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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
It’s hard out here for a bank. Your clients are, to put in bluntly, getting older, while the world around you just seems to get younger and younger every year.
“You have to understand who your clientele really is,” Vincent Bezemer, SVP of Americas for Backbase, explained in a recent conversation for Finovate TV. “Let’s face it: most institutions have an aging clientele. And that is really not indicative of what the future of banking should look like. There is this digital divide.”
Financial institutions – from Tier 1 banks to the credit union around the corner – are all working to figure out how to bring a 21st century digital experience to their customers. We caught up with Mr, Bezemer, a technology veteran with more than a decade of experience innovating in the CX space, to hear his thoughts on what institutions need to do in order to not just keep the customers they have, but to attract, engage, and retain new customers, as well.
On the importance of self-directness and becoming the kind of bank that people love
“…(T)here is this need for self-directedness. There is a large part of the population – inclusive of all the demographics – that simply does not want to engage with a person and, if they engage, they want to engage on their own terms.
Supporting that self-directedness – and giving our customers, the banks, and the credit unions the tools to compete in an omni-channel fashion when it comes to digital – is key. The experience on mobile, web, should all be the same. But also the processes should be the same. Whether I’m in collection cycle, whether I’m in a self-service cycle, or maybe when I’m originating products, I want those experiences to be the same. And if I need help, the bank’s team member actually sees that same view that I do as a customer has seen and they can help me with as little friction as possible.
On balancing the unique innovation needs of Tier 1 institutions compared to those of community banks and credit unions
We approach both sizes of our customer base with the same principle that is that we are a platform. As much as Amazon is an e-commerce platform and Netflix is a content platform and Uber is a mobility platform, we really approach it from a banking platform perspective.
With our proposition, you can take the platform as is and build on top of that, which is what a lot of Tier 1s want to do. They have built everything themselves. They basically had unlimited innovation power. But they saw that 80% of their IT budget was there to basically keep their legacy systems afloat. They are now seeing that all of these non-functionals – whether its from an auditing or security or entitlements perspective. They say, “why don’t we just outsource that? Why don’t we just get a product with a roadmap that is supported by hundreds of thousands of people in the Backbase ecosystem, so we don’t have to worry about that any more. Then we can apply our resources to actually create the experiences and the innovations that actually matter in our competitive landscape.”
On the nature of personalization in banking
I think in financial services specifically, personalization falls into two categories: one, do you understand your customer? Do you understand the moments of truth that matter to that customer when they start engaging with you for a certain product? And this is where market data, behavioral data, any type of database you can procure can really help you have that understanding.
But then the second kind of personalization is really a “mass personalization.” Can you give your prospective customer – and also existing customers – the feeling that they can tweak the product ever so slightly? Because if you can, you are relating more with the needs of that person.
So you want personalization in the top of the funnel, driving them to the moment of truth where you want to be there for them. And then, subsequently, you want to understand how you are going to create that process so that the customer feels that you truly listened and that they can make those small customizations.
In a round co-led by Abdiel Capital and Tiger Global, low code application development platform OutSystems has raised $150 million in new capital. The funding gives the company a valuation of $9.5 billion, and will help fuel investment in its R&D and go-to-market strategies.
In a statement, OutSystems CEO and founder Paulo Rosado highlighted the challenges businesses face when it comes to keeping pace with innovation in an increasingly digital and software-run world. “Developers are a scarce resource in business today, and the complexities of traditional software development exacerbate the challenges most organizations face when tackling their digital transformation agenda,” Rosado said.
“By fundamentally changing the way software is built, OutSystems makes it possible for every organization to compete, innovate and grow with the developers they already have,” Rosado explained. “We’re focused on helping customers succeed with their most challenging digital transformation initiatives, and today’s announcement is an acknowledgment of our progress on that journey.”
OutSystems gives businesses the ability to deploy and manage critical applications at speed – from enhancing the customer experience to streamlining and automating processes to modernizing legacy systems. OutSystems leverages a visually-based, model-driven development approach to enable institutions to build differentiation into their solution, maximize the development talent on hand, and accelerate the process of concept iteration to uncover new viable ideas.
“OutSystems matched our vision for reusable architecture, robust application lifecycle management, and a visual approach that would allow developers to focus more on delivering business value instead of coding,” Shepherd and Wedderburn Head of Technology Steve Dalgleish said. “It has given us the speed and agility to deliver effective process and technology solutions – both internally and for our clients – including complex, large scale, high-profile projects.”
