Banking and finance have been slow to come out of the dark into the light of the digital age. Until Venmo and PayPal, remember how hard it was to transfer money between people?

Plaid co-founders William Hockey and Zachary Perret noticed the need for something simpler, a system that would do the heavy lifting for other companies aiming to work with real financial data. The pair developed APIs that can ingest the mass volumes of financial data on the backend, transform it into a useable format, and then build a service on top - in other words, a platform.

Operating out of San Francisco's Financial District, Plaid enables the connection between applications, the banks, and a user's bank accounts to access transaction data, authenticate account ownership, and alleviate risks.

It sounds complicated, but that is part of Plaid's mission - simplifying complexities that run in the background and removing the barriers to innovation in financial services, bringing true digital transformation.

Bridging to the Future

The data infrastructure that previously undergirded several financial applications was terribly inefficient, causing substantial costs in time and effort. There were also challenges in trying to organize and process user data into a workable, useable format, one that makes handling financial data a much smoother process.

After repeatedly coming up against the same roadblocks when trying to build a series of consumer budgeting tools, they realized that real progress wasn't possible without improvement at the infrastructure layer. When Zach and William realized this need, they pounced.

As developers themselves, they focused on building a platform that was developer-friendly and for building integrations. Due to this focus, they quickly saw growing demand from developers and the emerging fintech industry to help build new applications for financial services.

Hockey and Perret's goal is to drive innovation in financial services. Instead of attempting to serve consumers directly, the pair believed it was a smarter move to build a business- and developer-facing platform, one that would power the entire fintech ecosystem for consumers indirectly.

In creating this massive infrastructure, Plaid became the engine behind new financial activity -- saving fintech startups, banks, and other large institutions plenty of time and energy building out wonky technology for authentication and the like.

In the long run, Plaid isn't just about securely exchanging data. Instead, its goal is to help developers tie disparate data together in order to build better financial products and create less friction for their users. The startup is storming into a highly fragmented market and hopes to build better bridges between so that the entire ecosystem will soon be powered by Plaid.

Traditionally, financial services and technology operated in totally different worlds, and in recent years, the gulf has only seemed to grow. Plaid has become the middle ground, bridging the old with the new and fostering new growth for innovation.

In stripping away the typical and mundane problems of dealing with financial institutions, Plaid delivers value to all sides of its network: the developers, the banks, and - ultimately - consumers. Plaid's biggest competitor isn't other companies; rather, it's the old way of doing things and the inherent friction in changing it.

Plaid is very open in the way it helps banks and startups who need financial tools. It partners with other companies and build new endpoints or even uses new analytics. Among Plaid's customers and partners are well-known fintech companies such as Venmo, Simple, Robinhood, Stripe, and Acorns.

A New Pattern

Moving forward, Plaid will focus on scaling this year. Its main goal is to continue to grow the platform that is seeing a lot of demand -- which also means recruiting more people to join the team. Although the team currently numbers around 90, the leadership hopes to grow the team to somewhere around 120 by the end of the year, hiring across all departments.

As it grows, Perret says maintaining the company's culture is key. There has been a lot of growth already since the startup raised a Series B round of funding last summer, which was led by Goldman Sachs and joined by Citi and American Express, so Perret and Hockey have their eyes set on doing it right.

The team is extremely proud of the scale of operations it's achieved thus far. They've come a long way since the early days when many of the original team members shared a house in North Beach, to now having a many of the most influential names in the industry using Plaid.

Everyone at the company is very excited about helping millions of consumers have access to the best tools and services in the digital financial world, and the company has truly taken advantage of the growing need for this type of hybrid technology.

Ultimately, Perret and Hockey want to see Plaid continue to grow and power more and more of the innovative ideas that are modernizing the modern age of financial services. It's good to see a savvy startup bringing such a hard-hitting and central industry into tomorrow.

Published on: Jun 2, 2017