Finovate Alumni News

On Finovate.com

  • Turnkey Lender Raises $2 Million in Series A.
  • Enhancing the Customer Experience in Financial Services.
  • New Partnership Turns PayPal into Apple App Store Payment Option

Around the web

  • Signifyd brings its Guaranteed Fraud Protection solution to Authorize.Net’s U.S.-based e-commerce merchants.
  • Passport launches parking payment app, Passport Canada, for students at Simon Fraser University.
  • Strategic partnership will integrate Key Lifestyle Indicator technology from Segmint with financial services solutions from IBM.

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.

First Look: Zelle Takes on Venmo, Square and Itself

Seventeen years ago PayPal took on Wells Fargo’s Billpoint (joint venture with eBay) and Citibank’s (C2IT) fledgling P2P payment services. It wasn’t a fair fight. With a $400 million VC war chest and an all-star exec team (Elon Musk, Peter Thiel, Max Levchin, David Sacks, Reid Hoffman and so on), the fight didn’t make it past the first round. Within a year PayPal had a stranglehold on eBay payments due to its superior UX and aggressive business model.

Now the banks are back with Zellea rebranded version of the clearXchange that has been up and running for six years. The service already has great traction. In 2016, Early Warning, the bank-owned operator (see note 1), processed 170 million transfers totaling $55 billion for the 85 million customers of their big-bank owners. That works out to exactly 2 transactions per customer annually with an average of $320 per transfer.

The value transferred is three times the size of Venmo’s $17.6 billion in volume, though the number of Venmo transactions is probably higher, perhaps considerably higher if its average transaction size is in the $15 to $20 range implying 1 billion venmos last year.

Using Zelle
Yesterday and today I used the mobile and desktop Zelle from Capital One for the first time. Other than the glitch with my mobile phone number (see note 3), which would stop many consumers from going further, setup was quick and easy. The desktop version is pretty straightforward, with a Send Money with Zelle link in the middle of the Payments menu (see screenshot below). This assumes you know what Zelle is, or you just ignore it since it comes after the key words, “Send Money.”

But the mobile UI is less intuitive. It wasn’t initially obvious how to use it because there is no Zelle or payments navigation item in the Capital One app…yet (it’s only been out since June 12). However, once you go to your checking account section, it’s one of the main navigation items at the top (see inset below).

 

I was initially surprised at what happened with my test payment. I sent a buck to my son (sorry, Paul I only had $1.12 in my account) and I was pleasantly surprised to find that my payment had been “qualified for expedited deposit” and he’d have the cash right away without the usual ACH delay.

But when my son forwarded the email he received, I was surprised to find that my Capital One payment has morphed into a branded Chase QuickPay with Zelle. There was no mention of Capital One anywhere in the message (see screenshot #1).

That makes sense now. My son has a Chase account and was already registered with Chase QuickPay. If he’d not already been registered, he would have received a Capital One branded email (see screenshot #2 below).

Why the new brand?
Zelle/clearXchange will continue to grow at a good clip if its big-bank owners stick with it. It’s already 3x the size of media darling Venmo (owned by PayPal). But I’m not sure the massive investment in creating a new payments brand is worthwhile (cut to the boardroom discussion of a 2018 Super Bowl ad).

I get that they are trying to create another Visa/Mastercard network that consumers recognize and trust. But unlike credit transactions at the POS in the 1950s and 60s, p2p payments are relatively understood by consumers and have much less need of a third-party organization to achieve the network effects. The big banks are already wired to each other and what’s needed, what clearXchange was already offering, is just a simpler UX inside each bank’s online and mobile application. Adding the Zelle name to the mix seems like a step backwards on that front.

Maybe I’m wrong and we’ll all be Zelling money to Mars in a few decades. But I’m not convinced the new brand will stand the test of time.

Bottom line: Love the service, which I expect to flourish, but confused by the branding.


#1: Email to a pre-registered Zelle recipient banking at Chase

 

#2 Email to a Zelle recipient not registered with a participating bank


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


Notes:

  1. Owners of Early Warning (aka Zelle) are: Bank of America, BB&T, Capital One, JPMorgan Chase, PNC, U.S. Bank, and Wells Fargo.
  2. If I were any bank other than BofA and Capital One, I’d be crying foul over how the banks are listed in alphabetic order. On the desktop, it doesn’t matter (yet) since they are all above the fold. But on mobile, you can only see BofA and Capital One, and there is no indicator that you should scroll for more.
  3. I received a fatal error message when I tried to use my mobile number as contact to send Zelle payments (see inset) from Capital One’s mobile app. This could be something particular to my account, but from the cryptic popup message, it sounds like my phone is registered at another bank. And that would be a big concern for most customers who would fear that identity thieves are hard at work draining their accounts.
  4. Image credit

Finicity Inks Data Exchange Deal with JPMorgan Chase

A new agreement between Finicity and JPMorgan Chase will give bank customers the ability to take advantage of a wide range of third-party financial apps without having to disclose their bank login credentials. APIs will enable secure information sharing between Finicity-supported apps and services, with tokenization supporting a frictionless experience for the consumer whose login data remains with the bank.

