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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Keeping up-to-date in the fintech world takes more than just reading what’s going on in the fintech news cycle. It’s important to read takes on different trends and themes from across the industry, as well. To help span this gap, we’ve brought insights from thought leaders across the industry to our Streamly videos.
Today, we’re featuring six videos recorded at FinovateEurope that showcase the expertise of some of the speakers in attendance. The first, 15-minute video highlights VC investors’ thoughts on fintech valuations, M&A activity, partnerships, and more.
The remaining videos we’re showcasing today are part of Streamly’s Fintech Founders Partnership series, a set of three-to-four minute videos that detail thought leaders’ opinions on a wide range of partnership issues.
Potential partnerships– assessing the strategic fit
Partnership goals– maintaining goal alignment
Data security & privacy– sharing sensitive financial information
Santander is launching its Openbank digital banking brand in the U.S. and Mexico.
Openbank currently serves two million customers across Spain, Germany, the Netherlands, Portugal, and Argentina, and counts $19.3 billion (€18 billion) in deposits.
Santander aims to launch in the new regions in the second half of this year.
Spain-based mega bank Santanderannounced plans to launch a new digital offering in the United States under the Openbank brand in the second half of this year.
Santander launched Openbank in 1995 as a telephone bank. The bank moved online in 1999, becoming an online broker for real-time trading in domestic and international markets. Openbank currently offers payment cards, including debit and credit cards, prepaid cards, and travel cards; personal loans and mortgages; bank deposit tools; home, life, car, and digital insurance; as well as mobile banking capabilities and PFM tools. Openbank serves two million customers across Spain, Germany, the Netherlands, Portugal, and Argentina, and counts $19.3 billion (€18 billion) in deposits.
“Openbank is the largest digital bank in Europe by deposits with among the highest customer loyalty and satisfaction,” said Openbank Executive Chair Ana Botín. “We remain committed to growing our business in the United States, the largest financial services market in the world, leveraging our proprietary technology and global expertise to deliver a winning customer experience.”
In addition to launching Openbank in the U.S., Santander also announced it will be rolling out the digital bank to users in Mexico around the same time.
To promote the U.S. launch, Santander global ambassador and golfer Jon Rahm and his team will wear an Openbank logo on their shirts during all golf competitions, starting at the Masters in Geogria this weekend. “The golfer will help Santander and Openbank increase their visibility in North America, where Santander has a significant presence,” the bank explained.
Many non-U.S.-based digital banks have experienced difficulty launching in the U.S., citing the difficulty to obtain a banking license from the U.S. OCC. As Finovate Analyst David Penn wrote in a blog post yesterday, “…it has not been easy for financial institutions outside the U.S. to secure approval to operate within the U.S. For example, Monzo, a U.K.-based challenger bank, tried and walked away from the process in 2021 when approval seemed unlikely. Unfortunately, new U.S.-based firms looking for bank charters have only fared a little better. For every Savi Financial, there is a New Canaan Bank.” Openbank should not have the same issue, however, as the bank will likely rely on Santander’s banking license it received after buying out Sovereign Bank in 2008.
Empower announced plans to acquire Petal for an undisclosed amount.
The deal will help Empower expand into the credit card market.
Empower also announced it closed the acquisition of Philippines-based consumer credit and lending fintech Cashalo.
Empower, a fintech helping to extend credit to underserved consumers, announced plans to acquire underserved credit card provider Petal. Financial terms of the deal, which is expected to close later this quarter, were not disclosed.
New York-based Petal was founded in 2018 to offer underserved consumers access to credit cards. To better help marginalized consumers access the credit they need, the company doesn’t require them to have a credit score to qualify for the card. Instead, Petal leverages users’ open banking data as underwriting data to offer them credit and help them establish a credit history. Empower anticipates integrating Petal’s technology into its own will help it broaden into the U.S credit card market.
