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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
With its announcement today, intelligent enterprise payment solutions provider Plastiq becomes the first company to fully integrate QuickBooks Online into its payments platform. The integration will enable businesses to take advantage of an automated payments reconciliation system that cuts costs, saves time, and eliminates the burden of manual data entry.
“Time and again, we’ve heard from our customers how crucial QuickBooks is to their record-keeping, but as a small business ourselves, we also recognize how time-consuming and error-prone it can be to manually maintain accurate QuickBooks records,” Plastiq co-founder and CEO Eliot Buchanan said. “By integrating QuickBooks into Plastiq, we’re giving businesses back vital time and resources while greatly reducing the chances of human error, enabling businesses to keep their eyes on innovating and propelling growth.”
The integration with QuickBooks will enable Plastiq users to import invoices directly, accelerating the process of identifying and populating essential data elements including vendor name, amount due, and more. After invoices have been paid via Plastiq, the payment information is exported back to QuickBooks to ensure accurate record-keeping for monthly reporting, tax returns, audits, and other compliance-related matters.
The full integration gives Plastiq an advantage over other platforms, whose partial integrations with QuickBooks still leave room for error, especially in the import/export process. This often means returning to manual data entry to make corrections, which not only takes up additional time and resources, but also re-opens the process to the potential for human error. With Plastiq’s full integration, by contrast, companies’ QuickBooks entries are “completely and accurately” updated to ensure both day-to-day accuracy as well as error-free monthly reconciliations and tax reporting.
Founded in 2012, San Francisco, California-based Plastiq ended 2020 with the launch of its new cash payments offering. The new feature enables businesses to pay all of their bills via their linked bank accounts, credit cards, or debit cards. Company Chief Product and Technology Officer Stoyan Kenderov said the addition provided a “fully integrated, intelligent payments solution that serves as a one-stop shop for all of businesses’ payment needs.”
Last fall, Plastiq’s Head of People, Angela Loeffler, was named to The Financial Technology Report’s 2020 Top 25 Women Leaders in Financial Technology roster. The company has raised more than $141 million in funding, most recently securing $75 million in a Series D round last spring led by B Capital Group.
With bitcoin and cryptocurrencies enjoying renewed interest, it’s worth noting that many fintech fans encountered their first bitcoin-related businesses through Finovate conferences.
Here’s a look at some of the companies that have brought their bitcoin and crypto-powered innovations to the Finovate stage.
OpenCoin – FinovateSpring 2013 – The company now well-known as Ripple was introduced to Finovate audiences back in 2013. At FinovateSpring that year, Chris Larsen – CEO of a startup called OpenCoin – introduced its virtual currency and distributed open source payment network. Founded in 2012 and headquartered in San Francisco, California, Ripple currently has more than 300 financial institutions who leverage its RippleNet blockchain network to power real-time payments.
KlickEx – FinovateAsia 2013 – New Zealand-based KlickEx unveiled its asset-backed and algorithmic cryptocurrency for institutional and retail users at FinovateAsia in 2013. The company, founded in 2009, recently announced a partnership with the National Reserve Bank of Tonga to launch a new national payment system.
Coinbase – FinovateSpring 2014 – Among the bigger names in bitcoin and cryptocurrency to have demonstrated their technology at Finovate conferences is San Francisco, California-based Coinbase. Debuting at Finovate with its Instant Exchange in 2014, Coinbase has grown into one of the biggest players in the cryptocurrency market with more than 35 million verified users and more than $320 billion in total volume traded on its platform.
AlphaPoint – FinovateEurope 2015 – With more than $350 million in monthly trading volume and 20 digital currency exchanges operating in 15 countries, AlphaPoint is a leading fintech exchange platform provider for digital currencies. The company demoed version two of its digital currency exchange platform at FinovateEurope in 2015.
