William Hockey, Co-founder and chief technology officer, Plaid
Please give us a bit of background on yourself, and how your organisation plays a leadership role in the financial technology space.
Plaid builds the financial technology infrastructure that underpins a large portion of the fintech ecosystem. As a company, we’ve become a leading provider of financial data and infrastructure to both bank and non-bank financial services players.
My co-founder (Zach Perret) and I started building Plaid after trying to build products in the financial sector and realizing that each time we came up against the same roadblocks - we could not get the level of data access that we needed to bring the application to life, or to market. We soon realized that we were not alone in this frustration, so we decided to focus our attention on the infrastructure.
We wanted to address a simple problem: making innovation in financial services easier and more inclusive for developers. We’ve always been firm believers that innovation fundamentally helps the best ideas and services compete and rise to the top so unlocking the next wave of progress in financial services required removing certain barriers to entry. One of our main goals in creating Plaid was to help make the entire ecosystem more inclusive to developers, consumers, and traditional institutions alike.
What challenges do you see for FinTech maturation?
Given how young of an industry fintech truly is, there has been a lot of change over the past five years (when Plaid first began.) As the industry has grown and matured very rapidly, the conversation has shifted from one centered around disruption and competition to one that’s largely focused on collaboration. This doesn’t mean that every party agrees on every detail - but there is a greater understanding and appreciation of both startups and financial services companies and the role each has to play in this ecosystem, not to mention the success we can achieve together. This theme of collaboration is essential to build a secure, interoperable system that empowers consumers and enriches their choices.
To bring real progress to financial services, I think it’s really important that this dialogue, where all parties are bringing their expertise to the table, continues.
How does Plaid differentiate itself?
Fundamentally, Plaid is a platform company. We think like developers, or builders, because the majority of us are. This means we are looking to find the best technological and user-oriented answer to a given entrenched problem.
APIs have been around for years, but historically they have not been accessible or easy to use. As that has changed, there has been an explosion of innovation in the sector, not only among emerging startups, but also at established financial institutions themselves. It is a win for the whole ecosystem.
Since launching publicly in April 2015, we’ve seen tremendous innovation by startups in financial services. These new applications are almost universally focused on creating new and better ways for consumers and small businesses to live their financial lives. Whether helping consumers manage their money (Digit, Truebill), build better budgets (Clarity Money), invest (Wealthfront, Betterment, Robinhood, Acorns), make donations (CharityWater), take loans (LendingClub, Upstart), transact (Stripe, Coinbase), transfer funds (Venmo, TransferWise); or businesses to run payroll (Justworks, Gusto, Zenefits), manage employees (Expensify, Abacus), provide financing (Affirm), or manage their cashflow (OnDeck, Fundera), the financial technology industry has seen massive growth over the past few years and we’re excited to play a central role in this growing ecosystem.
What will you be discussing at The Economist's Finance Disrupted Conference?
I’ll be discussing the power of identity data. We believe that sharing identity data - when done securely- is actually safer than many of the ways we share identity data today. Like other pieces of data that consumers store at their bank, this information is sensitive and must be handled with care. But it’s this data in particular that may prove critical to the continued development of the future of financial services.
When combined with and checked across other data sources, identity data can help a consumer prove his or her identity. Today, an array of digital services depends on this information — partly to prevent bad actors from accessing the financial services ecosystem, but also to deliver important services that hinge on knowing consumers are who they say.
In the future, especially as the financial services ecosystem becomes even more interconnected, it’s likely that such assurances will be even more important. As the financial services ecosystem matures, stakeholders have begun to consider — and implement — better approaches to safe and secure financial data sharing. And as these plans become more nuanced, many in the ecosystem are evaluating how best to handle account holder data fields. As such, identity info holds the potential to help protect banks, digital services, and consumers alike. It’s a rare example of a win-win-win: it increases security; lowers costs for financial institutions; and enables innovation for consumers.
How do you expect Plaid’s product set and customer base to evolve in the next few years?
We’ve really only seen the first wave of progress get unlocked. As financial institutions continue to act as platforms, Plaid will continue to act as a core enabler of innovation across the ecosystem. Even in our few short years, we have seen new challenges arise and seismic shifts take place.
However, these challenges present opportunities for improvement that trusted intermediaries like Plaid are uniquely positioned to solve. Ultimately, we hope this will bolster the healthy, competitive ecosystem that has started to take shape for the benefit of consumers and businesses everywhere.
To learn more about the Finance Disrupted event, please click here.