Month: December 2012

Compass Plus Earns High Marks in Annual PayX Report

By David Penn Posted on
Categories: Compass Plus

Thumbnail image for CompassPlusLogo.jpg

A perfect score in the “card-issuer processing capability” category helped TranzWare from Compass Plus earn high marks in the annual PayX report.

TranzWare helps financial institutions manage, switch, and route electronic payments from multiple devices. In this year’s PayX report, the TranzWare product suite earned perfect scores in “complementary products” and finished in the top three (out of 19 reviewed) in a number of other categories such as, “product,” “industry,” and “customer profile overview.”

The PayX report focuses on the year’s top card-acquiring-payment software solutions. This year’s appearance in the report was the second for Compass Plus.

Compass Plus demonstrated another of its recent products, TranzAxis, at FinovateFall 2012 in September.  See the demo from Compass Plus here.

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Guess Who’s Back? NetBank

By Jim Bruene Posted on
Categories: Bank of Internet, Deposits, Checking, Savings, CDs

imageIt’s been 5 years since NetBank failed (see our post). At the time it was the largest bank failure in 14 years. But little did we know then (Sep 2007), that the $110 million taxpayers coughed up to cover its deposits was nothing compared to what was about to happen in the financial markets (note 1).

After the failure, ING Direct bought the NetBank retail deposit business and took ownership of the domain netbank.com. But they never did anything with it besides forwarding the URL it its homepage. 

But evidently Capital One didn’t want to be associated with that failed endeavor and/or it thought the "net" was too limiting for the mobile world. So, the Netbank URL and name were sold sometime this year to Bank of Internet (note 2). The URL has pointed to BofI since at least September. No word on the purchase price, but given that investing.com just sold for $2.5 million, I’m guessing it was in the $500,000 to $1 million range. 

Anyway, the back story matters little anymore. It’s a good name, and once the Google search results no longer have those 5-year-old "failure" articles on the first page, the baggage should be reduced to almost nothing (note 3).

As you can see from the banner running across the homepage (see second screenshot below), the new NetBank is targeting the account towards the "underbanked" (note 4). But the account is positioned as "real checking" as opposed to a prepaid card.

And it has one key feature that sets it apart from most checking accounts: the ability to deposit cash into the account via Green Dot’s MoneyPak.

The checking account costs $6.95/mo with direct deposit, or $8.95 per month. It pays 0.25% interest and is loaded with all the important account features (checks, debit card, p2p transfers, rewards, PFM, mobile remote deposit and so on).

It’s a good value compared to many alt-banking products. However, consumers in good standing with the U.S. banking system and willing to forego the MoneyPak option, would save with BofI’s free checking with no overdraft charges. 

Bottom line: It’s good to have the brand back in the game. Now, when will someone revive NextCard’s name?

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Before: Last known screenshot of bank before failure (20 Aug 2007, from Archive.org)

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After: NetBank’s new homepage (13 Dec 2012)

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Notes:
1. For those that want to relive those dark days, here is the 54-page U.S. Treasury audit of why Netbank failed (published 23 April 2008).
2. I don’t know whether Capital One acquired netbank.com in its ING Direct acquisition or whether ING Direct sold it directly to BofI. It was not a material asset in the $9 billion deal.
3. Someone needs to do BofI a favor and get that Wikipedia entry updated ASAP. 
4. Or at least those currently locked out of the banking system due to bad ChexSystem scores.

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Finovate Alumni News– December 13, 2012

By David Penn Posted on
Categories: Credit Sesame, Dwolla, InComm, Lending Club, Manilla, On Deck Capital, PayPal, TradeHero, wipro
  • Manilla update means one app is all you need to manage expenses from bills to subscriptions.
  • Just in time for the holidays TradeHero is now available at the Apple app store.
  • Former Treasury Secretary Lawrence Summers to join Lending Club board of directors.
  • CorFire announces strategic integration with PayPal.
  • Speaking of PayPal, you can now fund your account with cash using PayPal’s new “PayPal My Cash Card.”
  • Credit Sesame launches free credit-monitoring service.
  • Wipro announces the launch of SmartOffers, in partnership with Intuition Intelligence.
  • On Deck Capital adds American Express veteran to head marketing efforts.
  • InComm launches the Paypal My Cash Card.

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.

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Apply to Demo Your Latest FinTech Innovation at FinovateSpring 2013

By Eric Mattson Posted on
Categories: Uncategorized

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With 2012 winding down and our awesome lineup for FinovateEurope soon to be announced, we’ve officially begun accepting applications to demo at FinovateSpring 2013 next May in San Francisco.

