Alumni News– February 25, 2015

  • Finovate-F-Logo.jpgFinovate Debuts: How Trunomi Shares Customers’ Personal Info while Maintaining Their Privacy.
  • LendingRobot adds Automated Secondary Market Trading.
  • Digital River wins the 2015 Merchant Payment Ecosystem Award.
  • PYMNTS looks at Credit Karma’s funding history and future plans.
  • Lincoln Savings Bank to Deploy CorePro from Social Money.
  • Verde International and Lending Club featured in PYMNTS column on banks and non-traditional loan decision-making.
  • Xero Raises $110 Million from Accel Partners, Matrix Capital.
  • CAN Capital and Worldpay partner to improve access to capital for SMEs.
  • Crain’s Chicago Business looks at Rippleshot and its plans for winning bigger clients.
  • ValidSoft launches its Device Trust solution with a second major UK bank.
  • Yelp Senior Vice President of Revenue Jed Nachman joins PaySimple Board of Directors.
  • Bluefin Payments partners with Infinite Peripherals, an mPOS device provider.
  • ProfitStars launches its Commercial Lending Center, a small business lending portal.
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.

Alumni News– June 24, 2014

  • Finovate-F-Logo.jpgAmerican Banker looks at Wipit’s partnership with prepaid mobile wallet, Boost Mobile.
  • Iceland’s Acquiring Bank, Borgun, launches mPOS solution powered by Handpoint.
  • e27 examines TradeHero’s mobile app.
  • San Francisco Business Times: Taulia taps Fortune 500 to finance small businesses.
  • Geezeo announces partnership with Payveris.
  • Seasons FCU (18k members; $140 million assets) to deploy Verde International’s Corona, Aurora solutions for loan decisioning.
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.

Verde Corona, Aurora to Drive Loan Decisioning at Seasons FCU

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Seasons Federal Credit Union announced late last week that it would adopt loan decisioning technology from Verde Advisor.

Howard Brady, Chief Lending Officer for Seasons FCU highlighted the way the technology would help the credit union improve its lending strategy by being able to provide credit to a greater percentage of its membership.

“Specifically, Verde’s model enables us to responsibly serve the entire credit spectrum while increasing our net credit margin,” he said.

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The announcement means that Seasons FCU will run Verde’s Aurora and Corona solutions in tandem. Aurora is Verde’s automated, decisioning optimization engine. Corona is the company’s loan origination technology. Verde Advisor demoed Aurora at the company’s Finovate debut earlier this year at FinovateSpring in San Jose.
Patrick Reily, Verde Advisor co-founder and CEO, said, “As one of the first credit unions to deploy Verde Aurora, we look forward to helping them better serve their members through more effective pricing and instant, optimized underwriting.”
Seasons_FCU_homepage
Based in Middletown, Connecticut, Seasons FCU has more than 18,000 members and more than $140 million in assets. Seasons FCU offers a number of services (namely, Kasasa) courtesy of another Finovate alum, BancVue
Verde Advisor was founded in 2006, and is headquartered in Atlanta, Georgia. Read our Behind the Scenes conversation with the company here.

Alumni News– June 23, 2014

  • CEOs and founders from eToro, BehavioSec, TransferWise, The Currency Cloud, and Nutmeg earn spots on FN’s 40 fintech leaders list.
  • Bill Harris, Personal Capital CEO, featured on CNBC to Personal Capital and how it differs from robo-advisors.
  • Investment News looks at the humans behind FutureAdvisor’s robo-advisors.
  • Betterment adds municipal bonds asset class to make client’s non-IRA portfolios more efficient.
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.

Behind the Scenes with Digital Retail Apps and Verde International

And so, because all good things must come to an end, we’ve reached the final installment of our Behind the Scenes series. It has been a pleasure highlighting the companies that became new Finovate alums after being accepted to demo at FinovateSpring 2014.

We’ve taken a good look at 23 Finovate newcomers in the week since our spring conference in San Jose. If you’re looking to get caught up, here’s a list that will connect you with all the previous installments in the series.

So now that you’re ready to go, come with us and meet two more newcomers to the Finovate family: mobile shopping innovator, Digital Retail Apps, and alternative credit decisioning specialist, Verde International.

