Payment Expert sat down with Ripsy Bandourian, Plaid’s Head of Europe, who provided a reflection on the development of fintech over the past year and the role the cost of living crisis is having on the reliance of fintech apps.
Payment Expert: Firstly, are you able to provide us an update on Plaid’s European growth and what markets have been at the centre of the focus?
Ripsy Bandourian: 2022 was momentous for Plaid in Europe and our customers throughout the region. Our customer base grew 60% this year, as we continued to embed our proposition in the European fintech ecosystem, and we saw the increasing adoption of digital finance.
This year saw our team double to more than one hundred people in London, Amsterdam and beyond. We’ve chosen Germany as our next key focus area to expand our open banking network in the region, making it easier for customers to digitally manage their money with our account onboarding and funding tools.
The explosion of digital finance we’ve seen over the past three years means more money than ever is digitising. As a result, we’ve also added our service coverage to twelve new countries including Latvia, Lithuania, Estonia, Sweden, Norway and Denmark and by 2024 we expect nearly half of all open banking users globally to be from Europe.
PE: As the payment ecosystem has evolved in recent times, what steps has Plaid taken to continue to grow with this?
RB: In our early days as a company, our work was about getting more people to use digital finance. Since then, we’ve made immense progress, and now we’re out to make it as simple as possible for people to manage their money, assuage their fears, and, ultimately, unlock financial freedom.
As the payments ecosystem evolves, customers are increasingly asking us to solve a broader range of needs through our platform, network and partner ecosystem, including identity, onboarding and conversion; money movement; fraud prevention; and deeper insights to help build even better decisioning and connected experiences.
As we move into 2023, we’re focused on offering a platform of connected solutions for more than 7,000 leading companies, no matter where they’re located, to build great fintech experiences across banking, payments, lending, investing, financial planning and more. We want to help companies onboard and engage their customers throughout the evolution of the payments system.
PE: What do you believe are the next steps for the expansion of open finance and how important is this growth?
RB: Open banking hasn’t gone far enough – people need to have protected access to all of their financial data, not just banking accounts. We need a transition to open finance to keep up the momentum, allow innovation to flourish and give people the tools they need to holistically manage their money online.
Open finance will give the fintech industry the ability to deliver new digital financial use cases that better meet people’s needs, from pension management to better debt management tools.
In the UK, Open Banking has been implemented widely across financial institutions. Now, we need policymakers to make a transition to open finance a priority in order to protect its status as an innovation hub. In the EU, we need standardisation as a first step – instead of the disparate implementation that’s happened to date.
The EU’s Instant Payments Legislation is first and foremost a milestone moment for consumers, and will turbocharge the growth of digital finance in Europe. The legislation will ensure they are better supported. Providers will be unable to charge a premium for pay by bank transactions – meaning it is set to become the fastest, safest and cost-effective payment method for consumers and businesses alike. As we move towards an open finance future, real time access to all financial data types will help people move and manage their money however they want. This legislation now lays the groundwork for the financial ecosystem to do just that as we move towards open finance.
PE: How vital is the role of the payment space as global economies go through hardships?
RB: Cost of living concerns are increasing users’ reliance on fintech apps, ushering in a wave of new fintech users managing their finances digitally for the first time.
Our recent research found that 83% of people listed the cost of living crisis as their main economic concern. 41% said they have little to no confidence in the economy, and 62% said their financial stress has increased since last year.
Technology has a vital role to play here. Over the next six months, Brits expect to manage 72% of their finances digitally on average, up from 67%. From budgeting apps and savings platforms, to automated bill payments, fintech is having a clear and consistent impact.
When people use fintech, they gain clear benefits of saved time and money, and increased control, which is exactly why adoption is persistent. Given the current economic uncertainty, fintech tools will provide critical lifelines and our research proves that consumers have shown an appetite for these tools, so innovation in the payments space must continue.
PE: In the midst of a slowdown of the fintech space, why is cross-atlantic expansion taking off so rapidly?
RB: Recent months have seen an increasingly difficult funding climate for fintech, and as such companies are refocusing their growth strategies and looking outside their headquarters for opportunities to tap into much broader customer bases. We are continuing to support companies looking to expand in both directions.
With connections to 12,000 institutions, Plaid is the only comprehensive transatlantic provider, helping companies like Kraken, Gemini, Quirk and more expand into new markets across North America and Europe.
As fintech matures and companies look for their next avenue to growth, this bridge will only ever become more critical.