Head of Chase Digital Banking Bill Wallace echoed this point in a statement accompanying the announcement, saying, “Working with Finicity, we will enable our customers to make informed decisions while protecting their Chase banking credentials.” Locating customer financial data “at the center of a superior experience with financial apps and services,” Finicity CEO Steve Smith added praise for JPMorgan’s “commitment to helping customers better manage their finances through data access, quality, and intelligence.”

Pictured (left to right): Co-founder and President Nick Thomas and Director of Engineering Jessie Morris demonstrating Finicity’s Verification of Income/Verification of Assets solutions at FinovateSpring 2017.

The news from Finicity is a Big Fintech Deal in the world of data aggregation and data sharing, and shows how Finicity’s unique relationships with FIs and service providers enable the company to provide data aggregation for a range of PFM, digital asset and income verification solutions. The agreement follows on the heels of Finicity’s data sharing deal with Wells Fargo announced earlier this year. In addition to Wells Fargo and now JPMorgan Chase, Finicity has also teamed up with Intuit and fellow Finovate alum, Experian. The later partner is also an investor; Finicity closed a $42 million Series B round led by Experian late last year.

Founded in 1999 and headquartered in Salt Lake City, Utah, Finicity demonstrated its Verification of Income (VoI)/Verification of Assets (VoA) solutions at FinovateSpring 2017. VoI and VoA are part of a suite of tools the company has developed designed to leverage consumer-permissioned data to improve the credit decisioning process. The company is also a veteran of our developers conference, having presented “The Frictionless Aggregation Experience” at FinDEVr New York 2017.

Fintech 71 Accelerator Application Deadline Less Than One Week Away

If you’re a startup with a ready-for-market solution that can be used by large FIs or scaled to millions of customers, then Columbus, Ohio’s newest fintech accelerator, Fintech 71, may be just what you’re looking for.

But don’t just look. The application deadline for Fintech 71 is less than one week away on July 17th. For more information – and to apply today – check out Fintech71’s registration page .

All of the companies selected will receive a $100,000 stipend in exchange for participation within Fintech71’s Accelerator. Fintech71 is a non-profit organization and will take a small percentage of equity, from 0-6%, that will be stage-appropriate. The accelerator will bring on up to 12 fintech startups for its first class that starts September 10, 2017.

Fintech71’s ideal fintech startup will have a product that is ready for the market and to be utilized by a large financial service company or scaled to millions of consumers—allowing the corporate sponsor, partner, mentor network of Fintech71 to bring tremendous value to the startups selected. Fintech71 is focused on startups across the spectrum of fintech verticals including:

  • Digital banking
  • Insurtech
  • Payments
  • Personal finance and investing
  • Institutional finance and investing
  • Lending
  • Regtech

Fintech 71 is also interested in startups using technologies like data analytics, artificial intelligence/machine learning, and security authentication to build financial services solutions.

Fintech71 continues to build momentum with more and more corporate financial services companies jumping on board to support this statewide initiative. The alignment of the public sector, private sector, and fintech entrepreneurs within Ohio has created a world class fintech hub that is sourcing fintech startups globally to join their inaugural accelerator class. The current corporate Sponsor/Partner list includes a host of companies with a presence in Ohio such as Visa, Key Bank, JPMorganChase, Grange Insurance, Huntington Bank, Silicon Valley Bank, and a host of other corporations.

What is unique about Ohio is that it is the home of one of the largest financial service ecosystems, combined with an incredible millennial talent base and a ton of great universities, centered around Ohio State University. In addition, Ohio enjoys an extremely attractive cost of living and “cost of doing business” environment which is ideal for startups during their early growth years. The state’s attractive business and living environment combined with access to some of the top financial service brands in the world is a recipe for success.

Check out fintech71.com to apply. And remember the deadline to get applications in for consideration is July 17.