An alum of our developers conference, OutSystems presented “Low-Code: The Next Evolution in App Dev Platforms (Oh, and 5xFaster)” at FinDEVrNewYork in 2017. In their presentation, the company showed how it helped take a European retail bank, BPI, through a major digital transformation including solutions for mobile banking, internet banking, branch, and contact center.
With headquarters in Boston, Massachusetts and Lisbon, Portugal, OutSystems has customers in 87 countries around the world and partnerships with 350 corporations including AWS, Deloitte, and fellow Finovate alum Infosys.
After 20 years as a player in the retail banking market of the Czech Republic, ING is calling it quits. The firm announced this week that it plans to withdraw from the country’s retail banking scene and is encouraging its customers to consider Raiffeisenbank Czech Republic as their alternative bank going forward.
ING expects to end its operations in the Czech Republic by the end of this year. The company has approximately 375,000 retail banking customers in the country and has worked with Raiffeisenbank to ensure the smoothest possible transition for ING customers to take advantage of the opportunity to transfer their savings and investments. This agreement is pending regulatory approval.
ING Group said that the decision in part reflects an assessment of whether or not operations “are likely to achieve the preferred scale in their market within a reasonable time frame. ING has more than 39 million retail and wholesale customers in 40 markets around the world.
We will stay in the CEE for this week’s Finovate Global Profile, which features payever, a German platform-as-a-service commerce solution for banks and insurance companies. Founded in 2013 and led by CEO Artur Schlaht, payever made its Finovate return last fall at our all-digital FinovateWest event. At the conference, the Hamburg, Germany-based company demonstrated its Commerce Infrastructure that enables banks and insurance companies to connect to hundreds of thousands of businesses – as well as million of consumers – online as well as at the point of sale.
Payever offers a variety of Business Apps that cover the entire sales cycle. The company’s Checkout solution gives customers wide access to a range of payment options without requiring the merchant to undergo complex integrations. With Shop, merchants can build their own online store in without needing any coding experience. The solution features design template as well as cloud hosting and support.
Payever’s PoS technology enables its partners to offer cashless payment acceptance using QR codes instead of expensive hardware. Other solutions offered by payever include a Studio to help merchants better display their wares digitally and Mail, an e-mail marketing solution for building newsletters, sending personalized offers and more – all without needing to code.
Check out payever’s demo from FinovateWest last year.
Here is our look at fintech innovation around the world.
Central and Eastern Europe
Tinkoffcollaborates with oneFactor to put AI-powered predictive analytics to work in enhancing credit scoring.
South Africa embarks on the second trial of both a wholesale central bank digital currency (CBDC) and a wholesale settlement token for interbank use. For more on the rise of CBDCs, check out our Finovate List Series Feature, Five Things to Know about CBDCs.
If the debut of FinovateFocus next week (Thursday, February 25th) is anything like its preview – shared in-house a few days ago – then fintech fans who have been craving a truly 21st century digital fintech experience are in for a treat.
Today we’re taking a look at the first half of the event – FinovateFocus Connect – which runs for an hour starting at 9am Central. Connect features a roster of more than nine top fintech analysts and innovation specialists who will share their top takes on creating an optimal digital experience for your customers. Each three-minute presentation will be followed by a brief networking opportunity to ask questions and make connections with your fellow digital attendees – all based on preferences you determine in advance.
Here’s a peek at next week’s FinovateFocus Connect agenda.
Personalization and customization with data in the banking and payments industry
Earning customer trust in the digital age
Wealth Management: Competing for affluent digital-native clients
What do customers want: Meeting customer needs
Chatbots, AI, and automation as platforms for revolutionizing CX
APIs and Open Banking: Putting the customer in the driver’s seat
Boosting CX in banking with AI: Conversation banking and exploring back-end technology
Customer Experience 2021: Using data to drive CX strategy, business outcomes, and flawless execution
Remember, FinovateFocus: Digital UX kicks off Thursday, February 25. The Connect component of the event will lead off at 9am Central. The FinovateFocus Roundtable event will follow at 10:30 am Central.