CoinJar – FinovateEurope 2015 – Australia’s largest and longest-operating bitcoin company, CoinJar demonstrated its platform at FinovateEurope 2015. The Best of Show-winning firm was the first in its market to offer a bitcoin debit card that enabled cardholders to use the cryptocurrency for everyday purchases.
Bitbond – FinovateEurope 2015 – Berlin, Germany’s Bitbond offers a global P2P bitcoin lending platform that enables anyone with an Internet connection to both get loans as well as invest their savings for interest. The company demonstrated its AutoInvest functionality, which facilitates and automates fund allocation in a portfolio, at FinovateEurope 2015.
itBit – FinovateSpring 2015 – New York-based itBit demonstrated its bitcoin trading platform at FinovateSpring in 2015. The company’s technology enables both institutional and retail investors to buy and sell bitcoin. Rebranded as Paxos in the fall of 2016, the company has since highlighted its work in private blockchains and distributed ledger technology.
Blockstack.io – FinovateFall 2015 – Best of Show winning Blockstack.io offers a hosted and licensed enterprise blockchain platform that enables financial services companies and others to build applications on their own private blockchain. The San Francisco, California-based company, founded in 2015, was acquired by Digital Asset Holdings for an undisclosed sum before the end of the year.
ArcBit – FinovateFall 2015 – With a pledge to leverage bitcoin and blockchain technology to bring banking to the underbanked, ArcBit, which made its Finovate debut at FinovateFall in 2015, offers a mobile wallet specifically designed to give bitcoin owners full control over their cryptoholdings.
Coinalytics – FinDEVr San Francisco 2015 – Our developers conference, FinDEVr is one way that many bitcoin and crytocurrency innovators were able to bring their innovations to the public. Coinanalytics, which offers an end-to-end intelligence platform for the bitcoin industry, is an example of the kind of company developing solutions to make bitcoin a better opportunity for payments, financial services, and IoT.
BlockCypher – FinDEVr Silicon Valley 2015 – Another alum of our developer’s conference, BlockCypher offers companies a cloud-optimized, enterprise-grade blockchain platform that enables them to build reliable blockchain apps. Headquartered in Redwood City, California, the company was founded in 2014.
Gem – FinDEVr Silicon Valley 2015 – Founded in 2014 and based in Venice, California, Gem demonstrated its API which provides a comprehensive security solution for bitcoin apps – without taking control over funds. With a few lines of code, Gem enables developers to provide an interface to their bitcoin apps that gives users better funding options.
Ledger – FinovateEurope 2016 – Headquartered in Paris, France and founded in 2015, Ledger designs trusted hardware solutions for bitcoin and blockchain apps. The company’s solutions, including the Nano X and Nano S, provide cryptocurrency owners with a secure, portable way to take and manage their digital assets wherever they are.
Stratumn – FinDEVr New York 2016 – Enterprise blockchain technology company Stratumn provides firms with the infrastructure and tools they need to to build, deploy, and run blockchain. The company presented the high performance, proof-of-existence engine of its development platform at our developer’s conference in 2016. Jerome Lefebvre took over as CEO of the company from co-founder Richard Caetano in the fall of 2019.
Plutus.it – FinovateEurope 2018 – London-based Plutus demonstrated its Tap & Pay and Debit Card solutions that enable consumers to pay with bitcoin or Ethereum at any contactless point of sale. Founded in 2016, the company currently supports more than 26,000 Plutus accounts and credits its users for acquiring more than $100,000 in rewards via its Pluton Rewards program.
Amber Labs – Finovate MiddleEast 2019 – Best of Show winner Amber Labs is a bitcoin exchange, wallet, and micro-investment app in one. Headquartered in Brisbane, Queensland, Australia, and founded in 2017, Amber Labs offers a mobile first, automated investment platform for retail customers looking to buy and sell bitcoin.
