More financial platforms exist than ever before to help consumers take control of their financial health. However, it can still be difficult for consumers to direct where their payroll funds go when choosing services that best fit their financial needs. Changing where direct deposits go is usually a manual and time-consuming process for both financial institutions and consumers. For example, in order to transition income to a new bank, many consumers typically have to complete a bank-provided form to collect their new account details, and then bring that form to their employer. With a paper-based process, there’s little to no clarity around when their paycheck will start flowing to the new account, which can leave the consumer feeling anxious and perplexed.
For financial institutions, high-friction onboarding experiences can lead to consumer drop-off and inactive accounts—and can ultimately prevent banks from becoming a consumer’s primary financial institution. A significant opportunity exists for expanded innovation that leads to better consumer outcomes. Plaid can help by building the infrastructure that bridges the gap between financial institutions and payroll data, starting with direct deposits.
Announcing Plaid Deposit Switch
Today, we’re excited to announce Plaid Deposit Switch, a new product, currently in beta, that makes it faster and easier for users to establish or change the destination of their paychecks. By automating direct deposit account funding, banks can optimize their account funding flows, and ultimately increase customer lifetime value.
deposit switch flow
Optimized for conversion and coverage, Deposit Switch offers both instant and fallback methods for consumers setting up recurring account funding. Our proprietary instant switch method connects a consumer’s payroll or employer account directly through Plaid Link. Instant account funding is available for employees at large and small companies, as well as gig economy workers. For consumers unable to utilize our instant switch method, we’re building a fallback method. Consumers will be able to ask Plaid to contact their employer on their behalf to update their direct deposits – no forms required.
We are excited about the positive feedback received from our beta partners, including Lili and Yotta:
“Fintech has given people more choices to find what works best for their specific money management needs,” Liran Zelkha, CTO, Lili, which provides banking services for freelance workers, including no-fee early access to wages with direct deposit. “Plaid Deposit Switch is helping us streamline the account funding process, which will give customers a better experience and should also benefit our customer acquisition and retention.”
“Yotta helps customers develop better financial habits by making it easy and fun to build and grow their savings,” Ben Doyle, Co-Founder, Yotta. “Working with Plaid, we’ve made it faster and easier for customers to take the first step by establishing and funding their accounts with direct deposit. Yotta also integrates with Plaid Exchange, so customers can securely use their Yotta account with other fintech apps for digital payments, financial planning, investments and more. Fintech is the new normal for most Americans and Plaid helps Yotta meet customers where they are.”