This was originally posted on the Zabo Blog.
Financial data aggregation is the backend technology that powers many of the financial services apps we love to use and build today. Historically there have been two leaders of financial data aggregation: Plaid and Yodlee.
But the world of financial data aggregation is rapidly changing.
Recent Open Banking laws are giving users more control of their data. Emerging asset classes like cryptocurrency are breaking into mainstream and becoming extremely important. APIs, once a rarity, are now becoming commonplace.
What does this mean for teams and developers wanting to incorporate financial data into their apps? In this post we'll compare Plaid, Yodlee and the newcomer Zabo to help you find the best tools for your financial app.
- Yodlee: the OG financial data aggregator
- Plaid API: bank and brokerage data aggregator for fintechs and startups
- A new era: cryptocurrency and the next phase of financial data aggregation
- Zabo: cryptocurrency financial data aggregation
Hitting the scene in 1999, Yodlee is a true veteran in the world of financial data aggregation. It was one of the pioneers that helped create the entire category before the concept "fintech" even existed.
In 2000, Yodlee merged with its competitor VerticalOne and spent 10+ years as the leading financial data aggregation platform. It leveraged this success to go public in 2014 and was later acquired by the wealth management technology company Envestnet.
Today Yodlee is still one of the leading financial data aggregators and is used primarily for banks and brokerage accounts. Yodlee supports many larger enterprise clients, including Microsoft, Transferwise and Personal Capital.
Excellent coverage: Yodlee’s APIs are known for their breadth of coverage when it comes to types and locations of financial accounts. The company claims to deliver data from over 21,000 sources around the world, including banks, credit cards, investment accounts, and more.
Capabilities beyond financial data aggregation: Yodlee's product extends beyond financial data aggregation to include account verification, data enrichment and even a virtual financial assistant offering.
Available in non-U.S. geographies: Yodlee is available in regions beyond the U.S., including the United Kingdom, Australia, New Zealand and South Africa.
Inconsistent, sometimes lacking developer experience: Public reviews indicate that the look and usability of the software can show the platform’s age. In addition, poorly-organized API documentation, limited SDKs and outdated developer resources are seen as average or below average compared to competitors.
In researching this post, we heard directly from developers that expressed frustration in differences between sandbox and production environments - causing extra development work for the teams.
"Alleged" privacy concerns: While Yodlee has made a statement maintaining their compliance with all laws, regulations, and best practices; the company has been under fire from Congress members calling on the Federal Trade Commission to investigate Yodlee for selling consumers’ personal financial data in a way they think goes against the law.
Yodlee's (US-based) pricing can be best described as a tiered consumption model:
Access to the sandbox test environment (Sandbox US tier) and a scoped-down live environment (Launch US tier) are free-to-use. This includes up to 100 free activities, which Yodlee defines as a connected user for 30 days or an account verification.
Their first paid tier, Grow US, starts at $500 and includes up to 1,000 activities.
Anything past 1,000 activities requires contacting Yodlee to setup a custom pricing plan.
The short answer is Yes... mostly.
One of Yodlee's strategies is to establish direct access partnerships with their data sources. The company claims that up to 70%+ of their data sources have this type of data access method.
These direct access connections can have desirable performance benefits, but one downside from the customers' perspective is that they sometimes strip out multi-factor authentication (also known as two-factor authentication or 2FA). This leaves just your password as a line of defense, which can be easily compromised.
Brian Krebs, a security expert, details how this enables hackers to leverage data aggregators like Yodlee to attempt to access you account by bypassing multi-factor-authentication.
The other safety angle to consider is the privacy of your data. As mentioned previously, Yodlee has been under fire for allegedly selling consumer information in ways that are unlawful.
These concerns must be balanced against Yodlee's long track record on security, which is pretty solid and has allowed them to gain the trust of large enterprise customers.
If you're involved in financial technology, chances are you've heard of Plaid — one of the most popular financial data aggregators on the market today. It's used primarily by U.S. based fintechs and startups for connecting banks and brokerage accounts.
At the time of this writing, Plaid claims to connect to 11,000 financial institutions across the U.S., Canada, and Europe. While most of that coverage is in the U.S., they are actively expanding in other regions.
Since its founding around 2012 — originally as a personal financial planning tool — Plaid has helped power many of the fintech darlings we know today, including Venmo, Robinhood, Chime and Betterment.
In early 2019, Plaid acquired Quovo, a competitor specializing in investment and brokerage accounts. The acquisition gave Plaid, which was more focused on banks at the time, a more comprehensive offering.
