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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
The big card companies continue to make the kind of deals that underscore the importance of fintech to the future of financial services. This week we get confirmation that international payments giant American Express has agreed to acquire SME lender Kabbage.
Terms of the deal were not disclosed. Speculation on the deal in recent days has put the purchase price between $850 million and $1 billion.
The acquisition will include Kabbage’s team, its suite of financial technology solutions, as well as the company’s data platform and IP built for small businesses. American Express also plans to leverage Kabbage’s technology and talent to offer additional cash flow management and working capital solutions to its small business customers. In the acquisition announcement, American Express highlighted Kabbage’s recently introduced business checking account, which centralizes funds for easier cash flow management.
“This acquisition accelerates our plans to offer U.S. small businesses an easy and efficient way to manage their payments and cash flow digitally in one place, which is more critical than ever in today’s environment,” President of Global Commercial Services at American Express Anna Marrs said.
A Finovate alum for more than a decade, Kabbage has raised $2.5 billion in funding, with the company’s last equity round closing in 2017 after raising $250 million. This year, in addition to the launch of its business checking account, Kabbage distinguished itself as a major conduit for small businesses seeking COVID-19 related relief funding. The company said it has facilitated 300,000 Paycheck Protection Program (PPP) loans valued at more than $7 billion. Kabbage’s participation in the program was a dramatic return to its role as a resource for small business financing after the company suspended SME lending in April in response to the global health crisis.
“At Kabbage, we have always made the success of America’s small businesses our primary objective,” Kabbage CEO and co-founder Rob Frohwein said in a statement. “We have built a technology and a data platform that provides them with the kind of capabilities and insights often reserved for larger businesses. By joining American Express, we can help more small businesses succeed with a fully digital suite of financial products to help them run and grow their companies.”
As part of the agreement, both Kabbage’s securitized SME loans and its PPP laons will be serviced by an separate entity to be established by Kabbage and American Express, the Financial Times reported.
American Express’ purchase of Kabbage comes less than a month after another big acquisition in the online SME lending space: Enova International’s $90 million deal for OnDeck. For both companies, the acquisitions provide the opportunity to expand meaningfully beyond their core competencies: Enova adding to its consumer lending operations, and AMEX bringing working capital and SME financing to its commercial card business.
The acquisition is expected to close later in 2020.
The decision by Canada’s Constellation Software to acquire Uruguayan technology firm – and Finovate alum – Infocorp earlier this year is a reminder of the vibrancy of the fintech ecosystems thriving in the countries to the north and south of the U.S. The acquisition was completed in June via Constellation Software’s U.S.-based subsidiary Aquila.
“We have been looking for a partner to support us as we move to our next level of experience for our clients,” InfoCorp CEO Ana Inex Echavarren said. “We are excited to join Aquila and the Constellation family as they believe in long-term relationships, and the ‘buy and hold forever’ approach supports us in our focus on long term growth with our clients.”
Montevideo-based InfoCorp offers its customers an omnichannel banking platform that leverages the latest advanced technologies – conversational AI, machine learning, voice recognition, and chatbots – to build solutions to better engage and serve financial services customers. With clients such as Banco Santander, Banco de Bogota, Banco Internacional, and Towerbank, the 25+ year old company made its Finovate debut in 2017, demonstrating its marketing and commercial actions orchestrator platform that enables more agile, personalized, marketing campaigns that lead to higher conversion rates and ROI.
“InfoCorp has an inspiring focus on their clients,” Aquila CEO Mike Byrne said. “To produce solutions that connect the banks with their clients is such a deep passion for the team at InfoCorp. We are really looking forward to working with the group.” Operations at InfoCorp will remain the same, post-acquisition, with Echavarren continuing as CEO and the company keeping its client portfolio and offices. InfoCorp has 250+ workers in its development and innovation centers in Santiago de Chile, Montevideo, and Colonia.
In fact, the company announced last month that it is looking to expand into both Mexico and Argentina in the wake of the acquisition, with potential expansion to Europe, Canada, and the U.S., as well. Echavarren told BNamericas that the company is currently growing at a rate of 40% to 50% a year over the past five years and is looking at investments to power Infocorp’s ability to enter bigger markets.