Cryptocurrency wallet provider Blockchain.com has picked up $120 million in funding. The Series A round featured participation from a sizable number of investors, including Access Industries, Lightspeed Venture Partners, and GV (Google Ventures) – among others. Blockchain.com’s total capital now stands at $190 million, and gives the London, U.K.-based firm a valuation of $3 billion.
In a blog post discussing the strategic financing, Blockchain.com CEO and co-founder Peter Smith highlighted the “immense optimism” toward cryptocurrencies displayed by a growing number of “serious, institutional investors.” He noted that the presence of major macro investors such as Louis Bacon’s Moore Strategic Ventures and Kyle Bass in Blockchain.com’s recent funding, and said it was “further proof that institutions are taking a serious look at their crypto strategy.”
And at Blockchain.com’s crypto strategy, as well. Smith noted that when the company began its Series A in 2014 – the same year it debuted at our developers conference, FinDEVr Silicon Valley – the company was powering “just over” two million bitcoin wallets. Today Blockchain.com powers more than 67 million wallets, representing more than $620 billion in transactions. Since 2012, Smith wrote “28% of all Bitcoin transactions … have occurred via Blockchain.com.”
Founded in 2011, Blockchain.com began by offering a blockchain information service, Explorer, and soon after introduced an open source bitcoin wallet to make it easier for investors to buy and sell cryptocurrencies. The company also unveiled Blockchain APIs that helped give a generation of bitcoin businesses the ability to provide services ranging from bitcoin wallet building to transaction verification.
Blockchain currently supports a cryptocurrency exchange, as well as an “exponentially growing” institutional business of digital asset trading, lending, and custody. Smith added that while the wallet remains “at the core” of Blockchain.com’s business, “our Institutional business is now significant enough to cover the entire operating cost of the business globally” in addition to providing further operating profits.
Have you fallen into debt and can’t get up? Fortunately, there’s a new fintech on the scene that has dedicated itself to helping Americans build credit and savings – and get out of debt.
SeedFi, launched in private beta in 2019, announced today that it has raised $15 million in new equity – along with $50 million in debt financing. The Series A round was led by Andreessen Horowitz. Flourish, Core Innovation Capital, and Quiet Capital also participated.
“Our goal is to address the root cause of the problem and leave our customers better off than we found them,” SeedFi CEO and co-founder Jim McGinley explained, “so we’ve structured all of our products to generate savings and build credit.”
SeedFi COO and co-founder Eric Burton explained the savings/debt dilemma for many Americans in a conversation with Crunchbase News. He noted that the lack of savings in the event of an emergency is often the pre-existing condition that can lead to serious debt problems, which in turn, make it more difficult to save. “The insight we’ve learned is to combine savings with credit to address the immediate need for credit in a way that will leave them better off and down the path to a better financial future,” Burton said.
The San Francisco, California-based company plans to put the new capital to use growing its customer base and – with its bank partners – bringing products to market across the country. SeedFi also plans to add to its product offerings, which currently include two solutions: Credit Builder and Borrow and Grow.
“SeedFi is creating a suite of plans to address borrowers at various financial points in their lives,” Andreessen Horowitz General Partner Angela Strange wrote on the company’s blog earlier today. “Customers can start by saving as little as $10 a paycheck through SeedFi’s Credit Builder Plan, which enables them to build credit while they save. For those in need of money, SeedFi’s Borrow and Grow Plan gives customers the cash they need now and sets them up to save for the future.”
Many financial commentators are boasting about the high savings rates many Americans are achieving due to limited spending opportunities during the COVID crisis. Our “K-shaped” economic recovery means that many people are surviving – or even thriving – financially during the pandemic. But there are a significant number of Americans for whom COVID-19 has meant major financial hardship – including loss of income and an increase in consumer debt. For those Americans, fintechs like SeedFi are increasingly part of the solution.
With new vaccines helping stoke confidence in a post-COVID summer, if not spring, what has the pandemic – and the work-from-anywhere movement it accelerated – revealed about the security of our increasingly digital world?
What is the biggest takeaway from your report on fraud?
Christina Luttrell: As COVID-19 drove 84 million Americans online for services that were previously carried out in person, businesses faced an influx of new customers to onboard. In response, many appeared to loosen fraud controls in an effort to reduce friction and simplify onboarding, particularly for digital “newbies.”