You Know It’s Gonna Be Alright: Revolut Raises $66 Million Series B

In a round led by Index Ventures and featuring participation from existing investors Balderton Capital and Ribbit Capital, Revolut has locked in $66 million in new funding. The investment takes Revolut’s total capital to more than $81 million raised since the London-based company was founded in 2015.

“We will be using the investment raised to take Revolut global, with the aim of establishing ourselves as the number one platform for consumers and businesses to manage their finances,” the company wrote in its announcement of the funding. Asia and North America are the initial destinations of Revolut’s global expansion “whilst growing our community of 700,000 customers across Europe.” To facilitate the company’s expansion in Europe, Revolut has hired a team of “international expansion managers. Switzerland, Germany, and France were name-checked as among the countries where the managers will be deployed. Revolut also announced that it is using a new provider, Google Cloud Platform.

Pictured (left to right): CEO and founder Nikolay Storonsky and CTO Vlad Yatsenko demonstrating Revolut at FinovateEurope 2015.

An alternative to traditional banks, Revolut is a Personal Money Cloud designed especially for traveling millennials. With the Revolut app and multi-currency card, users can make purchases in more than 100 currencies without worrying about exchange rate fees, and save up to 7.5% on international transfers in more than 20 different currencies. Revolut users can send or request money to and from friends via the app, email, or through social networks. The card and app provide push notifications, as well as a blocking feature in case of loss or theft. The app is available on both iOS and Android.

Revolut demonstrated its Personal Money Cloud platform at FinovateEurope 2015. Last month, the company launched business accounts in the U.K. and Europe and was named to both FinTechCity’s FinTech 50 and CB Insights’ Fintech 250 list. In April, Revolut partnered with U.K.-based online mortgage broker, Trussle, to enable homebuyers to begin the application process via mobile device, and in March, the company announced its £4 million crowdfunding investment round and the launch of its new Premium subscription service. Revolut teamed up with P2P lender Lending Works earlier this year, and introduced its customer service chatbot, Rita (“Revolut’s Intelligent Troubleshooting Assistant”) in February.

Finovate Alumni News

On Finovate.com

  • You Know It’s Gonna Be Alright: Revolut Raises $66 Million Series B.
  • Finicity Inks Data Sharing Deal with JPMorgan Chase.
  • Fintech 71 Accelerator Application Deadline Less Than One Week Away.

Around the web

  • Forrester names Backbase a leader in digital banking solutions.
  • Alpha Payments Cloud earns Fin5ive Payments Award at BankTech Asia.
  • Let’s Talk Payments interviews SecureKey CIO Andre Boysen.
  • Finland-based Aktia goes live with T24 core banking system from Temenos.
  • FICO enables identification of fourth party risks with new Security Score upgrade.
  • iSignthis subsidiary iSignthis eMoney teams up with Worldline to provide Paydentity services in EU.
  • CashStar adds real-time card activation, improved security, and streamlined ordering in new platform upgrade.
  • Dream Payments opens Centre of Excellence in Moncton, New Brunswick.

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.

 

Summit View: What Drives Innovation in Regtech & Insurtech?

To prepare for our expanded FinovateFall conference on September 11 through 14, we’re taking a look at each of the six summit discussions that will take place on days three and four of the conference. Today, we’re previewing trends in regtech and insurtech.

Summit #4: Regtech and Insurtech

Regtech and insurtech have benefitted from the same technology innovations that have turned fintech into a booming industry for consumers, businesses, and investors. According to CB Insights, regtech startups have raised more than $3 billion in funding between 2012 and 2016 (102 in 2016 alone). And what compliance-enabling technologies are attracting the most regtech investment? Capital Confirmation, which provides secure document transfer and transmission for auditing purposes raked in $60 million. Vendor risk management innovator, Prevalent, also raised $60 million in funding last year.

Regtech is a broad category, with solutions that are applicable to almost every aspect of financial technology. Consider, for example, the RegTech Top 100 Power list compiled by Planet Compliance this spring. Looking at Finovate alums alone, we see a surprising diversity in the types of companies aggregated under the “regtech” rubric. ID verification and anti-fraud companies like Trulioo and NetGuardians shared the spotlight with data analytics specialists like Ayasdi, document processing innovators like Mitek, and even banking systems providers like Temenos and nCino.

