With New Funding, Prosper’s Valuation Stands at $550 Million

U.S. peer-to-peer lending giant, Prosper has landed $50 million in a Series G funding round. The capital come from Hong Kong-based FinEx Asia and LPG Capital and raises the San Francisco-based company’s total equity funding to $410 million.

Prosper will use the financing to make strategic investments in the company’s platform and products. “This investment is a strong signal of confidence in our business fundamentals and the momentum we are seeing right now,” said David Kimball, CEO of Prosper Marketplace. “Over the past year, we’ve shown that we can build a sustainable business that continues to redefine the online lending experience for our borrowers and investors. We believe this partnership will open up additional opportunities for our business as we continue to grow.”

According to Lend Academy, Prosper’s valuation is now $550 million; a 70% drop from the company’s estimated 2015 valuation of $1.87 billion. However, Lend Academy also noted that Prosper’s decline aligns with competitor Lending Club’s valuation, which experienced a share price drop of 68% since April of 2015.

Marketplace lending as a whole has experienced a downturn in the past couple of years, and Prosper had to endure a stumbling block of its own in July of this year when it shuttered its Prosper Daily app. Aimed at prospective borrowers, the app was built from Prosper’s purchase of BillGuard in 2015 for $30 million.

Despite the setbacks, Prosper reported relatively strong second quarter performance this year, with $775 million in loan originations. This represents a 32% quarter-over-quarter increase and 74% year-over-year increase. Overall, the company has facilitated more than $10 billion in consumer loans over its platform since launching in 2006.

Prosper presented at FinovateSpring 2009 as well as the inaugural Finovate in 2007. Earlier this year, the company appointed Usama Ashraf as Chief Financial Officer and in November of 2016, selected David Kimball to succeed Aaron Vermut as CEO. Forbes interviewed Kimball in a feature this spring.

Kasasa Rolls Out Kasasa Loans

Financial technology and marketing services company Kasasa unveiled its newest offering this week. The Austin, Texas-based company launched Kasasa Loans, a loan product that lets consumers pay ahead to reduce debt, and take that extra money back if they need it.

Kasasa is calling it a Take-Back, and it works similar to a regular loan agreement in which the borrower repays according to a regular payment schedule. Here’s how the Take-Back works: every month, the consumer has the option to overpay on their loan repayment and at any time in the future if they need to access cash quickly, they have the option to “take-back” any portion of the overpayment.

The new loan offering aims to broaden financial institutions’ loan portfolio while enticing their clients with a flexible borrowing solution that is unique to Kasasa bank clients. It fits with Kasasa’s mission to “create products that are good for both consumers and community financial institutions” and helps financial institutions compete on something other than interest rates.

“Until now, there has been no way to differentiate loan products beyond interest rates – Kasasa Loans is changing that,” said Gabe Krajicek, CEO of Kasasa. “We are revolutionizing the customer experience of paying off debt early by introducing the first loan with take-backs. Kasasa Loans allows borrowers to pay off their loan faster but leverage take-backs to access extra payments in times of need, eliminating that fear of parting with ‘extra money’ while also enabling the consumer to make better financial decisions.”

In conjunction with this launch, the company began offering a new marketing automation platform, Connect. Kasasa was founded in 2003 when it launched its flagship REWARDChecking account to help community financial institutions compete against big banks. Since then, the company has expanded to 350 employees and now offers a full suite of branded bank products. Kasasa debuted at FinovateFall 2009 under its former parent company, BancVue. The company split from BancVue last July. Last month, Kasasa was named a Best Place to Work in Austin for the third consecutive year.

Tuition.io Raises $7 Million in Series B

In a round led by Wildcat Venture Partners and featuring participation from current investors Mohr Davidow Ventures and MassMutual Ventures, student loan repayment assistance platform Tuition.io has raised $7 million in new funding. The Series B round brings the company’s total capital to more than $15 million.

