How AI Will Transform Fintech In 2026

2018 2019 in fintech was late spring. You get into 2020 and COVID and that was utter insanity of a of a story. >> Like 25% of all venture dollars in that period went into fintech which is >> Wow. 25%. >> The stat after that is not a good stat which is um starting in like the second half of 2022 like basically 0% of venture dollars went into >> drought maybe. >> Yeah. Yeah. Fintech winter was the second half of 2022. Most of 23 and 24 things started to thaw a little bit and

like now we're very much back in spring. It turns out the biggest use case for AI is fraudsters committing fraud against financial services companies. Financial fraud is growing at like like 18 to 20% a year uh which is insane and it's already a huge market. I mean the cattle win long term, but the mouse is winning right now.

Zach, David, uh, we did this podcast, I believe, seven years ago, and it's great to have the the gang back together. Thanks for joining. >> Thank you for having us. >> Great to be here. Of course, a lot has happened since the last conversation in our personal lives, and a lot has happened in in fintech more broadly. I was listening to the the episode that we did um the last time we spoke and we were talking about what has changed in fintech, you know, from early 2010s to

to just before 2020. And I'm curious if we could just sort of um check in or reflect back as to, you know, since the last time we spoke to to to now, what have been some of the major themes in in in fintech? C catch us uh catch us up if someone was in a coma after listening to the last episode and just woke up and said, "Hey, what's changed in in fintech?" What would we say? >> Let's see. So, the last last time we talked was probably 2018 2019. Is that right? >> Yes.

>> Yeah. So, let's see. um a a lot. There's been like a bunch of different eras or like maybe we can think of it as like almost seasons in some sense. Um 2018 2019 in fintech was I guess like kind of late late spring. Um lot of lot of really good growth like the industry had a name. The name probably came about I actually think that David you created a name but no one will give you credit but I will give you credit. I think you created the name in like 2015. Um but we

we we now had a name for this industry. We had gone past like oh some people are maybe building financial services products to um all right we like it is an industry and there are a lot of things being built. Um you know we started to see the the million flowers bloom to to really overextend this analogy the million flowers bloom bloom from call it like 2014 2015 up until 2019 2020 like zillions of uh first time hey can I take this thing outside of a physical bank branch and deliver it to a

consumer digitally. Um so you saw applications like Robin Hood come up and grow incredibly well. you see all sorts of neo bank neo bankank for x or y or z subm market. Uh those are everywhere. Um uh you saw crypto like the first crypto apps really start to emerge and and grow a lot. Um and then kind of from 2019 you get into like 2020 and COVID and that was kind of just utter insanity of a of a story. Um you know first the first few months of 2020 were totally normal. Uh

consumer digitally. Um so you saw applications like Robin Hood come up and grow incredibly well. you see all sorts of neo bank neo bankank for x or y or z subm market. Uh those are everywhere. Um uh you saw crypto like the first crypto apps really start to emerge and and grow a lot. Um and then kind of from 2019 you get into like 2020 and COVID and that was kind of just utter insanity of a of a story. Um you know first the first few months of 2020 were totally normal. Uh

then you get into early COVID where everything froze. Um basically every business um kind of locked up including all the fintech companies. Um but within you know two two and a half months you then had this total inversion of fintech. So you went from late spring to like big EDM pumping uh summer uh really fast like the EDM music turned on very loudly very quickly. Um and uh so you just had this insane growth period for fintech uh from kind of mid 2020 through

um kind of like the end of 2021 and even into early 2022. And yes, a lot of new companies formed, but um every investor, whether venture or public markets or whatever it was, wanted to push money into fintech. Um and so you had just this this huge boom in funding, tons of new stuff grew. It was it was like really fun and very chaotic time honestly like a hard time to manage because uh you know the feature chase the things we had to build were going so rapidly.

>> I think like 25% of all venture dollars in that period went into fintech which is insane. >> 25%. >> It's a crazy stat actually. I think it's a great stat. The stat after that is not a good stat which is um starting in like the second half of 2022 like basically 0% of venture dollars went into >> drought maybe. >> Yeah. Yeah. So um summer uh went into a very very short fall. So that was kind of like mid 2022 and then immediately into winter. Um and fintech winter was the second half of 2022.

Most of 23 and 24 things started to thaw a little bit and like now we're very much back into spring. Yep. >> Um different format, but it's been it's been a fun cycle of the seasons. Totally. I you know and I think even to describe maybe what drove some of the seasons like you know the the rate cycle was a big part of that as like a from like a macro perspective you know having very low rates you know kind of drove Zer obviously not unique to fintech but a lot of you know technology broadly but

certainly a lot of lending volume in the space grew massively in those periods um you know the one benefit that I think has shown up more recently in fintech you know in the in the thaw period is that rates went up and it it it sort of shifted the mix of revenues for for any of these fintech companies from lending driven kind of origination you know oriented stuff to you know deposits um you know so many of these fintech companies decided I forget the exact

timing but to go kind of full stack you know so you saw you know uh fintech companies like SoFi you know buy banks you know lending club uh I think square got an ILC charter um you know Robin Hood Mercury many of these companies are generating very significant percentages of their revenue and profits today from deposit flows as rates have gone up And so that I think has helped thaw the market you know to some degree more recently >> usually. Yeah. And in in in 20 um 2018

