The best way to tell the FDX story is through the voice of our members. Welcome to the FDX Member Spotlight series, in which we sit down with some of the professionals from FDX member firms who juggle the responsibility of their day jobs with developing, integrating and implementing the FDX standard for the benefit of consumers and the entire financial services industry. We ask them about their experiences, goals and thoughts on the process.
John Pitts, Global Head of Policy, Plaid
Thanks for joining us today. Plaid has become more of a household name over the last year, so tell us a little bit about your role in the company and what you are working on in relation to consumer data sharing and Open Finance?
John Pitts: Ultimately Plaid sees its role as advocating on behalf of consumers when it comes to their data rights and enabling their ability to have control, transparency and choice when it comes to making decisions over their financial lives. Because the financial ecosystem is really complex and we have lots of stakeholders, Plaid works incredibly hard to communicate with banks, fintechs, regulators, and consumers to build a system that works for everyone and puts consumers at the center.
To that end, I’ve been overseeing our strategy to spearhead open finance, a framework that will enable all consumers to participate in a fully digital financial system, in all the places we operate. A lot of this of course involves interfacing with regulators and groups like FDX to chart out specific elements of that framework, and find alignment in a complex system on important issues like security, privacy, and consumer control.
Our policy and legal teams came together to deliver an 80-page comment letter in response to the CFPB’s ANPR, which everyone should read in full in their spare time! The letter carves out our positions on a lot of these important issues. The biggest piece of that was our call to be a supervised entity, a huge step for a company that started just 7 years ago.
Since Plaid is a global company, we’ve also been involved in recent conversations with Finance Canada as they consider their path to open finance, and have been in consultations with the UK government about evolving their Open Banking framework so it addresses the innovation and growing consumer demand for Open Finance. Navigating different API standards in different counties also gives us an acute awareness of the value of a single interoperable standard like FDX.
Almost everyone reading this Spotlight is aware of Plaid and Visa’s decision to abandon the merger. With that in mind, what is next for Plaid and where has this major shift in trajectory been positive for Plaid and its many employees and customers?
John Pitts: Plaid will continue to grow as a global network. While this is not the outcome we anticipated, we’re invigorated about the potential for what we’ll be able to make possible as the world increasingly accommodates a more connected digital financial system.
Plaid is on the FDX board and Co-Chairs the influential FDX Strategic Planning Committee so tell us a little bit about where Plaid finds the most value and synergy with FDX? What are Plaid’s main objectives in working on the FDX API standard?
John Pitts: Plaid is incredibly aligned with the FDX principles and ultimate goal of the group, which is to build alignment in our ecosystem. Our participation in FDX has enabled us to understand the perspective of all industry participants and has been a rewarding learning vehicle for us as we consider how we can best offer bi-directional value, to consumers and financial institutions.
Plaid’s objective on working on the FDX API standard is simple. We want to create a more streamlined, faster path to an API-forward ecosystem, and move the industry away from screen scraping. The FDX standard is an important part of our strategy as we aim to get to an API-driven world faster, which is a major company goal for us this year. It’s also valuable for us to be included in technical conversations about what the API needs to address in terms of innovation and changing consumer expectations. It’s important that we ensure longevity for the FDX standard by accommodating not only where the industry is today but use cases that could be critically important for consumers in the future.
Plaid is an industry leader in financial data access and insights and often plays the role as an intermediary between banks and fintech apps in the ecosystem. What are some key milestones that Plaid has observed in the broader data sharing arena over the last few years and where are we going from here?
John Pitts: Consumer habits are changing fast. As an industry, we’ve seen a radical shift in addressing those changes by prioritizing data access strategies. For example, 5 years ago when we were engaging in discussions about APIs, they seemed further down on the list of priorities at most FI’s. Fast forward to today, when we have migrated to or in the process of migrating to the majority of major FI APIs, these migrations are a top priority for anyone serious about meeting their customers where they are.
Beyond milestones specific to Plaid, like our data access agreements or participation in industry standard pilot programs, we’re seeing increasing attention from policymakers to understand how to interpret this shift in consumer preferences and accommodate a digital financial ecosystem. Given the interconnected nature of our ecosystem, wherever the CFPB nets out after reviewing their comment letters will be a major milestone not just for Plaid, but everyone.
In Plaid’s view, what is the biggest opportunity in front of the user-permissioned data ecosystem right now and how do entities across the spectrum need to work together to take advantage of it?
John Pitts: The biggest opportunity, at a macro level, is the chance to build a more consumer centric ecosystem. The services and tools enabled by contextual finance have significant potential to address many limitations facing consumers today when it comes to understanding, and better managing, their finances.
When I was at the CFPB, it was so inspiring to work on policy that engendered more opportunity for a huge number of people. I feel that we, as enablers of a digital financial ecosystem, have the same level of potential impact, and if we get it right as a collective we’ll be able to inspire radical benefits on behalf of millions of people.
A huge goal of ours is to ensure that consumers can have the same levels of access to their financial information regardless of which bank they use. We don’t want to see a future in which someone can’t use an application that they rely on because they bank with one institution instead of another. This means we all need to get on board with the notion that this system is still very much evolving, and we need to keep an open mind and build the right structures that can allow it to grow while keeping consumers protected.
Its no secret that financial services is a highly competitive landscape and anyone reading the press would think every day was an all-out war between different financial services industry segments and firms. However, even amidst fierce competition, there is a comradery in the industry at large within FDX that is exciting to be a part of. With that in mind, who are some individuals or companies that Plaid may compete with that you have really come to enjoy working with at FDX?
John Pitts: I think I tweeted the other week that after reviewing the CFPB comment letters from us, fintechs and banks, it’s clear that the “aggregator v bank” narrative that plays out in the press is ready to be retired. The core areas of agreement are by far more impactful and important than areas we have different perspectives.
And a lot of that has come from working in FDX. When I joined Plaid, Plaid and Capital One were in the midst of a public disagreement. Today, my Strategic Planning Committee co-chair is Becky Heironimus from Capital One and I couldn’t imagine a better working partnership.
It’s been exciting to see that shift in the past few years, and in particular I would say the past year we’ve really changed our approach to working with financial institutions after finding a considerable amount of common ground to anchor our discussions in. Bi-directional value to an interconnected ecosystem is increasingly more obvious, and everyone is reacting to that.
Finally, and with an eye toward knowing the real people that occupy senior roles in financial services - what concert or live music event do you wish you could have attended in person?
John Pitts: Hamilton! I’ve seen it twice (Broadway and at the Kennedy Center- my gift to my kids before starting at Plaid). But I would have loved to have been at the 2013 workshop performance of The Hamilton Mixtape.