What they do
From the perspective of Digital Retail Apps, it doesn’t matter how efficient your payment device is if you are still waiting in line with everybody else.
Instead, Digital Retail Apps has launched Self-Pay. Self-Pay is a technology that allows consumers to pay for items in store with their mobile devices, and have those purchases confirmed by mobile device-equipped sales personnel rather than waiting in line.
The goal, in the words of company founder and CEO Wendy MacKinnon Keith, is to have consumers spending more time shopping and buying, and less time standing and waiting.
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Digital Retail Apps launched Self-Pay last December at a beauty salon in Edmonton, Canada. During an anniversary event in the store the following spring, Self-Pay represented 8% of in-store transactions, with 78% of the Self-Pay shoppers opening accounts that day. From the company’s perspective, this is evidence that consumers will readily download and use a mobile app alternative to waiting in line.
The stats
  • Founded in March 2012
  • Launched SelfPay in May 2014
  • Has $500,000 in self-funded capital
  • Less than 10 employees
The experience
“We’ve finally integrated shopping and paying in one seamless flow,” says Wendy during a conversation at FinovateSpring 2014. And seamless is an apt description for the Self-Pay experience. Shoppers in a store where Self-Pay is available simply scan the QR codes of the items they want to purchase with the camera on their mobile device. The Self-Pay mobile app keeps the product data in a cart, just as shopper would encounter while doing online e-commerce.
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When the shopper is ready to check out, rather than head over to the register and hope the line isn’t too long, all she needs to do is bring her mobile device to a salesperson who is also carrying a Self-Pay enabled mobile device. The salesperson can then confirm the sale, and the shopper is quickly on her way. 
What’s interesting – and what was in evidence at the Lux Beauty Salon Self-Pay launch noted above – is that the time spent not waiting in line is often instead spent doing more shopping. Wendy found that the receipts for Self-Pay transactions were 17% higher than non Self-Pay transactions during Lux’s anniversary day event, and doubts that is a coincidence. “Lines change behavior,” she says.
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Self-Pay leverages Beacon technology in a number of ways, from welcoming shoppers when they enter stores where Self-Pay is available, to reminders to “come back soon” the next time the shopper is in the area. It is easy to imagine this technology being leveraged further, with highly-targeted offers, for example.
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Over the balance of the year, Digital Retail Apps hopes to pilot with much larger retailers. Self-Pay is fully-integrated with Beanstream, LightSpeed, Shopify, and Vend POS software, helping pave the way for wide adoption. A pilot with a major retailer by 2015 is among the company’s goals.
In the meanwhile, Digital Retail Apps remains focused on solving the needs of end users, reducing friction as much as possible. Technology should help consumers focus on what Wendy calls “the delight of the shopping experience” as opposed to the payment experience, where she sees most of the innovation focusing. “We are not payers, we are shoppers,” she says.