2019 um fintech was a startup industry um having gone through this entire cycle um yeah some ups some downs um but a lot of maturation um a lot of expansion. We've ended now with fintech is in my opinion synonymous with financial services. >> Um and it goes beyond just financial services as well. So you you've seen a few themes emerge. Um one thing that that uh we said for a long time that Andre Horus also likes to say is that every company is a fintech company and

that was kind of quite common from 2018 um kind of onward. Um now you see the emergence of embedded finance. So you know some apply customers are like Ford and John Deere and these companies that like you know yes they do have captive financial services uh embedded within them but you do not think of them as financial services companies um or you know large billers or it's expanded quite a lot. Um and then you see the banks themselves saying um historically they said oh we need to be fintech

companies too. Now they're saying we are the biggest fintech companies like we invest heavily in technology. And so you've seen the startup industry now become mainstream and the firmament of financial services but also powering experiences well beyond financial services. >> Let's go deeper into where we are today and and and and where we're going um g given that we're kind of in a you know exciting period. um you is it still like macro in terms like is it still early in

companies too. Now they're saying we are the biggest fintech companies like we invest heavily in technology. And so you've seen the startup industry now become mainstream and the firmament of financial services but also powering experiences well beyond financial services. >> Let's go deeper into where we are today and and and and where we're going um g given that we're kind of in a you know exciting period. um you is it still like macro in terms like is it still early in

terms of lot of things to be built um and some of the spaces you're you're excited about when maybe Zach you take the first plaid ourselves have have gone through a few phases and we're lucky that we have this really broad view of what's what's happening in fintech I'm going to keep calling it fintech but at this point realize that I mean financial services plus+ um so we have this really broad view of what's going on in fintech um and like the the things that we're

seeing today are, you know, very different and much more varied than um they were before. So um V1 of Plaid was how do we create access for everyone? And I would say largely um the fintech industry was focused on the same thing. So um instead of making you walk into a bank branch to open a bank account, how can you open a bank account on your mobile app? um instead of um you know making you carry money um and go to an exchange when you're trying to cross a border, how can we create a digital way

to do remittances so you can actually move money across the border um a little bit more easily. Um and and and apply that across kind of every every subse basically every product uh that that the banks were building at the time. Um we've solved the access problem not completely not in every little niche but but for the most part we as a collective industry have solved the access problem. So, um, you know, I grew up in a small small town, uh, you know, only one bank

in our town. Um, and if you didn't happen to be a member of that bank, you you couldn't get a loan easily. Um, now if you live in that same town, you just go online and you apply for a mortgage and you get, you know, 30 mortgage offers in an hour. Um, or you can do it with Rocket and, you know, be done in 5 minutes. And, um, these are awesome experiences. That said, what we've done is we've taken traditional financial services and we've made it digital. We haven't necessarily made it excellent.

Um that's that's like the next horizon for us. And so a lot of things that we've been investing in now are things like credit scoring. How do we make credit scoring more logical and something that a consumer can understand? Um if you get a new job and your income goes up but your expenses don't go up, you were a better loan risk. However, that doesn't show up in your credit file for like many many years because your credit file is long history of your your your repayments. Um

it's not necessarily indicative of your your free cash flow. Um and so like that that is the next horizon that a lot of the fintech companies that I'm seeing are starting to solve. So that's that's kind of like one big area. It's it's um kind of solving those endemic problems that are longlasting things like like fraud, things like credit scoring, so on and so forth. Um the second is um you know making financial services really easily available in places that you

might not have otherwise thought it to be. Um so you know putting BNPL on kind of everything. >> Yeah. um uh or or you know issuing a card kind of everywhere or issuing a wallet kind of everywhere. Um and so now now we're we're entering this like fintech is everywhere. Not every company is a fintech company but like every every consumer is surrounded by fintech and in in all the places they might want to go. Um and like you know the the future horizons are always like you know

looking at the the next few things that are happening like we look at AI and Agentic Financial Services and right now it's mostly hype and people talking about it and there are a few interesting use cases but you know fast forward two years and the way that you get a mortgage is going to be talking to you an AI application um because that is just the most efficient fastest way to do it. So that's that's been a fascinating one to watch and then like seeing what's going on with stables is

of course fascinating as well. So, um, lots more to come. >> Just on that note, it is crypto basically just fintech or, you know, people said is the new version of the internet. Maybe hopefully it still happens, but in terms of where it is right now, is it, you know, mo mostly just a subset of fintech? >> Well, David, you're an investor, so you probably know better than me. My my take is sometimes like ultimately I don't think that consumers um change all that much over time and so

the kind of things that a consumer would want to do 5 years ago are similar to the kinds of things that they might want to do today but the form factor in which they can do it uh is very different. So um you know 5 years ago um a consumer might want to speculate um and you know you can speculate on gold, you can speculate on a few of these other things and u bitcoin and and and other uh coins made it very simple for consumers to speculate. So great you can pull up an

app, you can speculate on things, speculation continues. Um the form factor has changed. Um another thing that consumers like to do is make predictions. Um so you know in the past you might make a bet with some friends. Um uh now you might go on Cal Street or Poly Market and uh you know enter prediction markets or you might do that via Robin Hood or or whatever it is. Um other things that consumers like to do are like you know spend money, save, invest so and so forth. And in as much

as consumer behavior doesn't change it's a question of like how and where does crypto and fintech fit into the existing set of consumer behaviors. >> So I think if you look at again what a bank does like they're roughly tailored to what consumers want. Consumers want to save money, invest, get loans so and so forth. Um and I think the wisest product development strategy is to kind of like take um take the things that consumers already do and just like make them newer, easier, more accessible, so

on and so forth. Um and so I suspect that there will be a convergence of uh one side of crypto um and core financial services um be that exchanging um you know like checking accounts with dollars in them for checking accounts with USDC in them wallets with USDC in them um or or or similar like I think there's a a convergence that'll likely happen there but then also crypto does some crazy out there stuff and really pushes the bounce on innovation and like totally

