David Penn, Author at Finovate

Fighting Financial Crime in the COVID-19 Era

By David Penn Posted on December 9, 2020
Categories: Feedzai, List series, Report series

What are the biggest fraud challenges to emerge during the COVID-19 era? According to a new report from Feedzai, card cloning tops the list of major indicators for fraud in both financial services and e-commerce.

With card cloning, criminals copy stolen credit or debit card information and transfer it to a new card. Also known as “skimming,” card cloning is a big business on the dark web, where fraudsters – “carders” – buy and sell stolen payment card data.

But card cloning is not the only danger highlighted in the report. High speed ordering with bot attacks that move quickly and can last for hours is another fraud threat in financial services, as is what Feedzai refers to as “High risk merchant category code (MCC).” Businesses that earn this designation from their bank are typically those with above average chargebacks, as well as a higher risk of fraud potential.

Within ecommerce, the report found that in addition to card cloning, both account takeover (ATO) and suspicious email are among the top three indicators for fraud. With an ATO attack, the criminal uses bots to access an unsuspecting individual’s bank or e-commerce account. This enables a bad actor to access that account and make fraudulent and unauthorized transactions from it. Suspicious email is a broader category that includes common but effective tactics like phishing, and as well as fake emails and email domains.

“It wasn’t just consumers who met the call to digitally transform,” Feedzai’s Quarterly Financial Crime Report reads. “Fraudsters, ever technologically savvy and opportunistic, made the most of the shift.”

Feedzai’s report on financial crime puts current trends in the context of a society that is embracing digital channels at a rapid pace. It notes significant increases in the dollar amounts and value, as well as the number of ecommerce transactions processed between May and September of 2020 compared to the same period last year. Unfortunately, the report also noted a dramatic increase in network fraud this year. “The realignment of holiday shopping trends was also an early gift for fraudsters,” the report reads.

What can financial institutions do to help fight financial crime?

Monitor Card Behavior: Multiple transactions in a short period of time, unusually high dollar amounts per transaction, and a sizable number of merchant codes within a relatively short period time are all potentially indicative of payment card fraud. Leveraging machine learning and AI-powered algorithms to accurately identify these patterns is an optimal way for businesses to keep up pace with the speed and complexity of this kind of fraud.

Track Suspicious Email Domains: High-risk domains, invalid emails, and unconfirmed email addresses are all potential sources of fraudulent activity. Companies can use both software and the services of security specialists who maintain up-to-date information on domains and email addresses that may be used by fraudsters.

Know Your Customer: Knowing what “normal” looks like is the first step to identifying abnormal behavior. By developing an accurate customer profile that takes into account such factors as a customer’s typical log-in times, devices, and time spent on different platforms, businesses can more readily spot behavior that is exceptional, and take further steps to determine whether or not that fraudulent activity is taking place. Feedzai refers to these as “hypergranular risk profiles.”

“COVID has created a big disruption in the banking, payments, and e-commerce sectors with multiple impacts all over the world,” Feedzai Senior Director of Global Data Science Jaime Ferreira said. “Feedzai is in a good position to add clarity to this debate and help financial institutions to understand these complex shifts and how to better protect their customers.”

Feedzai’s Quarterly Financial Crime Report for Q4 2020 leverages Feedzai’s data from more than four billion global transactions from March 20 through September of this year. The report also features information from consumer research surveys of “nearly 2,200 account-holding U.S. consumers.”

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How to Manage and Exceed Evolving Customer Expectations

By David Penn Posted on December 8, 2020
Categories: CEO Interview, FI.SPAN, Interview

Is open banking key to enabling banks and other financial institutions to keep up with ever-evolving customer needs and expectations? With trend drivers as unpredictable as technological innovation on one hand and a once-in-a-generation pandemic on the other, what strategies and tactics can financial institutions embrace in order to best serve their customers now and in the future?

We caught up with Clayton Weir, co-founder of business banking solution provider FI.SPAN, to answer these questions and more. Based in Vancouver, British Columbia, Canada, and founded in 2016, FI.SPAN turns banking services into branded banking experiences that are embedded within the ERP and accounting systems of the bank’s business customers.

A recent report indicated that almost 90% of innovation managers fear that integration challenges themselves are an obstacle to digital transformation. Are they right?

Clayton Weir: Yes, I believe they have a valid argument for considering this an obstacle to digital transformation. Forrester and Avoka published a great study on how many large IT projects at enterprise banking and financial services firms get delayed, overrun, and even more disappointingly fail to deliver all of the business value promised.