“We are committed to expanding our student loan assistance offerings and driving mass adoption until student loan repayment assistance becomes a national and even international employee benefit standard,” Tuition.io CEO Scott Thompson said. Thompson also referred to student loan repayment assistance as a global competitiveness issue for companies “in the increasingly aggressive race to hire and retain top talent.”

Scott Thompson, Tuition.io CEO, discussing the challenge of helping millennials manage student loan debt with Finovate Director of Strategy Lisa Moyle at FinovateFall last week.

“Tuition.io’s value to our partners and their employees is clear,” General Partner at Wildcat Venture Partners Bryan Stolle added. “The company is changing the face of employee benefits while helping address a national crisis that is only slated to get worse,” Stolle said.

In addition to the funding, the company also announced a new office in San Mateo, California, which will be staffed by a pair of new executives: Scott Simmons and Danica Bracy. Simmons will serve as Chief Operating Officer/Chief Financial Officer. Bracy will oversee management of the client portfolio as Senior Director of Partner Success.

Founded in 2011 and headquartered in Los Angeles, California, Tuition.io demonstrated its technology a year later at FinovateFall 2012. The company was named a preferred provider by global health, wellness, and career consulting leader Mercer in September. This summer, Tuition.io announced that it would administer the new Student Loan Reduction Program for the City of Memphis. CEO Thompson participated in our Finovate Talks interview series during FinovateFall this year, opining on the topic “How Can We Help Millennials Work Through the Student Loan Debt Crisis?”

AutoGravity Teams Up with Hyundai Capital America

Thanks to a new partnership between Finovate Best of Show winner AutoGravity and Hyundai Capital America, California car buyers using AutoGravity have new financing options when looking to buy a Hyundai, Kia, or Genesis vehicle. “With the growing number of consumers embracing AutoGravity, as well as the seamless integration of AutoGravity with dealer process, we felt that this was the perfect opportunity to test the platform,” Hyundai Capital America President and CEO Ross Williams said.

AutoGravity founder and CEO Andreas Hinrichs said the partnership with Hyundai Capital America – which does business as Hyundai Motor Finance, Kia Motors Finance, and Genesis Finance – will give users of the auto buying and financing app a greater range of financing options. “AutoGravity brings the car financing experience into the digital age where today’s consumer wants to find it: in the palm of their hand,” Hinrichs added.

Available in at both the Apple App Store and at Google Play, AutoGravity’s free app digitally connects prospective car buyers and leasers with lenders and dealers. Partnerships with leading banks and captive lenders like Hyundai Capital America enable car shoppers to arrive at the dealership with everything from vehicle selection to financing already ready-to-go. Since its launch in 2016, more than 700,000 consumers have downloaded AutoGravity’s app.

Founded in 2015 and headquartered in Irvine, California, AutoGravity demonstrated its app at FinovateFall 2016, winning Best of Show. Last month, the company was highlighted by GoBankingRates as one of the best personal finance apps and featured by AutoFinance News as one out of 10 auto finance and mobility companies leveraging AI. AutoGravity announced an investment from VW Credit, Volkswagen’s finance division in July, a partnership with Fletcher Jones Auto Group in June, and won the 2017 North American Frost & Sullivan Entrepreneurial Company of the Year Award in May.

A Look Back at FinovateFall’s Four-Day Flow

Adding a pair of Discussion Days to Finovate’s traditional Demo Days format, has made it that much easier for Finovate attendees to answer the question perennial post-conference question: “So. What did you think?” Two days of keynote speeches, panels, and presentations – to say nothing of another two days of networking – gave Finovate attendees time to digest, discuss, and debate many of the ideas, technologies, and solutions that dominated the conference.

Indeed, with more than 500 minutes of live demos on Days One and Two, and twin-track, double-barrel breakout sessions and panels on Days Three and Four – it seems like the only more valuable commodity than cool fintech last week was the time to take it all in.

So with that in mind, here are a trio of Big Themes that go a long way toward defining both the content of and conversation around FinovateFall 2017.