>> I'm not sure that that's necessarily going to end up merging with banks but who knows >> totally. Yeah. Yeah. I I mean I totally agree with with what what Zach was saying. I think part of it is um you know culture, right? And how people to Zach's point, you know, um you know, want to interact with financial services. I think part of this has been driven from a regulatory perspective. And I think maybe the more meta theme as I've sort of watched fintech evolve and

I think this is permeating into crypto is just how the large incumbent financial institutions are are embracing this innovation and technology, you know, at large. I think a lot of the you know I'd refer to my you know crypto colleagues who are much deeper in this space than I am. A lot of the enthusiasm I I would say here is about uh you know the existing kind of financial system adopting you know things like stable coins or maybe even tokenizing kind of real world world assets and um I think

that's that's different in you know from a lot of the more frontier stuff that that I think the team had had talked about internally which was kind of more purely decentralized and and kind of owning the internet but but I think you know for crypto to go very mainstream and kind of plug into the broader financial system that probably is and will continue to happen with with Zach and the team PL have done you know over you know the last 14 years 13 years uh is is remarkable. I mean you know you

you know from my vantage point like you won the hearts and minds of the developer community. You built this sort of foundational infrastructure that really catalyzed like you know I I can't take credit for creating the fintech uh term. You like created the enabling infrastructure to like create the industry in many ways. um you know now have I don't know hundreds of millions of accounts you know connected and and you're to your point now bringing kind of this whole ecosystem of kind of value

added services and analytics you know to make financial products better um and I think while we saw different seasons kind of over that period you know uh you know hay fever and and long winters and uh uh you know euphoria in some moments um you know many of these companies are now bigger than ever I mean Robin Hood is now I don't know hundred billion dollar public company you I I looked up SoFi's stock price. You know, they're a $35 billion public company. A firm is a

$20 billion company. Like these are these are outcomes that you couldn't even imagine. >> Revolute. >> Yeah. I mean, Revolute $75 billion, you know, for new investors. And and that phenomenon is not just US- ccentric to that point. It's it's become a global one. I mean, new bank, you know, hundred billion dollar, you know, you know, company, you know, in Brazil, you know, my good friend Pier Paulo who runs WAN in Argentina, you know, Colombia, Mexico. um you know so these these

companies have worked and they've kind of proliferated and brought access of financial products you know everywhere um uh and I think that that trend will continue you know I think while they started often with point solutions and they kind of perfected whatever their wedge product was you know many of them have now rebundled right they want to become kind of the full you know financial picture for their for their customers whether that's through cards or accounts or lending um again many of

them have gone full stack and actually bought banks and actually hold deposits and are generating significant revenue you know from from that float. I think the other meta theme which has been um been interesting and and I think it's accelerating now with AI is just again the um the posture of a lot of the incumbent financial institutions you know to fintech and technology broadly. Um, you know, I saw this kind of firsthand, uh, certainly, you know, as an investor back at Spark, as a founder,

and then inside of Goldman, just even their own sort of evolution, uh, and and posture to technology, you know, for a long time, many of these institutions, like if the technology wasn't built there, they weren't interested. I mean, Goldman had literally created their own email client. Like they they they didn't operate on Outlook or on Gmail. They had this thing called Orbit. I don't know why Goldman Sachs needs to create their own email client, but you know that that

was that was like a window into the psychology from a technology perspective. >> Don't they still use like secd internally like they they have their own database that they built? >> That that makes more sense to me because it was like a centralized risk system for managing all their trades but outlook equivalent like makes no sense. Um you know then I think there was this period where you know many of the large institutions were like we want to be the fintech companies ourselves and you know

Goldman went very aggressively and you know into Marcus and and others followed suit. I think there's a bit of a humbling that has happened. You know, may maybe I'm using them as one one lens, but but more broadly, I think the the positive impact of that experience um made them more open to adopting the best technology that exists in the market and and no longer are building everything in house. And so a lot of where I've been spending time the past several years has been in, you know,

fintech companies that lead with software that, you know, ideally have the potential for a network effect and are selling into these financial, you know, larger financial institutions and solving, you know, real real workflow challenges for them. Um, and I think we're at this interesting moment where because the software itself can actually do the work, you know, with AI, there's sort of this bottoms up momentum and top down pressure that's happening that I think is accelerating this cultural

change. you know, many of these institutions are beginning to adopt products like cursor or, you know, even GitHub copilot or a broader ecosystem of kind of AI products in their in their employee base and people are seeing the productivity gains and then unlike I think prior periods of of kind of product cycle or platform shifts, if you were the CEO of a big bank and you said, you know, do I need to be in the cloud? Like that was sort of an esoteric question. Now it's like any CEO, any