The application of technology to the field of insurance is another area of fintech that seems like a no-brainer now that so many entrepreneurs and startups have embraced it. And while there is some debate as to whether or not insurtech is a part of fintech or an industry all to its own, there is no denying that many of the concerns that have propelled technological innovation in fintech are also at work driving disruption in insurtech. Big Data analysis and risk modeling, document transmission and storage, customer experience improvements that leverage mobile and other technologies to make it easier to shop for insurance products, are all components of the insurtech revolution. And this adds to companies like Finovate alum Insuritas that have simply leveraged technology to make it easier for community banks and similar FIs to offer insurance products to their customers.

CB Insights reports $1.7 billion raised by insurtech firms in 2016 for a total of 173 deals. Among some of the companies picking up funding in 2016 were Clover ($160 million, with another $130 million in May 2017), Bright Health ($80 million, with another $160 million in June 2017), and Cyence ($40 million). The unique health care system in the United States certainly creates ample opportunity for innovation in this space, as analysts have pointed out. But the rise in the number of insurtech startups in places like the U.K. and Europe is a reminder that there are plenty of insurance services beyond healthcare financing that technology can help provide.

Startups and Sandboxes, Challengers and Incumbents

What is in store for regtech in 2017 and beyond? One interesting prediction from Michael Meyer, Vice Chair International RegTech Association, is the rise of sandboxes as a way to incubate “dedicated testing spaces” for companies working on specific regtech challenges. “In this environment we will see companies with solutions around risk data aggregation; modeling, scenario analysis, and forecasting as required for stress testing; and, alternative approaches to AML/KYC/BSA to name a few,” Meyer wrote. “As with other domains in the fintech space, regulatory buy-in for regTech solutions will be imperative. Sandboxes can provide a means to that end.” Meyer also is optimistic on partnerships playing as much or more of a role than disruption when it comes to the relationship between startups and incumbents in the space. The role of sandboxes in the development of regtech startups will be one of the key focuses of the Regtech & Insurtech track at FinovateFall in September.

If greater cooperation between industry participants is likely to characterize regtech innovation, will insurtech be a better place to look for true disruption? In their look at top insurtech trends for 2017, Roger Peverelli and Reggy de Feniks argue that here too, incumbents and challengers will find value in working together. “Relationships between insurers and insurtechs will become much more intense,” the two wrote, pointing out that incumbents are benefitting both the specific capabilities of startups as well as “the culture at insurtechs and the way of working.” This was echoed by KPMG Insurance Partner, Murray Raisbeck, whose review of the insurtech/insurer relationship at the beginning of the year noted a “cross-pollination of leadership talent between insurtech and the traditional insurance sector during 2017.” Raisbeck suggested that the 2016 trend that saw a number of insurers creating Chief Data Officer, Chief Digital Officer, and CTO positions for the first time was likely to “accelerate” into this year. Additionally, Raisbeck sees insurers competing with each other to partner with or incubate the best insurtech startups. The winners among the insurers will be those best able to work with startups on their own terms, ensure connectivity between legacy systems and API technology, continued investment in quality data, and, not unlike in the regtech space “an acceleration of ‘proof of concept’ and pilot programmes” to speed development and eventual integration. Conversations on this relationship between insurtech startups and incumbents, as well as the prospects for disruption, will be a topic during the regtech & insurtech track at FinovateFall.


Just after the demo sessions at FinovateFall, our discussion days on the 13th and 14th present a great opportunity for deep dives and expanded discussions on critical issues in fintech. Join our live panel discussions with industry thought leaders, bank executives, and fintech professionals. Register today and save your spot.

Here’s a peek at a few of the planning conversations for the Regtech & Insurtech track at the Digital Banking Summit.

  • RegTech USA: Innovating Regulatory Compliance
  • Sandboxes and Start-ups: Supporting the development of an ecosystem
  • InsurTech Conversations: Meeting the challenge of digital disruption
  • Key trends in insurtech

This is the fourth of our six-part FinovateFall Summit Series. Stayed tuned for more on Thursday when we look at the different Digital Markets fintech is serving in 2017 and beyond.

Ephesoft Earns $15 Million Investment from Mercato Partners

Document capture and data analytics company Ephesoft landed $15 million in Series A funding from Mercato Partners. This marks the company’s first round of funding since it was founded in 2010.

“Mercato’s investment will help Ephesoft realize its vision of liberating meaning through machine learning technology,” said Ike Kavas, Ephesoft’s founder. “We view Mercato as a long-term strategic partner, and we appreciate their experience in helping visionary technology companies accelerate and manage growth. This funding will enable Ephesoft to help organizations improve business outcomes by identifying and rationalizing dark data, then understanding how it impacts their business.”