When you look at the biggest drivers of a failed software project, a disproportionate amount of blame tends to fall on some failure to properly scope the mission in terms of vision, customer needs, and potential constraints.

In addition to the inability to properly staff the program with the right skill mix, I believe those risks become heightened in a domain area like embedded/ERP banking. A team has to understand the nuances of client ERP systems, bank legacy systems, treasury banking, accounting workflows, banking workflows and deliver a program that can exist and add value within all of those different constraints. Not only will most banks and contracted build partners be unlikely to have some of those perspectives sitting on the bench, it also will be hard to deploy the right mix of people to the initiative concurrently.

Technology has moved too far too fast for the banks to build those capabilities themselves. Buying companies that can bring those services to market is not impossible, but well outside the purview of most commercial banks. The best way to go for B2B banks to manage the impact of rapidly evolving customer expectations is to partner with agile, innovative fintech services that not simply meet expectations, but exceed them.

Why do you believe that open banking is the missing link in helping banks make digital transformations?

Weir: Over the next few years, it’s likely that governments will force financial institutions to become more transparent with their data and share information of the client’s choosing with their peers because of open banking. By having a freer flow of information between these parties, both banks and fintechs could develop new apps and services to better serve the needs of their customers. Open banking will make it easier for customers to access fintech products or even open accounts with other financial institutions, but they’ll transact with others through their main bank’s platforms. Rather than getting frustrated with their bank’s limitations, customers will be grateful for how much easier it is to work with their institution.

What do you see when you look at the prospects for open banking in the U.S.? What will drive it forward?

Weir: Many businesses are feeling neglected by banks, when we look into some of the niches that are cropping up; fintechs can come in and support this happening, starting to find ways to serve small niches across the board.

Open banking is a big part of this conversation, and there is market-based momentum around open banking. Open banking is showing up as a direct response to the market opportunity. Meaning, the demand from consumers to use third party apps is increasing. If your bank doesn’t work with those apps, it’s a massive disadvantage for you. If a customer can’t use a certain app because you don’t offer it, they’re going to find a different bank that can offer them a better experience.

Effectively, there is going to be more and more momentum in the marketplace, so as the European and Australian open banking regimes mature, the scope will go above and and beyond what the U.S. has done. As multinational banks, fintechs and developers start to develop other offerings around open banking infrastructure in those other markets, it’s going to dial up the customer expectations in North America. Even if open banking is slow to adopt in the U.S. and Canada, the best things that come out of open banking will undoubtedly surface North America. Multinational banks are going to bring the best of their open banking infrastructure to their North American banks and use it in competitive and interesting ways.

What is the environment for open banking in Canada – where FI.SPAN is based?

Weir: Canada is lagging somewhat behind some other countries, such as Europe and Australia, where governments have mandated open banking and the sharing of customer information. However, adoption in these locales has been slow, while technical issues have made open banking difficult to implement. At some point, the Canadian government will follow suit and mandate open banking, but the sooner banks come on board – and some may get ahead of legislation and create better user experiences now – the better. Everyone should want to see open banking succeed, as it will make it easier for a bank’s business clients to operate, which then further increases economic innovation and competitiveness.

If Canada’s banks are going to become global financial innovators, they need to be more open-minded when it comes to working with fintechs and embrace key trends which include open banking, authentication and digital identification, payments modernization, and embedding financial services within other applications.

Why does the global health crisis – and its economic fallout – represent a special opportunity to embrace open banking? Has COVID-19 made it harder in some ways to advance open banking?

Weir: Quite the opposite, we see it as having brought about digitization and innovation at a quicker pace than pre-pandemic. I think what has essentially happened was that businesses suddenly needed to eliminate manual and paper-based processes, they looked to their banks for help implementing digital solutions quickly. This has pushed banks to start rethinking their innovation goals, and they’ve started asking what efforts will have an immediate impact on the client experience. The fact that embedded banking has suddenly become ubiquitous means that FI.SPAN is now positioned to bring about a huge shift in how businesses consume banking products.

How does FI.SPAN fit into this effort with regard to open banking? How is your company making a difference?

Weir: We make it easy for banks to extend their service offering to their business clients by embedding commercial banking applications within the organization’s ERP or accounting software. The most innovative banks are partnering with fintechs to deliver better payment services they believe will make their customers happier, their relationships stronger, and drive revenue.