Plaid shocked the fintech world in early 2020 when it announced they were being acquired by Visa for over $5 billion. It's unclear how the acquisition will impact Plaid's service offering longer term. At the time of writing, the deal has yet to close; the U.S. government is attempting to block the deal on the grounds that it would create a monopoly in digital monetary transactions.
Solid coverage for bank and brokerage accounts: Plaid claims to connect to over 11,000 financial institutions. They also claim that their Auth product (used for confirming you own an account) would be able to authenticate accounts in every bank and credit union in the U.S.
Developer friendliness: Given that financial data aggregation happens via API, it's extremely important that the process is developer-friendly. Plaid gets high marks for strong API documentation, a helpful Quickstart guide, useful example apps and multiple SDKs for various programming languages and platforms.
Some known connectivity issues: It’s well known that connectivity between Plaid and Capital One is iffy, at best. Plaid had similar clashes with PNC (through Venmo, a Plaid customer). The root of the problem is philosophical differences between Plaid and financial institutions on how both data is fetched and how credentials are stored.
No support for cryptocurrency: While Plaid can connect to many banks and brokerages, it does not allow your app to support cryptocurrency, leaving those accounts stranded.
Plaid's pricing can also be described as a tiered consumption model and it's quite similar to Yodlee's pricing.
Plaid segments it's products into the following categories:
- Transactions - transaction histories of accounts
- Auth - confirming account ownership
- Balance - balances of accounts
- Identity - confirming who you are
- Investments - balances and transactions for brokerages
- Assets - financial snapshot for loans
- Liabilities - access customer loan data
Plaid’s has three pricing tiers for the U.S. and Canada: Test, Scale and Launch.
Test is a free account that starts with up to 100 live connections. A live connection is a single connected account. If Jane connects her Bank of America and Vanguard accounts, that is two live connections in Plaid.
The Scale tier is a pay-as-you-go plan with unlimited items with no minimums. According to our research, individual connections start at around $0.30 per connection per month and decline in cost based on volume. Single-usage products like Auth and Identity cost between $1.00 $2.00 per call depending on volume.
The last tier starts at $500/month for access to every feature, access to support, a tailored package, and volume pricing on the individual products. For more further intel on this topic, check out this post from Plaid customers.
Similar to Yodlee, the short answer is Yes... ish.
Though Plaid plans to switch to using more APIs and direct access methods, today they use a technology called screen scraping to retrieve most of their data. Their reason for this is threefold:
- Some financial institutions have no APIs, so you can't get access otherwise
- Some financial institutions have APIs, but don't give them out without partnerships
- Screen scraping is a an easier way to get access to some types of data an API might not provide
Because of lack of APIs and reliance on screen scraping, Plaid not only has more access to data in accounts than simply balances or transaction history, but they are storing data (including credentials) in their system in a less permissioned way (from the data source's perspective). This poses a security risk, one that you must trust Plaid to handle with care.
So far, Plaid has appeared to act in good faith with customer data and has a good security track record. If the Visa / Plaid acquisition closes, you'll have to trust Visa to be a good steward too.
As we've seen, financial data aggregation leaders Plaid and Yodlee are focused mostly on banks and investment brokerages. Using one or even a combination of them can give you solid coverage of traditional accounts.
But there's one critical account type that Plaid and Yodlee are missing: cryptocurrency accounts.
Luckily, Zabo is the financial data aggregator that fills the cryptocurrency void. Zabo is built specifically for connecting to crypto accounts such as exchanges and wallets. It supports all the top exchanges, including Coinbase, Binance, Gemini, Kraken and many more.
In other words, Zabo is the Plaid or Yodlee for cryptocurrency.
But before we dive into Zabo, let's reflect on why we think it is so important to support cryptocurrency in your application.
The reality is that cryptocurrency isn't some small, obscure thing anymore. It's a market approaching a trillion dollars in value and growing very quickly. Coinbase alone supports over 35 million accounts, which is more than investments goliath Fidelity.
Recent research from the University of Cambridge estimates there are at least 191 million cryptocurrency accounts in existence and that number is growing at an incredible rate From University of Cambridge's 3rd Global Cryptoasset Benchmarking study):
2020 was an insane growth year for cryptocurrency, ushering in an unprecedented level of adoption across both fintech and the investing world. Some of the highlights include:
- PayPal announcing that their U.S. users would be able to start buying, selling, and holding cryptocurrency via their Cash or Cash Plus accounts
- Fidelity Investments — which manages over $3.3 trillion in assets — announcing a Bitcoin mutual fund (after previously creating Fidelity Digital Assets)
- Microstrategy — a public technology company — bought $475M worth of Bitcoin and then raised money and bought $600M more
- Square investing $50M of their assets in Bitcoin, stating that: "Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company's purpose."
