Open banking fintech Plaid has spent around $250 million on identity verification and compliance technology firm Cognito.
The cash and stock deal brings “all of the tools and data sources a company needs for automating identity verification, KYC (know your customer) and AML (anti-money laundering) screening” to Plaid, a fintech that connects bank accounts with financial apps.
Plaid co-founder and chief executive officer Zach Perret says in a blog post announcing the acquisition that this was “one of three critical parts of a complete onboarding experience” that the fintech was missing.
“Identity verification is one of three critical parts of a complete onboarding experience, along with account connection (connecting your bank/financial data to an app) and account funding (moving money into an app), which Plaid provides today,” he explains.
“With Cognito, the next major step in our journey is to help developers build the best and most seamless onboarding experiences across all of these areas. This means simplifying every step of the consumer journey from their first interaction during signup, to the first magical moment delivered by that product—the first time sending money to a friend, or the first time trading a stock or cryptocurrency.”
“Together, we can combine our experience in safely connecting millions of people to financial apps with Cognito’s expertise in identity and compliance to help make the onramps to digital finance easier, safer and more accessible for everyone.”
The entire Cognito team and its three co-founders are joining Plaid as part of the acquisition.