What they do
Are borrowers more than just credit risks to be managed? Or are borrowers fully financial and economic entities that are often more than the sum of their credit scores?
It may sound crazy in this post-financial crisis era, but Verde International is making a strong case for the latter.
In the words of Verde International’ s Chief Operating Officer Jason Daniels, Verde International’s goal is to help financial institutions capture the $140 billion in net income of dollars “left on the table” due to the inability of FI’s to properly serve retail and business customers deemed poor credit risks. Unveiling their loan decisioning technology, Aurora, at FinovateSpring, the company is showing how big data and big analytics can help lenders catch many potential borrowers who are otherwise falling through the cracks.
Verde_International_homepage
My conversation with Verde International CEO Pat Reily was a fascinating excursion into the world of lending at the margin. “As we move beyond the very best credit customers,” he explained. “Denial rates go up in part because models are poor.”
“Looking at out of the mainstream customers with mainstream tools,” he said, is a sure path to what he calls “alienated customers.” It also offers us a new way of looking at a lending market, the subprime market, in a way that is also very much out of fashion in recent years.
“Subprime isn’t bad,” Pat said. “There may not be enough information or a life event. These factors go unseen.”
The stats
  • Founded in June 2006
  • Product launched in April 2014
  • Headquartered in Atlanta, Georgia
The experience
Verde Aurora looks to both improve loan terms and to help FIs meet the unmet demand Jason and Pat spoke of. The technology starts by predicting payment behavior and uses these predictions as a basis to set up pro forms for each set of loan terms.
Each possible loan term option is given optimal terms that satisfy both the customer and investor return expectations. Verde International calls this part of the process “getting to the best guess” and explains how it differs from the “fast” but “crude” traditional approach that focuses almost exclusively on “rates on scorecards.”
Instead, Verde International relies on advanced, market-specific modeling, as well as customer experience, to predict not only repayment behavior (including default risk), but repayment timing and magnitude, also. This nuanced attention to behavior helps the company understand the complex relationship between behavior and pricing. “This is a simultaneous problem requiring a simultaneous, convergent solution,” said Jason.
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Aurora lets clients test their financial assumptions around their policy thresholds. Everything from fees and costs, collateral and cost of capital can be seen alongside real world loan application scenarios. These initial loan terms are compared with optimized terms calculated by Verde Aurora to provide clients with a base from which to make further adjustments.
In the examples provided, the adjustment for the given loan included a term adjustment that extended the life of the loan. The idea in this instance was that a loan with a potential charge-off later in its life was more valuable than a loan that had the potential for an earlier charge-off date.
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The goal is to create a win-win for all stakeholders involved: competitive pricing for borrowers, a fair return for shareholder risk, and terms that meet the letter and spirit of fair lending. Above is a screenshot showing a comparison of cash flows for the optimized solution versus collateral value in the sample loan.
And below is a screenshot of Verde Aurora’s loan origination system (although the platform plays well with most common loan origination systems). Aurora provides a final evaluation of the loan terms as requested, an evaluation that even includes a counteroffer in the event that it can improve on the terms initially offered.
Verde-Finovate-3
Looking forward, Pat seems a number of opportunities for Verde International and Aurora, real estate and the mortgage area is one, particularly as it relates to the economics of the secondary market. He said the company is also looking into the possibility of integrating a mobile web app for loan origination with top fraud and ID verification resources. “If you’re going to lend well in a non-traditional environment, you need to meet (people) where they are,” Pat said, adding that features as straightforward as push alerts and similar reminders could also become a part of the platform by early 2015. The goal, he said, “is to increase the quality of the engagement.”
But in many ways it is the underlying insight that not only guides the technology, but the mission of the company as well. “If you take away nothing else,” said Jason from the Finovate stage, ” it’s that underwriting loans is not just a credit risk decision.”
In conversation late on Wednesday as the conference attendees were making their way downstairs for the Best of Show announcements, Pat echoes those sentiments: “I’m passionate about giving people a rung on the ladder.  For example, the nature of the job matters. Consider a farm worker. What kind of cash flow can we expect from this borrower? Making the payment easy to digest is critical.”

Verde International Debuts Aurora: a Next Gen Automated Loan Underwriting Optimization Engine

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This post is part of our live coverage of FinovateSpring 2014.

Our next presenter is Verde International, an innovator in the field of loan origination.

“Verde Aurora sets itself apart from the limited decision-making capability of today’s loan origination systems. You need more than a collection of filters and screens to guide a manual decision. Verde Aurora uses advanced behavioral models and projected cash flows to automate offers with rare staff involvement. Each loan is designed to maximize the opportunity for both shareholders and customers. This solution is equally effective across the full credit spectrum and is scalable for lenders of all sizes. In subprime space, it routinely increases approval rates fourfold, and in super prime, it more than doubles average ROA’s.”
Presenting: Patrick Reily (CEO & Co-Founder) and Robert Hughes (CEO, Finance and Thrift)

Product Launch: April 2014
Product distribution strategy: Direct to Business (B2B), through financial institutions, licensed
HQ: Atlanta, Georgia
Founded: June 2006

FinovateSpring 2014 Sneak Peek: Part 1

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The northern hemisphere’s first day of spring last week can mean only one thing: FinovateSpring 2014 is just around the corner. To help you prepare for the upcoming onslaught of innovation, we’ll be dishing up bite-sized pieces of some of the companies you’ll see in San Jose on April 29 and 30.

In this first installment, we showcase ChiaraMail, Dealstruck, Digital Insight, ID.me, LendingRobot, and Verde International:


ChiaraMailLogo

ChiaraMail offers the first technology to protect your customers from becoming victims of e-mail address spoofing, while providing them unprecedented e-mail privacy without the use of encryption.