“Safe, affordable credit is unavailable to tens of millions of consumers in the U.S. and billions worldwide. We believe that modern product design and new technologies like cash flow underwriting can be used to radically improve credit access around the world,” said Petal Co-founder Jason Rosen. “This merger brings together two of the leading innovators in this arena. Our combined product offerings, financial strength, technical capabilities, and global reach will allow us to move much faster to close the equity gap in credit.”
The news comes after Petal has been struggling with high interest rates as the cost of borrowing has increased. By June of last year, Petal had cut 20% of its staff and, though it raised $240 million in combined debt and equity funding in August, by November, rumors swirled that Petal would become insolvent if it did not find a buyer quickly.
As part of today’s news, Empower also announced it completed its acquisition of Cashalo, a Philippines-based consumer credit and lending fintech. Empower plans to combine both companies under the Empower name.
“In both companies, we found a shared commitment to harnessing technology and rich alternative data to unlock financial opportunity for more people who merit our consideration,” said Empower Co-founder and CEO Warren Hogarth. “I’m confident that by merging Petal and Cashalo into Empower, we amass new product, operational, and analytical capabilities to help alleviate the credit insecurity that billions of people around the world struggle with.”
Empower was founded in 2016 and uses its technology to underwrite consumers using real-time cash flow, other nontraditional data, and machine learning to assess credit risk. The company offers lines of credit, which are issued by FinWise Bank, and no-interest cash advances. Empower has two million active subscribers and achieved profitability in 2022.
Can’t sleep? Maybe that’s because you’re among the BaaS-enabled banks worried about consent orders.
Since late 2023, the FDIC and CFPB have issued seven consent orders because of BaaS-related issues. In addition to two consent orders issued this month to Sutton Bank and Piermont Bank; Lineage Bank, Blue Ridge Bank, Cross River Bank, Green Dot, and First Fed Bank have all been hit with consent orders in recent months.
BaaS was once considered the key to having it all; banks could maintain their legacy core technology while quickly adapting to consumer trends by bolting on the newest fintech innovations. Many BaaS-enabled banks are starting to discover that using third-party technology may not be the best solution, however. As it turns out, implementing another company’s technology comes with its own set of issues.
Part of the problem stems from the fact that regulators have been eschewing formal rule-making, and have instead been making examples of particular firms by enforcing consequences in the form of consent orders.
But where are things going wrong? Below are four things banks are (or should be) worried about when it comes to using BaaS partners:
Data privacy, security
While every bank executive worries about fraud, security, and data privacy, BaaS-enabled banks face double the concern because they not only need to worry about the security of their own institution, but also that of their third party partners. That’s because BaaS involves sharing sensitive customer data with third party providers. Banks need to ensure that their partners comply with data protection regulations and stay up-to-date on regulatory changes.
Regulatory compliance and reporting
Speaking of regulations, banks that use BaaS tools need to ensure that their own organization, as well as their third party partners, are complying with all financial regulations such as AML and KYC requirements. To verify ongoing compliance, banks need to implement vendor management practices to oversee the compliance efforts of their BaaS providers and mitigate risks on both sides.
Almost as important as complying with regulations is proper reporting around activities. Banks should make sure that they can accurately report on their activities and compliance efforts, even when using BaaS tools. Banks should maintain proper records and be able to provide information to regulators upon request.
Consumer protection
Banks must not only safeguard their consumers’ data privacy, but they must also protect consumers from misinformation. Banks are responsible for ensuring their BaaS providers are relaying information regarding their products and services accurately and clearly to customers. This will both facilitate fair treatment and reduce redlining concerns.
Operational risk
Adding to the list of concerns is operational risk. When working with BaaS providers, banks are responsible for things outside of their control, including service disruptions and clunky or broken user interfaces. To reduce these issues, banks should have risk management processes in place and regularly check in with their partners.
When it comes down to it, banks can’t oversee every part of their BaaS partners’ organization. However, by conducting proper due diligence, regularly updating controls, and learning from other institutions’ mistakes, firms may find it easier to sleep at night.
