Plaid, a data network that powers the digital financial system, and Codat, a universal API for small business data, have announced a strategic product partnership. This collaboration is designed to enhance the embedded finance experience for small and medium-sized businesses (SMBs).

The integration enables financial institutions and fintech companies to access a comprehensive view of an SMB’s financial health, combining consented financial account data from Plaid with authenticated commercial data, such as accounting, commerce, and payroll information from Codat. This unified data access aims to streamline and accelerate credit underwriting decisions.

Historically, SMBs have faced challenges in securing capital due to the manual and time-consuming process of gathering and sharing financial data. The partnership seeks to mitigate these issues, offering a more efficient and accurate assessment process for lenders. By automating data aggregation, the solution aims to reduce the time from application to funding, potentially unlocking capital for businesses that might otherwise be overlooked.

David Fatchel, Head of Strategic Partnerships at Plaid, stated that the partnership allows customers to connect to both platforms simultaneously, leveraging the combined capabilities of open finance data and open business data. Peter Lord, CEO and Co-Founder of Codat, highlighted the potential for financial institutions and fintechs to develop new product experiences and expand access to capital for SMBs through improved data insights.

Both Plaid and Codat have established positions in the financial technology sector. Plaid’s network facilitates over 500 million API calls per day, connecting more than 8,000 apps and services to over 200 million consumer and small business accounts. Codat’s API is utilized by various financial institutions and fintechs, including lenders, insurers, and payment providers, to automate the exchange of financial data from SMB software.