Ephesoft’s cloud-based, machine learning technology generates insights from unstructured content by capturing, extracting, and analyzing raw data for its 500 customers that operate in a variety of sectors ranging from financial services, Federal government, insurance, mortgage and healthcare. At FinovateSpring 2017, the company demoed how its platform can be used to comb through international transaction data to identify and catch money launderers.

(pictured left to right): Ike Kavas (CTO)and Alex Welsh (Vice President, Analytics Practice) at FinovateSpring 2017

The California-based company will use the investment to accelerate product development and expand operations, market presence, and sales. As a part of the investment, Joe Kaiser Principal at Mercato Partners, will join Ephesoft’s Board of Directors.

In a press release, Kaiser said:

“Organizations are struggling with the enormous volume of unstructured content, which represents upwards of 80% of all available content, and is growing at a rate of 43% per year. To provide tangible value, that information needs to be processed and analyzed. Ephesoft’s solutions are disrupting the advanced capture market with a definitive value proposition: apply machine learning to convert these unstructured information streams and repositories into actionable data.”

Earlier this month, the company announced the availability of its cloud services on Microsoft Azure. In June, Ephesoft established its Asia Pacific offices in Sydney, Australia. The company was named to the 2015 Inc. 500 list of the fastest growing companies in America and has recently received a patent for its machine learning technology.

Expensify Brings Auto Expensing to Lyft Business Riders

In the latest piece of not Schadenfreude-related good news for ridesharing innovator Lyft, Expensify has made it easier for Lyft business riders to expense the cost of work-related travel.

“Our goal is to make expense management something that happens behind-the-scenes, so our customers can focus on their business and not on keeping track of receipts,” Expensify CEO and founder David Barrett said. The new automatic expensing feature is available to individual Lyft riders who set up a Lyft Business Profile and choose “Expensify” in settings. Additionally, a Lyft for Business account option enables administrators to set up auto expensing for entire teams or departments. The new integration is a part of Expensify’s ReceiptBurner platform, which the company debuted a year ago this month, and means Lyft riders will no longer have to forward their receipts to Expensify by email for tracking and reimbursement.

“It’s always a pleasure to partner with one of our customers,” Barrett added, “especially in this case – Lyft rides are one of the five most commonly expensed items in Expensify!”

Founded in 2012, Lyft is available in 300 cities in the U.S. and supplies more than 18 million rides a month. With a valuation of $7.5 billion and $2.6 billion in funding, the ride sharing startup is often compared with rival, Uber (570 cities worldwide, valuation of more than $50 billion, $11.5 billion in total funding), which was founded three years earlier. Lyft is headquartered in San Francisco, California, and reported revenues of more than $700 million in 2016.

Founded in 2008 and also based in San Francisco, Expensify demonstrated its invoicing technology at FinovateSpring 2013. The company is also an alum of our developer’s conference in Silicon Valley last fall, at which Barrett presented “Bedrock – Expensify’s Open-Sourced Infrastructure Secret Weapon.” Last month, Expensify announced exceeding the 35,000 customer mark and in May, the company partnered with fellow Finovate/FinDEVr alum Xero, which will use Expensify’s expense management technology in-house at all 21 of its offices around the world.

Expensify has raised more than $27 million in total funding, including a $17 million Series C round in 2015. The company counts OpenView, Barracuda Networks, and Redpoint among its investors.

Finovate Alumni News

On Finovate.com

  • Expensfy Brings Auto Expensing to Lyft Business Riders.
  • Ephesoft Earns $15 Million Investment from Mercato Partners.
  • Summit View: What Drives Innovation in Regtech and Insurtech?

Around the web

  • LendingClub expands partnership with Opportunity Fund to help entrepreneurs access capital.
  • Gene Lockhart appointed Chairman of DemystData.
  • BioCatch receives patent for detecting the presence of remote access tools.
  • eToro launches Crypto CopyFund that includes top cryptocurrencies.
  • Segmint partners with IBM to enhance Financial Institutions’ data ACI Worldwide expands in Romania
  • FICO extends cybersecurity score to rate 4th party risks.
  • BrightFunds and Roostify named to Forbes Cloud 100.
  • GreenKey Technologies partners with Red Box Recorders to launch trading voice collaboration and compliance recording solution.
  • American National Bank selects Jack Henry Banking’s SilverLake System.
  • Hip Pocket graduates from Points of Light Civic Accelerator.
  • Financial Resources Federal Credit Union Teams with Roostify to Create Better Online Mortgage Experience.
  • Santander partners with supply chain finance startup Tradeshift.
  • Bancpass issued patent for its mobile payment technology.

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.