Sweden-based Minna Technologies has secured more than $18 million (€15.5 million) in new funding to help bring its subscription management technology to more banks around the world. The Series B round was led by Element Ventures, and featured participation from MiddleGame Ventures, Nineyards Equity, and Visa. Minna Technologies now has raised more than $27 million (€23 million) in funding.
“Over the past four years, the subscription economy has exploded from Spotify and Netflix to even iPhones and cars,” Minna Technologies co-founder and CEO Joakim Sjöblom explained. “It’s becoming increasingly difficult for consumers to keep track of the payments and harder for banks to handle inquiries to shut them down. Minna’s tech improves the procedure for banks by simplifying the process, as well as providing an in-demand digital product that consumers are starting to expect from their financial institutions.”
Minna Technologies enables banks to offer their customers a better way to manage what analysts say are an average of 11 monthly subscriptions valued at €333 a month for European consumers. Rather than having to deal with each vendor or merchant separately, users of Minna’s solution can manage subscriptions directly via their banking app. The technology will also notify subscribers when free trial offers are nearing expiration to help users avoid accidental overpayment. Minna said that its technology has helped retail banking customers at partners Swedbank and ING save more than €40 million.
The subscription economy – driven by demand for products and services like online streaming and on-demand shopping – has grown by more than 3.5x since 2012, the company noted. A growing number of companies in the pre-digital economy are also taking advantage of the subscription model. As one example, automaker Volvo introduced a subscription service in the U.K., Care by Volvo, last fall. The new offering includes servicing, road tax, and maintenance as part of its “genuine, flexible alternative” to car ownership.
Element Ventures partner Michael McFadgen praised Minna as a company that was “revolutionizing financial services” for consumers and highlighted the ability of fintech innovation to provide banks with potential additional revenue streams, as well. “This is a clear example of the liberating services Open Banking promised us and we’re excited to be part of this journey with Minna,” McFadgen said.
Founded in 2016, Minna Technologies demonstrated its technology at FinovateEurope 2019 in Berlin, Germany. Last summer, the company announced a partnership with ING Belgium, enabling the bank’s 1.8 million customers to manage their subscription commitments without leaving the bank portal.
Pre-accounting platform Expensify commemorated Martin Luther King Jr. Day with a creative way to fight injustice. The company will donate 25 cents for every dollar it pays its white male employees to its volunteer-led campaigns. The company estimates that this initiative – the product of “numerous internal conversations” among Expensify employees – will raise $3 million in 2021.
Dude fee? Bro tax? As Expensify CEO and founder David Barrett explained, the calculation was made based on national gender pay gap data. “As part of our broader commitment to creating a world free of injustice, we’re using external data sources to determine our direct donations so it meaningfully reflects the types of fundamental and generational issues we’re trying to help solve.”
In the company’s announcement, Expensify Director Puneet Lath – a nine-year veteran of the firm- elaborated on the thinking behind the decision. Pointing out that members of some minority groups can earn as low as 75 cents on the dollar compared to white men doing the same work, Lath said this gap has contributed to systemic inequality and “unequal treatment in the workforce.” To this end, he said this specific funding approach “furthers our commitment to unwind systemic injustice throughout society.”
The engine of Expensify’s program is Expensify.org, which was launched last year to help facilitate charitable giving and volunteering. The onset of the COVID-19 crisis caused the organization to focus its efforts on hunger relief efforts, resulting in assistance to 5,000 low-income families by the end of 2020.
A Finovate alum for more than a decade, Expensify also participated in our developer’s conference, FinDEVr Silicon Valley. Founded in 2008 and headquartered in San Francisco, California, the receipt tracking and expense management app has more than 10 million users around the world.
One of the greatest “How It Started” vs “How It Going” stories in international fintech these days continues to be the rise of Grab Financial, the spin-off from ride-hailing and food delivery company Grab. The Singapore-based company announced this week that it has secured more than $300 million in a round led by Hanwha Asset Management of South Korea. The investment, which also featured participation from K3 Ventures, GGV Capital, Arbor Ventures, and Flourish Ventures, gives the company an estimated valuation of $3 billion.