change. you know, many of these institutions are beginning to adopt products like cursor or, you know, even GitHub copilot or a broader ecosystem of kind of AI products in their in their employee base and people are seeing the productivity gains and then unlike I think prior periods of of kind of product cycle or platform shifts, if you were the CEO of a big bank and you said, you know, do I need to be in the cloud? Like that was sort of an esoteric question. Now it's like any CEO, any

board member can plug a prompt into one of these models and sort of intuitively understand the impact that it could have on their business. And so I think that's broadening the aperture at least from my vantage point of what fintech is. >> And it's really I think to your point just financial services and I think software in large part sold into financial services as well. >> Yeah. And and and David say more about sort of that that change around when you know it went from 25% to you know

significantly less than that. what what was changing in these businesses that that that caused that you you mentioned sort of the macro environment. Is there anything else we could learn from it and and more around now where are you particularly excited to to to invest or what what are the sort of different um you know sort of subspaces that you're you know looking at or excited to >> I think 2021 period was sort of wild for lots of reasons. I think um you know financial services is and remains

obviously one of the biggest parts of our global economy and so I think people you know often get over excited maybe by TAM you know and and and so every venture firm created a fintech team had you know was deploying a lot of capital you know to that market um uh you know and again many of these companies have have continued to succeed but I think it it was probably um too much euphoria going into that space relative to the amount of dollars um >> no I think it was the exact right amount

of euphoria Yeah, just the pullback afterwards that was the issue. >> Uh exact exactly you know again part of that was that companies you know when rates are zero you can lend money and and grow very quickly and there's a lot of you know margin to capture there. I think when rates go up your cost of capital goes up and that margin you know shrinks and there's a natural ceiling on on borrowing that people you know both from a regulatory perspective and a and

a kind of consumer appetite perspective. So you know the business model of a lot of on the lending side I think you know kind of compressed >> but you also have to look at like the underlying growth rates of these apps were insane. >> Totally. >> Like you you you look at the number of consumers that were you know signing up to invest or signing up to take a loan or signing up to buy Bitcoin or whatever it was. Totally >> like we just looked at the the charts and like you know if if the app was

growing at what 25% a month it was actually a great venture investment. I mean, yes, you might know that the music at some point is going to slow down or stop, but um 25% a month's growth is insane. >> Totally. >> Yeah, totally. I mean, yeah. And this was like stimulus and there was there was a lot of >> helicopter money everywhere. Yeah. There were a lot of reasons they were growing that fast. >> 100%. And look, I think like from a I don't know industry health perspective,

like I think things have normalized, but the the companies continue to grow and succeed. I mean, again, now they're, you know, bigger than they've ever been. the the great ones. There was a wash out and and um there were a lot of fintech companies that um died or shut down in the second half of 22 in the first half of 23. Um there were a lot that you know kind of went sideways for uh for quite a while. Um and a lot of lenders especially who just like basically

closed up shop or merge or things like that. >> Um but the ones that succeeded coming out of it across all of fintech they were much much stronger for it. Totally. So, as you said, like if you started off with a neo bank and all they did was have a a checking account and a savings account and maybe a card. Um, well, in this period, if they wanted to survive, they needed to to to build the lending side of of their offering. And so, um, you know, they they expanded there or

build the investment side of their offering, so they expanded there. And so, now you've come out with these like much more full-fledged like longlasting uh companies. So, the winners became even more so the winners. Um, and yeah, there was an unfortunate number of companies that also didn't make it >> totally. And and David, I'm curious h how you or how we look at the sort of investible universe or or sort of divide. Is it you know that there's certain type of form factors and it's

you know each region is going to have their their their new banks so to speak or is it um you know by sort of sort of form factor or value prop to to the how do we think about the the universe? How do we map it? >> You know it's been interesting. I mean, I would say from our from our vantage point, we haven't made as many consumer fintech investments in recent years as we have historically. I think um part of that's just it's it's more expensive to acquire customers and and hit the kind

of scale you need to really be, you know, kind of venture venture scale outcomes. And I think that's a function of, you know, um just, you know, consumer acquisition channels getting more expensive and some of these companies starting early and it was easier to acquire u and then build massive LTV with their existing customer bases. that that does change around the world. I think um you know in some markets people were entering the formal financial economy for the first time and

so offering a fee free mobile first you know bank account and a and a debit card you know literally gave them access to you know e-commerce and and things like Netflix and Spotify and and Amazon for the you know for the very first time. Credit doesn't exist you know equally in in every market around the world nor do credit bureaus and credit data. Um, so there's, I think, still, you know, tons of interesting kind of macro opportunity from a financial product perspective. I

think especially in emerging economies. Um, I think AI could be an interesting, you know, kind of catalyst for a new resurgence of consumer fintech. I mean, there there's always been this promise of, you know, kind of self-driving money or, um, you know, PFMs that actually do the work for you and help you make, you know, not not just give you advice, but actually, you know, help you earn, you know, save and and spend better. And I think like we've yet to see as many of