Quavo Fraud & Disputes has teamed up with Snowflake.
The partnership between Quavo and Snowflake will allow Quavo to offer its clients access to more extensive datasets, helping them manage their fraud and disputes processes.
Since it was founded in 2015, Quavo has helped recover nearly $660 million for 6+ million users
“As Quavo has continued to push the limit of automation in the payment dispute management space, data security and flexibility have become increasingly important,” said Quavo Director of Strategic Partnerships Dana Reiner. “I am excited we have formalized our relationship with Snowflake, as they have proven to be a vital part of our analytics and innovation.”
Quavo will integrate Quavo Fraud & Disputes (QFD) with Snowflake’s platform. QFD is Quavo’s SaaS platform that helps issuing financial institutions resolve fraudulent and disputed transactions. Using the tool, banks can manage the entire flow of the disputes process. By partnering with Snowflake, Quavo will be able to offer its clients access to more extensive datasets, which will help them manage their fraud and disputes processes.
Quavo was founded in 2015 to help financial institutions deal with the rising cost of fraud and payment disputes. Since then, the company has helped recover nearly $660 million for 6+ million users who have suffered financial fraud, merchant issues, and identity theft. Quavo counts KeyBank, Galileo, Green Dot, and others among its clients.
Snowflake launched its data platform in 2012 to help businesses load, integrate, analyze, and share their data, securely and at scale. While the California-based company’s solutions span many different verticals, Snowflake’s financial services use cases include quantitative research and trading, personalized investment planning, financial crime prevention, insurance underwriting tools, and more.
Snowflake’s Head of Banking & Capital Markets James McGeehan made it clear that today’s partnership is just the start of the alliance between the two companies. “We look forward to further collaboration with Quavo in an effort to advance fraud resolution capabilities for financial institutions,” McGeehan said. “Our scalable cloud data platform combined with QFD will help to arm issuers with a robust data solution for the fight against fraud, and help customers to safeguard consumers’ financial well-being.”
YCombinator (YC) recently wrapped up its three-month winter tech accelerator program, holding its demo day last week. This program, which is one of two the accelerator hosts each year, comprised of 21 fintech companies. The fintech graduates from YC’s winter program can be broken down into six main categories: asset management, banking and exchange, credit and lending, insurance, payments, and other.
The recent batch of YCombinator fintech graduates showcases a variety of trends and innovations in the industry. There are three main themes that pulse throughout this year’s cohorts. First– and not surprisingly– many are leveraging AI to create efficiencies and enhance existing operations. Additionally, several startups are focusing on providing specialized banking solutions tailored to specific needs. This includes offshore banking for international contractors, banking platforms for nonprofits and cross-border businesses, and white-label bonding solutions for insurance agents. Perhaps most notably, there is a strong focus on innovation in the payments space, with multiple startups offering solutions to help businesses go international more easily, providing instant international payments, and facilitating the launch of card programs and financial products in emerging markets.
Check out this year’s YC winter fintech graduates below:
Asset management
Powder leverages AI to help wealth advisors create sales proposals personalized for each prospective client.
Centauri offers an AI-powered data platform for financial analysts.
Double aims to offer a smarter investing account by allowing users to build custom direct index strategies while automating things like tax loss harvesting and dollar cost averaging.
Banking and exchange
Numo is an offshore bank for international contractors.
GoldenBasis leverages AI to automate back-office workflows for brokerages.
Givefront offers a banking platform tailored for nonprofits.
Credit and lending
Corefin provides open-source lending software that allows tech companies to build and launch lending products.
Rove leverages a cash-flow algorithm for underwriting to offer a no-annual-fee travel card that allows average spenders to earn a free trip each year.
Yenmo offers India-based investors access to cash locked up in illiquid investments without having to liquidate their current investments.
Insurance
Healia’s platform allows employers to help their employees find the best health insurance plan by leveraging their spouse’s healthcare plan to lower costs.
Blume Benefits helps health insurance brokers reduce manual data entry by streamlining insurance quoting, renewal, and revenue operations processes.