“We are at an inflection point in Southeast Asia,” Grab Financial Group senior managing director Reuben Lai said, “as the pandemic has accelerated the need for digital financial services that help us grow and protect our incomes.” The company reported that the new capital will help support the hiring of additional talent, as well as fuel expansion and the introduction of new products.
Among the recent accomplishments of Grab’s fintech division are a 40% gain in 2020 revenues, a 4x increase in users of its insurance distribution offering, and the launch of its first wealth management solution. Grab – as part of its consortium with Singtel – was also among the fortunate few to earn approval from the Monetary Authority of Singapore to launch a digital bank.
This week’s Finovate Global Reports features a fresh look at fintech in Latin America courtesy of EBANX annual Beyond Borders 2020/2021 study. The report looks at the impact of COVID-19 on cross-border e-commerce and payments trends in Latin America.
Among the key insights include the centrality of mobile in driving digital consumption of services as 4G becomes more widespread throughout the region. The report also suggests that Latin America has the potential to rival southeast Asia in terms of the growth of its e-commerce sector.
For our international Finovate Global Alumni Profile this week, here’s a look at ModularBank, a digital banking solution provider based in Estonia that raised €4 million in new funding this week. The company, which demoed its technology at FinovateEurope 2019 in London, offers a modern, API-based, banking-as-a-service solution to help businesses leverage new business models and gain competitive advantage.
“Increasingly, people are demanding more flexible and convenient services that fit around the way they work and live and in response, there is a wave of digitalization and embedded finance on the horizon, beginning to build,” explained Modularbank CEO Vilve Vene upon announcement of the company’s recent funding.
“To harness this momentum there is a real need for lean, yet sophisticated core banking technology … Modularbank was set up to enable banks and other customer-facing businesses to devise and roll out personalized banking services quickly and easily.”
A collaboration between the State Bank of Pakistan and the Bill & Melinda Gates Foundation will bring a state-run digital payments system, named Raast, to Pakistan.
Jamaica-based digital microfinance company Sprint Financial Services picks up an investment from black-led Blue Mahoe Capital Partners, based in Florida.
Mynt, the fintech division of telecom Globe and e-wallet GCash, raises $175 million in new funding to support growth in mobile payments in the Philippines.
With a focus on South Eastern and Central and Eastern European startups, LAUNCHub Ventures announces first closing of its new fund, bringing in €44 million en route to its €70 million goal.
Upgrade, the neobank launched by LendingClub founder Renaud Laplanche is celebrating the one-year anniversary of its flagship Upgrade Card – and a $50 million fundraising – with a new mobile checking account. Upgrade’s Unique Reward Checking Accounts offer 2% cash back on everyday and recurring expenses and 1% cash back on all other debit charges. Qualifying accountholders are eligible for up to 20% discounts on Upgrade loans.
“We asked our customers what would cause them to switch their primary checking account,” Laplanche said. “The overwhelming answer was attractive rewards on debit card purchases. While credit cards often provide decent rewards, it has been nearly impossible for consumers to earn a broad 2% cash back on debit charges.”
Upgrade’s Rewards Checking account, as well as all of the neobank’s banking services, are backed by Cross River Bank, chartered in New Jersey. Cross River founder, CEO, and chairman called the new accounts “everything mainstream consumers expect from a modern checking account with no fees, generous rewards, and access to affordable credit.”
The new offering comes as Upgrade enjoys strong adoption of its Upgrade Card, which offers access to installment financing online and at millions of points of sale via the Visa network. The company reported an annual rate of $1 billion in new credit lines already made available to consumers who are applying for Upgrade Cards or loans at a rate of more than one million a month.
