With the acquisition, Plaid plans to enhance its identity verification services. Here are the top-line bullets you need to know.
WHO ARE THE PARTIES TO THE DEAL?
- Cognito: California-based Cognito provides business and consumer identity verification and compliance solutions. The company currently has over 300 clients, and it has verified 76M IDs to date. Cognito’s customer base includes Affirm, Brex, Current, Republic, and Wyre.
- Plaid: California-based Plaid provides API tools for financial services app developers. The startup reportedly generated $170M in revenue in FY’20. The company counts around 5.5K fintech firms as customers, including Wave, Varo, Bright, Prosper, and Carvana. Plaid is supported by a team of over 1K employees and maintains 6 global offices.
WHY DOES THE MARKET MATTER?
- The global digital identity solutions market is expected to reach a value of $49.5B by 2026, growing at a CAGR of 16.2%, according to Markets and Markets.
- The growing prevalence of cyber fraud and data breaches as well as mounting regulatory pressure have contributed to the market’s growth.
- The widespread digitization of banking services has increased the discussion surrounding digital identity services. In the UK, the institution of PSD2 gave way to new legal requirements related to customer authentication, which has led banks, card issuers, and other payment service providers to turn to customer authentication solutions.