those companies today, but I think there's the technology might be ripe. I'm curious if you're seeing this, you know, uh on your side like to actually deliver on that promise. >> Yeah. You know, it's funny when when we think about pro prospective apps that like, you know, the app that I wish that existed. Um, you know, I wish that there was a self-driving money app that I could just say, hey, you know, my paycheck goes in here. Like, you know, sweep enough money into my checking

account so that I can pay my daily expenses, but put all the rest into this like high yield savings account and you invest this percent of it in the market. And, you know, I wish that this thing existed. >> I don't actually know that that's necessarily a very good app to build because I'm a weird power user. I have insane trust in fintech companies to do all this stuff for me. Like I understand all the actions that the agent would take and I have uh you know enough

background in the space that like the actions seem logical to me. But if I gave that to my mom, she'd be like where's my body? What's going on? Like I don't trust this thing. Like wait, why did it move body over there? I have all these questions. And so um you know I I'm not sure that I'm necessarily the best this like so I I have all these visions of like the the the prospective apps that should exist out there. But then you know for us as plaid and and and in a lot of senses for for you as an

investor um like certainly for us as plaid like our job is like we need to build the platform and then figure out what emergent behavior starts to exist on it and then go optimize for that emerging behavior as uh as as as new interesting companies start to emerge. Um and so that's how we think of our job. So like our job as it relates to AI is like let's build tools that allow consumers safely to link their data with agents. Um then let's build tools that allow those agents to take the proper

actions. Be that just analyzing data or be that actually moving money or something else. Let's let's build tools that allow those agents to to to to take those actions. Um and then let's see what happens and like have a team that's just like constantly looking at like the emerging behavior and figuring out oh is that a good thing? Do we want to optimize for that? Oh, like has that enabled some new vector of risk that we need to we need to avoid? And that's kind of the the the thought process we

actions. Be that just analyzing data or be that actually moving money or something else. Let's let's build tools that allow those agents to to to to take those actions. Um and then let's see what happens and like have a team that's just like constantly looking at like the emerging behavior and figuring out oh is that a good thing? Do we want to optimize for that? Oh, like has that enabled some new vector of risk that we need to we need to avoid? And that's kind of the the the thought process we

take across all the things that we do. So, um a lot of it is like if you build it, they will come. You just don't know who will come and what they'll look like and like what exactly is going to be the next big thing. Um but we have to be very prepared to react when we see it. >> Yeah. And I I think as a result like we've we've been focused on maybe more known problems like there's so many there's so much work that happens inside of all these large financial institutions that it's just done

manually by expensive people you know frankly across risk compliance legal you know vendor onboarding treasury management I mean you know I can go on and on and on um and and now you have again AI to actually you know solve many of those problems and so that's I think you know largely where we've been spending time you know, you know, companies like, you know, moment that had built, you know, fixed income trading infrastructure. If you're a wealth management client of of JP Morgan

today, you know, building a bond ladder is still a manual process. You're picking, you know, individual securities one by one. That's insane. Like that hasn't existed for, you know, at least a decade in in equities. And so, you know, there's a ton of opportunity to solve, you know, kind of basic problems like that. and and I would argue build you know very large uh you know kind of software and kind of platform style businesses on the back of that and so whether it's you know things like you

know um you know a company like salient which is doing you know bringing voice agents to uh loan servicing and collections right the idea that you know a voice agent can speak in 50 languages you know fully compliantly track UDEP you know do welcome calls and payment reminders um you know and actually deliver on a better customer experience because it can speak their native language uh and and get better results. It's infinitely patient, right? Um you know, that is a really interesting

opportunity for the moment, you know, in large part because it's unlocking markets that were never particularly interesting to soft suffer into because it budgets were small and now, you know, the TAM is largely labor. And so that's been I think kind of one of the reorientations that we've seen the last few years from kind of financial productled companies largely to uh you know software businesses and and kind of financial services we're at large. >> Zach you you wrote about your

predictions for 2026. Maybe share one we we haven't uh gotten to yet around where things are going where you're particularly excited. >> I was at a dinner a couple weeks ago and so this might not be a prediction. This might just be a recognition of of of current truth. Um, but I was at a dinner recently and someone asked the table a question. Um, and the question was, "What's the biggest use case um, of AI in financial services?" And some people had answers and then it got to me and

and I I kind of flippantly uh said doing fraud. It turns out the biggest use case for AI is fraudsters committing fraud against financial services companies. Um, and I said it jokingly and then realized half like as I was saying it, oh no, this is actually the correct answer. Um, the entire table was like, yeah, okay, that's that's the correct answer. sadly. Um, and so, you know, we're at this this point in the ecosystem where AI has so much potential to change things. And who's using it the

most? It's the fraudsters. Um, and I like right now we're at a point where financial fraud is growing at like like 18 to 20% a year. Uh, which is insane and it's already a huge market. Um, and so I guess in that in that vein, um, one of my predictions for, um, 2026 is unfortunately, um, financial fraud is going to continue to accelerate in a way that we don't quite understand and probably can't quite feel out and predict yet. Um, because, you know, it's it's a cat-and- mouse game, but the

most? It's the fraudsters. Um, and I like right now we're at a point where financial fraud is growing at like like 18 to 20% a year. Uh, which is insane and it's already a huge market. Um, and so I guess in that in that vein, um, one of my predictions for, um, 2026 is unfortunately, um, financial fraud is going to continue to accelerate in a way that we don't quite understand and probably can't quite feel out and predict yet. Um, because, you know, it's it's a cat-and- mouse game, but the

mouse is winning right now. I mean, the cat the cat will win long term, but the mouse is winning right now. And so, um, it's kind of a depressing prediction, but, uh, I think likely. >> What What are you guys doing about it? >> Well, so we we we build an anti-fraud product suite. Um, this I promise this was not me teeing up bragging about why, but I will I I will gladly brag about it's a hard it's a hard problem to solve, but if anybody can kind of try to figure it out.

