Exchange, the company is addressing the other part of the equation — banks and financial institutions. While the appeal of Plaid is that you can just use one API to connect with thousands of banks, it requires a ton of work on Plaid’s side to create those connectors.
Some banks already have a modern API while others just let you access your account from a website. Plaid relies on screen scraping for those banks, meaning that it reproduces the same clicks that you would do to access your bank account from your web browser.
Financial institutions can work with Plaid to implement a modern, token-based API. It is much more efficient, reduces load on the servers and opens up some new possibilities.
With today’s update, an app developer that uses Plaid to query your bank account will get instant transactions updates if the financial institution uses Plaid Exchange. For instance, Venmo could leverage that feature to notify you when your money has arrived on your bank account.
Branch is using Plaid Exchange. With instant account activity, their customers get better budgeting tools. Let’s see whether Plaid can manage to persuade big banks to use Plaid Exchange.
As a bank, you want to let your customers move money from a checking account to a savings account in seconds. But customers expect the same experience with other financial services.
If banks and financial institutions can’t provide a reliable and fast API, the next generation of adults who are considering opening an account will choose a challenger bank and skip financial institutions that don’t provide real-time data altogether.