finicity – Noyes Payments Blog

Summary

Primary driver of finicity/Plaid deals is not open banking, but in support of the “network of networks” strategy.
The owner of the consumer directory, will rule payments. Tokens are the central battle field for trust networks (and payment network) consolidation as well as new services.
MA lost out on the Plaid purchase, but is likely to end up far better off for it.
The Visa/Plaid deal is likely to fall through as the retain consumer credentials for 5yr (claimed by class action).
V/MA will likely own the payment token directory
- Visa is leading – 1B tokens issued by Visa (acquisition of BellID/Rambus)
- Mastercard Track successfully leads the market in global B2B Least Cost Routing
V/MA have substantial hurdles in expanding the directory beyond payments
- Few direct consumer or merchant relationships
- Bank and Apple/Google leadership in Customer Identity/Trust
- Trust is the core of bank risk management (and Bank margin)
- Network effects decrease transaction costs for established services and increase value (acceptance). However they have the reverse effect on new services.
- Value/Margin is migrating to the ends of the network and many new networks are forming.
- The energy to manage participation in multiple networks is dropping (with Mobile). Enabling specialized networks that cater more finely to precise needs of each node.
- V/MA will see substantial growth in core payment volume with continued network effects and the breakdown of Payment silos.