Meanwhile in the wake of Brexit, European challenger bank Revolut is back in the market for a banking license in its home country. Revolut opted to secure its first banking license from the European Central Bank rather than pursue banking in the U.K. when anxieties over the future of a post-Brexit United Kingdom were at their peak. But now, with Brexit moving closer toward resolution, Revolut has returned with a bid to bring its digital banking services to the U.K.
“We want to be the best in class for customer experience, value and capabilities, and offering full bank accounts allows us to do just that,” Revolut founder and CEO Nik Storonsky said. “In the future, we want to offer many more innovative products to our UK customers and we are excited to continue driving innovation and competition in the banking industry. Becoming a fully licensed bank in the U.K. is a central pillar of that ambition.”
Toronto, Ontario-based challenger bank Koho announced this week that it has hired former Wayfair Director of Engineering Jonathan Klein as its new Chief Technology Officer. Klein takes over the CTO spot from Kris Hansen, who left the position back in August.
Founded in 2014 as the country’s first neobank, Koho has more than 120,000 accounts and reports $500 million in annualized transactions. The neobank offers full-service individual and joint bank accounts, along with a prepaid Visa card issued by People Trust Company. Koho has raised a total of $57.7 million in funding, most recently securing a $18.8 million Series B in the fall of 2019. Last year, Koho picked up an award for Best Prepaid Credit Card in Canada for 2021 from CreditCardGenius.
And for more from the neobank beat, check out our eulogy for Simple, the in-house challenger bank which was shuttered by BBVA after six years in operation.
How are businesses in financial services applying technologies like machine learning and AI? What obstacles and challenges remain for companies looking to deploy these technologies and how can these roadblocks be overcome? What does it mean for businesses to be “resilient” and why is “resilience” as important for businesses in today’s dynamic and uncertain times as “agility”?
We caught up with Jeff Fried, Director of Product Management for InterSystems, last week to address these and other critical questions for financial services companies in the COVID – and post-COVID – era. Fried was featured during our FinovateWest Digital conference last month, where he led a keynote address titled, “The 7 Steps to Using Machine Learning to Improve Your Business.”
For more insights from Jeff Fried into how businesses can make the most out of the current crisis, check out our feature Giving AI and Machine Learning the Business.
The news that retail giant Walmart is turning its attention to fintech is an impressive reminder of how the industry has grown. What began as a land of incumbents defending itself from a siege of digitally-savvy disruptors has become more of an Age of Exploration, in which companies large and small compete for slices of an increasingly valuable and growing market for digital financial services.
What is Walmart doing?
Walmart announced on Monday that it is building a fintech startup that will “develop unique and affordable financial products for Walmart employees and customers.”
“For years, millions of customers have put their trust in Walmart to not only save them money when they shop with us but help them manage their financial needs. And they’ve made it clear they want more from us in the financial services arena,” Walmart U.S. president and CEO John Furner said. “We’re thrilled to work with Ribbit Capital in a new venture to help us deliver innovative and needed options to our customers and associates – with speed and at scale.”
The new entity will be majority-owned by Walmart, and the company has previewed a handful of future board members: Furner and Walmart CFO Brett Biggs.
Why are they doing it?
Walmart already offers financial services to its customers in the form of products like its prepaid debit solution, the Walmart MoneyCard, as well as its Walmart Credit Card, check cashing, and money transfer services. The big box retailer also offers consumer financing alternatives like buy now pay later, courtesy of its partnership with Affirm (which went public this week).
Creating a fintech arm or subsidiary would enable the retail giant potentially to offer a wide variety of additional services ranging from investment and wealth management, to insurance, lending, and banking.
Who is helping them?
Collaborating with Walmart in this new venture is Ribbit Capital, the venture capital firm behind Robinhood, Affirm, and Credit Karma. Walmart, in its statement, described the new company as a “strategic partnership” with the Palo Alto, California-based venture capital firm. Founded in 2012 by Meyer Malka, Ribbit Capital focuses on investments in early-stage companies and has an extensive portfolio of investments in fintechs, in particular. These ranks include – in addition to the companies noted above – such innovative fintechs as Revolut, Gusto, Coinbase, and Wealthfront (all Finovate alums, by the way).
