Plaid has tapped income and employment platform Pinwheel to provide additional consumer-permission payroll data to customers of the fintech’s income product.
The partnership, announced Thursday, will see Pinwheel become a preferred provider for direct deposit switching services and help power additional payroll data for income verification. As the preferred provider, Plaid will refer customers requiring direct deposit switching to Pinwheel, the statement said.
“The promise of digital finance means unlocking financial freedom and making it easy for consumers to access better financial services and, ultimately, better financial outcomes,” Tamara Romanek, head of partnerships of Plaid said in a statement. “We selected Pinwheel as our Preferred Provider for direct deposit switching referrals so that our customers can better support the needs of their customers and leverage different tools in our partner network that enhance their product experiences.”
The move comes close on the heels of the Consumer Financial Protection Bureau’s June announcement that it will propose an open-banking rule, thereby giving consumers more control over their personal financial information and the right to share it as they want.
Pinwheel will provide additional consumer-permissioned payroll data for Plaid’s income product, which enables lenders to verify their borrower’s income through pay stubs, bank statements and payroll data, the company said.
“Plaid is a pioneering infrastructure company allowing users to share their bank account data across their financial lives,” Brian Karimi-Pashaki, partnerships lead of Pinwheel said in an emailed response. “Plaid is a major industry influence and by striking this partnership, they’re setting the precedent for deposit switching becoming a priority for the entire financial services ecosystem. This will fast-track the widespread adoption of direct deposit switching for banks and fintechs.”
“Banks or fintechs using Pinwheel have a much easier time getting new customers, especially when it comes to new account incentive campaigns,” he added.
Pinwheel connects more than 1,700 platforms covering 80% of U.S. workers and over 1.5 million employers, according to the company statement.
"Fintech has come so far in the past decade, and we're now staring down the next era of great innovation, one that will be built atop real-time income and employment data," Karimi-Pashaki said in a statement. “Income is arguably the most important part of someone's financial picture, and we're just scratching the surface of how unlocking this missing data can create more positive outcomes for consumers and financial institutions alike.”
The partnership will help power new and improved underwriting processes for mortgages, auto and personal loans, he added.
Pinwheel’s additional payroll connectivity will allow more consumers to access the products that are tailored to meet their needs, which would let banks and fintechs serve more customers because of their access to consumer data showcasing their creditworthiness, the statement noted.
Direct deposit switching allows a customer to move more freely within the financial system and helps them to choose companies that offer the best products — be it the traditional banks or a fintech startup, Karimi-Pashaki said.
“One important thing to consider about today’s news is the ‘why now,’ component. Before Pinwheel, the pipes necessary for deposit switching didn’t exist because they’re incredibly hard to build. Now that we’ve built the API that connects to 100% of consumers paid via direct deposit, we’re seeing this become more mainstream,” he added.