There is a tremendous amount of innovation going in the fintech space in Silicon Valley and we’re incredibly excited to be headed back to San Francisco to showcase the best of it. Based on early trends, we expect FinovateSpring 2013 to be our largest event ever — beating last year’s record attendance of 1,200. 

If you’re interested in debuting your latest financial or banking technology innovation at the event, please email us at spring@finovate.com to get more details.

If you want to attend and watch the future of fintech debut live, tickets for the event are now on sale at our lowest “presale” price of $995 ($400 off list price) — but only through this Friday December 14. Please lock in your seat now to guarantee your ability to attend (and these savings)!

We’ll see you in San Francisco in May (or London in February)!

FinovateSpring 2013 is sponsored by: The Bancorp and Financial Technology Partners

FinovateSpring 2013 partners include: BankersHub and Celent

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Apply to Demo Your Latest FinTech Innovation at FinovateSpring 2013

By Eric Mattson Posted on
Categories: Uncategorized

btn2_ov.png

With 2012 winding down and our awesome lineup for FinovateEurope soon to be announced, we’ve officially begun accepting applications to demo at FinovateSpring 2013 next May in San Francisco.

There is a tremendous amount of innovation going in the fintech space in Silicon Valley and we’re incredibly excited to be headed back to San Francisco to showcase the best of it. Based on early trends, we expect FinovateSpring 2013 to be our largest event ever — beating last year’s record attendance of 1,200. 

If you’re interested in debuting your latest financial or banking technology innovation at the event, please email us at spring@finovate.com to get more details.

If you want to attend and watch the future of fintech debut live, tickets for the event are now on sale at our lowest “presale” price of $995 ($400 off list price) — but only through this Friday December 14. Please lock in your seat now to guarantee your ability to attend (and these savings)!

We’ll see you in San Francisco in May (or London in February)!

FinovateSpring 2013 is sponsored by: The Bancorp and Financial Technology Partners

FinovateSpring 2013 partners include: BankersHub and Celent

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P2P Lending Pioneer Zopa Announces New Funding Round

By David Penn Posted on
Categories: Zopa
Image representing Zopa as depicted in CrunchBase

UK peer-to-peer lender, Zopa, announced Monday that it landed a “multi-million pound” funding-round. Exact terms remain undisclosed. Augmentum Capital, a venture capital fund under RIT Capital, led the round.

Zopa’s news arrives as the United Kingdom takes a closer look at the growing business of peer-to-peer lending, and is considering additional regulations on the industry. Founded in 2005, Zopa was the first “peer-to-peer” lending marketplace. It now has about 500,000 members who have lent more than £250 million among themselves.

Investors in the company have included Balderton Capital, Forward Venture Partners, Bessemer Venture Partners, and Wellington Partners, as well as Augmentum Capital.  

Additionally, the British government has announced that Zopa will be one of the peer-to-peer lenders it will use as part of £110 million in lending to small-and-medium-sized enterprises.  Zopa’s share of the initiative is £10 million.

Zopa’s now-defunct USA affiliate presented at the first Finovate in San Francisco here.

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12/12/12 Credit Union Promotions

By Jim Bruene Posted on
Categories: Certificate of Deposit, Chase Bank, Holiday promotions, Loans & Credit

imageLast year, we were disappointed at the lack of promotions on double-triple-digit day, finding just a single promo 11/11/11 promotion (see our post on Notre Dame FCU). But it was Veteran’s Day and most U.S. banks were closed.

This year, 12/12/12 falls at a much better time in the promo calendar, and FI marketers responded, at least on the credit union side. In the first five pages of Google results we found 15 CU promotions, most offering 12-month, $1,200 loans.

However, it turns out that “12/12/12 loans” are regular December fare at a number of credit unions. Only four of the 15 were focused on the once-in-a-hundred-years date, one on the deposit side and three low-rate loan specials (note 1).

The standout deal? A 0.12% APR on a $1,200 loan from L’Oreal USA FCU. 

Here are the four CU 12/12/12 promos:

  • L’Oreal USA Federal Credit Union: 12-month, $1,200 loan with with APR = 0.12% (requires payroll deduction & estatements; link, screenshot #1)
  • Meadowland Credit Union: 12-month, $1,200 loan with rate as low as 1.2% (direct deposit & checking account required; link, screenshot #2)
  • Notre Dame Federal Credit Union: 120-day loan of $1,212.12 at an APR of 1.1212% (requires opening new credit card; link, screenshot #3)
  • USAlliance FCU: 12-month, 1.2% APY CD (new money only; link, screenshot #4)

Other 12/12/12 loan seemingly unrelated to Dec 12, 2012 (with links to the loan page):

  • Carolina Foothills FCU (link)
  • Clackamas FCU (link)
  • Ecusta Credit Union (link)
  • Freedom FCU (ran during the summer, link)
  • Fremont FCU (link)
  • Gulf Coast Educators FCU (link; see banner at top of post)
  • John Hopkins FCU (link)
  • Northwest Georgia Credit Union (link)
  • Northwest Resource FCU (link)
  • SRP Federal Credit Union (link)
  • Telhio Credit Union (link)

No banks seem to be joining the fun. Although Chase was promoting its sponsorship of the 12/12/12 Sandy benefit concert with an AdWords buy on Google yesterday (screenshot 5). 