The fintech ecosystem in Uruguay is often overlooked compared to the fintech industries in other Latin American nations such as Mexico and Brazil – both of which Uruguay borders. With a population of approximately three and a half million, the country is the second smallest in South America and gets high marks on a number of metrics including democracy, low perception of corruption, and e-government. Uruguay is regarded as a “high-income country” by the United Nations.
In its look at fintech in Uruguay, Contxto highlighted a baker’s dozen of companies that are not only growing regionally, but moving closer to expansion worldwide. The feature divides the country’s fintech industry into five components: payments, exchange, open banking, investments, and what it calls “fintech enterprise services (FES).” This primarily involves providing fintech solutions to online financial services companies.
Here is our look at fintech around the world.
Sub-Saharan Africa
A partnership with Standard Chartered Bank will enable Airtel Africa to build its fintech business and help support financial inclusion.
South African digital banking platform provider Ukheshe earns finalist spot in the 2020 Ecobank Fintech Challenge.
ThisDayLive features VC investor Ameya Upadhyay on the challenge of startup development in Africa.
Central and Eastern Europe
Fintech Futures takes a look at financial inclusion in Russia.
Poland’s mPay teams up with iDenfy to bring biometric facial recognition and other identity verification technologies to its mobile payments platform.
Romania’s PayByFace brings its biometric facial recognition technology to Up Romania cardholders, enabling biometric purchases as participating stores and restaurants.
Middle East and Northern Africa
CIH Bank of Morocco partners with Finastra for a remote implementation of the company’s Fusion Corporate Channels and Fusion Trade Innovation systems.
Cairo, Egypt-based payments-as-a-service fintech Paymob raises $3.5 million in funding.
National Bank of Oman enables cardless ATM transactions.
Central and Southern Asia
MEDICI featured Indian regtech startup Signzy in its RegTech Top 21 Startups for 2020 roster. Signzy is the only Indian regtech to make the list.
Reserve Bank of India announces offline digital payments pilot project.
JCB International and PJSCB Orient Finans initiate merchant acquiring operations in Uzbekistan.
Rapyd partners with PayMyTuition to boost the company’s ability to accept bank transfer-based payments from countries in Latin America and the Asia Pacific region.
WorldRemit teams up with a pair of Mexican neobanks, albo and Klar.
Asia-Pacific
Ayoconnect, a billpay network based in Indonesia, raises $5 million in pre-Series B funding.
Southeast Asian fintech TrueMoney teams up with cross-border payments firm Thunes to expand its remittance business.
Vietnamese digital banking platform Timo announces new partnership with Viet Capital Bank.
Led by David Marcus, co-creator of Facebook’s cryptocurrency project Libra, Facebook Financial is the social media giant’s latest effort to enhance the company’s payments initiatives.
Facebook has not made an official announcement about Facebook Financial – referred to internally as F2. Reporting at both MarketWatch and Bloomberg suggests that the new unit will also feature Stephane Kasriel as payments vice president. Kasriel comes to the project from Upwork, where he was CEO. Marcus currently runs Novi, a division of Facebook that is developing a digital wallet for Libra, and will continue in that capacity as Novi moves under the F2 umbrella.
“We have a lot of commerce stuff going on across Facebook,” Marcus told Bloomberg earlier this week. “It felt like it was the right thing to do to rationalize the strategy at a company level around all things payments.” Notably, Marcus has significant payments experience, having been PayPal president from 2012-2014.
Facebook Financial will also handle WhatsApp Pay, recently launched in Brazil, and Facebook Pay, the social media platform’s e-commerce payment system. Engadget’s reporting on the conversation surrounding the new division noted that Facebook sees unifying payments on its different platforms as key to boosting value for advertisers and increasing in-app transactions.
The discussion over Facebook Financial comes just a week after the firm announced another e-commerce-friendly initiative: a Commerce Accelerator that will partner with 60 startups from countries in Europe, the Middle East, Africa, and Latin America to help build out Facebook’s online marketplace.
“In this critical time, Facebook is doubling down on commerce and accelerating its work to enable every business to sell online and help people gain inspiration and discover and buy the products they love. We can’t achieve this alone,” the company announced in a blog post, “so we are looking for startups to build technology with us.”
Zuckerberg himself has praised the role of payments in Facebook’s future. In a recent earnings call, the Facebook CEO noted that “as payments grow across Messenger and WhatsApp, and as we’re able to roll that out in more places, I think that that will only grow as a trend.”