Best of Show 2.0

Bringing our Best of Show winners on stage to kickoff the Discussion Days was a great opportunity to once-again highlight the achievements of some of our most innovative companies – as chosen by Finovate attendees. In addition to giving those who missed parts of our Demo Days the opportunity to meet our Best of Show winning companies, our panel also gave the companies the chance to reintroduce themselves and their technologies, as well as talk about their overall Finovate experience.

The Best of Show panel also helped shine a spotlight on which subsectors within fintech are really experiencing significant innovation. Think PFM is dead? Meet Envestnet | Yodlee, a multiple Best of Show winner with a new, less sophisticated take on promoting and supporting financial health and wellness. Have a hard time telling one chatbot from another? Not those who voted for Finn.ai, another multiple Best of Show winner, whose virtual banking assistant continues to impress.

From new payment technologies (Jiffee) and security solutions (SpyCloud) to customer insight technologies (Sensibill), more social approaches to investing (Voleo), and an easier way to contribute to your favorite causes (Sustainably), the Best of Show panel was a well-placed bridge to the broader discussions and deep dives on Days Three and Four.

Power to the Panel!

When it comes to getting down to fintech’s brass tacks, give me a stage filled with some of our industry’s most loquacious luminaries. Whether the topic is banking for the underbanked or blockchain technology, there’s nothing like a panel of fintech potentates to remind us of what matters to consumers, merchants, and financial institutions alike.

And what did we learn? From panelist and keynote speaker alike, it is clear that the rise of AI will be the most dominant feature of our technological future – and this will be as true for fintech as for any other subset such as biotech or insurtech. Dave Birch, Director of Innovation for Consult Hyperion, announced during his keynote speech, “Your AI will be selling financial services to my AI,” while members of our AI showcase discussed the numerous ways AI is already helping us meet challenges ranging from customer engagement to workflow automation to fraud management.

And of course big props to Day Four keynoter Tim Urban of @WaitButWhy fame whose “The AI Revolution and the Road to Superintelligence” provided a thoughtful, rousing, occasionally frightful but always entertaining exegesis on AI.

In addition to artificial intelligence, there was plenty of old school human brain power at work, as well. Consider Bradley Leimer’s interview with Jon Stein of Betterment, the informative exchange between John Waupsh and Jim Bruene on community banking, and Ghela Boskovich discussing women and investing during the Wealth Management & Investing Summit track for just a few samples of the high-calibre conversation during our Discussion Days.

Where All the Fintech Women At?

There is no doubt that fintech – like the rest of technology – is becoming a more diverse place for entrepreneurs and technologists of all backgrounds. Sometimes the networking sessions at a Finovate conference can resemble a gaggle at the United Nations as the mix of Baby Boomers, GenXers, and Millennials from across the world come together to talk fintech.

Gender diversity is another area where fintech in general and Finovate in specific have made strides. In what might be the largest number of women leading or participating on the Finovate stage, our Demo Days featured Olivia Lovenmark (Voleo), Ana Silva and Sara Martins (ITSector), Janice Diner (Horizn), Meggie Ladlow (United Income), Nikhita Iyar (Moxtra), Inbal Tirosh (Endor), Izabella Gawron (ING Bank Slaski), Sarah Clark (Mitek), Elisabeth Asirifi (cyberProductivity), Ellison Anne Williams (ENVEIL), Lauren Matheson (PromonTech), Diana Winstanley (ebankIT), Harini Padmanabhan (Envestnet | Yodlee), Lisa Shields (FI SPAN), and Donna Tilden (RateSeer).

But our work is far from done. As more than one attendee noted, our panel on fintech incubators on Day Four featured 14 startups showcased by seven accelerators – but nary a woman on stage. “Let’s fix this!” one attendee tweeted – and we agree. For those of us who play any role in helping encourage and enable the next generation of fintech entrepreneurs, ensuring the representation of #womenintech needs to be job one.