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Financial Education Specialist gohenry Raises $40 Million in New Funding

By David Penn Posted on December 8, 2020
Categories: Daily news, Funding

Yesterday we shared news that EVERFI and Sallie Mae were teaming up to promote financial literacy for high school kids in California. Today we share news on another youth finance-related front. gohenry, which specializes in providing financial education for youth and their families, has secured $40 million in financing. The round was led by Edison Partners, and featured participation from Gaia Capital Partners, Citi Ventures, and Muse Capital.

The funding takes the company’s total capital to more than $56 million.

“For too long, kids have been locked out of the digital economy and parents lacked the tools to help their children gain confidence with money and finances,” gohenry CEO Alex Zivoder said. “gohenry was the first to respond to these needs in 2012 when we launched a groundbreaking financial education app and debit card that truly empowered children. In 2020, we’ve achieved three key milestones: becoming profitable which many B2C fintechs seek, raising $40 million during COVID, and partnering with world leading funds. All three will help us fuel our U.S. expansion.”

gohenry specializes in helping kids aged six to eighteen develop sound money and financial habits. Launched in the U.K. as a financial literacy app and debit card in 2012, the company has grown its offerings to include its Teen and Eco cards – both of which feature built-in parental controls. The company’s solutions enable youth to learn how to manage allowances and other earnings and give parents the opportunity to guide their children as they learn the basics of digital finance. The company noted that young customers on its platform earned “nearly $150 million in allowances” and “contributed more than $140 million back into the global economy.”

As part of the agreement, Edison Partners managing director Chris Sugden will join gohenry’s board of directors.

“gohenry is catering to millions of parents who are looking to raise smart, financially literate children but are currently underserved by existing solutions,” Sugden said. “We’re thrilled to partner with Alex and the gohenry management team on this next milestone in their growth journey and look forward to realizing their ambitions to improve the financial fitness of kids across the globe.”

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EVERFI, Sallie Mae Bring Digital Financial Literacy to California Teens

By David Penn Posted on December 7, 2020
Categories: Alumni News, EVERFI

A new strategic partnership between social-impact education provider EVERFI and Sallie Mae will bring an interactive financial literacy program to high school age students in California.

The new curriculum, Sallie Mae’s Knowledge for College program, will be made available to high school juniors and seniors in California either in a classroom or virtually. The program is focused on helping provide students – and their families – with the information they need to know in order to finance their higher education goals. The partnership between EVERFI and Sallie Mae comes as research indicates that eight in ten families find affording college “challenging,” less than half of families have a plan to pay for college, and just over half (51%) of students have researched financial aid opportunities.

The two companies also noted that California is unique in that it does not require high school students to take coursework in personal finance before graduating.

“Students and families continue to value higher education, but there’s still a certain level of anxiety and angst about how to pay for it,” Ray Martinez, co-founder and president of EVERFI, said. “(This) is why it is crucial that we provide these students with necessary tools to become confident in their ability to make smart financial decisions well into adulthood. Ensuring students and their families fully understand not only the process by which to apply for student financial aid, but also the responsibilities it carries is of the utmost importance and will help set them up for financial success.”

Knowledge for College includes five interactive modules to help students develop strategies for financing their post-secondary education and, beyond that, building good financial habits for life. Saving and budgeting are among the topics included in the curriculum, as are more advanced topics such as student loans and consumer financing.

“Financial literacy provides students with a strong foundation of knowledge and confidence in making informed decisions about the future,” Sallie Mae SVP Jen O’Donald said. “That future includes planning and paying for higher education, which is one of the first major financial decisions for many students and families. We want families to make these decisions with eyes wide open and that means providing critical education and information early in the process through programs like Knowledge for College.”

Washington, D.C.-based EVERFI made its Finovate debut last year at FinovateSpring. Founded in 2008, the company has been busy making friends this fall: teaming up with Athletes First this month and the Anti-Defamation League (ADL) last month to help develop educational programs to boost African American history and fight anti-semitism, respectively. On the fintech front, EVERFI announced in November that it was working with Zelle to launch a free digital financial literacy course for high schools, and, in October, partnered with Citizens Financial Group to enhance the company’s existing College Bound Citizens education outreach initiative with a “robust digital component.”

We featured EVERFI in our look at the importance of financial literacy earlier this year. The company has raised more than $250 million in funding from investors including Jeff Bezos, Eric Schmidt, and the Rise Fund, among others.

