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“We’re shaping the future of the B2B payments industry by fundamentally changing the way businesses pay their bills,” AvidXchange CEO and co-founder Michael Praeger said. “(We) provide a single platform for AP and payments with the largest payments network for the middle market.”
Praeger noted that even in 2019 more than 60% of businesses in the U.S. relied on paper checks to pay bills, generating $2.7 trillion in annual administrative costs. AvidXchange enables mid-market businesses to avoid this expense by automating invoice and payment processing in a single platform. the company processes 9.5 million payments a year via its network of more than 500,000 suppliers.
The funding announcement comes as the company reports that new acquisition BankTEL has secured its first partnership leveraging AvidXchange’s AvidPay solution. BankTEL will collaborate with Studio Bank, a Nashville, Tennessee-based boutique bank, which will use the platform to automate and streamline their AP to payment process.
AvidXchange was named to the Inc. 5000 list in November and earned a spot on the Forbes Cloud 100 list in October. Last year, the company also added 175 new workers, taking its total workforce to 1,400+ across seven offices. Headquartered in Charlotte, North Carolina, AvidXchange was founded in 2000.
With FinovateEurope less than a month away, we thought we’d take a look at some of the fundraising success the conference’s alums had in 2019.
From companies that demoed at our very first FinovateEurope in 2012 to some of FinovateEurope’s newest players, alums of our European conference raised more than $940 million in funding last year. We’ve listed the companies below in alphabetic order, along with a link to their demo so you can learn more about the company and its work.
Looking to showcase your latest fintech innovation on stage? Send us an email at firstname.lastname@example.org to find out how to become one of our demoing companies next month at FinovateEurope in Berlin, Germany, on February 11 through 13.
And if you haven’t picked up your ticket yet, run, don’t walk, to our registration page and save your spot today! Take advantage of big savings by signing up before January 31.
Vive la France, indeed! One week after French payment app Lydia announced a $45 million fundraising, neobank Qonto reports that it has just closed the largest funding round to date for a French fintech.
French challenger bank Qonto has raised $115 million (€104 million) in Series C funding. The round was led by Tencent and DST Global, and also featured participation from existing investors Valar and VC Alven. Two angel investors, Taavet Hinrikus (TransferWise co-founder) and Ingo Uytdehaage (Adyen CFO), were also involved in the financing. Qonto now has raised a total of more than $150 million (€136 million) in capital.
The company will use the funds to fuel its expansion into three new markets just entered in 2019: Italy, Spain, and Germany. The investment will also help Qonto strengthen its position in France where the majority of its 65,000 SME and freelancer customers do business. The funding will help the company grow its headcount from 200 to 300 within a year, and help Qonto secure a credit institution license by year’s end that will allow it to become a bank.
Investors in the firm credited Qonto for its ability to efficiently provide financial services for an underserved sector such as freelancers. Managing Partner for DST Global Tom Stafford praised the company for “using technology to change banking for small and medium size businesses from a source of friction to a source of competitive advantage.”
Founded in 2017, Qonto offers freelancers and SME business owners a range of financial services from streamlined account opening and expense management to real-time notifications and visibility into cash flow. The company was named one of the “hottest startups in Paris” by Wired U.K. last August.
When the discussion of diversity in the tech world comes up, the conversation is typically oriented around gender diversity. But the call for greater inclusion in the tech world is not limited to gender; diversity along ethnic lines is also a goal that technology companies have increasingly begun to strive toward.
Perhaps the international nature of many technology enterprises, with tech entrepreneurs and tech talent truly arriving in Silicon Valley from all corners of the globe, serves to mask the relatively small number of tech firms in general, and fintech firms, in specific, that are run by Americans who are ethnic minorities. Indeed, an online search for “African Americans in fintech,” for example, is almost as likely to produce entrepreneurs from Nairobi, Kenya as from Newark, New Jersey.