With this loosening, combined with COVID-19 factors such as dispersed fraud teams, remote work, stimulus checks, and sophisticated phishing and synthetic identity fraud (SIF) schemes, it’s easy to understand why fraud attempts surged to a four-year high. Also not surprising is the emergence of mobile as the most targeted channel, evidenced by an astounding 89% increase in fraud attempts likely due to an increased reliance on mobile devices during the pandemic.
In the report each year, we’ve seen businesses struggle with the challenge of balancing fraud with customer friction. Businesses drive revenue by greenlighting customers, which includes removing barriers and minimizing effort during the onboarding process to avoid unnecessary “friction.” Yet they must do so while deterring fraud. This challenge is exacerbated by current events and the state of fraud and, as a result, verification of identities was cited as the top challenge to fraud deterrence among businesses. Many have come to the conclusion that, at its core, fraud is an identity problem and 86% firmly view digital identity verification is a strategic differentiator across all industries.
When it comes to the future, 79% of businesses expect fraud to increase in 2021. With the COVID-induced shift to digital, fresh collection of more Personally Identifiable Information (PII) from 2020 and potential economic conditions, this is likely to be a “bust out” year for fraud.
How quickly have fraudsters followed the migration to digital channels during the COVID-19 crisis?
Luttrell: From our study, The COVID-19 Effect on Identity, Fraud and Customer Onboarding, we know that between March and July of 2020, 37% of Americans online activated an online service that was done offline prior and 46% said they have used their smartphone more often to sign up or apply for a new service. As a result, one-third of businesses experienced a customer shift of 50% or more to digital channels. In 2020, the number of new accounts opened with a mobile phone increased 43%. Fraudsters tend to follow the masses and the money and, in 2020, as those consumers went digital, criminals were quick to follow, employing rapidly shifting tactics, which was reported as a top challenge to fraud deterrence for 40% of businesses.
Mobile fraud attempts surged 89% in 2020 with increases across all fraud types, from spoofing and cloning to porting. With more consumers relying on digital information sources and businesses sending a higher number of customer communications, 56% of businesses reported phishing attacks as one of the most prevalent forms of fraud in their industries.
The pandemic provided a prime opportunity for fraudsters to take advantage of distracted Americans, the increase in digital communication between businesses and consumers and government relief efforts. Our research shows that 84 million Americans reported experiencing a phishing attack attempt in the months following the pandemic’s start, with an average of four attempts per person between March and June.
How have cybersecurity professionals effectively responded to this shift?
Luttrell: It appears cybersecurity professionals responded rapidly to this shift as best they could, but COVID-related disruption and distraction, such as remote working and government relief checks, put a wrinkle in plans and added a new layer of complexity to fraud detection and the consumer experience. Fraud is an identity problem, making identity verification the essential “digital handshake” and element of establishing trust. We expect to see more companies rely on the orchestration of blanketed layers of identity attributes, artificial intelligence, and integrated verification methods to remove friction and deter fraud.
Successfully onboarding new customers and building long-term loyalty in today’s rapidly shifting fraud landscape will require businesses to act quickly. On the back end, they will need to understand how identity verification attributes are performing so they can make adjustments to attributes that pinpoint fraud on an extremely granular scale while streamlining the verification process for real customers.
What kinds of fraud are increasingly prevalent – especially compared to the pre-COVID-19 period?
Luttrell: Aside from COVID-related fraud, such as vaccination schemes, the fundamental methods of remain relatively unchanged. Instead, the shift has occurred in the sophistication and amount of fraud which, as I mentioned, is rising across the board compared to pre-COVID numbers.
Credit, debit, and prepaid fraud were reported as the most prevalent by 63% of businesses, followed by phishing, account takeover, ACH/wire and first-person fraud. ACH/wire fraud spiked by 15% – presumably because of rising P2P usage due to social distancing and first-party, specifically “friendly or know fraud,” increased 28%. This may be attributable to chargeback fraud schemes as many Americans were unemployed, underemployed or suffering in shape or form financially, thereby increasing their pressure and rationalization of committing fraud.
Your report mentions the issue of synthetic fraud in the PPP lending program as specific challenge. Can you elaborate on this problem and what should be done?