“Walmart has a relationship with millions of customers and associates built on trust, security and integrity,” Malka said. “When we combine our deep knowledge of technology-driven financial businesses and our ability to move with speed with Walmart’s mission and reach, we can create and deliver financial offerings that are second to none.”
What’s the upside?
Given the current climate, the tougher challenge may lie in making the argument against Walmart’s flirtation with fintech. Given Walmart’s size and popularity – the company serves more than 265 million customers in 11,400 stores around the world every week – the company is in as good a position as any other retailer – short of Amazon perhaps – to make an impact on fintech wherever it decides to land.
That said, consumer financing and payments both appear on the surface to be the easiest ways for a Walmart fintech arm to make the biggest difference fastest. With regard to payments, as Barron’s observed, Walmart could leverage its ownership of India-based Flipkart. In the review, Barron’s quoted Bank of America analyst Robert Ohmes highlighted the monetization opportunities in financial services as a potential way for Walmart to secure “long-term profitability.”
What are the risks?
On the other hand, Walmart will need to be wary of “diversifying away its edge.” John Zolidis, president of Quo Vadis Capital warns of a potential loss of focus should Walmart aggressively pursue business opportunities away from its “core competency.” Zolidis noted further that the company’s primary customers may not be the earliest adopters of digital financial services, pointing out that nearly 25% of Walmart’s customers do not have a bank account, and 50% lack access to credit.
Then again, these may be exactly the sort of problems for which Walmart’s new fintech venture is a kind of solution.
Some fintech observers may have gotten an inadvertent peek at the news yesterday. But today the big funding rumor has been confirmed: Less than a week after announcing its strategic partnership with fellow Finovate alum Hydrogen, money experience innovator MX is back in the fintech headlines with word of a $300 million fundraising.
TPG Growth led the round with a $150 million commitment. Also participating were existing investors CapitalG, Geodesic Capital, Greycroft, Canapi Ventures, Digital Garage, Point72 Ventures, Pelion Venture Partners, and Regions Financial Corporation. The Series C round takes MX’s total capital to $505 million and increases the firm’s valuation to $1.9 billion – making MX fintech’s latest unicorn.
In a statement, company CEO Ryan Caldwell said that in addition to hiring more talent, MX will use the capital to boost its platform’s data collection and enhancement capabilities. He specifically mentioned the importance of “scaling and finding additional ways to market” which underscores MX’s recent forays into embedded finance and its just-announced partnership with Hydrogen.
“The financial industry is at an inflection point as organizations look to become not only intermediaries, but true advocates for their customers by offering personalized insights and data-driven money experiences,” Caldwell explained. “Along with incredible partners, we are helping financial institutions and technology companies accelerate their digital roadmaps and launch next generation services and apps that will fundamentally transform how people interact with their money.”
MX helps businesses turn raw, unstructured data into valuable, insight-rich assets. This empowers them to build new solutions and services for their customers, drive growth, and boost brand loyalty. In addition to cleaning and categorizing data, MX’s technology adds key metadata that enables companies to better fight fraud, make faster loan approvals, and help their customers make better financial decisions.
In the funding announcement, Derek Zanutto of CapitalG praised MX’s ability to “leverage data strategically” and favorably compared MX’s potential impact on the financial industry to that of Netflix in the streaming content space and to Amazon in the e-commerce space. TPG Growth’s Mike Zappert noted that his firm was committed to investing in the digital transformation that is sweeping through financial services and sees MX as a big part of it. He called MX’s technology “a clear differentiator” that has delivered “tremendous growth for the Company over the last 12 months.”