Importantly, there are tech firms that have won admiration for the diversity of their teams. Slack, for example, was widely praised for its diversity report which, released in 2017, showed that the company had achieved better gender diversity than its Silicon Valley peers. The report also revealed that Slack’s workforce had as much as 3x the number of underrepresented minorities (African American, Latino/Hispanic, and Native American) as its peers. An Atlantic article from 2018 pointed out that where Slack had minorities in 13% of all technical positions and 6% in leadership positions, companies like Google and Facebook had less than 4% of their technical positions filled by underrepresented minorities.
How has fintech fared when it comes to ethnic diversity in its technical and leadership ranks? Finovate has hosted a handful of fintech companies with African American leadership over the years – Clinc and its CEO and co-founder Jason Mars, DarcMatter and its COO and co-founder Natasha Bansgopaul, are two that come to mind. And the industry writ large may have more founders of color than many think: Forbes celebrated the release of its Forbes Fintech 50 roster last year by featuring Ryan Williams, the young, African American CEO of mortgagetech firm Cadre on the magazine’s cover. And venture capital firms like Backstage Capital have made investment in startups with founders of color – as well as women and members of the LGBT community – a priority.
Nevertheless, even as the number of African American and Latino/Hispanic tech founders and leaders has grown, it remains true that there are fewer African American and Latino/Hispanic founders and CEOs in fintech relative to other areas of technology, including education and health-related tech fields.
One of the biggest problems that companies lacking in diversity can face is that it can make them less capable of responding to the needs of diverse markets. Fintech analyst Mary Wisniewski wondered in a 2018 American Banker article “Are black millennials a blind spot for fintech firms?” and noted that while millennials in general have developed a healthy skepticism toward banks, this wariness is all the more pronounced in young people from communities of color. Among the solutions offered are more minority-owned financial institutions, and an increased emphasis on financial literacy and wellness as an engagement strategy for younger minorities.
In this regard, fintechs like GRIND may become more well-known and popular. Launched last year and based in South Central Los Angeles where it caters to the local African American community, GRIND offers FDIC-insured debit accounts, a mobile banking app, and the ability to get paid two days earlier if they set up direct deposit with GRIND. Another example of this kind of company is Finhabits, a bilingual (Spanish/English) mobile investment platform launched by Carlos Garcia in 2015. Garcia, an MIT graduate with experience with Merrill Lynch and Galileo Investment Management, explained that the issue for Latino and Hispanic communities was not their ability to save, but their lack of familiarity with investing. “Our day-to-day money management is good, but planning for 15 years ahead is not” he said in a 2017 profile.
As fintech continues to diversify itself as an industry, one good note is that it appears that fintech may be helping alleviate some of the issues in financial services caused, in part, by a lack of diversity. A recent report from the FDIC on consumer-lending discrimination in the fintech era, for example, suggested that technology may be playing a positive role in reducing the discrimination in credit faced by Latino/Hispanic and African-American consumers in particular. The report specifically pointed to “new entry of fintech platforms” as well as digital improvements by incumbents for increasing competition and declining rate discrimination.
It is hard to imagine having a better start to your week than Plaid had seven days ago when the innovative fintech (and Finovate alum) announced that it had agreed to be acquired by Visa for $5.3 billion.
But the €90 million ($100 million) raised by Swedish open banking platform Tink on Monday is nothing to sneeze at. In fact, the funding, which is the company’s largest to date, is a reminder that investment interest in (and funding for) companies dedicated to developing the infrastructure that connects consumers, banks, and the financial technologies is very much in abundance.
“Our aim is to become the preferred pan-European provider of digital banking services and to offer the technology needed for banks, fintechs, and startups to leverage the opportunities of open banking and enable them to successfully develop financial services in the future,” Tink co-founder and CEO Daniel Kjellén said in a statement.
The London-based money transfer firm, founded in 2012, promoted its COO Richard Ambrose to CEO back in August, as Azimo founder Michael Kent took what TechCrunch referred to as a lateral move to become executive chairman. Today, Fintech Futures, Finovate’s sister publication, reports that the company has appointed Dora Ziambra to the post of Chief Operating Officer. Azimo also promoted its head of finance Tatiana Okhotina to the post of Chief Financial Officer.
