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US fintech Plaid rolls out services in the UK

US fintech firm Plaid has confirmed recent reports that it is setting up in the UK and plans to expand into mainland Europe.

The San Francisco-based company, formed six years ago and valued at US$2.7 billion, is known for its platform, which enables applications to connect with users’ bank accounts. Plaid enables consumers and businesses to interact with their bank accounts, check balances, and make payments through fintech applications.

Recent reports suggested that the company has been hiring senior managers to lead its European operations. Plaid said that it will hire more than 25 people by 2020, and has opened its first UK office, ahead of expansion into other European countries.

Zach Perret, co-founder and chief executive of the company, told Financial News: “We think that open banking generally and particularly the clarity around regulation that the [UK’s] Financial Conduct Authority(FCA) has put forward is a huge boon to the fintech market.

“For fintech in the UK, there’s this incredible boom – it’s a market we’ve always wanted to be to be in.” He added that regulatory clarity on data sharing in the UK is much greater than in the US.

A strong presence

Since its formation, Plaid’s focus has been on building data links between US banks and the newer financial disruptors. Few consumers even realise they’re using the company’s technology, which is aimed at software developers and links payment companies with consumer bank accounts.

Plaid says its software is integrated with more than 15,000 US banks and is already connected to eight of Britain’s largest traditional and digital banks, which will give UK fintech businesses instant access to 70% of personal current accounts.

In the US, Plaid’s customers include payments companies Stripe and PayPal’s peer-to-peer (P2P) payment app Venmo, the trading platform Robinhood, the crypto-trading outfit Coinbase and LendingClub, the digital lender. The company says that 80% of America’s largest fintech firms rely on its infrastructure.

Plaid already has two UK customers, one of which is the money management app Emma, and is promoting its technology as a means to help UK firms go international, by connecting them with financial firms abroad.

Although US banks were initially reluctant or even hostile to financial disruptors accessing their customer data, Perret claims there has been a  “sea change” in the relationship between banks and fintechs more recently. As an example, JP Morgan launched Finn, an online bank specifically targeted at millennials, last July.

Plaid has also raised money from major US banks such as Goldman Sachs, Citigroup, and American Express. A founding round last December raised $250 million, with US venture capital funds Kleiner Perkins, Index Ventures and Andreessen Horowitz participating alongside existing backers Goldman Sachs and Spark Capital.

The company hopes that there will be less initial resistance from banks in the UK, following the implementation of open banking regulations at the start of 2018. Perret described European banks as being cautiously receptive to its business, which “you would hope and expect.” 

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