Open Banking for Real-Time B2B Credit Verification

If you’ve ever wished you could approve a new customer’s credit line in hours instead of weeks, you’re not alone. Credit managers and CFOs often grapple with slow, manual credit checks – especially the traditional bank reference process. Fortunately, financial technology is catching up. Open banking and tools like Plaid now make it possible to instantly verify a business applicant’s bank data. The result is faster credit decisions, better risk insights, and a smoother experience for all parties. This article will explain what open banking is (in a U.S. context), who Plaid is and why it’s trusted, and how real-time bank data can transform your B2B credit application workflow.

What Is Open Banking?

Open banking is the practice of banks and financial companies sharing customer financial data with authorized third-party applications via secure APIs – but only with the customer’s consents. In plain terms, it means a business or consumer can choose to share their bank account information electronically with another service (like a finance app or a credit platform) in a safe, standardized way. The concept is built on the idea that you, the customer, own your financial data and should be able to use it to get better services.

Major banks, fintech companies, and data aggregators have voluntarily created systems to share data because customers demand more integrated and personalized financial services. In fact, most Americans are already using open banking without realizing it. A recent survey found 87% of U.S. consumers have linked their bank accounts to at least one third-party financial app or service - think of apps that help you pay friends, invest, or budget. This widespread adoption shows that people are comfortable with (and expect) real-time connectivity to their financial data.

Meet Plaid: Trusted Bridge to Bank Data

One of the leading platforms powering open banking is Plaid. Plaid is a financial technology company (founded in 2013) that has become a cornerstone of fintech by connecting bank accounts to apps in a secure, seamless way. At its core, Plaid acts as a bridge between banks and thousands of apps and services. When you link your bank account in an app like Venmo or Robinhood, there’s a good chance Plaid is working behind the scenes to make that connection possible. In fact, Plaid’s API platform integrates with over 11,000 U.S. banks and credit unions and powers popular finance apps including Venmo, Robinhood, Chime, and Coinbase. With such a wide network, Plaid has enabled countless applications – from budgeting tools to investment platforms – to offer services that require bank data access.

Plaid’s ubiquity has also made it a trusted name. Part of why Plaid is trusted is its strong emphasis on security and privacy. It never shares your bank login credentials with the apps; instead, it uses encryption and secure tokens to fetch only the data that you authorize. For example, if a user consents to share their account balance, Plaid will retrieve that information from the bank and pass it to the app without exposing the user’s username or password or any other financial information. This intermediary role means the fintech app gets the info it needs (say, to verify an account or check a balance) without ever handling sensitive login data or getting access to anything they were not expressly granted access to.

Using Plaid in B2B Credit Workflows

So how does all this help B2B credit managers? When a company applies for trade credit, the credit team typically wants to assess the applicant’s financial health. One common step is requesting a bank reference or bank verification. Traditionally, this involves the applicant providing their bank’s contact details, then your team reaching out to that bank for information. It’s a slow, manual process – often involving phone calls, faxes, or emails – and, even when you do get information back, it is often vague or incomplete. This is where open banking via Plaid offers a radical improvement.

With Plaid (or similar open banking tools), you can ask the credit applicant to securely share their banking data in real time as part of the application. The process is straightforward: the applicant clicks a link and logs into their business bank account through a Plaid interface. Within seconds, your credit application system receives verified data from the bank. For instance, you could instantly get confirmation of the account’s ownership, the current balance, and even a snapshot of recent transactions – all with the applicant’s permission.

Compare this to waiting days for a banker’s reference letter. In other words, what used to be a bottleneck in your credit process can now be done on-the-spot. This not only speeds up your decision; it also gives you more reliable information.

Embracing Real-Time Data in Credit Decisions

Open banking may have started in the consumer finance world (powering apps like Venmo and Mint), but its value in B2B credit management is quickly becoming clear. By leveraging trusted platforms like Plaid to access banking data with permission, credit managers and CFOs can dramatically improve how they evaluate credit applications. The process becomes faster, more data-driven, and more secure. Rather than replacing your judgment as a credit professional, these tools augment your decision-making with better information. If you are curious about learning more, please schedule a demo with our team.