Eighty percent of Americans now say they can manage their
finances without a physical bank branch, according to a new survey commissioned
Fintech is viewed as the “new normal” by 73 percent of
Americans, according to the report, and 67 percent plan to continue managing
most of their finances digitally after COVID.
Plaid commissioned the report to understand if this increase
is a temporary trend, or if new consumer habits around financial services will
“The majority of survey respondents used fintech before the
crisis. But the survey showed that when COVID-19 hit, fintech adoption
accelerated and Americans reported using more fintech tools, more frequently,
and for more financial tasks during the pandemic—59 percent of respondents
stated they use more apps to manage money now than they did before the
pandemic” John Pitts, Plaid’s head of policy, wrote in a blog post.
San Francisco-based Plaid is well positioned to monitor this
behavior—it’s the fintech glue linking users’ bank accounts with apps in order
to make connections seamless. Plaid charges apps to make these transactions
easier, and links to more than 10,000 financial institutions as a result.
Plaid is slated to be acquired by Visa for $5.3 billion. The
deal recently received approval from regulators in the U.K., and is expected to
close before the end of the year.
Some mainstream players Plaid helps power include Varo in
online banking, Venmo in payments, Robinhood for investments, Credit Karma for
tax filing, Affirm in lending, and Personal Capital in budgeting apps.
Survey findings in context
Crunchbase News spoke with Lowell Putnam, who runs Plaid’s
ecosystem partnerships, for context on the findings. Putnam also co-founded
Quovo, which was acquired by Plaid in January 2019.
Since COVID struck, Plaid has experienced a 44 percent
increase in usage across its customer base March through May when compared to
the same period last year, according to Putnam. In self-directed brokerage,
Plaid saw an even greater increase at 300 percent year over year.
“Fintech is becoming increasingly what consumers are calling
‘necessary or lifeblood apps’ for them. More consumers are looking for more
applications to meet their needs,” Putnam told Crunchbase News.
Through the pandemic, Plaid has also seen more interest from
incumbent financial institutions. It’s seeing regional banks and credit unions
that want to join the data ecosystem. Plaid wants to facilitate its customers’
access to the fintech app economy with connectors like Steady, which supports
gig economy workers, Robinhood for trading, or SoFi for student loans.
“They can show a huge amount of differentiation to their
customer base, especially if you remove traditional geographic hurdles of a
community bank or credit union,” said Putnam.
Subscription models could also experience a resurgence, he
said. Consumers have become accustomed to paying Netflix $13 a month, so they
might be open to paying $5 or $10 a month to help with budgeting if an app can
push real dollars back into their pockets.
Early investors in Plaid include Spark Capital, GV, Felicis
Ventures, Homebrew and New Enterprise Associates, which all invested in its
seed round in September 2012. NEA and Spark went on to jointly lead its Series
A a year later.
We noted in our Industry Spotlight: Fintech Report (launched
earlier this year) that investments in fintech companies have grown more than
ninefold since 2010 and have more than doubled since 2015.
Leading sectors for investments in fintech are in payments,
insurance, banking and lending. So far in 2020, $26.5 billion has been invested
in global fintech companies. That amounts to 14
percent of all investment dollars.
What can we look to for the future? A new wave of
apps–thanks to nuts-and-bolts service companies that make it easier to build
fintech apps–users looking for services that support financial health, and
lower customer acquisition costs.
Correction: Plaid has experienced a 44 percent–not 70
percent–increase in usage across its customer base March through May when
compared to the same period last year,
here for the original article.