Since Plaid can enable end users to make transactions, it can also facilitate peer to peer transactions to increase network effects. If I am not wrong, Zelle allows me to register only one bank account for a peer to peer transaction. Plaid allows end users to register with multiple banks and multiple fintech apps. So, it can facilitate seamless peer to peer transactions between the end users and their own accounts. This will also help Plaid pivot from being seen just as an API platform to a payment platform and improve both discoverability and defensibility.
Another nice article. I have few queries Andrei and Julian. 1) In Stage 1, the API platforms required permissions fro banks to integrate with them, In Stage 2 everything is permission-less. Am I right? 2) "This ensured the linkages between fintech apps and banks always worked, even when banks changed their user interface, and that customers’ data did not have to be saved by Plaid (which was better for security reasons)". How both the parties mitigating the risk in Stage 2? 3) Is it that regulations in banking industry are hindering the power and defensibility of API platforms? 4) "In contrast with Plaid, the integrations that an app may need to work with other apps are not so easily standardized." Does it mean that complexities in non banking API platforms related to integration make these platforms more powerful and defensible?
1) No, it's the other way around: in stage 1, there is no permission required from the banks as we describe in the article. Banks are not actively participating at this stage. In stage 2 banks participate actively.
3) Yes, regulation forces banks to provide common/standardized APIs, which reduces the value of Plaid APIs.
4) Our argument is specific to Zapier there, not to any generic API platform.
Since Plaid can enable end users to make transactions, it can also facilitate peer to peer transactions to increase network effects. If I am not wrong, Zelle allows me to register only one bank account for a peer to peer transaction. Plaid allows end users to register with multiple banks and multiple fintech apps. So, it can facilitate seamless peer to peer transactions between the end users and their own accounts. This will also help Plaid pivot from being seen just as an API platform to a payment platform and improve both discoverability and defensibility.
Good point. I think they are indeed already exploring some consumer-facing features and P2P payments could be one of them.
Another nice article. I have few queries Andrei and Julian. 1) In Stage 1, the API platforms required permissions fro banks to integrate with them, In Stage 2 everything is permission-less. Am I right? 2) "This ensured the linkages between fintech apps and banks always worked, even when banks changed their user interface, and that customers’ data did not have to be saved by Plaid (which was better for security reasons)". How both the parties mitigating the risk in Stage 2? 3) Is it that regulations in banking industry are hindering the power and defensibility of API platforms? 4) "In contrast with Plaid, the integrations that an app may need to work with other apps are not so easily standardized." Does it mean that complexities in non banking API platforms related to integration make these platforms more powerful and defensible?
Will appreciate your response. Regards
1) No, it's the other way around: in stage 1, there is no permission required from the banks as we describe in the article. Banks are not actively participating at this stage. In stage 2 banks participate actively.
3) Yes, regulation forces banks to provide common/standardized APIs, which reduces the value of Plaid APIs.
4) Our argument is specific to Zapier there, not to any generic API platform.
Thanks Andrei
ZOMG, this is just Grand Central Communications circa 2002: https://www.computerworld.com/article/2575593/grand-central-networks--hub-and-spoke-web-services-network.html