MX currently works with more than 2,000 banks, credit unions, fintechs, and other companies, and includes 85% of digital banking providers among its partners. This has given the Lehi, Utah-based company a combined reach of more than 200 million consumers. A multiple Finovate Best of Show winner, MX last demonstrated its technology at FinovateFall 2019.
First things first: congratulations to SoFi. The financial services platform has earned a $8.65 billion post-money valuation after agreeing to a merger with Social Capital Hedosophia Holdings, a publicly traded special purpose acquisition company or SPAC that specializes in consumer-focused fintech businesses.
Now, what in the world is a SPAC? And why would merging with one be a sound route to the public markets?
A SPAC is pretty much as described. It is a corporation that is built specifically to buy other corporations. A SPAC, which has no other business operations, works by raising money via an initial public offering, and then using that capital to acquire other companies. These entities are taking advantage of the contemporary interest in the IPO market, leveraging demand for new companies – mostly in technology – into demand for firms betting on the ability to know which among these companies are longer-term winners.
The decision to merge with Social Capital – and to pursue this new route to going public – says a lot about the company initially known as “Social Finance” when it was founded almost ten years ago.
“SoFi is on a mission to help people achieve financial independence to realize their ambitions,” company CEO Anthony Noto said. “Our ecosystem of products, rewards, and membership benefits all work together to help our members get their money right.”
By giving its members a one-stop-digital-shop for financial services such as consumer financing, investments, and insurance, SoFi is well-positioned to take advantage of what Noto called “the secular acceleration in digital first financial services offerings.”
This momentum is in evidence within SoFi’s own ecosystem, as well. Social Capital founder and CEO Chamath Palihapitiya noted the “acceleration of cross-buying by existing SoFi members” as creating “a virtual cycle of compounding growth, diversified revenue, and high profitability.”
Speaking on CNBC, Palihapitiya compared SoFi favorably to Amazon and said that the company best represented the kind of banking solutions people want most. From its origins as a student loan refinancing company to its current incarnation as a diversified financial services platform, SoFi reported more than $200 million in total net revenue in Q3 2020 and is on pace generate $1 billion of estimated adjusted net revenue this year. Noto will continue as CEO of SoFi post-merger.
The deal comes just months after SoFi earned “preliminary, conditional approval” from the U.S. Comptroller of the Currency for a national bank charter. A bank charter, the company noted in the merger announcement, would lower the cost of funds and “further support SoFi’s growth.” In an interview with Yahoo! Finance, Noto explained that this was key to having the ability to provide lower interest rates to consumers and would drive innovations like SoFi Money, the company’s cash management account.
Another plum in the purchase is Galileo, a leading provider of customer-facing and backend technology infrastructure services for financial services providers that SoFi acquired last April. There are 50 million accounts on the platform.
From SoFi’s perspective, “deal certainty” was one of the reasons why the company took advantage of the SPAC route to the public markets rather than a traditional IPO. Palihapitiya is a veteran of the nascent SPAC craze, having taken a number of companies, including Virgin Galactic Holdings in 2019, public in this fashion.
Founded in 2011, the San Francisco, California-based company participated in our developers conference, FinDEVr New York 2017. At the event, SoFi teamed up with data platform Quovo to demonstrate their innovations in providing secure authentication for bank accounts. SoFi currently has more than 1.8 million members and has raised $2.5 billion in funding to date.
Digital banking platform Modularbank has secured a $4.8 million (€4 million) investment in a round led by Karma Ventures and Blackfit Capital Partners. The company, founded in 2018 and headquartered in Estonia, said that the seed funding will help it establish operations in the U.K., as well as add engineering and product development talent to meet its expansion goals.
Modularbank’s banking-as-a-service technology leverages APIs and microservice architecture to offer a core banking solution to serve both retail and business banking customers. And because Modularbank is, in fact, modular, companies can select the specific services they want – core banking, deposits and savings accounts, assets and collateral, lending, financial accounting, and payments – to build the solution that best fits their needs.
