(Bloomberg) -- Plaid Inc. wants to make it easier for retail investors to move their holdings from one brokerage platform to another, a traditionally clunky and time-consuming process.
The firm, best known for connecting consumers’ bank accounts to financial-technology companies, is now easing the transfer of investments from one account to another without having to sell holdings and incur taxes in the process.
In the past, consumers have had to manually enter such a request via the Automated Account Clearing and Transfer Service, or ACATS, and sometimes wait several business days for it to be completed. Plaid’s technology, which will be known as Investments Move, eliminates the need to manually enter a consumer’s account information digit by digit, and improves the likelihood of a transfer request being quickly approved, addressing a common complaint Plaid received, according to the statement.
“We fundamentally believe in a world of open finance,” Plaid President Jen Taylor said in an interview. “It is just the beginning.”
The technology — already used by some fintech brokerages, including Public.com — is being made available at a time when firms are fighting to keep client assets in-house amid increased competition. Robinhood Markets Inc., which also already uses the technology, has frequently offered promotions to lure customers away from their existing brokerages. Making that process less arduous could ramp up competition.
“The institutions are really going to have to think about not only the nuts and bolts of the services they provide, but also the quality of the service they provide to the users,” Taylor said.
The technology further builds out Plaid’s financial-plumbing ecosystem that’s moved beyond just connecting a consumer’s bank account to a fintech. The firm is moving toward overseeing and securing a full-scale consumer-data network, with customer profiles including more of an individual’s many relationships with different financial institutions. Plaid is also closely watched as a contender for an initial public offering.
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