Current, a challenger bank with 4 million customers, is rolling out an application programming interface platform that will make it easier for its customers to use other fintech apps for things like payments, financial planning and investing. Current also hopes to use the platform to offer embedded banking to other fintechs.
The data aggregator Plaid is the first data aggregator to work with the new platform. Through the partnership, Current users will be able to connect their Current bank account to any of the 6,000 fintechs in Plaid’s network. Plaid will feed account data from Current to the fintechs, using phone number and device authentication and averting screen scraping.
Current is one of the most requested fintech apps among consumers who use Plaid Link to connect their accounts to Plaid’s fintech clients, the companies said.
This announcement is the latest example of the American version of open banking, where data aggregators, for a fee, move data from banks to fintechs. In the early days, aggregators did this by making consumers cough up their online banking usernames and passwords and then repeatedly logging in using their credentials to take their banking data. Now they are all shifting toward the use of APIs.
Current’s moves are not unusual in the sense that many banks and fintechs are working with data aggregators and sharing customer data through APIs. Plaid says it already works with the neobanks Aspiration, Chime, Dave, Green Dot, MoneyLion, NorthOne and One, among others.
It is unusual for a challenger bank to offer embedded banking to other fintechs.
“Challenger banks haven’t typically had the banking license to offer services to other fintechs,” said Sam Kilmer, managing director, fintech advisory at Cornerstone Advisors. A fintech without a banking license would be reselling something its partner bank supports that likely already has tight margin, he pointed out.
Current’s bank partner is Choice Financial Group.
Plaid approached the Current team at the end of last year to pitch its Plaid Exchange API services.
“It's something that we always resisted a little bit, because it was quite a lot of development effort to go and support these things,” said Trevor Marshall, chief technology officer at Current. “And as their requirements changed over time, we didn't want to be bound contractually or otherwise to external specifications.”
But Current started getting lots of requests from customers who wanted to link their Current account to a fintech app.
“We knew we needed to enable something very quickly,” Marshall said. “Separately, we had been trying to figure out the best way to introduce a platform API.”
Current’s platform API is designed to let partners manage deeper integrations and connect to Current’s core system directly, Marshall said.
This could allow banking data to be used for things like accounting, tax reporting and even online shopping checkout.
“This is the kickoff of a longer platform initiative where we're very consciously designing our platform to be available to and consumable by other fintechs,” Marshall said. “If I'm using a tax software that can easily aggregate across banks, then I don't have to go and find invoices across all of these different places. Checkout is another really clear use case. Instead of typing in all of my credentials and a card number, I could check out with a Current integration.”
Banks could also use Current’s API platform to do things like get real-time balance checks before allowing customers to make payments.
“They could have a guarantee around the funds availability because a lot of our customers live in that paycheck-to-paycheck mode many Americans do,” Marshall said. “Getting real-time balance checks and doing real-time payments is a really unsolved problem. So being able to offer that as an API, outside of ACH rails, which have a lot of chargeback risk, can lower return rates and you can get a better customer experience.”
Current is speaking with other data aggregator partners, Marshall said.
“It's a good trend,” Marshall said. “It is the way that the U.S. is approaching open banking, which is companies actually putting out usable APIs and identifying partners. It's not to the full extent of a government mandated specification for exposing data, but it is actually getting to the same sort of outcome, which is, your transactions are yours and they should be available through other places that might need them. It's very American to put it in the hands of private companies to figure out how to make that most accessible and available.”