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ReceiptHero Secures €2 Million Seed Investment

By David Penn Posted on December 4, 2020
Categories: Alumni News, Daily news, Funding, ReceiptHero

It’s been a grand week for Finland’s ReceiptHero. The company announced a few days ago that it was teaming up with SEB Kort to have its digital receipt functionality integrated into SEB Kort’s corporate card, Eurocard. Then, we learned that ReceiptHero had inked a deal with fellow Finovate alum ETRONIKA that will enable the launch of the first e-receipt solution in the Baltic region. The new offering will allow ETRONIKA’s business customers to use their KASU retail network management system and ReceiptHero’s technology to issue digital receipts to their customers.

“ETRONIKA has built a truly modern retail chain management and POS product and we are thrilled to be partnering on a wider partnership that allows us the initial steps of building out the Baltic ecosystem.” ReceiptHero CEO Joel Ojala said.

Today comes more news from the Finland-based fintech. Courtesy of an investment from VC Lifeline Ventures, Superhero Capital, and Vidici Ventures of Sweden, ReceiptHero has picked up $2.43 million (€2 million) in seed funding.

“We’re making some real strides now with merchants and potential bank partners,” Ojala said. “We’ve hit an inflection point where banks understand the potential of digital receipts and value for their customers. For merchants they feel safe with ReceiptHero protecting their customer data and payment information.”

Growing interest in ReceiptHero’s technology, which transmits digital receipts from merchants directly to customer banking or account apps, comes as Finland’s government has decreed that digital receipts will be mandatory by 2025. Finland launched a digital receipt pilot project in 2019 that saw more than 50,000 state workers shopping exclusively with merchants using ReceiptHero’s platform.

ReceiptHero made its Finovate debut earlier this year at FinovateEurope in Berlin. Headquartered in Helsinki, the company is also partnered with Nordea, integrating its technology with the bank’s Nordea Wallet offering at the beginning of last year. Other recent ReceiptHero partners include SKJ Systems, Diebold Nixdorf, and global IT system integrator CGI.

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Envestnet Goes Aussie on Open Banking; BNPL Consolidates in the Americas

By David Penn Posted on December 4, 2020
Categories: Finovate Global

One of the more interesting questions during a recent FinovateWest Digital panel on challenger banks asked: how important are partnerships to these digital newcomers? This week, one answer to that question came in the form of an announcement from Australia’s self-described “smartbank” – 86 400 – that it was teaming up with one of the global leaders in data aggregation and insights: Envestnet | Yodlee.

“The average Australians’ financial world can be very complex, with numerous accounts for numerous products across different financial institutions,” 86 400 CIO Brian Parker explained. “By partnering with Envestnet | Yodlee, we’ve given our customers the ability to see all their accounts in one place, delivering a better view of their financial lives and helping them take control of their money.”

Founded in 2017 and backed by Cuscal, Australia’s largest independent payments company, 86 400 offers no fee banking; card, mobile, and smartwatch-based payments; and competitive interest rates for both savers and borrowers. Via mobile app, 86 400 customers can easily monitor and manage their finances, functionality that will be significantly enhanced via the smartbank’s new relationship with Envestnet | Yodlee.

“Consumers don’t have to wait for Open Banking to access and use their own data,” Envestnet | Yodlee ANZ Country Manager Tim Poskitt said. “Envestnet | Yodlee’s data aggregation enables consumers to link their financial accounts with tools and products that deliver better financial outcomes. That’s what 86 400’s products provide.”

86 400, which takes its name from the total number of seconds in a 24 hour day, has forged partnerships in recent months with mortgage brokers like Mortgage Choice and Connective. Headquartered in Sydney, New South Wales, 86 400 won Best in Class at Australia’s International Good Design Awards. Robert Bell is CEO.

Maybe it is true, as fintech observer and wit Ron Shevlin suggested on Twitter recently, that the credit card issuers have to be scratching their heads a bit with the sudden popularity of the Buy Now Pay Later ecommerce craze-turned-trend. But as Homer Simpson famously put it, “we’re not succumbing to mass hysteria. We’re just jumping on the bandwagon.”

The latest news from the BNPL bandwagon features U.S. buy now pay later company Affirm, which announced that it would acquire Canadian BNPL outfit PayBright for $264 million (C$340 million).

