APIs have evolved from simple data connectors to the fundamental architecture driving financial innovation. In this episode of the Tearsheet Podcast, I speak with John Pitts. Plaid’s John Pitts reveals how they’re driving open banking and empowering consumer control. He is the Global Head of Policy at Plaid. With a career spanning regulatory and policy roles, Pitts brings a unique perspective to the table. He discusses the evolving role of APIs in financial services. From his role at the Consumer Financial Protection Bureau (CFPB) to leading policy at Plaid, Pitts shares key insights on open banking. He explores how APIs are shaping the future of consumer financial data rights and fintech innovation.

The Big Ideas

1. APIs Are the Backbone of Modern Financial Services. They serve as the foundation for modern financial services. This enables secure, efficient, and scalable data sharing. “It’s like moving from dirt roads to highways,” Pitts explains.

2. Consumer Control Powers the Future of Open Banking. APIs empower consumers to access and share their financial data across platforms. This fosters innovation. “The U.S. has more connected accounts than anywhere else,” Pitts notes.

3. Embedded Finance Is Becoming a Key Use Case for APIs. Companies outside the financial sector, such as Tesla and John Deere, are adopting APIs for integrated financial services.

4. APIs Enable Stronger Collaboration to Prevent Digital Fraud. They facilitate data sharing among financial institutions, creating stronger defenses against digital fraud. “Greater data sharing protects consumers,” says Pitts.

5. API Adoption Is Both a Compliance Need and a Strategic Opportunity. Financial institutions can use APIs to increase consumer engagement and maintain account primacy.