We hope you enjoyed our expanded FinovateFall 2017. For more coverage of the conference, check out our Best of Show review, our Twitter coverage, and our upcoming Finovate in the Press feature!

Feature Friday: Sweep Accounts for the Mass Market

Does anyone remember when sweep accounts were all the rage? They were disruptive technology in the 1980s. The idea was to automatically sweep idle cash from non-interest bearing accounts to savings or investment accounts with higher yields. It’s still a core feature in treasury management accounts for large businesses, but you don’t hear much about it these days on the retail side.

Why? The small differential between checking and savings or money markets hardly justifies the trouble. If the average annual amount swept to savings was $2,500, it would only net an extra $1 or $2 annually (after tax) from a typical large U.S. bank, or up to $10 in a “high interest” account from a community bank or credit union.

But if instead of sweeping idle cash into savings, what if you could use it to pay down, even temporarily, a personal loan or revolving credit balance? All of a sudden, that $2,500 cushion is worth $300 or more annually (assuming 12% APR), 150x the return of sweeping to a bank savings account. That’s enough to get your customers’ attention.

Some overdraft credit lines work this way. You can freely transfer money between credit line and checking to minimize interest charges. I had the feature at US Bank years ago. During cash-strapped times, I would keep $0 in checking and every time I wrote a check it would trigger an automatic (and fee-free) credit line advance. It was a great system, but when the bank started charging fees on each automatic transfer, I abandoned my “sweep account” hack.

Fast-forward 10 years and Kasasa has reinvented the credit-line sweep with its hybrid loan product launched today. Kasasa loans offer a “take back” feature which allows consumers to pay down their loan balance at any time, and then get those extra funds back at any time in the future free of charge. Basically, in banking jargon, it’s a fixed-rate installment loan (with a repayment schedule), married to a credit line that allows you to move money in and out up to the extra amount you’ve paid in (see note 1). One sees this in the home equity space, but not in the personal loan arena.

A key part of the account’s appeal is the Loan Management Dashboard. Without the dashboard, the changing balances and available “excess” would be a customer services nightmare to explain and track. The dashboard makes it (relatively) simple to move money back and forth. There will be some customer service questions, but they should primarily be one-time only.

Bottom line: Kasasa’s hybrid loan is a winning concept, especially for its community bank and credit union clients looking to differentiate themselves from the big banks and online lenders. It’s a user-friendly approach that should play well with their loyal customer/member bases. The laon does have the downside of cannibalizing deposits while lowering loan balances. But with proper marketing, a Kasasa speciality, the incremental loan balances (and customers) should far outweigh the lower deposit totals.

Author: Jim Bruene (@netbanker) is Founder & Senior Advisor to Finovate as well as Principal of BUX Advisors, a financial services user-experience consultancy. 

(1) Unlike a credit line where you can always borrow to the maximum credit line, in the Kasasa Loan, you can only borrow back your excess contributions. This is a benefit for consumers who prefer the discipline of a fixed repayment period rather than an open-ended credit line.

Finovate Alumni News

On Finovate.com

  • With New Funding, Prosper’s Valuation stands at $550 Million.
  • Tuition.io Raises $7 Million in Series B.
  • AutoGravity Teams Up with Hyundai Capital America.

Around the web

  • Infosys Finacle partners with ToneTag to leverage sound wave technology to drive contactless authentications and transactions.
  • PYMNTS interviews Jumio CEO Stephen Stuut on the challenge of combating cybercrime in “real time.”
  • Xero teams up with TradeGecko to help Singapore’s SMEs Go-Digital.
  • Bento for Business appoints Jeff Pomeroy to the role of Vice President of Product.
  • ThreatMetrix Announces Smart Authentication Platform.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

FinovateFall in the Press

One week ago today, the doors closed on FinovateFall 2017. The extended format allowed for rapid-fire fintech demos, while the in-depth summit sessions and keynote presentations offered an in-depth look into specific, hot-button issues for banks and fintechs.