“We’re fortunate to have the depth of talent to fill these top roles internally,” Ambrose said in a statement. “We’re lucky too that Azimo will continue to benefit from the experience and leadership of these two outstanding women.”
Here’s our weekly roundup of the latest news from our Finovate alumni:
Union Bank to leverage technology from FIS for core banking.
Italy-based CREDEM leveragingWorldline’s Payment and Liquidity Hub software CRISTAL to process Target2 payments
POS software Vend partners with Klarna to offer retailers more flexible payment options.
U.K. food retailer The Co-operative to deployACI Worldwide’s fraud management solution, ReD Shield.
A partnership between TransferGo and Currencycloud will enable the money transfer company to enter 14 new markets.
YellowDogforges reseller agreement with Annex Pro.
Bankable cozies up with Plaid to allow its bank customers to connect with their users’ bank accounts.
Ohpenappoints former Tesla marketing leader Corinne Aaron as new head of marketing.
Segmint to acquire WAND’s Product and Service Taxonomy division.
CuneXuscelebrates 2019 success with a 40% year-over-year increase in consumer reach.
Three Key Lessons We Learned from Plaid – Unless you’ve been living under a rock, you’ve probably heard that Visa is acquiring Plaid for a deal that’s worth $5.3 billion. The fact that they were so widely used at such an early stage is a testament to the quality of their code, but there are also a few key lessons to take away from their success.
ITSCREDIT’s Joao Pinto on the Digital Lending Opportunity – ITSCREDIT is a spinoff from ITSECTOR and is a fairly new player in the digital lending space. In this interview, Pinto talks to us about the digital lending opportunity, how his company fits into the current state of this fintech subsector, and what we can expect to see next.
Kasasa Enhances its Take-Back Loan – Community bank marketing expert Kasasaannounced a partnership with Carleton today in which Kasasa will integrate Carleton’s insurance and debt protection calculations into its Kasasa Loan.
Plinqit Brings Rewards-Powered Financial Literacy to First Community Bank – One day in the distant future, children will be educated in basic financial literacy as readily as they are taught algebra. Until then, solutions like Plinqit from HT Mobile Apps will be valuable tools for credit unions and community banks looking for novel ways to engage and educate their members and customers.
Credit, Data, and Cryptocurrencies: Graychain Rebrands as Credmark – The company that is bringing credit data clarity to the cryptocurrency industry is entering 2020 with a new name.
Tradeshift Lands $240 Million as it Inches Toward Profitability – The San Francisco-based company will use the investment to boost expansion efforts and gear toward a “direct path to profitability in the near future.”
Backbase-as-a-Service Helps Banks Leverage the Cloud to Innovate and Scale – The solution makes the company’s broad portfolio of digital banking offerings available to FIs looking to accelerate their ability to develop and offer new technologies to customers.
Also on Finovate.com
Visa to Acquire Plaid in $5.3 Billion Deal – “Today marks an important milestone for our company and for fintech,” company co-founder and CEO Zach Perret wrote on the Plaid blog earlier today. “What started with two founders building in a cramped conference room has become an incredible network that enables millions of consumers to interact with over 2,500 digital finance products.”
Not Another 2020 Trends Prediction Post (Seriously, It’s Not!) – We’re taking a look at the trends you can expect to see on stage next month at FinovateEurope. To keep things simple this year, we assessed the themes at a very high level and broke them down into three categories: the big, the little, and the trends in-between.
Singapore’s Digital Banking License Space Race Accelerates – Is there anyone out there who is NOT trying to secure a digital banking license in Singapore? The Monetary Authority of Singapore announced last week that has received 21 applications for digital bank licenses.
MogoSpend Offers Credit, Cashback, and Help Reducing Your Carbon Footprint – The new digital spending account from Canadian fintech Mogo does more than help Canadians get control of their finances. The solution also offers cardholders generous cashback rewards and a way to make a positive impact on the environment by reducing their carbon footprint.
