When reducing onboarding friction for fintechs is both a blessing and a curse

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I can't decide if fintechs will view this recent Stripe launch as a blessing or a curse.

Obviously this will improve conversions by reducing friction. But that works both ways. With fungible IDV, if it's just as easy to sign up for one fintech as another, does that also increase churn?

Then there's these other factors that complicate the network effect benefits. If you only verify a user once, does one fintech pay for every successive fintech's IDV? What happens if you identify and block user fraud? Does that help your competitors who have user overlap?

Competition can blind us to the universal benefits of network effects. At Sift, we witnessed this firsthand: even though our "global network" provided valuable fraud signals, some big companies refused to participate because they didn't want to help their rivals.

Meanwhile, I've seen the opposite issue where sharing is disallowed. At Chime, we wanted to share data between companies to prevent fraud in the fintech ecosystem. But sharing that data could violate consumer regulations and was often barred. How did Plaid overcome this challenge?

Ultimately, a rising tide lifts all boats, and network-driven IDV is no exception. That said, it's not all positives for centralized networks that monetize & own data sharing. Decentralized data networks could be an interesting evolution but this is still a good first step.