BondCenter is a white-label, automated bonding solution for insurance agents that allows them to help businesses apply for surety bonds and receive affordable quotes online in minutes.
Payments
xPay offers a payment gateway orchestrator coupled with a managed gateway solution to help businesses in India and Southeast Asia can go international more easily.
Infinity is a banking and payments platform for cross-border businesses in India.
Swift is building instant international payments to replace the archaic correspondent banking infrastructure.
Other
NowHouse’s post-trade processing suite offers brokerage trading ops teams near-instant trade settlement capabilities, helping them to intelligently reconcile trades and corporate actions.
Miden helps facilitate the launch of card programs and various financial products for businesses in Sub-Sahran Africa.
Cleva enables African freelancers and businesses to receive international payments while protecting themselves from currency volatility.
TokenOwl helps active memecoin and crypto traders calculate taxes with greater accuracy and generate AI-powered insights about their portfolio.
Greenboard is leveraging AI to manage financial firms’ compliance programs and back office processes.
GovernGPT is an AI-based database that pre-populates due diligence questionnaires with recent and trusted data.
Busey Bank has selected CorServ to offer a new credit card program for its commercial clients.
Busey Bank is giving up its Agent Bank program in favor of CorServ’s Account Issuer Program, in which Busey Bank will directly issue credit cards.
CorServ has been offering card issuing services since it launched in 2009.
Illinois-based Busey Bank announced today it has selected card issuer CorServ to power a a modern credit card program for its commercial customers.
Busey Bank has switched from its Agent Bank program, in which a third party financial institution issued the cards, selecting CorServ’s Account Issuer Program, in which Busey Bank will directly issue credit cards to its customers through CorServ’s program. The bank anticipates the move will make its card solution more comprehensive and will improve the interchange, benefitting both the bank and its clients.
“Busey Bank uniquely knows the financial situation and banking needs of our commercial customers,” said Busey Bank EVP and Director of Treasury Management Andy Santangelo. “CorServ’s commercial card program provides us with tools for credit decisioning, options for local servicing, and custom rebates which empower Busey Bank to better serve our commercial customers compared to what National card issuers can offer.”
Busey Bank was founded in 1868 and serves retail and commercial customers across its 80 branch locations in Illinois, Missouri, Florida, and Indiana. In addition to its commercial card service offerings, the bank also offers commercial clients business planning and business online banking tools.
CorServ has been offering card issuing services since it launched in 2009. The fintech currently offers a turnkey credit card issuing service, a direct credit card issuing service, and a payment cards-as-a-service API. Leveraging CorServ’s Account Issuer Program, Busey Bank will offer its commercial customers better credit card products, a self-service card management interface, customizable reports that include including Level 2 and 3 transaction data, virtual cards, employee spend controls, and expense reporting.
CorServ has raised a total of $2.1 million, according to Crunchbase. Last month, the company was selected by Scale Bank to enhance its commercial lending. Additionally, a month earlier, Gorham Savings Bank announced plans to utilize CorServ’s technology to improve its commercial credit card program.
“CorServ’s program gives commercial customers a modern approach to banking with more capabilities for a convenient and simple experience,” said CorServ CEO Anil Goyal. “We are thrilled to partner with Busey Bank to contribute to their legacy of associate excellence, customer service, community involvement, and expanding shareholder value.”
As part of the Eastern U.S. prepares to enjoy the total solar eclipse today, fintech enthusiasts can also eclipse the competition with the latest news and updates in the fintech world. Check back for real-time updates on how the fintech landscape evolves this week.
Payments
Business payments and financial platform Airwallexlaunches its Borderless Visa card in Canada.
Mexican BNPL provider Kueskiintroduces in-store mobile payment solution.
Kyriba and Onyx by J.P. Morgan (Onyx) leverage the blockchain to streamline cross-border payments.
Arizona Financial Credit Union (AZFCU) selects NCR Atleos’ ATM as a Service (ATMaaS) to increase operational efficiencies within the self-service banking channel.