“We built PayBright with the mission of making the everyday commerce experience simply better for Canadians,” company President and CEO Wayne Pommen said. “Partnering with Affirm gives us the opportunity to deliver on that promise on a much larger scale.” Pommen added that he was “delighted” at the opportunity to take “Buy Now Pay Later to the next level in Canada.”

Just where is that next level? PayBright currently has more than 7,000 retailer partners around the world, including companies like Samsung, Wayfair, and Oakley. And competition in the Canadian BNPL space has intensified of late; Australian BNPL rival Afterpay announced its expansion to the country in August.

Here is our look at fintech around the world.

Latin America and the Caribbean

BNamericas interviews Ruben Galindo, CEO of Mexican fintech CapitalTech on how the company has managed to serve its customers during the pandemic.
A partnership between FacePhi and Peruvian fintech TuSueldoYa will help businesses better manage cash advances during the COVID-19 crisis.
IBS Intelligence highlights four Mexican fintechs that are “transforming the financial sector”: Credijusto, Konfio, Clip, and Albo.

Asia-Pacific

Lightnet, a Singapore-based company that leverages blockchain technology to power its remittance offering, announces partnership with Siam Commercial Bank.
P2P lending marketplace Rai Capital goes live in Cambodia.
The Philippine Central Bank recognizes digital banks as a new bank category as part of a new regulatory framework.

Sub-Saharan Africa

A rare look at the evolving fintech ecocsystem in Cameroon.
Telkom, a telecommunications company based in South Africa, goes live with its digital wallet that enables WhatsApp based P2P mobile payments.
Nigerian payment infrastructure solution provider Airopay introduces a new digital payment app.

Central and Eastern Europe

Paysera expands to Albania, opening offices in the capital city of Tirana.
Polish fintech ZEN announces strategic partnership with Mastercard; goes live in 32 European markets.
U.K.-based cashless payment solution provider DiPocket chooses Lithuania for its office in the CEE region.

Middle East and Northern Africa

Emirates NBD introduces next-generation global corporate banking platform businessONLINE.
New report highlights Riyadh and Bahrain among “top fintech ecosystems to watch.”
Kuwait-based banking technology service provider VeriTech partners with Norway’s Zwipe to meet growing demand for contactless payments in the Middle East.

Central and Southern Asia

India-based cryptocurrency investment platform CoinSwitch Kuber announces plans for early December launch.
Fintech Futures takes a look at Indian challenger bank Finwego, which specializes in lending in the private school education space.
Swedish biometric company Fingerprint Cards teams up with Indian smartcard manufacturer M-Tech Innovations to launch contactless cards in India.

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The Importance of Innovation in Customer Experience

By David Penn Posted on December 3, 2020
Categories: Finovate Fintech Fulltime Review, Speaker series

With 2021 right around the corner, we’re taking one last look at a year we will remember for a long time.

The Finovate Fintech Fulltime Review kicks off next week with a free, all-digital, live and on-demand showcase of webinars, white papers, eMagazines and more – all designed to make sense out of a year that was in many ways both tragic and transformative. The event begins Monday, December 7 and runs through Friday, December 11.

Among the features of next week’s event worth highlighting is our interactive conversation: Don’t Let Your Contact Center Be the Black Sheep of Your Bank’s Innovation. This live webinar with Mike Straham, VP of Contact Center Solutions with Lifesize, will explain the role of the bank contact center in the overall customer experience and why it is critical for banks to innovate in this space.

A customer experience specialist, Straham has more than 20 years of experience identifying and implementing advanced software technologies to reduce costs, increase productivity, improve customer satisfaction, and create new revenue streams. He joined Lifesize earlier this year after tenures at Talkdesk, Genesys, and Interactive Intelligence.

Headquartered in Austin, Texas, Lifesize specializes in providing video conferencing and collaboration solutions. In October, the company announced a strategic partnership with Omilia, a conversational AI solution provider. Over the summer, Lifesize acquired U.K.- and Silicon Valley, California-based digital collaboration solutions company Kaptivo.

Also featured next week during our Finovate Fintech Fulltime Review is our conversation with Quadient: Digital Overload: What Do Customers Want Now Besides Emergency Zoom Installations and Contactless Payments?

Led by Quadient’s Andrew Stevens, Principal for Banking and Financial Services, and moderated by Celent Senior Banking Analyst Craig Focardi, this interactive webinar will discuss how to maintain a true focus on the customer experience in the middle of rapid technological change and disruption.

