Technology is forcing banks to break open their vaults and share their data with the world.
Plaid has raised $2.8 million to grow its API for banks which makes their data more accessible to developers, enterprises, and ultimately, consumers.
The startup is building a developer platform that allows developers to integrate with data from financial institutions and use it to build applications. Banks are traditional difficult to work with. An API is smart way to start making them more developer-friendly.
“As developers in financial technology ourselves, we struggled with the lack of a unified bank API and the low quality of transactional data – so we decided to build the infrastructure to fix it,” said founder Zach Perret in an email. “Financial technology has always had significant barriers to entry, and by simplifying the infrastructure we’re helping developers transform the way businesses and consumers use their financial data.”
Financial services is a hot space right now, and developers and investors alike are salivating over opportunities to modernize the way banking is done. At Y Combinator’s recent demo day, the most buzzed about startup was Standard Treasury which provides a similar product.
In the wake of the financial crisis, banks are facing low interest rates and increasing regulation that compels them to open up their infrastructure and find other ways to make money.
Plaid offers simple integration through a RESTful API and “high-quality machine-readable transaction data.”
Parret said that since launching the private beta a few months ago, the demand from the developer community as been “overwhelming.” Most of the early traction has been in accounting, tax, expense, and lending, but the opportunities extend beyond financial services and into other industries.
“One of our tax clients built an application that allows users to scan their bank & credit histories to quickly identify deductible expenses,” Parret said. “In the past, you had to mail your statements and receipts to your accountant, who would read through names like SBXUSQ0112x and try to figure out what the transactions mean. Using Plaid, applications allow users to link their accounts and get high-context data on each transaction – cleaning up that transaction to Starbucks Coffee at 41 Union Square West, NYC 10003.”
Spark Capital led this round, with participation from Google Ventures, NEA, Felicis Ventures, and Homebrew Capital.