Luttrell: A range of fraud schemes were used to exploit PPP in 2020, one of the most concerning being synthetic identity fraud (SIF). According to McKinsey, this is the fastest growing type of financial crime in the U.S. A recent report by Aite Group revealed that among 47 financial institutions surveyed, 25% experienced an increase of 10% or more since the start of the pandemic. Our own research also underscores the SIF problem, which hit an all-time high, with a 43% increase in SIF reported by respondents to the IDology Fraud Report.
SIF continues to trouble businesses, especially given the challenges associated with decentralized fraud teams working from home and the need to interpret and apply once-in-a-lifetime changes in consumer behavior and the swings and noise they create. There are also the problems created by the never-ending stream of data breaches, and the use of personally identifiable information gathered from phishing attempts and other scams that continue to thrive in the COVID era.
To quickly issue PPP loans and prevent fraud, lenders should reconsider the importance of Know Your Customer (KYC) measures. Placing a focus on strong KYC is not only best business practice, it also will help lenders prevent fraud and maintain integrity. To easily and securely ensure a borrower is who they claim to be and provide a smooth experience while battling fraud, such as SIF, the identity verification process supporting KYC should include multiple layers, control of the entire identity verification process and the flexibility to make and automatically deploy configuration changes and machine complimented with human intelligence.
How would you characterize the business world’s response to these new threats, especially in financial services?
Luttrell: The business world, as a whole, responded admirably. Consider the massive logistical shifts that needed to happen in months, if not weeks, from the mass migration of working from home to customer engagement and the shift toward digital. On a human scale, it’s a breathless achievement. Eighty-seven percent of businesses feel their organization is equipped to some degree to make the necessary changes to stay ahead of rapid digitization and COVID-19 fraud trends, indicating they recognize and perhaps, have a higher than expected sense of confidence.
Although two-thirds of Americans feel companies could be doing more to protect their identities, confidence in organizations being able to protect their data actually increased in comparison to pre-COVID-19 levels. Our data shows that financial services organizations are stepping up, forecasting larger anti-fraud investments and budgets for 2021, and leaning into a multi-layered approach to identity proofing as well as using diverse sources and types of data. Eighty percent of financial institutions expect to increase budgets on fraud deterrence in 2021, with 45% saying significantly, more so than any other industry. Though the investment varies by sub-sectors such as fintech, lenders and prepaid, prepaid firms appear to be most aggressive.
How do you think the post-COVID cybersecurity landscape will differ from the pre-COVID cybersecurity landscape?
Luttrell: The cat and mouse saga continues and the chase maze has become significantly more complicated. The lesson for many, in hindsight, is that strong, thoughtful and comprehensive digital identity verification is mission-critical. The digital handshake is essential in establishing trust.
Fraud knows no borders and the world is small and inter-related, as is identity verification. Address verification as part of identities is not only critical for accurate verification, but also for the delivery of essential items and resources. Americans have migrated much of their lives to digital, forever.
Identity collaboration between businesses and with customers will be more sought after, and technology, such as artificial intelligence, will need to be supplemented with high-touch layers of human intuition, proactive detection, fraud expertise, and consortium intelligence from other organizations. This is especially important as COVID introduces novel fraud schemes that can fool pre-COVID identity proofing methodologies. As was the case with major events in the past, the outcomes and unintended consequences of the pandemic are unknown but we know that fraudsters are harvesting data, scheming, probing new defenses, partnering with nation states and utilizing artificial intelligence to scale fraud on a global basis.
In a round led by Warburg Pincus, data-driven personalization and customer engagement solution provider Personeticshas raised $75 million in new funding. The round brings the company’s total funding to $93 million.
“The financial services industry is reaching a tipping point in mobile adoption and setting a new standard in Smart Personalized Engagement,” Personetics CEO and co-founder Davis Sosna explained. “Personetics has set out down this path and has launched its vision of Self-Driving Finance. We are looking to quickly expand our global footprint with new partners and clients, and support our existing customers with innovative business solutions. We are very excited to be partnering with Warburg Pincus on this journey.”
Personetics teams up with banks and other financial institutions to help them better engage their customers, and to make it easier for them to understand and make the financial decisions they need to improve their lives. The company’s automated financial wellness programs help users reach long-term financial goals by leveraging technologies like AI-driven chatbots to provide personalized, relevant, and timely financial advice and recommendations.
