Recent product news van Stripe and Plaid indicate that the two privately-owned companies are hunting each other as the market for B2B financial technology matures, expands and individual players increasingly overlap.
It may sound crazy that Stripe, best known for its payment technology, and Plaid, best known for its API that connects consumer bank accounts to third-party services, are competing. It’s not.
The quote, “All software tastes like chicken from a financial perspective” is both funny and true. It’s also largely true for fintech companies, but for a reason unique to the space: Fintech startups, unicorns, and even public companies tend to broaden their capabilities over time and increasingly require more competencies. to add.
Both B2B and B2C startups have similar motives. Customer acquisition (advertising, onboarding, etc.) is expensive and competitive, so once a fintech lands a user or customer, it is best to extract as much value from it as possible. That’s why companies like Plaid and Stripe build and buy to meet more and more needs of their customers – until they get together on the doorstep.
What happens once they do that? We’re going to find out.
Recent Skirmishes of the Great Fintech War
In January 2022, Plaid announced it was acquiring Cognito, a decision that Marketingwithanoy said was part of a move “beyond account linking.” Essentially, Cognito has added know-your-customer (KYC) and anti-fraud tools to Plaid’s list of features. By doing so, it would be able to offer its customers much more than just account connections.
By 2021, Plaid had bought a company called Flannel that focused on payments. With account connections, security tools and payment technology, Plaid built and bought its way into a larger potential totally addressable market – one already under attack by other privately held fintechs.
Obviously, Stripe has broadened its feature set from its original remit. The company has so many services that the on-site menus become more of a catalog than an organizational tool. It is therefore nothing special to see the company launching something new here and there.
But in early May, when Stripe announced “Financial Connections,” a service that, Marketingwithanoy wrote, will let its “customers connect directly to their customers’ bank accounts to access financial data to speed up or execute certain types of transactions.” feed’. Note.
The product announcement put Stripe on a collision course with Plaid’s core business, even if it was fair play – the latter company had already told the market it was considering payments through the 2021 Flannel deal.
Still, Plaid clearly objected to what his leaders suggested was a sneaky way to get information and a lack of transparency on Stripe’s part in light of their partnership and history.
With the two companies arguing with each other on Twitter, it was clear that, as far as they can go in the API world, the gloves were off.