Recent product announcements from Stripe and Plaid suggest the two private businesses are vying for market share as the B2B financial technology sector reaches maturity, expands, and sees an increase in player overlap. It may seem absurd that Stripe, which is best recognized for its payment technology, and Plaid, which is most known for its API that links consumer bank accounts to outside businesses, are in direct competition with one another. It’s not.
The saying, “From a financial standpoint, all software tastes like chicken,” is both humorous and accurate. Fintech startups, unicorns, and even public organizations tend to increase their skills over time, adding more and more talents. This is mostly true for fintech businesses as well. Startups in the B2B and B2C sectors have similar goals. Since customer acquisition (promotion, onboarding, etc.) is costly and difficult, a fintech should try to maximize the value it derives from each user or client.
Because of this, businesses like Plaid and Stripe construct and acquire new assets to meet the demands of an increasing number of their clients, eventually bringing them face to face. What occurs after they do? We’ll investigate this.
Latest battles in the Great Fintech War, According to TechCrunch, Plaid’s decision to purchase Cognito in January 2022 was a step “beyond just linking accounts.” In essence, Cognito expanded Plaid’s feature set by adding know-your-customer (KYC) and anti-fraud features. By doing so, it could give its clients considerably more than just account links.
Plaid had acquired the payments-focused Flannel firm in 2021. Plaid was growing and acquiring its way into a broader potential total addressable market with account connections, security tools, and payments technology—a market that is already being pursued by other private fintechs. It is clear that Stripe has expanded its feature set beyond the scope of its initial mission. Due to the company’s extensive service offerings, the on-site menus are starting to resemble a catalog more than an organizing tool. It is thus not unusual to see the corporation introduce new products now and then.
We took notice, however, when Stripe unveiled “Financial Connections” in early May. According to TechCrunch, this service would let users to “link directly to their clients’ bank accounts to obtain financial data to speed up or perform specific types of transactions.” Even if it was fair play, the product announcement put Stripe in direct conflict with Plaid’s primary business because the latter firm had previously made it known to the market that payments were on its mind with the 2021 Flannel transaction.
However, given their collaboration and history, Plaid plainly objected to what its executives said was Stripe’s use of a cunning method of information gathering and a lack of openness. As far as the API industry allows for it, it was obvious that the gloves were off when the two businesses started bickering on Twitter.