Stevens is a customer experience and communications experts who has worked with and executed transformation programs for institutions across the world. His experience in both technology and banking/finance gives him unique insights into the challenges that financial institutions face today in meeting the needs of ever-more-demanding customers.

Quadient is an international customer experience solution provider specializing in customer experience management, business process automation, mail-related solutions, and parcel locker solutions. Headquartered in Bagneux, France, Quadient includes Societe Generale, Humana, FedEx Express, and Ping An Bank among its customers.

To learn about all we have in store for next week’s Finovate Fintech Fulltime Review, check out our event hub for more information.

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MX Brings the Benefits of Data Enhancement to VyStar Credit Union

By David Penn Posted on December 2, 2020
Categories: Alumni News, Daily news, MX

With more than $9 billion in assets, VyStar Credit Union is the latest community-based financial institution to partner with open finance money experience innovator MX. VyStar, one of the 20 largest credit unions in the U.S., will leverage MX’s data connectivity APIs, account aggregation, and data enhancement tools to enhance the online experience for its more than 735,000 members in Georgia and northeastern Florida.

“Our strategy is to harness innovation and strategic fintech relationships that provide the best experiences that will improve our members’ financial well-being, and this partnership with an innovative fintech like MX is a big step in furthering that strategy,” Joseph R. Colca, SVP of Digital Experience at VyStar Credit Union, said. “We’ve been impressed not only with MX’s world-class data enhancement tools, but also with the alignment of our missions to empower financial strength through member advocacy.”

The partnership will enable members of VyStar Credit Union to aggregate and view accounts from all of their financial institutions into a single interface. MX’s technology collects, cleanses, and enriches transaction data, providing insights that help users more accurately plan their financial futures, as well as take smarter financial actions in the present. VyStar believes that embracing the technology will enable the Jacksonville, Florida-based credit union to gain wallet share among its customers by removing any need to log in to other apps or websites.

“With MX, VyStar is giving its customers greater clarity into their finances, which is exactly the kind of innovation, partnership, and money experience that MX loves to enable through our powerful data platform,” Chief Customer Officer for MX Nate Gardner said.

A multiple time Finovate Best of Show winner, MX most recently demonstrated its technology last year at FinovateFall. A leading data platform for banks, credit unions, fintechs, and other financial services providers, MX offers solutions to quickly and accurately collect, enhance, analyze, and present financial data. The company enables financial institutions to better understand and serve their customers, and helps them empower their customers to make better, more informed financial decisions.

Founded in 2010 and headquartered in Lehi, Utah, MX has made headlines in recent months via its partnerships with companies like Borrowell, a leading credit education firm based in Toronto, Ontario, Canada; Advicent, a SaaS technology solution provider for financial advisors and planners headquartered in Milwaukee, Wisconsin; and Central Pacific Bank , a full-service financial institution based in Honolulu, Hawaii. Named to the 2020 CB Insights Fintech 250 and highlighted as one of the fastest growing companies in Utah, MX unveiled its open finance platform, MX Open, in September. Ryan Caldwell is co-founder and CEO.

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Fiserv Forges Partnership with African American Credit Union Coalition

By David Penn Posted on December 1, 2020
Categories: Alumni News, Daily news, Diversity in Fintech, Fiserv

One of the more fascinating stories in the history of black America is the rise of black-run banking institutions in the final decades of the 19th century. And while the early days of black banking and finance had their fair share of tragedy – the massacre at “Black Wall Street” in Tulsa, Oklahoma in 1921 among the more horrific – the industry persisted nevertheless, enabling black SMEs and families to access basic banking services and credit at a time when mainstream financial institutions refused to serve them.

It’s hard not to recall this history when reading the news that Fiserv has become a corporate partner of the non-profit African-American Credit Union Coalition (AACUC). As a new corporate partner, Fiserv will support the Coalition’s internship and mentorship programs, as well as make a financial contribution and back Coalition efforts such as its I’ve Got Five on It Giving Tuesday campaign.

AACUC President and Executive Officer Renée Sattiewhite acknowledged that Fiserv’s participation comes at a time of heightened awareness of and renewed determination to fight forms of systemic racism in particular. “As a year that has galvanized support for African-American community comes to a close,” Sattiewhite said, “we are looking forward to the future along with organizations like Fiserv.”