A Finovate alum since 2016, Personetics customers include leading global banks such as U.S. Bank in the U.S., RBC in Canada, Metro Bank in the U.K., UOB in Singapore, and MUFG in Japan. More than 95 million bank customers around the world are using solutions and services enhanced by Personetics’ technology; the company claims its customers are recognizing gains of as much as 35% in their mobile app engagement and a 20% increase in customer account and balance growth.
Last fall, the company announced a partnership with Santander UK to leverage AI-driven personalized insights to boost engagement and enhance the customer digital experience. Together, the two firms launched a new digital solution called My Money Manager that offers cash flow analysis, payment reminders, and other personalized financial insights. In August, Personetics teamed up with Israel-based Discount Bank to launch its auto savings solution, Smart Save.
A new year brings a new roster of guests to the Finovate Podcast. Hosted by Finovate VP of Strategy Greg Palmer, the Finovate Podcast showcases the latest in fintech thought leadership, with innovators, analysts, bankers, and entrepreneurs sharing their insights into the future of fintech today.
From the Fintech in Extraordinary Times series documenting fintech’s response to COVID-19 to discussions on future tech and financial inclusion, the Finovate Podcast is a great way to get up to speed on the conversations in fintech that count.
Check out Greg’s guests from 2021 so far. And be sure to catch the show every week.
Raul Rodiguez, Managing Director, Innovation Accelerator, Charles Schwab – Lessons on what it takes to build and foster a culture of innovation at a large-scale financial institution. LinkedIn
Mark Goldberg, Partner, Index Ventures – Data privacy is going to be a massive concern for fintechs and banks in the next few years. Mark Goldberg of Index Ventures shares his thoughts on how privacy will evolve, and what banks and fintechs need to do now to prepare. LinkedIn
Srinivas Njay, Founder and CEO, Interface.ai – Finovate Best of Show winner Interface.ai joins us to talk through turning your call center from a cost center into a revenue generator, and how financial institutions can go about picking the right organizations to partner with. LinkedIn
Bhavin Turakhia, Co-founder and CEO, Zeta – FinovateWest Best of Show winner Zeta Technologies talks about the influence of neobanks and the future of banking. LinkedIn
Jim Van Dyke, CEO, Breach Clarity – FinovateWest Best of Show winner Breach Clarity talks about the aftermath of data breaches, creating individualized responses, and helping consumers safeguard their identities. LinkedIn
In a Series D round led by existing investor Coatue Management, Indian financial services company BharatPe has secured $108 million in new funding. The investment, which also included participation from all of the firm’s current institutional investors, boosts the company’s total to $268 million and gives BharatPe a valuation of $900 million.
The company highlighted that the oversubscribed round in its statement was “one of the fastest round closures for any startup in India.” But the company’s co-founder and CEO Ashneer Grover was quick to underscore what part of the news deserved the most attention. “We, at BharatPe, do not celebrate fund raises – it is akin to procuring raw material. We are super excited though to have returned INR 125 crores of capital to angels and all ESOP holders, earning them one of the highest returns on investment.”
Grover added that the company has experienced 5x growth in its payments business and 10x growth in its lending business in the last 12 months. “This growth reiterates the trust that the small merchants and kirana store owners have showed in us.” He said BharatPe remains committed to the goal of building “India’s largest B2B financial services company” and a “one-stop destination for small merchants.”
Founded in 2018, BharatPe was launched to bring better financing and payments services to Indian SMEs. The company was the first to offer a UPI interoperable QR code, first to offer a ZERO MDR payment acceptance service, and first to provide a UPI payment backed merchant cash advance service. More than five million merchants rely on BharatPe’s platform, which handles an annualized total payment volume of $7 billion.
For this week’s FinovateGlobal Reports, we turn to a 2021 forecast of fintech in the Middle East published by Finextra earlier this month. The report features contributions from a number of sources, including S&P Global, Findexable and its Global Fintech Index, the WEF Global Competitive Report, as well as a 2019 analyst overview published by Clifford Chance, Fintech in the Middle East – Developments Across MENA.
“Fintech continues to transform the delivery of financial services across the region and remains high on the agenda of industry participants and governments seeking to develop and modernize and, for GCC governments, to diversity from natural resources,” the report noted. Among the key takeaways on a region that (according to Accenture) is expected to see its fintech market grow to $2.5 billion in value by 2022 are:
Public and public institutions are helping reinforce a “collaborative approach to fintech.”
Regional leadership in fintech remains seated in the UAE “both in respect of the number of participants and forward-thinking approaches.”