>> Well, we we can't solve it all. We can solve pieces of it. So, we build an anti-fraud product suite. It's called Protect. Um within that we have this analysis of every user and every user action that uh we can assign a score to to say what's the trustworthiness of this user this this account this user action that they're taking. Um and we we pull this data and build it based on looking at every user action that's taken across every fintech company that we work with. Um plus uh the data that's

coming from the bank account plus device data plus a zillion other data sets that we that we match it all with. >> Um and so it's the first kind of network linked like cross fintech crossbank uh type of anti fraud tool. And it's awesome and and it adds some amazing signal to to to the companies that we work with. Um but this is like one of very many solutions that need to exist. Um we're starting to get good at fighting deep fakes as well. I mean like as an industry and and and plaid

specifically, but like still very early there. Um but you know this the stuff that that freaks me out is um you know have you heard of pig butchering? Um, for those listening on a podcast, I'll explain it briefly cuz it's kind of a gruesome uh term. Um, but it is basically um when you get a text message that says, "Hey, how you doing, um, and that that and you respond to it, don't ever respond to those, but if you do get one of those and and and you were to respond to it, um, they would then

strike up a conversation with you and eventually they would like find some complex way to like ask you to give them money. Um, and when you go up and execute that transaction, um, you have just sent money to a total stranger on the internet and yes, they've stolen the like that's that that is like in 100% of cases what happens. Um that used to be done based on these like like uh human factories in like Malaysia where they would like have these people like locked

in rooms sending text messages to to unassuming people in the US mostly but but around the world. Um now that's all AI. You don't need these human factories anymore. The AI can do all that. Um India is just getting better and better and better. Um and like >> how do we fight that? like because it's it's a human taking an action that they think is sending money to a friend and they've been tricked, but it is fraud, but it's very hard to to fight that kind of fraud. So, um

I mean there are so many more tools that we need to build as an industry collectively and of course as as plaid specifically. Totally. >> We were talking about the different eras of of fintech. I'm I'm curious what have been sort of the the different eras of of plat of of course there was the you know um sort of the acquisition that that didn't go through with with with visa and sort of the ups and downs that that you guys have had you know alongside the the macro and obviously

you're in an incredible position right now is the is talk more about the different eras of plaid or how the plaid vision has has evolved or or or you know or stayed true to the original. So started Plaid uh started working on the a thing that wasn't plaid but pivoted into Plaid in the very end of 2012. We we launched um we pivoted into what we were doing in kind of mid late 2013 and launched to the world in 2014. So um you know it's it's been a good 11 to 13 years depending on how you you count

that uh series of bad products that we built first. Um David actually was a friend and knew us then. Um but I'm not actually brief aside. Um David, I don't know if you know this. Um David uh found Plaid. He was the first investor, led the seed round uh at Spark. >> Um actually like sourced the deal as like you were an associate I think at Spark at the time. Um then he went to Goldman uh around the time that Goldman invested. You weren't involved in the investment specifically, but you were at

Goldman at that time and like probably helpful in the background. um then came to Andre and Andre invested um and has been like a huge friend and supporter of of plot over the years. So if we owe a lot to David and a huge amount of thank you and he also creates all the important industry terms. >> Um so you know the fintech industry owes a lot to David. >> I don't know. Um anyway so uh plaid started started call it let's say 2014 we launched and then 2014 to like 2019

that was all about linking bank accounts like how do we enable you to link a bank account so that you can um gain more access to financial products broadly so link a bank account so you can pay a friend on vend link a bank account so you can get a loan on lending club um that was kind of phase one kind of 2019 2020 um you know we called this what like like late um uh like late spring, like looming spring um continuing to grow in that vein. Um in 2020 um January

2020, we signed paperwork to sell the company to Visa. Um and you know, still late spring, uh we didn't know that CO was coming. We didn't know that the EDM music would turn on. Um >> I remember chatting with you, I think it was like February or March, you know, like it was probably March, right when CO was just beginning. I was like, "Wow, you really timed that well." You know, and then and then the business starts ripping and I was like, "Oh, that's a very expensive free call

option." Yeah. You know, on the business and so walking away from that is pretty >> in an acquisition like at least in our acquisition, you sign paperwork that says we're in exclusivity and as soon as everything is uh cleared, like all the check boxes are are checked, then the deal will close. Um, and so we had a year of exclusivity and and it started in January of 2020. Um uh and yeah, like in in call it like late March of 2020 or maybe early April, we were talking and

option." Yeah. You know, on the business and so walking away from that is pretty >> in an acquisition like at least in our acquisition, you sign paperwork that says we're in exclusivity and as soon as everything is uh cleared, like all the check boxes are are checked, then the deal will close. Um, and so we had a year of exclusivity and and it started in January of 2020. Um uh and yeah, like in in call it like late March of 2020 or maybe early April, we were talking and