Fiserv General Manager of Credit Union Solutions and executive sponsor of the partnership Derek Everett put the collaboration in the context of Fiserv’s goal of better engaging underbanked communities. In addition to its partnership with AACUC, Fiserv is also investing $10 million in black- and minority-owned businesses via its Back2Business initiative. “As we begin our work with AACUC, our team is looking forward to strengthening existing relationships and forging new ones with the diverse communities and professionals AACUC strives to empower,” Everett said.

Headquartered in Duluth, Georgia, the Coalition promotes racial equality and fairness in the credit union industry, and supports black-led credit unions and credit unions serving black communities. Larry Sewell, who recently took over as chairman of the AACUC, discussed the challenge of diversity in an interview this fall. Currently Vice President of Corporate Partnerships and Advocacy for Together Credit Union, Sewell noted that of the more than 5,000 credit unions in the U.S., there are “approximately 170 African-American CEOs.” The number of women among those 170 CEOs, it should be noted, is impressive at more than 58%. But the industry clearly has room to improve in terms of ethnic diversity at its most senior, leadership ranks.

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Square Takes on Taxes as Justice OKs Intuit, Credit Karma Acquisition

By David Penn Posted on November 30, 2020
Categories: Alumni News, Credit Karma, Daily news, Intuit

From in-house innovation to outright acquisition, businesses have myriad paths to consider when looking to expand their product portfolios. We learned late last week that mobile payments company Square has taken one of the less flashy routes to growing its offerings: paying $50 million in cash for Credit Karma’s tax business. Square will add the service’s DIY tax filing functionality to its own Cash App.

The free tax filing option will be featured along with the app’s other financial tools, including P2P payments, Cash Card, direct deposit, and the ability to make fractional investments in stocks and bitcoin. Cash App was launched by Square seven years ago as a P2P money transfer service and has grown into an integrated financial ecosystem with more than 30 million monthly active customers as of June 2020.

“We created Cash App to provide more access to the masses of people left out of the financial system and are constantly looking for ways to redefine our customers’ relationship with money by making it more relatable, instantly available, and universally acceptable,” Cash App lead Brian Grassadonia said.

One in two tax filers – a total of 80 million taxpayers – prepared and filed their own Federal income taxes electronically in 2020, according to the IRS, and the trend is expected to accelerate. Credit Karma Tax Director of Engineering Patrick Fink underscored this point, noting that despite the “challenge” of filing taxes, more customers are transitioning toward filing taxes on their own. “Credit Karma Tax provides a seamless, mobile-first solution for individuals to file their taxes at no cost,” Fink said. “We’re excited to be joining an entrepreneurial team and continue to build simple, innovative tools for Cash App customers.” Credit Karma tax processed more than two million tax filers last year.

The acquisition is expected to close by the end of 2020 and is subject to customary closing conditions.

Square’s investment in its Cash App is timely. At the beginning of the month, the company noted in its third quarter financial reporting that Cash App had generated more than $2 billion in net revenue and $385 million of its gross profit for the quarter. The performance reflected gains of 5.74x and 2.12x, year over year, respectively.

The timeliness of the transaction also has a lot to do with Intuit’s acquisition of Credit Karma, which was cleared by the U.S. Department of Justice last week. Announced at the beginning of the year, the $7 billion deal is Intuit’s largest acquisition to date, and by shedding Credit Karma’s tax business, an obstacle to the union between the two companies has been removed. Intuit is the developer of it own online tax filing service, TurboTax.

“We are very excited to reach this important milestone today,” Intuit CEO Sasan Goodarzi said. “This brings us one step closer to transforming personal finance by making it simpler for consumers to find the right financial products, put more money in their pockets, and provide financial expertise and advice.”

The Credit Karma Tax announcement also comes one month after Square announced a $50 million investment in bitcoin, a sum the company said represented “approximately one percent” of the firm’s total assets as of the end of Q2 2020. Bitcoin trading has been available on Square’s Cash App since 2018 and, as of 2019, the company’s Square Crypto team has been contributing to bitcoin open-source efforts.

“We believe that bitcoin has the potential to be a more ubiquitous currency in the future,” Square Chief Financial Officer Amrita Ahuja said. “As it grows in adoption, we intend to learn and participate in a disciplined way. For a company that is building products based on a more inclusive future, this investment is a step on that journey.”