The Clearing House’s RTP experienced a record 76 million transactions valued at $42 billion in the first quarter of this year.
Corlyticsreceives investment from Verdane for its compliance technology.
Wealthtech
Investment research platform Teguslaunches its AI chat tool, AskTegus.
Open banking
Open banking powered account-to-account payment infrastructure provider Token.iointroduces new Chief Commercial Officer Ronnie d’Arienzo, new Chief Financial Officer Tatiana Okhotina, and new Chief Operations Officer Tim Corke.
Atto, a credit risk solutions provider based in the U.K., teams up with analytics software firm FICO to bring open banking data into U.K. credit scoring.
Most of us have heard the phrase, “If you aren’t paying for the product, you are the product,” meaning the company providing the service you’re using is profiting off your data. But what if you’re both paying for the product and your data is being used for profit? That is what Chase’s new Media Solutions business is aiming for.
Chase announced the launch of Chase Media Solutions earlier this week. The new digital media business aims to connect brands with its 80 million customers by way of customers’ transaction data. While this move will provide consumers with personalized offers and cashback opportunities, it also raises concerns about data privacy and consumer consent.
Chase Media Solutions will offer a new stream of revenue for the bank. By leveraging customer transaction history, Chase can offer highly targeted advertising opportunities to brands, generating revenue from both consumers and advertisers. And while consumers are promised some value, such as cashback and personalized offers (if you consider personalized offers valuable), the new launch raises ethical questions about whether banks should be profiting off consumer data in this way. This is especially a concern when, in many cases, consumers are already paying for the bank’s services.
So what is missing from Chase Media Solutions? One of the key issues with the launch that was notably left out of the announcement is availablility of an opt-out option for consumers. Traditional media platforms, such as Facebook, allow users to choose whether to share their data for targeted advertising. Chase, on the other hand, did not mention offering the ability for consumers to opt out of having their data used.
This raises questions about privacy and whether consumers are fully aware of how their data is being used. As the U.S. prepares to enter a new era of open banking, Chase’s stance on who owns customer data becomes clear. By seeking to profit from customer data, the bank is asserting its belief that consumer data ultimately belongs to the bank.
Part of the reason Chase’s launch of a media business is so notable is because it is the first bank to make the move. This begs the question– why haven’t other banks launched similar initiatives? One reason could be the complexity and sensitivity of consumer data. Chase didn’t mention whether it plans to tokenize customer data, but even if it does, using customer data for advertising purposes could be seen as a breach of trust. Additionally, banks may be concerned about drawing attention from regulators, especially in light of increasing scrutiny over data privacy and security. And if you add in the uncertainty around pending open banking regulation, starting a media business like this is a bit risky. The launch of Chase Media Solutions is a bold move.
Want to dive into the latest trends and discussions in the fintech world? Check out the conversations we’ve curated in these four videos recorded at last month’s FinovateEurope conference. From the future of payments to the role of banks in embedded finance, these videos offer valuable insights into some of the industry’s most pressing topics.
Hear from IFX Payments’ Head of Operations Stephen Hutchinson on changes in the payments scene, Ericsson’s Head of Mobile Financial Services Solutions & Strategy Ville Sointu on the future of CBDCs in Europe, Innovate Finance’s CEO Janine Hirt on embedded finance, and Harrington Star Group’s Co-Founder & Chief Customer Officer Nadia Edwards-Dashti on how fintech is engaging with DEI.
Payments in 2024: New challenges, regulations, and innovation
The future of CBDCs in Europe: What does the ECB have in store?
Embedded finance and the role of banks in its future
Driving positive changes in fintech: How is the industry engaging with DEI?
Banking-as-a-Service provider Finzly launched Account Galaxy, a new embedded banking solution.
Account Galaxy allows non-banks and fintechs to launch virtual accounts with real-time transaction monitoring.
The virtual accounts exist alongside an organization’s current infrastructure within what Finzly calls a “sidecar core.”