it was like, yeah, we have this deal to sell the company for just over $5 billion and it's fixed price. Um uh Visa stock price goes is going down. So like all of the the stock compensation that we're going to get out of this deal, man, that's worth a whole lot more as a percentage of Visa. Like we own a large chunk of Visa. That that that that seems interesting. Um uh and then we looked it through the docs and like they have this things called like material adverse

event. Um uh so you can get out of a deal if something crazy happens. And there was a provision in there that says you cannot get out of the deal even in the case of a global pandemic. And like some lawyer somewhere in some room had like come up with like oh let's let's just like add this in. Um and I don't know we were like oh man this is great. We got we got everything set. They can't get out of it in case of a pandemic. Like we're going to get a huge chunk of

event. Um uh so you can get out of a deal if something crazy happens. And there was a provision in there that says you cannot get out of the deal even in the case of a global pandemic. And like some lawyer somewhere in some room had like come up with like oh let's let's just like add this in. Um and I don't know we were like oh man this is great. We got we got everything set. They can't get out of it in case of a pandemic. Like we're going to get a huge chunk of

visa. We're going to be off to the races. Um, and then like the deal took forever to close because the DOJ was investigating Visa for being a monopolist and like all this overhead. Um, and like kind of for the next the next phase the EDM music just like started getting louder and louder and louder and like summer started happening and like fintech started growing and people were stuck at home. They needed to use digital finance to to live their financial lives. Um, and so at the end a

visa. We're going to be off to the races. Um, and then like the deal took forever to close because the DOJ was investigating Visa for being a monopolist and like all this overhead. Um, and like kind of for the next the next phase the EDM music just like started getting louder and louder and louder and like summer started happening and like fintech started growing and people were stuck at home. They needed to use digital finance to to live their financial lives. Um, and so at the end a

year later we looked at and we said um, for a large variety of reasons it makes sense for us to part as friends with Visa. Um, and uh, we'll go our own way. we'll we'll keep running plat as an independent entity. Um and then we raised a big up round and um you know off to the races. But um you know through that you tell the company, hey, we're selling. Okay, great. That's that's a really hard thing to convince everybody to still be excited even though you're selling the company. A

year later, hey, we're not selling. Um and another very very hard thing uh because you're telling everybody um you know, you're not going to get all that cash that you thought you were going to get. Like you can't buy the house. I'm sorry, but we'll try to do a secondary soon so maybe you can buy a car. Um, and you have to like really change the culture. It's like almost a reounding moment at that point. Um, then you go through uh the rest of the summer and

that was great. Lots of growth, but then into like fintech winter and that's another like like we got we got to all come together like like our customers are growing more slowly. Yes, we're producing great products. Yes, like the plaid is is growing. Um, but like you know it's not the growth that we're used to because we're in in in in fintech winter. Um, and it's nice to finally be back in spring, but like there's definitely a lot of ups and downs on that journey. Like, um, I think it was

like multiple like refounding or like multiple crucible moments along the way. >> Was was there a period in that where you found your I maybe you always had it uh but like your second win because at least from the outside it's felt like your product velocity really increased at some point in the last like you know two and a half years. >> Yeah. Yeah, it has. I mean I I shifted my role quite significantly. So like I'm I'm our chief product officer like I am in all of the product stuff.

>> Um and a lot of it was like for us really it was like building the data set to the size that we can actually run analytics on it. So we build fraud scores that look at um your actions relative to every other user that we see in our platform and identify if you're anomalous. If we didn't have enough data to identify if you were anomalous then it wouldn't be a relevant score for us to build. we got to one enough data and then two we finally figured out how to

like build and watch products quickly. Um and so that's been like one of the most fun things for me actually. Weirdly like >> I think I was like like not as happy in the period of like EDM pumping like fast growth everybody's like throwing money at fintech like that industry. I think I was like a little less happy because I was like I don't think I'm adding differential value. I think I'm just like, you know, running as fast as I possibly can and um, you know, maybe I

make some good decisions, but like, you know, it all doesn't matter cuz everything's up and to the right. >> Um, like I think I was like happier in that like winter period. >> I'm like, oh man, like this is this is where we become an amazing company long term. Like this is where like, you know, we prove ourselves and and we really step up and help our customers. We launch the next next wave of products that really matter. Um, but I think I felt similarly to be honest like you

know having done fintech since I don't know 2011 like people you know, that felt early, you know, to to be investing then and then it's like, okay, everybody like, you know, found out that this thing existed. Every everybody became a fintech investor from, you know, 2019 to, you know, 2021. And then everybody's, you know, some of the best fintech investors in the world like came out on podcasts and were like, fintech is dead. >> Yeah. >> I'm like, >> fintech is dead. Everyone should go home

except for people that are building fint making people that use it. >> You guys can leave and just stop investing in fintech. We we will continue. the fintech team is still here, you know, despite the uh the naming con um >> the brand >> and uh I think that's that's actually benefited us, you know, and I mean selfishly but >> but I think it's it's tested the people like the true believers and um yeah, I in some ways it's brought the community together, I would argue.

