An entire sub-niche of fintech has emerged in the last five years. Given the API economy that has been developed, it is now possible to connect in real-time to most sources of income for the vast majority of the population. This has enabled completely new products to be developed and made some existing products much more efficient.
It all began with the creation of an employment verification database in 1985 by TALX Corporation called The Work Number. This was done to help large enterprises leverage their own workforce data and eventually enabled others to do the same. TALX was acquired by Equifax in 2007 and renamed to Equifax Workforce Solutions. The Work Number brand remained and became the largest database of employee data in the country.
It was only a matter of time before fintech companies began to take notice of the success of The Work Number. Companies like Argyle, Atomic, Pinwheel and Truv took this one step further. Rather than maintain a database they connected with payroll platforms and gig economy marketplaces directly in real-time to provide an instant and holistic view of an individual’s income. This innovation has created new opportunities.
Getting accurate and real-time information on income is useful for a variety of purposes:
This is just the start. There are other use cases in various stages of development today including tax withholding optimization and tax refunds but I think the lending use case is what is most powerful today.
We can’t really talk about real-time access to bank accounts without mentioning Plaid. They were the first to do this at scale and are now ubiquitous when it comes to connecting bank accounts.
Plaid Income was first announced back in 2021 and I assumed that this might mean the death knell for the other fintechs in the space. But that has proven not to be the case. In fact, Plaid recently announced improvements to its income verification service that involves partnerships with both Pinwheel and Atomic to improve their coverage.
I am excited to see what the future holds for this dynamic segment. It is technology that is really making a difference today in financial health with new and better products. And with enterprising fintechs tackling this space, you can be sure that new and better products are coming.
Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.