Account Galaxy is the name of the newest solution from Finzly. The Banking-as-a-Service (BaaS) solutions provider unveiled the new embedded banking solution in an announcement today that highlights how Account Galaxy can help banks participate in embedded banking.
Account Galaxy offers two main use cases to facilitate BaaS functionality: advanced payment processing and flexible accounting capabilities. These capabilities offer non-banks and fintechs virtual accounts where transactions can be monitored in real-time. The accounts not only provide reduced compliance risk, but also offer enhanced speed. Additionally, Account Galaxy helps small-to-mid-size banks attract commercial clients by embedding services into ERP, accounts receivables, and payables in an automated way.
“Embedded banking will have a significant impact on how banking services are provided to business and consumers,” said Datos Insights Strategic Advisor Enrico Camerinelli. “Providing tools to empower banks of all sizes to participate in this emerging industry will lead to greater innovation and ultimately better services for all.”
Account Galaxy’s virtual accounts are supported by a virtual ledger, enabling them to exist alongside an organization’s current infrastructure within what Finzly calls a “sidecar core.” This setup prevents new accounts from overburdening the organization’s existing systems.
“With Account Galaxy, banks can cost-effectively enable the integration of banking services into corporate systems and non-bank platforms, unlocking new opportunities for growth and innovation,” said Finzly founder and CEO Booshan Rengachari.
Finzly’s flagship offering, Finzly OS, enables clients to launch a modern bank from scratch. The company’s API connects to all U.S. payment rails, including Fed ACH, Fedwire, RTP, SWIFT, and FedNow. Founded in 2012 under the name SwapsTech, the North Carolina-based company recently landed $10 million in funding in a Series A round led by TZP Group.
Finzly most recently demoed at FinovateSpring 2023, and has taken home Best of Show honors for its demos at FinovateFall 2020 and FinovateSpring 2020. By the way, we’re still accepting applications from companies interested in demoing at our upcoming conferece, FinovateSpring 2024. Take a look at the event and find out more about what it takes to demo.
Nuvei has agreed to be acquired by Advent International, which plans to take Nuvei private in an all-cash deal valued at around $6.3 billion.
Nuvei originally went public in 2020 and has a current market capitalization of $6.08 billion.
The deal is expected to close in late 2024 or early 2025.
Payment acceptance technology provider Nuveiannounced this week it has agreed to go private via an acquisition by private equity firm Advent International. The all-cash deal values Nuvei at around $6.3 billion.
Canada-based Nuvei offers global card acquiring services, alternative payment acceptance methods, crypto payments, fraud and risk management, analytics and more. The company offers serves businesses across a range of industries in more than 200 global markets, facilitating 150 currencies via 600 payment methods. Nuvei’s customers include large brands such as New Balance, Shein, and Microsoft.
“This transaction marks the beginning of an exciting new chapter for Nuvei, and we are glad to partner with Advent to continue to deliver for our customers and employees and capitalize on the significant opportunities that this investment provides,” said Nuvei Chair and CEO Philip Fayer. “Our strategic initiatives have always focused on accelerating our customers revenue, driving innovation across our technology, and developing our people. Bringing in a partner with such extensive experience in the payments sector will continue to support our development.”
Fayer will continue to serve as Nuvei’s Chair and CEO and will lead business operations. The company’s current leadership team will also remain in place once the deal is closed.
Nuvei went public in 2020 and now has a market capitalization of $6.08 billion. The company anticipates that operating under Advent, which has been investing in the payments space since 1984, will offer it resources, operational and sector expertise, and the capacity for investment.
“Our deep expertise and experience in payments give us conviction in the opportunity to support Nuvei as it continues to scale from its base in Canada as a global player in the space,” said Advent Managing Director Bo Huang. “We look forward to collaborating closely with Nuvei to capitalize on emerging opportunities to help shape the future of the payments industry.”
The deal is expected to close in late 2024 or early 2025.