Getsafe Expands its Insurtech to the U.K. – If your insurance company is offering you drone insurance, you know it’s not your grandmother’s insurance agency. Germany-based insurtech Getsafe does just that– and the company announced today it is expanding its home contents insurance offering (though, sadly, not its drone insurance offering) to users in the U.K.
Raisin’s New Acquisition Gives Company Access to the U.S. Market – European deposit marketplace Raisin announced today it acquired New York-based Choice Financial Solutions.
French Fintech Lydia Locks in $45 Million – TechCrunch reported this morning that French mobile payment app Lydia has raised $45 million (€40 million) in a round led by Tencent.
Visa’s Tap to Phone Brings Contactless Payments to mPOS – With Visa’sTap to Phone app arriving pre-installed on the new, enterprise grade smartphone from Samsung, a broad range of merchants will have access to yet another way to accept payments from customers.
INTL FCStone Acquires International Bank Transfer Firm – Headquartered in Germany, GIROXX offers international bank transfers and currency hedging. INTL FCStone plans to leverage this technology to expand its current client base to small-and-medium-sized enterprises (SMEs).
The new digital spending account from Canadian fintech Mogo does more than help Canadians get control of their finances. The solution – which also comes with a Mogo Visa Platinum Prepaid Card – also offers cardholders generous cashback rewards and a way to make a positive impact on the environment by reducing their carbon footprint.
“With MogoSpend,” company founder and CEO David Feller explained, “our goal was to create a product that gives consumers even more control than a debit card and with cashback rewards that rival the best credit cards in Canada, without charging monthly or annual fees, and importantly, we wanted to make this a card that also help make a positive impact on the planet.”
Feller noted that 57 percent of Canadians carry credit card debt, which he connected with the problem of overspending. This, according to Feller, leads to overconsumption which he said was “directly linked to climate change.” He added, “Being more mindful around spending can help us achieve important life goals like buying a home and retirement, and many of us are becoming increasingly aware that being a mindful consumer is key to a healthy planet.”
MogoSpend is accessible via Mogo’s iOS and Android app, and can be set up in less than three minutes. The free service has no monthly or annual fees, works like a checking account, and enables users to instantly transfer funds from their bank account to their MogoSpend account. MogoSpend gives 1.5% cashback on domestic purchases and 3% on international currency purchases. Users can see how much cashback they have earned on the app in real time, and those funds are credited to the users account on a monthly basis, rather than at year’s end.
The only payment card in Canada to offer a carbon offset program, MogoSpend will offset one pound of CO2 for every dollar MogoSpend users spend using the card. The program comes courtesy of a partnership between Mogo and Canadian sustainability and carbon-management solution provider, Offsetters.
Mogo will make the new offering available to members on its waiting list “in the next few months.” Those interested can join the waiting list by downloading the free Mogo app and opening an account.
Is there anyone out there who is NOT trying to secure a digital banking license in Singapore?
The Monetary Authority of Singapore (MAS) announced last week that it has received 21 applications for digital bank licenses. A decision is expected in June, and the fortunate five who receive licenses will be able to launch their businesses by the middle of next year. Applicants have included a wide range of companies, from e-commerce and telecommunications firms, to fintechs, PSPs, and crowdfunding platforms.
Specifically, MAS is making available two different types of license: a digital full bank license and a digital wholesale bank license. There are two digital full bank licenses available, which would enable non-banks to accept deposits from retail customers. There are seven applicants for these licenses, which come with initial, temporary restrictions on deposits and capitalization.
The digital wholesale bank license will permit firms to lend to SMEs. Fourteen companies have applied for the three digital wholesale bank licenses MAS is making available. These new businesses would be required to meet the same regulations as existing wholesale banks, including capitalization of $74 million (S$100 million). Among the more well-known firms competing for these digital wholesale bank licenses are rideshare startup Grab and Ant Financial.