- Mass Mutual — the $285 billion insurer and asset manager — announced they bought $100M worth of Bitcoin
- Legendary macro investors bought Bitcoin, including Paul Tudor Jones, Stan Druckenmiller and Bill Miller
- The OCC officially declared that U.S. banks can custody cryptocurrency
- Coinbase, the leading U.S. cryptocurrency exchange, surpassed 35 million accounts
It’s no surprise that these developments led to Bitcoin to shatter all-time high prices and create even more interest in cryptocurrency.
One thing is very clear: whether you're a fintech, a digital bank, an investment brokerage, personal financial management tool, or even tax and accounting tool, Bitcoin and cryptocurrency are now a mainstream asset that needs to be reflected in your product portfolio.
To operate in this new world of cryptocurrency, you need a tool like Zabo.
Founded in 2018, Zabo is a next-generation financial data aggregator with a focus on cryptocurrency accounts. The team behind Zabo has been involved in building cryptocurrency infrastructure and products since 2015.
While Plaid and Yodlee enable connecting traditional accounts like banks and brokerages, Zabo allows you to connect to any cryptocurrency account.
One of the killer features of Zabo is that it not only supports major custodial exchanges like Coinbase, Binance, Kraken and others, but also the millions of user-held self-custody wallets such as Trezor, Ledger and MetaMask. Given that self-custody and decentralization are core principles of cryptocurrency, this is critically important.
Deep, constantly-improving cryptocurrency coverage: Zabo has the largest library of cryptocurrency integrations and is continually adding new connection types to stay on the cutting edge. This is very important in the rapidly evolving world of cryptocurrency.
Support for both custodial and non-custodial accounts: Zabo connects to all the major crypto exchanges, including Coinbase, Binance, Kraken, Gemini and many, many others. But Zabo also supports self-custody wallets like Trezor, Ledger and MetaMask, as well as decentralized finance (DeFi) protocols like Uniswap.
Robust developer resources and friendliness: Zabo is a product for developers made by developers. We are deeply focused on providing an amazing developer experience by:
- having clean, clear and detailed API documentation
- facilitating direct and fast support / communication through their Discord and forums
- providing helpful tools to get started quickly (e.g. their Quickstart application) and reduce your development time
The very slick Zabo Quickstart inside the Zabo developer dashboard
No support for traditional accounts: Of course if you’re looking to help your users connect their crypto accounts as well as other more traditional financial accounts, you’ll need to pair Zabo with another financial data aggregator of your choosing.
Similar to Plaid and Yodlee, Zabo has a tiered consumption model that is split into three parts: Test, Team and Scale.
When you signup, you are automatically given access to the free Test tier, which has full access to the Zabo sandbox with endpoints that mirror the live API environment.
Once you're ready to go live, you can connect up to 100 live accounts for free while having access to the entire Zabo integration library.
The first paid plan (Team) is pay as you go and is priced on a per connection per month basis (similar to Plaid). There are price breaks based on hitting volume of connection thresholds (e.g. after 1,000 connections) so that the pricing becomes more attractive as you grow.
For large applications, Zabo works with teams to establish custom, volume pricing based on usage and scale.
Importantly, there are no minimums or set up fees. Simply sign up, start testing and then only pay for what you use afterwards.
One of the most ground-breaking innovations of cryptocurrency is that they are bearer assets: they don't require a middle man to hold or transact with. This is a stark contrast to the highly intermediated world of traditional finance, where literally everything requires middle men.
The flip side of this self-custody super power is that there are new best practices and norms required to secure cryptocurrencies.
Zabo's team background is in security - prior to the Zabo API the team was a provider of security audits for cryptocurrency projects. This makes security the most important thing for everything the team builds, including:
- No access to private keys
- Zabo collects zero personal information on users who connect accounts
- No write-access on accounts. Every Zabo integration is intentionally scoped to read-only access
- End-to-end encryption on any credentials entering the system and military-grade security around backend infrastructure
- Layered security and OpSec. Role-based access and tiered controls to production infrastructure
Importantly, Zabo also does not change the underlying security of integrations. That means if you have two-factor authentication (2FA) on your account (which you absolutely should in 100% of cases), Zabo requires users to provide the 2FA in order to authenticate.
When financial data aggregation emerged, it enabled financial services to leverage technology to serve customers in ways never before possible. Now we are at the dawn of a new era, with tools that will provide newer experiences (like cryptocurrencies) and even greater gains for companies and customers alike.
The reality is that you don't have to just use one financial data aggregator. Because aggregators have consumption-based pricing, it's easy to mix and match them for the best combination of features. In fact, when we interviewed developers and teams for this post, that's exactly what most did.