Features:
    • Eliminates spoofing and the resulting identity theft.
    • Ensures in-transit privacy.
    • Adds critical functionality such as changing e-mails after sending, and improved mail network efficiency.
Why it’s great:
ChiaraMail technology assures your customers that a message that claims to be from you is actually from you.  
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Robert Uomini, CEO/President
Uomini is founder of ChiaraMail and inventor/developer of the patented technology behind ChiaraMail. He has been developing disruptive technologies for many years.
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David Head, Chief Marketing Officer
Head is a senior marketing and sales executive with more than 20 years of experience in enterprise and start-up companies bringing game-changing technologies to market.


DealstruckLogo

Dealstruck is a web-based peer-to-peer lending company that offers a suite of financing products to small business borrowers designed to progressively graduate them toward conventional financing.

Features:

    • Real-time access to borrowers and deals
    • Ability to manipulate data from Dealstruck loan packaging to augment underwriting/yield
    • Opportunity to participate alongside others or take down full loans
Why its great:
Dealstruck provides the most complete suite of financing options for business borrowers and investment opportunities for lenders.  

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Ethan Senturia, co-founder and CEO
Senturia is Wharton Business School graduate who previously ran Internet marketing for a lead generation startup, Ampush Media, and in distressed credit at Lehman Brothers.

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Russell McLoughlin
McLoughlin, co-founder and CTO, is a B.S./M.S. who has worked at the Biodefense Knowledge Center at Lawrence Livermore National Laboratory, and at Google Machine Translation and Apple.

DigitalInsightLogo

Digital Insight’s Promotion Suite for mobile reaches the right customers on their mobile device with the right offers at the moment of truth.

Features:

    • Brings personalized, relevant cross-sell offers from financial institutions to their customers.
    • Engages consumers in their moment of need anywhere, anytime and on any device.
Why it’s great:
Provides personalized engagements and enhanced communications to connect financial institutions with their customers like never before. 

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Karishma Anand
Anand is the director of product management for Digital Insight. She is responsible for driving product strategy, execution for digital banking and payments solutions.
LinkedIn

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Marshall Yuan 
Yuan is a senior product manager at Digital Insight. In this role, he oversees the strategy and go-to-market plan for Android banking applications.
LinkedIn


IDmeLogo

ID.me verifies attributes of a consumer’s identity and ties them to a payment medium

Features:

    • CRM, Offers, Loyalty and Authentication via a payment medium
    • Elimination of physical credentials needed at checkout
    • Fraud prevention for high-value transactions via authentication
Why it’s great:
User-centric digital identity, attribute verification and a mobile device enables the holy grail of marketing: personalization  

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Blake Hall 
Hall is a former Army Ranger and Harvard Business School graduate. Thanks to The Economist, he is the first Google result for “muscly entrepreneur.”

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Matthew Thompson
Thompson is a former Army Ranger and a decorated combat veteran. He co-founded ID.me while attending Harvard Business School.
LinkedIn


LendingRobotLogo

LendingRobot automates loan selection and investment in Peer Lending.

Features:
    • Fully automates investment in LendingClub and Prosper
    • Submits orders within one second after new loans appear
    • Automated definition of investment strategies
Why it’s great:
LendingRobot makes investing in Peer Lending simple and efficient, and allows individuals to compete with institutional investors.  

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Gilad Golan, CEO 
Golan shipped almost every product he ever built (and he built a lot of them).
LinkedIn

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Emmanuel Marot, President
Marot uniquely mixes backgrounds in both user experience design and quantitative finance.


VerdeInternationalLogo

Verde International’s Verde Aurora is a next-gen automated loan-underwriting optimization engine satisfying customers, shareholders, regulators, dealers, and other stakeholders, instantly.

Features:
    • The best possible decisions and counteroffers, delivered in seconds
    • Loss models that outperform industry leading models by fourfold
    • Scalable deployment that any financial institution can afford
Why it’s great:
Verde Aurora obsoletes today’s decision systems by integrating behavioral models, DCF analysis and MPP-driven optimization for perfect instant offers, pleasing customers and shareholders alike. 
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Patrick Reily, CEO and Co-Founder Verde International
Reily’s multidisciplinary approach to strategic planning and business development is the result of 25 years of experience in banking and financial services. 
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Robert Hughes, CEO of Finance and Thrift Co.
Bob has over 30 years of experience as the President/CEO of federally insured financial institutions.

Stay tuned for a sneak peek of another six companies later this week.