If you missed out, don’t worry– the demo videos will be live on Finovate.com in a few weeks and here’s a look at the Best of Show winners, Twitter highlights, and what impressed the media:

American Banker
Collaboration in, disruption out at Finovate
By Penny Crosman

Bank Innovation
It’s Not Time (Yet) for Mobile Mortgages, Unison Says
by Grace Noto

The Future of the Financial WorkStation is Mobile, says Samsung
by Grace Noto

Big Fintech Media
Giving a Voice to Fintech Innovation

Digital Wealth Insights
PFM Meets AI and Reinvents Financial Planning
by Ian McKenna

Finovate TV YouTube Channel

Gonzo Banker
8 Quick Finovate 2017 Takeaways
by Sam Kilmer

Wide Range of Startups Demo at Finovate Fall 2017
by Ryan Lichtenwald

Ian McKenna at Finovate: Lessons from US personal finance leaders
by Ian McKenna

The Best of Fintech: Finovate Fall 2017 Recap
by Jon Ogden

OCC Says It’s Not Ready For FinTech Banking Applications

Red Fan Communications

U.S. banking regulator not ready for fintech charter applications
by Anna Irrera

William Mills Agency Blog

A hearty thanks to everyone who demoed, presented, attended, and networked! Our show would not exist without all of you. We’ll see you next year or at Hong Kong in November.

Somerset Trust Leverages MalauzaiOne to Bring Digital Banking to Business Customers

Courtesy of its partnership with Malauzai, Somerset Trust Company is extending its digital banking service to its business customers. The West Pennsylvania-based community bank will use the same MalauzaiOne digital banking platform it rolled out to retail customers last year, giving business users digital access to their accounts and easier ways to manage payments and receivables.

“The response to our digital banking offerings from our retail customers has been tremendous,” Somerset Bank COO John Gill said. He credited the alliance with Malauzai for giving the bank the ability to “design a cutting-edge banking solution that both our retail and business customers can use interchangeably and seamlessly.” Somerset Bank’s deployment of Malauzai’s technology for retail users was recognized by the inaugural Best of FinXTech Awards, sponsored by Bank Director.

In his statement, Malauzai Chief Product Officer Robb Gaynor highlighted this same advantage of using a single platform for both retail and business banking. “It is great to see banks like Somerset benefit from what Malauzai’s single platform delivers: better engagement with customers, less complexity in their back office and ultimately much lower costs to support the digital channels.”

Founded in 2009 and headquartered in Austin, Texas, Malauzai demonstrated its Conversational Banking for Businesses at FinovateFall 2017 (demo video available soon). The company has more than 425 customers using its technology and more than 800,000 active end users. In August, Malauzai added the Public Service Credit Union (PSCU) with more than $2.3 billion in assets and 219,000 members to the list of FIs using MalauzaiOne Digital Banking. Back in May, Malauzai’s partnership with fellow Finovate alums OnDot and Vantiv enabled Vantiv to launch a youth spending solution called Family Manager: SmartKid Control.

Malauzai has raised more than $25 million in funding and includes Live Oak Banking Company and Wellington Management among its investors. Tom Shen is CEO.

Finovate Alumni News

On Finovate.com

  • Enabled by AI, Self-Service Is the Future of Banking

Around the web

  • eWise offers free access to Categorization-as-a-Service (CaaS) API.
  • Mastercard to introduce contactless payments in Myanmar courtesy of partnership with Co-Operative Limited Bank (CB Bank).
  • Michigan-based Marshall Community Credit Union hires Insuritas.
  • Tesobe announcing APIDays Berlin on 7 & 8 November
  • Pascal Gauthier nominated President of cryptocurrency & blockchain security company Ledger
  • Hyundai Capital America joins the AutoGravity car shopping and financing platform
  • Coinbase announces Ethereum & Litecoin vaults
  • Pirean’s Access: One wins Cloud Security Product of the Year at the 2017 Computing Cloud Excellence Awards.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.