With Visa (V) and the Plaid deal off the table, Plaid is more likely to IPO via direct listing, a special purpose vehicle (SPAC) or through the traditional process.
One of the reasons why the deal was shot down was because of antitrust regulators, according to rumors, Plaid used this as leverage to back out of the deal because CEO Zach Perret knew that there was a coming Fintech boom and that the company is worth way more than $5 billion.
However, they will continue to work together moving forward. The termination of this takeover could delay Visa’s move into open banking, which regulators are now forced to regulate. This may sting Visa more because the DOJ approved Mastercard’s acquisition of Finicity, a Fintech data aggregator similar to Plaid.
The DOJ’s apparent distaste toward the idea of an open banking giant will perpetuate the fragmented US open banking environment—leaving the door open for regulators to implement a standardized approach.
- Consumers’ access to financial data sharing in the US has largely depended on private-sector efforts. For example, Plaid is a member of the Financial Data Exchange, a 168-member financial industry consortium that has adopted its own data-sharing principles. But consortia carry no regulatory obligations to comply, and they don’t preclude other standards from popping up: A number of banks are making another play with Akoya, a financial data-sharing startup. The Visa-Plaid tie-up could have been big enough to force unity across the financial services industry—but the DOJ shooting it down suggests that a centralized regulatory approach will in fact be necessary.
- Standardized rules would make data sharing more convenient for customers and ease banks’ implementation of open banking. The Consumer Financial Protection Bureau (CFPB) has been working to determine how consumers’ access to their financial information is regulated. And Insider Intelligence expects that the soon-to-be Biden-led agency will fast-track legal standards around open finance. If the CFPB drafts rules that mandate greater consumer control over their own financial data, it could spur a vast array of new services and help consumers take better control of their financial lives. And for banks, a regulated approach could make it easier to implement open banking-enabled products, as they will only need to follow a single standard.
SPACS that could sign a deal with Plaid
- Artius Acquisition (AACQ)
- FTAC Olympus (FTOC)
- Fusion (FUSE)
- GS Acquisition (GSAH)