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Top Takeaways on the Future of Fintech from FinovateWest Digital

By David Penn Posted on November 30, 2020
Categories: David's column, FinovateWest 2020

FinovateWest Digital is a wrap. And with our second, all-digital fintech conference now in the books, what have we learned about the state – and future – of fintech after three days of live demos, keynote addresses, and expert discussions?

Every Year is the Year of the Customer

The COVID-19 crisis has sensitized businesses to the speed at which consumer behaviors can shift. These shifts can both accelerate existing trends as well as to create new trends that had not been broadly anticipated. Whether this has meant embrace of digital technologies or improving the efficiency and security of incumbent solutions, businesses in have learned to listen more and move faster when it comes to responding to customer needs.

Maybe “The Era of the Customer” is a better way to describe the New Normal between businesses and consumers. With Big Tech, Big Banks, and a host of other financial and fintech providers increasingly competing over the same financial services turf, the most obvious and potentially enduring winners of this contest are most likely to be the consumers those firms are battling ferociously to serve.

Find a Friend!

There was a moment on the final day of FinovateWest when the moderator of a panel on challenger banking turned to his panelists and asked: “we hear a great deal about partnerships with incumbent financial institutions? What value do partnerships have for upstart institutions like challenger banks?”

The question took the neobanking innovators a bit by surprise, at first. But the idea of the innovators turning to innovators to help them add key elements to their offering, or to ensure that their solution is safe and secure is as much a part of the promise of fintech as is “disrupting” incumbents – if not more so. In the same way that our developers conferences helped shine a light on those professionals whose skills make everything from UX to back office operations that much better, so to do events like FinovateWest Digital provide a valuable space for all the players in the fintech ecosystem to meet and do business together.

Partnership is the fastest way to add competencies. You can’t innovate faster than someone who has already figured it out.

Live/Digital is Our Destiny

For those who fear a future of AI-powered robot overlords, the growing consensus among technologists is that AI will most likely and effectively be used in coordination with and support of human activity. In other words, rather than be replaced, human beings are more likely to be merely “enhanced”.

Similarly, even as news of a potential COVID-19 vaccine becomes more common and optimistic, we see a role for both digital-only and live-with -digital fintech conferences for the forseeable future. That’s not just for our upcoming Finovate Fintech Fulltime Review, December 7 through 11, but for our big events in 2021, as well.

For now, our upcoming events for European and West coast audiences are still slated to be digital-only affairs in March and May of 2021, respectively. But like those increasingly agile banks, financial services companies, and fintechs we praised above, we’re looking forward to engaging our audiences – live in-person or online and digital – wherever they are and every way we can.

FinovateWest Digital is still available On Demand for registered attendees. Check out live demos from our Best of Show winning companies, videos of our keynotes and panels, and more!

Photo by Sebastian Voortman from Pexels

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FinovateWest Best of Show Winners Announced

By David Penn Posted on November 25, 2020
Categories: Best of Show, FinovateWest 2020

Here ye! Here ye! The votes have been cast and tallied. Here are the companies that have been awarded Best of Show trophies at this year’s FinovateWest Digital fintech conference.

Breach Clarity for its technology that identifies and diagnoses consumers’ unique breach histories to prescribe personalized actions to improve financial health for both financial institutions and consumers. Video.

Finzly for its digital banking solution that improves banking services for any bank using novel UIs and a services-based architecture. Video.

Glia for its digital customer service platform that connects financial institutions to their customers using chat, voice, video, cobrowsing, and AI. Video.

Interface for its AI-powered call center technology that helps financial institutions automate 60% of their calls in 60 days. Video.

Zeta for its full-stack, cloud-native, API-ready core banking and transaction processing platform for issuance of credit, debit, and prepaid products. Video.

A huge, pre-Thanksgiving thanks to all the companies that participated in FinovateWest Digital – and to all those who attended our November conference, as well. Be sure to keep an eye out for our all-digital, year-end event, the Finovate Fulltime Review, coming up in December. In the meanwhile, have a wonderful holiday week!

Notes on methodology:

1. Only audience members NOT associated with demoing companies were eligible to vote. Finovate employees did not vote.

2. Attendees were encouraged to note their favorites during each day. At the end of the last demo, they chose their five favorites.

3. The exact written instructions given to attendees: “Please rate (the companies) on the basis of demo quality and potential impact of the innovation demoed.”

4. The five companies appearing on the highest percentage of submitted ballots were named “Best of Show.”

5. Go here for a list of previous Best of Show winners through 2014. Best of Show winners from our 2015 through 2020 conferences are below:

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