Also in the running for a digital wholesale bank license is Finovate alum and Best of Show winner Arival Bank. The firm announced its application earlier this week, noting that securing the license “will add tremendous value in Arival’s quest to becoming a borderless fintech bank.” The company plans to leverage its ArivalOS digital banking technology, as well as its banking-as-a-service (BaaS) platform to serve the freelancers, micro businesses, and startups that it believes remain underserved within the broader SME market worldwide.
In other international news on the Finovate blog this week, we talked with João Pinto of Portugal’s ITSCREDIT ahead of the company’s Finovate appearance next month in Berlin. We also featured German insurtech Getsafe’s expansion to the U.K., looked at European deposit marketplace Raisin’s acquisition of U.S. fintech Choice Financial Solutions, and profiled French mobile payments app Lydia as it locks in $45 million in new funding.
Here is our weekly look at fintech around the world.
Central and Southern Asia
Business Maverick looks at PayU’s decision to merge its consumer lending business, LazyPay, with Indian digital credit platform, PaySense.
EpiFi, a Bengalaru, India-based digital banking startup founded by a pair of former Google executives, raises $13.2 million in funding.
Entrepreneur India features B2B digital ledger mobile app, KhataBook.
Latin America and the Caribbean
Resuelve tu Deuda, a Mexican fintech that specializes in helping consumer repair their credit, raises $24 million in funding.
Nasdaq.com lists online payments, banking, billpay, proptech, and lending in its feature, 5 Opportunities for Fintech Disruption in Latin America.
Brazilian neobank Nubank announces its first acquisition, purchasing local consulting company Plataformatec largely to access the firm’s crew of engineering and developer talent.
Digital-only neobank Tonik secures banking license in Philippines ahead of planned launch.
Arival Bank is the latest fintech to throw its hat into the Singapore digital banking license ring.
CredoLabearns listing from Indonesia’s Financial Services Authority OJK) as an official provider of financial services in the country – the first fintech in Indonesia to be granted this recognition.
EverSend founder Stone Atwine talks about trends in the African fintech industry with CNBC Africa.
Kenyan fintech Alternative Circle earns recognition as “One to Watch” in the first global fintex index ranking 2020 by Findexable.
What can we expect from South African fintech in 2020? Ventureburn examines the country’s prospects.
Central and Eastern Europe
Euromoney takes a look at the complicated relationship between banks and fintechs in the CEE region.
The Paypers interviews Valeri Valtchev of the Bulgarian Fintech Association on the evolution of Bulgaria as a fintech hub.
Latvian fintech Jeff App locks in €150,000 to help improve financial inclusion for borrowers in Southeast Asia.
Middle East and Northern Africa
Salaam African Bank in Djibouti selects core banking technology from Oracle FSS.
A partnership between crypto exchange Huobi and Dubai-based real estate firm fäm Properties will enable investors to pay in a digital assets such as Bitcoin, Ether, and XRP.
Qatar Islamic Bank (QIB) introduces its Instant Credit Card service via its mobile app.
As Finovate goes increasingly global, so does our coverage of financial technology. Finovate Global is our weekly look at fintech innovation in developing economies in Asia, Africa, the Middle East, Latin America, and Central and Eastern Europe.
One day in the distant future, children will be educated in basic financial literacy as readily as they are taught algebra. Until then, solutions like Plinqit from HT Mobile Apps, that reward users for learning how to be better savers and consumers, will be valuable tools for credit unions and community banks looking for novel ways to engage and educate their members and customers.
“There is a true need for improved financial literacy with 41 percent of Americans reporting that their lack of understanding of finances is holding them back from making financial progress,” HT Mobile Apps CEO and founder Kathleen Craig said. “And Plinqit has a proven track record – more than 60 percent of users that reach their savings goal continue to save by setting new goals.”
This helps explain why First Community Bank has decided to partner with HT Mobile Apps. The Arkansas-based bank, with $1.5 billion in assets and 26 branches in Arkansas and Missouri, will offer the Plinqit savings app and financial literacy solution to its customers.
“We are proud to do everything in our power to strengthen our local economy, and one of the best ways we can deliver on our promise is by helping people learn about finances so they can begin saving,” First Community Bank CEO and chairman Dale Cole said. “Plinqit is a unique tool that satisfies our customers’ digital needs and encourages smart financial decisions.”