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1. L’Oreal USA FCU is offering a rate of just 0.12%
Note: Interest totals just $0.78 over the life of the loan, payroll deduction required

image

2. Meadowland Credit Union worked Aaron Rodger into its promo

image


3. Notre Dame FCU is the only FI that ran promotions on both 11/11/11 and 12/12/12 promotions (11 Dec 2012)

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4. USAlliance FCU was the only one with a deposit special

image

Chase Bank is the headline sponsor of a Sandy benefit concert (link)

image

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Note:
1. We searched for “12/12/12 promotion credit union” and found many entries. The same search with “bank” instead of “credit union” turned about nothing (at least through the first dozen pages of results).

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Finovate Alumni News– December 12, 2012

By David Penn Posted on
Categories: BrightScope, MasterCard, TSYS, Zopa

Thumbnail image for Thumbnail image for Finovate-F-Logo.jpg

  • BrightScope’s annual list of top 401(k) funds has been highlighted in The New York Times.
  • Two credit unions sign deal with TSYS to provide payments services for consumer credit businesses.
  • MasterCard announces investment in and partnership with C-SAM.
  • British government to loan 10 million pounds to SMEs by way of P2P lender, Zopa.
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.

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Entrepreneurial Finance Lab’s Platform Helps FIs Increase Small Business Lending in Developing Nations

By Julie Muhn (@julieschicktanz) Posted on
Categories: Entrepreneurial Finance Lab, Product Review

EFLLogo.jpg

Earlier this month, I was briefed by the COO of Entrepreneurial Finance Lab (EFL), Dennis DiDonna, on how they are increasing small business lending in developing countries while lowering default rates. EFL demonstrated at FinovateAsia last month in Singapore.

Company overview

eflStats.jpg

    • Launched in 2010 
    • 30 employees
    • Offices in North America, Latin America, & Africa
    • Used by a top-10 bank in Indonesia

Origin
EFL began as a Harvard Kennedy School of Government research project by professor Asim Khwaja, and PHD student Bailey Klinger. Khwaja and Klinger were studying the “missing middle,” meaning the lack of small- to medium-sized enterprises in developing countries. The project was so successful that the two went on to co-found the company.

Operating in 16 countries

  • Kenya
  • Nigeria 
  • Ghana
  • Tanzania
  • Malawi
  • Lesotho
  • Botswana
  • Zambia

  • Namibia
  • Swaziland
  • Mexico
  • Peru
  • Costa Rica
  • Indonesia
  • Haiti
  • Zimbabwe
EFLMap.jpg

EFL from the borrower’s perspective
Prospective borrowers begin the loan application by answering about 200 assessment questions. Using their finger or a stylus on an Android tablet app or PC, 80% of participants finish within 40 minutes because the questions are written at at third-grade reading level.

The questions are different from what you would expect on a typical loan application and use techniques such as memory recall to keep users engaged (see samples below). It seems more like a game than a test.

Since the application doesn’t require cellular or mobile data, it can be completed offline. This flexibility is crucial when doing business in countries with limited Internet access. The app can be taken into the field (e.g., the borrower’s home or business) or it can be completed in the branch.

Sample question 1 (memory recall challenge):

Thumbnail image for fluidintelligenceQuestion.jpgSample question 2 (honesty assessment):Thumbnail image for HonestyQuestion.jpgSample question 3 (business intelligence assessment):Thumbnail image for BusinessQuestion1.jpgFrom the bank’s perspective

The FI has two options for the underwriting process:

1) They can send one of their loan officers to the customer’s place of business, where the assessment can be taken on a tablet

2) The customer can come into the bank branch and complete the assessment on a PC or tablet

Completed loan applications are submitted to EFL, where the startup analyzes the answers, generates a risk score, and sends the score to the FI within 30 minutes. 

In addition to the risk score, the EFL application can also capture:

    • Borrower’s fingerprints captured on the device 
    • Photo of the borrower (see screenshot below)
    • Photos the borrower’s inventory and storefront

Each of these extra inputs increases the likelihood that the loan will be repaid.  

EFL maintains a database of applicant-info that FIs can use to analyze their borrower base.