>> Yeah. And and you know the the the tourists go home like the like and we saw it on our team even like there were people that joined Plaid in 2020 when the the music was loud and it seemed like the industry to be in >> and you know then they then they they've gone and chased the next trend and the next trend and um well while well we'll miss them and they're nice people. Um the people now that are focused on it are like these are the people like who really want to be here in the long term

like they deeply believe in the mission um and you know they're they're in it in the way that we all want to be in it. Totally feels great. >> Where are we now in the in in the cycle? H >> how should we think about this moment? >> Early to mid-spring, I would say we see like green shoots like lots of emergence. It's been a pretty good year for for many parts of fintech and it's been a shaky year for others. I mean, I think if you look at the lending markets, you know, it's it's not as bad

as last year, but it's not as good as it was. And um there are elements of the economy that are pretty scary and parts of like a large part of of consumer spending is being propped up by a small number of people. And so like there are all these things that are scary but for the most part um you know you continue to see companies that are building very solid products. Um you do see like great uh startups emerging um but they they look a little different than they used to.

Like they're thinking more responsibly about markets in the long term. like they're more thinking about uh you know profitability and growth and um you're also seeing like the insanity of of of AI funding go on kind of like in AI land and some of this starting to bleed into fintech because you're seeing these like fintech AI uh products start to come. So um I would say spring like lots of green shoots, lots of exciting stuff. Um still some you know still some snow in the

background that's snow melt is still happening. Um but uh looking pretty optimistic right now. >> Awesome. Okay. So let let's let's wrap on just what does 2026 and the near-term f future look like? Uh David, how we're approaching an agency. >> It still feels like we're in early innings, you know, uh even spring in and AI land as well. Um uh you know, so just incredibly excited and enthusiastic by the momentum we're seeing, you know, for again largely software companies selling

into financial institutions. That's kind of been our orientation in the fintech ecosystem. Um, you know, again, I sat on the on the board of a a company called Moment, which we, you know, described earlier that is uh now bringing some largest wealth management platforms online. You'll see them, you know, they announced LPL. We have another a number of other large institutions that we'll be announcing uh early next year. Um, you know, companies like Modernify, which have built uh, you know,

bank-to-bank deposit marketplaces that are really starting to to grow and see significant volume in that in that network. Um and again just more more broadly um you know really excited by the opportunity for AI to actually do the work you know within within these institutions and and the momentum and excitement you know you know there to adopt you know new products >> and and are we excited David they're they're because they're they're such great customers or because they're so

they're so underserved because they're or they're finally transitioning or or why have we narrowed in on on that focus as one we're particularly excited about? I mean, look, the the industry is still massive, right? Like if you if I look back at at even just Goldman Sachs, and I know use them as a as an example often, but like the the entire firm was uh you know, they called the the kind of middle and back office the the federation. You know, again, these were

were folks living in Excel largely, not using Excel as a modeling tool, but using Excel to track work. And so there's just such opportunity to build amazing software products to solve everything from, you know, compliance to payments to treasury management to again all of the kind of uh, you know, manual work that goes into making the financial services industry tick. Um, and I think AI is again creating kind of a new window and wedge opportunity for entrepreneurs to kind of, you know,

build software companies that that couldn't have existed years ago. And and again, I think the the appetite, you know, for adopting new products and new software to solve some of those problems is is more real than ever. Um because again, the most senior people at these institutions, uh, you know, can intuitively understand the impact that AI is having on their business. And so I think there's just a lot more conversation and momentum happening at the board level. um you know and it's

making the enterprise sort of sales cycles you know for for many of even our early stage companies happen a lot faster than than I've seen in in you know my experience you know investing in this space. Zach, how about you and h how you think about things things at Plaid and more broadly? >> We this past year launched, as I said, the the anti-fraud suite on Protect uh called Protect and um tons and tons of acceleration behind that. Uh we launched a credit score uh a modern consumer

credit score that's based on your income, your expenses, the things that you do in your daily life. So your score goes up if you have a higher income. Uh your score goes down if you start having way higher personal expenses, like the logical credit score. So we launched that, it's called Lens Score. we launched that last year. Like these two things are going to be major drivers for us in the coming year. So um distributing this this this new version of a credit score um into all the

lenders and then of course on the protect side like helping fight this this AIdriven financial fraud that we're seeing. Um and then for us like you know we're we're we're back to back to like hiring and recruiting and and and growing and um so you know despite the fact that fintech has been through these waves like I still think that plat is like one of the most amazing places to work. Please tell tell all your friends. Um if you want to work with big data, if

you want to have have a hu huge impact on consumer's lives, um again financial freedom is the the core focus of uh of what we do. Um uh and then you don't you want to have an opportunity. We we try to think of ourselves as like the most cons consumer sorry the most customer centric employer where you know we put engineers in the customer so they're actually talking to them like we think it's an incredibly fun way to work. Um so like not forward deployed to engineering but Ford deployed company.

Um, so you know, tell all your fans. We're hiring lots of people and uh I think it's going to be a great 2026. >> Zack, David, you guys are pioneers in in in in the in the space in the category and I can't wait to have you both back in 2030 and we can talk about how the how the space has evolved. Uh, thanks so much. >> Do it sooner. >> Yeah, it's so far away. >> Exactly. We don't want you to wait, you know. >> That's true. We don't have to wait every 5 years. Uh, Zack, David, thanks so much

for coming to the podcast. Great. Good to see you both.