Wariness toward cryptocurrencies and digital assets remains even as some regions, such as Dubai, have begun to “embrace blockchain” technology.
Embedded fintech products into governmental services and banking have improved efficiencies and increased opportunities for fintech innovation.
An integration between two of Intuit’s top acquisitions, consumer financial technology platform Credit Karma and TurboTax tax management software, will help put the former’s new U.S. checking account – Credit Karma Money Spend – in the hands of more consumers.
The integration will provide a seamless process for getting refunds to eligible taxpayers when they file their taxes with TurboTax – and then turn those taxpayers into Credit Karma checking accountholders. Filers on TurboTax will have the ability to open a Credit Karma Money Spend account and have their refund sent directly to that new checking account. Users then can access the full Credit Karma Money experience – for example, setting up direct deposit and adding debit cards to their digital wallets – from within TurboTax. The checking account’s Instant Karma feature also encourages users to make payments with their Credit Karma Money Spend accounts by offering monetary rewards for actions like on-time credit card bill payments and automating direct deposits.
“We believe consumers should have a checking account that helps them make financial progress, which is why we created Credit Karma Money Spend,” Credit Karma founder and CEO Kenneth Lin explained. “We’re starting 2021 off by leveraging our relationship with Intuit to bring Credit Karma Money to millions of tax filers this tax season.” Lin referred to tax refunds as “the biggest paychecks” many Americans receive, and added that getting taxpayers the refunds they are owed and helping them put that money to work “(maximizing) their day-to-day spending and billpay” is a critical role the new integration will play.
Acquired by Intuit in a deal just completed in December, Credit Karma is among Finovate’s earliest alums, demonstrating its consumer credit score monitoring platform back in 2008. Now with more than 110 million members in the United States, Canada, and the U.K., Credit Karma offers a wide range of financial wellness solutions for individuals including identity monitoring, credit cards and loan shopping, insurance, high-yield savings accounts and, most recently, its new checking accounts backed by bank partner MVB Bank.
The integration news comes in the wake of a flurry of recent criticism that Credit Karma’s credit scores varied from what users were expecting when engaging with credit card companies or prospective lenders. The differences have since been explained – Credit Karma uses a credit score model, VantageScore 3.0, that not only examines factors other than those traditionally considered for FICO scores, but also can weigh like factors differently. But the issue may reflect a growing trend of popular annoyance with some of the ways fintechs are able to provide the services they do. This “Robinhood Syndrome” is a challenge that is only likely to grow as more customers – with varied expectations and financial sophistication – continue to migrate to fintech platforms.
It may not be the return of Black Wall Street. But from veteran bankers leading their institutions into the digital future to celebrities and athletes, who are leveraging their fame to encourage African Americans to take advantage of digital financial tools, the challenger banking revolution that is sweeping the globe is also creating new opportunities for banking in African American communities.
As part of our Black History Month commemoration, we’re taking a look at three, digital-first neobanks – and another that was a digital pioneer ahead of its peers – that were founded and are run by African Americans. It is especially interesting to see how all of these financial institutions both respond to the financial wellness needs of the individual while also working support African American small businesses.
It should be noted that digital banking customers who want to support black-owned banks also have the option of signing up for the online offerings of the more than 40 brick and mortar black-owned banks in the U.S. that provide digital banking services.
First Boulevard – Headquartered in Overland Park, Kansas, First Boulevard offers “Unapologetic Banking Built for Black America.” In addition to a contactless Visa debit card and P2P payments, First Boulevard also includes programs such as Early Payday, which enables account holders to get paid up to two days early, and rewards program called “Cash Back for Buying Black.” This program gives First Boulevard accountholders up to 5% cash back at participating African-American businesses.
First Boulevard charges no overdraft or monthly fees, and has no minimum balance requirements. The bank’s app features PFM tools that enable users to round up purchases to store away extra savings, as well as provie spending recommendations and real-time insights based on the user’s purchases.
“(First Boulevard’s) mission is to help Black America build wealth,” said CEO Donald Hawkins. Hawkins co-founded First Boulevard along with COO Asya Bradley, who was recently recognized as an “Inspiring FinTech Female” by NYC FinTech Women. “We are thrilled to partner with the leader in digital payments, Visa, and leverage their crypto APIs to provide another channel for the Black community to access crypto as a new asset class that can help build Black wealth,” he said.