FIReport2.jpg

What’s next
This week, EFL will be launching in Zimbabwe and is heavily focused on more geographic expansion. Because countries are culturally different, each requires a tailored interaction with the borrower base. EFL is also researching the use of biometrics for additional security on the system.

To learn more about EFL, watch its FinovateAsia 2012 demo.

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Finovate Alumni News– December 11, 2012

By David Penn Posted on
Categories: Bill.com, Capital Access Network, FIS, Flint Mobile, MasterCard, Monitise
  • From online to the desktop, Bill.com is now fully integrated with Quickbooks.
  • Thumbnail image for Thumbnail image for Finovate-F-Logo.jpgFIS announces deal with VW Credit for North American loan and lease processing.
  • New team at Capital Acess Network to build online lending engine, CapTap.
  • MasterCard launches ‘cash electronification’ service rePower in Europe.
  • Monitise and Intuit partner to bring Mint to financial institutions.
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.

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Square Expands its Payments Footprint with Virtual Gift Cards

By Jim Bruene Posted on
Categories: Mobile Payments, Prepaid/gift cards, Square

imageAs the first billion-plus payments startup since PayPal, I’ve been looking forward to watching Square deliver on those hefty expectations.

We got a glimpse today of where it’s heading as the company rolled out virtual gift cards. That’s a business with as much potential as anything it has done to date (note 1). 

And it’s available now at any of the 200,000 merchants that accept the Square Wallet.

__________________________________

How it works
__________________________________

Square mobile app with Gift Card option Consumers can use their Square Wallet app to purchase a virtual gift card ($10 minimum; $1000 max) for any Square merchant. It can be sent immediately to any email address right from mobile app, which is integrated with iPhone contacts.      

As show in the inset, the gift card option is shown under each merchant’s "page" within the Square Wallet app (above the fold).

Square holds the funds until redeemed. The virtual card can only be used by the recipient at the designated merchant using Square’s processing services. In the event that the merchant stops taking Square, the funds will be cashed out and placed in the recipient’s Square wallet for use at any other Square merchant.

Recipients can potentially redeem in three ways, but the last two options only work for merchants that support bar-code scanning at the POS:

1. Square Wallet app
2. iPhone Passbook (if merchant accepts Passbook)
3. Printing or displaying the QR code sent in the original email to recipient (if merchant supports QR code scanning)

If the recipient does not accept the gift card within 90 days, the money is returned to the sender.

So far, there are no fees or expiration dates for the gift cards. But the company must comply with a thicket of state rules on abandoned property and escheatment, so dormant cards are not pure profit unless Square institutes some type of inactivity fee down the road (note 2).
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Bottom line
_____________________________________________________

While messy, gift card issuing is a great business that offers numerous monetization avenues (note 2). It demonstrates how potentially lucrative it can be to be both the transaction acquirer and wallet/card issuer. That’s what’s sending Square’s value to the stratosphere. 

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1. Email from Square to the gift card recipient

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2. The Gift Card "wrapper"
Note: This is one of four designs the sender selects from

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3. The Gift Card then needs to be "saved"

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4. Non-Square customers are prompted to open a Square Wallet account
Note: For those that don’t want to open a Square account, an "print" option is offered (at bottom of screen), but the merchant must support bar-code scanning for that option to work (see next screenshot).

image

5. If the merchant does not support bar-code scanning, the gift card can only be redeemed through Square Wallet

image

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Notes:
1. Here are the current Square business initiatives:

  • Merchant acquiring
  • POS systems
  • Merchant analytics
  • Mobile wallet
  • Merchant discovery/offers/ads
  • Starbucks relationship
  • Merchant loyalty business

2. Currently, Square tells users in the app that "Gift cards through Square have no fees and never expire." So, it doesn’t sound like they’ll be monetizing with inactivity fees anytime soon. 

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Third Quarter 2012 Funding for Finovate Alumni: More Than $50 Million Raised

By David Penn Posted on
Categories: CashStar, Continuity Control, DemystData, FreeMonee, FutureAdvisor, On Deck Capital, SaveUp, The Currency Cloud

Thumbnail image for Thumbnail image for Finovate-F-Logo.jpg

August was the biggest funding month of the third quarter. Six companies raised more than $49 million, led by FreeMonee, which alone raised $34 million.

In addition to the eight companies listed below, On Deck Capital raised $100 million in credit facility commitments in late August. 

Here’s the Q3 summary for 2012:

July — $6 million raised by 2 companies

August — More than $49 million raised by 6 companies

Note: Funding that companies received before they demonstrated at Finovate was not counted. Questions? Comments? E-mail us at Julie@Finovate.com or David@Finovate.com.

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