Plinqit’s Build Skills feature enables users to earn money by watching contextual videos or successfully completing lessons and quizzes on key personal finance concepts. For example, a bank customer opening their banking app to make a credit card payment may see a Build Skills notification that notes their heavy credit card spending. The app may then suggest exploring credit management or debt consolidation options by way of an educational video. The different videos and quizzes have a value – 50 cents, for example, or $1 – which, once the video or quiz is completed, is deposited into the user’s Plinqit account.
To get started, users link their Plinqit account to their bank or credit union checking account, and then set up as many as five savings goals in the Plinqit app. Plinqit helps users determine how much to set aside on a regular basis in order to meet the different savings goals on schedule. Users earn money by reaching savings goals, referring others to the platform, and, as noted above, by engaging the video and other personal finance content. The app is free to use; all that is required is ownership of a U.S. checking account.
HT Mobile Apps demonstrated Plinqit at FinovateFall last year. The Michigan-based company provides banks and credit unions with a variety of customer engagement and retention solutions including Banker Jr., Member Jr., and 2019 acquisition, Hip Pocket. The partnership news with First Community Banks comes in the wake of a year that saw the company’s app record higher user engagement of 55 percent on average compared to the average finance app engagement rate of 36.3 percent. The company also announced that it inked partnerships with more than a dozen banks and credit unions in 2019. HT Mobile Apps’ platform now serves clients in 20+ states with assets ranging from $26 million to more than $40 billion.
TechCrunch reported this morning that French mobile payment app Lydia has raised $45 million (€40 million) in a round led by Tencent. With existing investors CNP Assurances, XAnge, and New Alpha also participating in the Series B, Lydia adds significantly to the more than $16 million (€13 million) the company raised in 2018. The funding will help propel the firm toward its self-described goal of being the “PayPal of the new mobile generation.”
Lydia is used to make P2P payments, link and share accounts, as well as access a marketplace of additional financial offerings such as lending products and insurance. Available as a free app with other premium services available, Lydia can also set up recurring payments and enable users to pay with their smartphone via Apple Pay, Google Pay, Samsung Pay, or QR code. Company co-founder and CEO Cyril Chiche pointed to the growing numbers of French consumers who are using the app for a variety of money management functions, highlighting the fact that 25% of French consumers between the ages of 18 and 30 have a Lydia account. Chiche added that the technology has three million users across Europe.
Lydia, which was founded in 2013, will use the funding to fuel its continued expansion in Europe. Lydia is particularly keen on opportunities to reach millennial Europeans in markets like the U.K., Ireland, Spain, and Portugal – where its app was deployed in the second half of 2017.
Compared to other countries in Europe, the fintech industry in France is often overlooked. This is not wholly without foundation. According to the recent report on European fintech by Dealroom, the share of fintech related VC spending in France in recent years was 12% compared to 20% in Europe overall, 21% in Germany, and 30% in the U.K. Born2Invest noted in December that French fintech startups had raised $700 million in 2019, and suggested that this year would likely see “a lot of talk about assuretech” also known as insurech, where technologies like digitization and automation are able to make dramatic differences in data management.
Lydia was featured in Silicon Canals last spring in its look at “10 exciting French fintech startups to work for in 2019.” For more on the French fintech industry, check out this infographic from BlackFin Tech which depicts the five main ecosystems in French fintech – regtech, assurtech, financial services, banking/PFM, and payment services – as well as some of the major players.
Backbase announced today the availability of its new managed cloud platform, Backbase-as-a-Service. The solution makes the company’s broad portfolio of digital banking offerings available to FIs looking to accelerate their ability to develop and offer new technologies to customers.