Greenwood Financial – Founded by a host of African American notables including Civil Rights leader Andrew J. Young, rapper and activist Michael “Killer Mike” Render, and Bounce TV Network founder Ryan Glover, Greenwood Financial blends “best-in-class” online banking services with innovative strategies to support black and Latino-oriented causes and SMEs.
Greenwood borrows its name from the Greenwood District of Tulsa, Oklahoma, which featured what was called “Black Wall Street” of early 20th century black-owned financial institutions established in the wake of the Reconstruction Era.
The firm’s C-suite includes Aparicio Giddins, President and Chief Technology Officer, a former executive at both Bank of America and TD with years of work in mobile product and emerging platform management – experience that will prove critical in helping Greenwood grow.
“I wanted to start a bank out of college,” Giddens told ABC News in an interview earlier this year, adding that he was motivated in part by the fact that he observed so few African Americans in banking. In Greenwood, he recognizes the opportunity not just to increase African American representation in the industry, but to bolster the community by using black-owned banks to “recirculate dollars” back into the community.
Greenwood Financial raised $3 million in seed funding back in October. Last month, the platform announced that it has topped 500,000 sign-ups for its virtual banking solutions in its first 100 days. Greenwood’s offering includes savings and spending accounts, virtual debit cards, P2P transfers, mobile check deposit, and no-hidden-fee ATMs in more than 30,000 locations.
OneUnited Bank – In addition to being the largest African-American owned, FDIC-insured bank, OneUnited Bank also has the distinction of being a pioneer in Internet banking among black-owned banks. Founded in 1968 as Unity Bank and Trust Company with $1.2 million in capital, OneUnited Bank has grown into a multi-branch bank and community development financial institution (CDFI) with more than $680 million in total assets. And with offices in Los Angeles, Boston, and Miami, OneUnited Bank has financed more than $100 million in loans over the past two years.
This month, the institution announced its OneTransaction Campaign. In partnership with Visa, and including a free virtual financial conference on Junetheenth of this year (June 19), the initiative is geared toward convincing African Americans to choose one transaction in 2021 to improve their financial net worth. Ideas range from getting life insurance to starting an automatic savings plan to get rid of high-interest debt.
“The reality is the racial wealth gap for each family can be closed by one strategic transaction,” OneUnited Bank Chairman and CEO Kevin Cohee explained. “By encouraging our community to accomplish One Transaction in 2021, we can make financial literacy a core value of the Black community and create generational wealth.”
Last fall, OneUnited Bank announced a $10 million deposit from international biotech company Biogen. “This deposit is one of many ways we are delivering on our enhanced Diversity, Equity, and Inclusion strategy,” Biogen EVP for Global Product Strategy and Commercialization Chirfi Guindo said. “But for OneUnited’s customers, this deposit could mean allowing them to pursue their dreams or strengthening underrepresented minority businesses.”
MoCaFi – Headquartered in New York, MoCaFi (which stands for Mobility Capital Finance) is a black-owned mobile banking platform that specializes in helping members of underserved communities benefit from digital financial services. Founded in 2015 by CEO Wole Coaxum, MoCaFi combines 21st century financial wellness solutions with an equally contemporary awareness that – in many communities – both physical money and physical banking locations are a major part of the financial ecosystem. The company partners with retail stores to enable MoCaFi account holders to deposit and withdraw money from their accounts without fee.
Last fall, MoCaFi announced a partnership with Finovate alum InComm that will give members of the black-owned neobank the ability to load their MoCaFi Mobility Debit Mastercard cash at physical retail locations around the country. InComm Payments SVP of Sales Tim Richardson praised MoCaFi as “one of the fastest growing mobile banking platforms in the country” and highlighted the company’s ability to close the “cashless” payments gap for many underbanked consumers that do not have a traditional credit or debit card.
“We already know that Blacks and Hispanics spend at least 50% more on banking services than their white counterparts,” Coaxum said last summer as the company launched its upgraded banking platform. “This is not acceptable. MoCaFi is addressing structural failures in our financial system by reimagining services that ensure that all Americans have access to safe, secure, affordable, and convenient products and services.”
MoCaFi has raised $5.3 million in funding. The firm’s investors include Radicle Impact and Partnership Fund for New York City.
