Need to Know
- Fintech startup Plaid has announced a new payroll-focused product called Income.
- Income, now in beta, is designed to help users more easily verify their income when applying for loans and rental agreements.
- According to Plaid, payroll data is the “next frontier” in fintech and will offer users or employees a more holistic approach to their own financial management.
Fintech company Plaid is trialing a new product that will improve the income verification process. Simply called Income, the new tool is designed to make it easier for people to validate their income when applying for things like loans, leases, and rental apartments.
Income will give lenders data, with permission, on the income, employment status, and tax liabilities of individual users.
The process of providing income statements has been, historically, time-consuming and often stressful, requiring applicants to search for and share multiple documents.
With Plaid’s Income tool, the process is much more streamlined, either uploading their income and tax statements directly to the app or by authorizing the use of their payroll provider account.
Last month, Plaid launched Deposit Switch, a product in the same suite that allows people to “quickly switch their direct deposits to a new or existing bank account by linking their payroll account via Plaid.”
Users can supply important information to the lender, via Plaid, that would not require them to authorize or provide additional credentials. Users can review the information first and can opt-out anytime.
Plaid, which focuses on “democratizing financial services through technology” has opted to build its own platform rather than partnering with another company. Plaid’s planned merger with Visa fell through at the start of this year.
“Over the past few years, we’ve added support for several additional different types of consumer-permissioned data, including liabilities, investments, mortgage data and more,” said a Plaid spokesperson. “It’s become clearer that payroll data has huge potential value for enabling new or more streamlined services that help people better manage their financial lives, and we knew we wanted to bring that to market ourselves.”
According to Plaid, payroll information is “the next frontier for fintech.”
In a blog post on the company’s website, author Ben White said payroll providers are “embracing a data transformation driven by their growing interest in playing a helpful role in employees’ financial lives.”
Apparently, more than half of all companies now offer some form of financial wellness benefit.
By having access to their financial information, consumers can more easily access, control, and share this data, and when shared with fintech providers like Plaid, can “help them qualify for a loan, find better rates, and even optimize earnings from multiple income streams.”
After the termination of the Visa deal earlier this year, Plaid has turned its focus to embracing open banking.
Writes White, “improved consumer access to payroll data holds promise to unlock the next new wave of innovation that can benefit consumers and move the industry a step closer to open finance.”