In their statement, the company depicted banks as challenged by not one, but two types of technologically-driven competitors: digitally-native neobanks and big tech-first companies that are beginning to develop financial products (“TechFin”). The problem of legacy, non-digital infrastructure, according to Backbase, is a key hurdle for most banks when it comes to “keeping pace” with the new digital services these rivals are able to offer. Backbase-as-a-Service enables FIs to develop their digital solutions faster, and to bring them to market without having to overcome their outdated infrastructure – or bear the high cost of replacing it with another on-premise system.
Backbase CEO Jouk Pleiter called the cloud “an exceptional tool” to help financial institutions transition to becoming digital first. “We believe the move to cloud is an unstoppable one, and one which every financial institution needs to embrace,” he said. “Our clients want the freedom to innovate and maintain their competitive edge, so launching Backbase-as-a-Service is the logical step or us.”
The technology will enable banks to take advantage of innovations in account aggregation, security and identity verification, personalization, and smart banking. Developers benefit from the option to use shared or dedicated Backbase environments, as well as multiple sandbox environments to support the development and testing of new integrations and products. BaaS provides 99.9% uptime, database backups and multi-zone redundancy, as well as end-to-end encryption for all communications. The solution meets regulatory requirements, including the ability to audit across environments.
A multiple-time Finovate Best of Show winner, Backbase most recently demonstrated its digital banking platform at FinovateEurope 2018. Headquartered in Amsterdam, the Netherlands, and founded in 2003, the company inked a deal with Payveris late last year to provide FIs with an integrated digital payments and money movement solution. With more than 100 FIs using its technology, Backbase includes Barclays, Citi, KeyBank, Navy Federal Credit Union, and Societe Generale among its customers.
The company that is bringing credit data clarity to the cryptocurrency industry is entering 2020 with a new name. Credmark, which made its Finovate debut as Graychain at FinovateAsia earlier this year, is reintroducing itself with a new Southeast Asia headquarters and partners who are helping develop the cryptocurrency lending market.
“We’ve been wanting to rebrand for awhile,” Credmark CEO Paul Murphy said. “When we decided to move the company from Hong Kong to Singapore, we realized it was the right time to rebrand.”
Murphy believes the rebrand will make it easier for people to understand what the company is about – especially in a field like cryptocurrencies, which can be intimidatingly complex to both businesses and consumers. “We are the only company giving credit ratings to blockchain addresses, not individuals or corporations,” Murphy explained. “This allows us to address a much wider range of use-cases including anonymous and pseudonymous borrowing, and smart contract credit, as well as more traditional uses of credit.”
Murphy agrees with those who see cryptocurrencies as the foundation of a new financial system. Like any other financial system, he said, cryptocurrencies will need credit (what he called “a proxy for trust”) in order to function efficiently. And in order to extend credit, you need data. And that’s where Credmark comes in.
“Credmark is developing a product to remove friction in the crypto space caused by lack of trust,” Murphy said. “This product will help minimize systemic credit risk whilst simultaneously speeding up business transactions.”
One example he shared was his company’s collaboration with a firm that is tokenizing sneakers in order to use them as collateral for crypto loans. “Crypto finance is proving endlessly creative. Building on top of centuries of technology in a global, decentralized environment is a rare opportunity. This work will have a profound impact on everyone, from the world’s richest to its poorest,” Murphy said.
In addition to Murphy’s 12 years of building software for financial firms on Wall Street, Credmark benefits from the talents of co-founder Neil Zumwalde, the company’s Chief Technology Officer. Zumwalde is a veteran software developer and engineer whose experience includes building complex distributed systems in the IOT/energy space.
About the company’s technology, Murphy said Credmark is a big user of blockchain technology (“we currently work with nine different chains!”), Credmark also leverages AI to build its cutting-edge prediction models. The company currently offers three products – Credmark Wealth, Credmark Clear, and Credmark Clear for Business – which help crypto businesses, lenders, and investors evaluate the value of digital asset holdings on a company’s or address’ overall net worth and creditworthiness.
Credmark’s decision to relocate from Hong Kong – where the company has been headquartered since its founding in 2018 – to Singapore is also a key part of the company’s evolution. In addition to putting some distance between itself and Hong Kong’s civil unrest of recent months, the move will enable Credmark to remain in a major fintech hub while building its position in the rapidly growing Southeast Asia cryptocurrency industry.
