Plaid, a financial technology giant that’s known for its API, has announced that it’ll be acquiring Cognito for about $250 million. The transaction will happen in a combination of stocks and cash. Cognito provides identity verification and compliance service with the help of groundbreaking tech partnerships and integrations.
Plaid said that Cognito will help it provide its users with a complete onboarding experience consisting of 3 key parts – verification, account connection, and account funding. The fintech giant added that it aims at combining its experience in connecting users to financial apps with the identity and compliance expertise of Cognito to help make the onramps to digital finance safer, easier, and more accessible for everybody.
More on Plaid acquiring Cognito
Alan Meier, CEO of Cognito, said in a company blog that Plaid Link is nearly ubiquitous across the financial technology ecosystem as it does a great job at abstracting over the thousands of banking service providers every organization needs to support.
“The identity and compliance story that immediately follows connecting a bank account is still, comparatively, quite fragmented and home-rolled,” Plaid said in a blog.
With Cognito, the next major step in Plaid’s journey is to help developers across the world build the best, most seamless onboarding experiences across all of these areas, meaning simplifying every step of the consumer journey from their first interaction at the time signup, to the first magical moment delivered by that product, the first time they send money to a friend and the first time they trade a stock or cryptocurrency, says the company.
Meier added that fintech Plaid believes in Cognito’s vision of drastically reducing the onboarding overhead of customers for all fintech applications. With Plaid backing Cognito, they will continue building amazing products for years ahead.
About Plaid and Cognito
Plaid is a financial technology company headquartered in San Francisco, California. The fintech firm is focused on building an efficient data transfer network that empowers digital finance products. Founded by William Hockey, Plaid is best known for Plaid API. The company was founded in 2013 and today has over 500 employees spread across 7 countries – Canada, the United States, the United Kingdom, Spain, France, Netherlands, and Ireland.
Cognito is an organization focused on building smart identity verification solutions. The tools help meet organizations prevet fraud, meet compliance and enforce safety requirements. It helps companies take care of user onboarding by simplifying watchlist screening and KYC processes. Cognito is trusted by globally-celebrated companies including Coinbase, Affirm, Brex, Current, Republic, and FTX. Founded in the year 2014, it has over 300 clients and has secured investment from big names like Khosla Ventures, Battery, Lightspeed, Digital Currency Group, and Y Combinator.
The deal remarks another key expansion that is beyond Plaid’s core offering of API-based data sharing business after the firm’s big acquisition by Visa which was blocked in 2021 by the United States Justice Department over competition concerns.
Recently, the fintech also put together an effective ecosystem of payment partners in Europe and North America, including some big names in the industry like Square, Currencycloud, and Dwolla, for a step further into account-to-account payments.
For more latest IT news and updates, keep reading iTMunch