Plaid, a US fintech that enables consumers to connect their bank accounts to other financial services providers through application programming interfaces (APIs), has acquired Quovo, a similar startup, per a blog post.
Although financial details have not been disclosed, Plaid is said to be paying around $200 million for its biggest competitor, according to Bloomberg citing three people familiar with the transaction. The acquisition of Quovo comes on the back of a major Series C funding round for Plaid last month, in which it raised $250 million from a number of big-name investors at a $2.65 billion valuation.
The tie-up with Quovo will enable Plaid to broaden its reach. Plaid connects consumers’ bank accounts in the US with services from fintechs like Robinhood, Coinbase, and Acorns. And, according to the startup, 25% of US consumers with bank accounts have connected to other financial services apps using Plaid, per CNBC. The startup has also signed on major financial institutions (FIs), including Capital One and JPMorgan Chase.
Although Quovo also allows consumers to connect their accounts to other financial apps, these are usually investment and brokerage services. Among the companies it connects to are fintechs like Betterment and Wealthfront, as well as incumbents like Vanguard. As such, the tie-up expands the FIs Plaid connects to, providing it with a broader view of a customer’s financial life, CEO Zach Perret told CNBC.
For instance, to see whether a prospective borrower could pay back a loan, a lender could ask a customer to see their bank account balance, which can be done through Plaid. The Quovo integration will bolster this by allowing those platforms to ask to view other assets like brokerage accounts, Perret explained.
Plaid is in a prime position to capitalize on the digital revolution taking hold in financial services. Digitalization in financial services continues to accelerate at pace around the world, with authorities in markets like the UK and Europe introducing regulations to drive this evolution.
Open banking legislation, which mandates FIs to share their troves of data at their customers’ request with fintechs and other third-party providers, is a key part of this regulatory movement. As such, the acquisition of Quovo not only entrenches Plaid’s position in the US as a go-to provider of financial services APIs, but also opens the door for significant global expansion.
Source: Business Insider
- Experian offers its Affordability Passport to debt charities and lenders for free in response to the Coronavirus outbreak
- Starling Bank announces Coronavirus Support Scheme
- Moneybox app announces Open Banking merger with Santander
- Insight: Consumer trust and bringing Open Banking to life for the consumer
- How can we accelerate Open Finance adoption?