“Singapore is a fantastic jurisdiction in which to do business,” Murphy said. “Rules are very clear, bureaucrats are efficient, and legal and financial services are of very high quality. I personally ran several businesses in the U.K., so Singapore’s legal system is very familiar.”
The rebrand also comes as the company issues its second Crypto Credit Industry report (CCR). Credmark’s CCRs are a compilation of industry data with analysis and commentary to help readers learn about the crypto credit industry, the vendors that participate in it, and the different products they offer. The company’s first report was released in late August, and covers industry developments through Q2 2019.
“Our latest industry report reveals growth of 23% in the third quarter,” Murphy said of the Q3 report. “And institutional lending products are starting to mature.” He added that one way the CCR will benefit readers will be in bringing greater clarity and transparency to the world of crypto financing.
“The industry uses some vanity metrics that are confusing and sometimes misleading,” Murphy explained. “We’re calling those out and planning to de-emphasize them.”
Asked where he thinks Credmark will be a year or two from now, Murphy responds, “If we’d been asked that question two years ago our predictions would have been completely wrong. The industry is moving fast. We are careful to take this rapid, uncertain evolution into account as we design our products. We have taken a big bet on crypto, but have remained blockchain-independent.”
“No matter how things evolve, we expect to play a central role in this emerging financial system,” he said.
Updated 1/14/2020: The first big fintech acquisition of the year just crossed the headlines: Visa has agreed to acquire innovative fintech Plaid for a reported $5.3 billion in “total purchase consideration.”
“Today marks an important milestone for our company and for fintech,” company co-founder and CEO Zach Perret wrote on the Plaid blog earlier today. “What started with two founders building in a cramped conference room has become an incredible network that enables millions of consumers to interact with over 2,500 digital finance products.”
Plaid’s technology connects digital consumers with thousands of apps and services ranging from Transferwise and Betterment to Chime, Acorns, and popular payment app, Venmo. The company estimates that one in four individuals with a U.S. bank account have used Plaid to connect with thousands of developers across 11,000+ financial institutions.
Visa said the acquisition will bolster the company’s capacity to serve and reputation with fintech developers – especially when it comes to providing them with enhanced payment functionality and related value-added services. Visa also believes the acquisition will help open new business opportunities both in the U.S. and around the world.
“We are extremely excited about our acquisition of Plaid and how it enhances the growth trajectory of our business,” Visa CEO and chairman Al Kelly said. “Plaid is a leader in the fast growing fintech world with best-in-class capabilities and talent. The acquisition, combined with our many fintech efforts already underway, will position Visa to deliver even more value for developers, financial institutions, and consumers.”
Visa participated in Plaid’s Series C round in 2018, which was led by Index Ventures and Kleiner Perkins. The company raised $250 million in that funding raising effort. Plaid began the year with an acquisition of its own, purchasing account aggregation and data analytics technology provider Quovo in January of 2019. The value of that deal was not disclosed; Bloomberg reported that the sticker price for Quovo could have been as high as $200 million. Quovo, incidentally, is also a FinDEVr alum, participating in our New York developers conference in 2017.
Plaid demonstrated its technology at FinDEVrSiliconValley in 2014, demonstrating how its API for Financial Infrastructure enabled developers to leverage data quickly, efficiently, and securely power fintech applications. Headquartered in San Francisco, California and founded in 2012, Plaid had raised $310 million in funding previous to today’s announcement.
The ripples from the acquisition news are reverberating throughout the fintech community. And while some are worried about the ability of the innovative startup from San Francisco continue to drive change in the industry, others are busy heralding the news as a victory for fintech and incumbent financial services firms, alike.
Indeed, the acquisition of Plaid by Visa has put other fintechs involved in financial data on notice that they too may hear an inquiring knock on their proverbial doors. One observer on Twitter asked “Will $MA pick up Finicity now?” As of this writing, neither company has deigned to comment.