“Increasingly, people are demanding more flexible and convenient services that fit around the way they work and live and in response, there is a wave of digitalization and embedded finance on the horizon, beginning to build,” Modularbank CEO Vilve Vene explained. “To harness this momentum there is a real need for lean, yet sophisticated core banking technology and that’s where Modularbank comes in, as we do exactly that. Modularbank was set up to enable banks and other customer-facing businesses to devise and roll out personalized banking services quickly and easily.”
Also participating in the round were Plug and Play Ventures, Siena Capital, and Ott Kaukver, angel investor and former CTO of Twilio and Skype.
Modularbank made its Finovate debut at FinovateEurope in 2019. Since then, the company has collaborated with Germany’s Senacor Technologies and announced a strategic partnership with payments processor NETS Estonia. In December, Vene was named one of the most impressive women in fintech in 2020 by Fintech Futures.
CRED, a credit card repayment company based in Bangalore, India, has scored $81 million in funding courtesy of a Series C round announced earlier this week. Led by existing investor DST Global, the investment featured the participation of Sequoia Capital, Ribbit Capital, Tiger Global, and General Catalyst, and gives the company a valuation of $806 million.
The company’s founder Kunal Shah said in a statement that the funds would help support CRED’s growth and added that CRED is committed to providing wealth-creation opportunities for its employees, as well. Shah said that the company has allocated 10% of its cap table for ESOPs (employee stock ownership plans).
CRED processes a fifth of all credit card bill payments in India. The membership-based company rewards those who pay via CRED with CRED coins that can be used to win exclusive rewards or to earn access to curated products and services. More than 35% of premium credit card holders in the country use CRED, which has seen its overall user base climb to more than 5.9 million users. The company also benefits from creditworthy borrowers – the median credit core for CRED users is 830. CRED members reportedly spend on average 2x the amount of the average CRED user.
For some, news that German digital bank N26 was entering the increasingly competitive challenger banking market in Brazil was met with a loud “it’s about time!” The neobank, which previewed its intentions to launch operations in Brazil back in 2019, may have been temporarily wrong-footed by the twin complications of Brexit and COVID-19. But the news this week suggests that the firm is back on track with its Latin American expansion plans – and a showdown with Nubank.
Not only is Nubank the home team when it comes to neobanking in Brazil, the institution is also the biggest challenger bank in the world in terms of customers and valuation (25 million of the former, $10 billion of the latter). This compares favorably with N26’s five million customers and valuation of approximately $3.5 billion. That said, the Berlin-based challenger bank has significant wind at its back, having just celebrated the one-year anniversary of its arrival in the U.S. back in August and, more recently, locking in $100 million in one of the largest funding rounds of 2020.
Russian bank Tinkoff announces that its voice assistant is now available as both Oleg (male) and Olya (female).
PYMNTS.com features Toms Niparts, CEO of Jeff, an app-based lending platform headquartered in Latvia.
Middle East and Northern Africa
A new 425 million euro line of credit from the European Investment Bank will help Egypt’s Banque Misr support small businesses affected by the COVID-19 pandemic.
A partnership between Visa and fiat-to-crypto service provider Simplex will enable the Israel-based fintech to issue crypto debit cards.
RuPay launches new payment solution for Indian merchants – RuPay PoS – courtesy of a partnership with RBL Bank and PayNearby.
The normalization of relations between Israel and some of its neighboring countries has encouraged the State Bank of India to offer trade finance solutions to Israeli corporations.
Critics have called a new regulation in Mexico that bars third-parties from using platforms or APIs to offer financial services directly “a death sentence” for the fintech-as-a-service model in the country.
Kenya-based MSME financing platform Pezesha takes first prize at the 2020 AFI Inclusive FinTech Showcase.
Chairman of the Digital Lenders Association of Kenya Kevin Mutiso weighs in on the role of “customer-centric regulation” in shaping the growth of fintech.
