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Not all fintechs are looking for a hiding place. Plaid and Stripe see opportunities

Not all fintechs are looking for a hiding place. Plaid and Stripe see opportunities

Fintechs, the firms that have embedded themselves so deeply in world economies, are consolidating and the result will be fintechs becoming internal organs within so many companies that they will be ubiquitous and invisible.

That seems like a strong likelihood and, as it happens, it is the opinion of the brain trust at fintech Plaid. Four executives, including CEO Zack Perret, think many onboarding functions provided by their industry to banks, retailers, ecommerce providers and others are being absorbed by the customers.

The quartet was not saying fintechs are going away. In fact, one of their competitors had some major moves to announce this week.

If any industry – yes, including hard technology – has proven itself capable of spontaneously evolving relevancy, it is finance.

Earlier this year, Perret hosted a panel of in-house cohorts: Ginger Baker, head of financial access: Alain Meier, head of identity; and John Pitts, head of policy. They covered a good deal of ground in an hour, but the biometrics-focused portion was particularly interesting for buyers and sellers of the products.

Meier said that in his discussions with banks, he has found an uncharacteristic bold streak in some executives.

Onboarding technology is “very, very battle-tested” on the fintech side, so much so that banks want to buy their own anti-fraud and identity verification systems, Meier said.

In fact, bank executives might be a bit too fashion forward. Some are being “more aggressive with techniques than fintechs.” A few of them are fine with “prepopulating customer PII for mobile and network operational data.”

There are fintechs (maybe Plaid), who think that kind of thing might cross some lines in Washington D.C.

The group goes deeper than most industry chats on this and other topics, and the video is worth the time to visit even if it is a bit of groupthink with the boss. But there is bigger, newer news to be discussed that shows just how powerfully fintechs have rooted themselves in the firmament.

Stripe, a payment processor and API builder for e-commerce companies with its own identity verification capabilities, say it has closed a $6.5 billion series I round of funding at a $50 billion valuation. The company also enables buyers to programmatically confirm the identity of users and perform KYC checks, reducing friction for them, and freeing resources up to rebuff fraudsters.

Some of the money came from new investors, including Goldman Sachs Asset and Wealth Management, Singapore’s Temasek and Singaporean sovereign with found GIC Private.

Andreessen Horowitz, Founders Fund and General Catalyst added to their previous placements in Stripe.

As if all that money in today’s world was not sign enough that Stripe is feeling healthy, the company’s announcement puts its finger in everyone else’s face: “Stripe does not need this capital to run its business.”

The money is promised to current and former employees for their liquidity with a minimal tax hit.

As if addressing the trend of customers insourcing onboarding processes, the announcement says executives still see plenty of opportunity to innovate.

And while it is not fully the same thing, Stripe has also just announced that generative algorithm startup OpenAI will build Stripe’s payment functions into products and services hanging off OpenAI’s GPT-4.

Products including Link, Tax, Revenue Recognition, Billing and Checkout will be integrated “in a matter of weeks,” according to Stripe.

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