This week’s announcement that Stripe had hired former General Motors Chief Financial Officer Dhivya Suryadevara as its own new CFO is a reminder that the hunt for top talent in fintech has never been hotter. As tech titians and financial services giants embrace fintech solutions, the pressure to find the most effective leaders, the most insightful technologists, and other key executives is forcing companies to up their game when it comes to attracting the best of the best.
With that in mind, here are another nine companies who in 2020 have done just that: made a major, C-suite addition to their leadership ranks that should help propel their respective companies to the next level.
Nicolas Weng Kan – Yolt CEO – news. Former Google Compare CEO Kan took the helm of ING’s smart money app, Yolt, as well as Yolt Technology Services (YTS), a provider of open banking services in Europe last month. Yolt won Best Personal Finance App at the Wealth & Finance FinTech Awards earlier this month.
Anna Manz – London Stock Exchange CFO – news. The London Stock Exchange has a new Chief Financial Officer as former Johnson Matthey CFO and executive director Anna Manz succeeds David Warren, who had held the position since 2012. Prior to her time at Johnson Matthey, Manz spent more than 16 years in executive roles with Diageo.
Lucy Hagues – Capital One UK CEO – news. Hagues, who spent three years as Chief Marketing Officer at Capital One UK and is an alum of the firm’s graduate program, replaced outgoing CEO Amy Lenander. Hagues is the first program graduate to reach the CEO’s office.
Nkihil Rathi – Financial Conduct Authority CEO – news. Appointed CEO of the FCA at the age of 40, U.K. head of the London Stock Exchange Rathi is the first member of an ethnic minority to lead the regulatory body.
Steven van Rijswijk – ING CEO – news. ING Chief Risk Officer Steven van Rijswijk is the company’s latest CEO. He took over for outgoing Ralph Hamers who is headed toward a CEO post at UBS. Van Rijswijk’s promotion comes after 25 years of service at the bank.
Brady Harris – Dwolla CEO – news. Former President of payment solution provider Payscape, Harris was tapped by Dwolla founder Ben Milne to lead the company this spring. Milne praised Harris for helping lead Payscape’s merger with Payroc, “creating a full-service payment powerhouse that operates in 46 countries.”
Michael Miebach – Mastercard CEO – news. “Putting products first” might be one way to describe Mastercard’s decision to replace its outgoing CEO Ajay Banga – who is transitioning to the role of executive chairman – with the company’s chief product officer Michael Miebach. A 10-year Mastercard veteran, Mieback is credited for being a “key architect” of the company’s “multi-rail strategy.”
Hironori Kamezawa – MUFG CEO – news. The appointment of Kamezawa as Chief Executive Officer of Mitsubishi UFJ Financial Group was a bit surprising, insofar as the outgoing CEO has only been in place for a year. But observers speculated that Kamezawa’s leadership will likely mean a broader and more aggressive embrace of fintech by the company.
Asger Hattel – Signicat CEO – news. A new year, a new CEO for the Denmark-based digital identity solution provider as former CEO and Head of Nets Merchant Services Asger Hattel took leadership of Signicat in January. Hattel replaces company co-founder Gunnar Nordseth, who will remain as a shareholder and help support business development.
In the latest example of the New Economy leveraging the best of the Old Economy, online payments innovator Stripe (founded 2010) announced that it has hired Dhivya Suryadevara as its new Chief Financial Officer. Suryadevara will leave her position as CFO for General Motors, a company that was founded in 1908.
“Dhivya is a rare leader who has run an industry-leading leviathan but also gets excited about enabling the brand-new products and the yet-to-be invented products, too,” Stripe co-founder John Collison said in a statement. “She has the expertise and the instincts to help steer Stripe through our growth in the years ahead.”
More than just the corporation’s most recent CFO, Suryadevara was a long-time General Motors veteran. She joined the company’s Treasurer’s Office as a Senior Financial Analyst in 2004, and became the Chief Investment Officer and CEO of GM Asset Management by 2013. Appointed Vice President of Corporate Finance for General Motors in 2017, she was named CFO a year later. Suryadevara was educated at the University of Madras and earned an MBA from Harvard Business School.
As CFO for General Motors, Suryadevara oversaw financial operations involving more than $100 billion in annual revenue. She was credited for providing leadership in capital allocation decision-making, and for “spearheading numerous strategic transactions for the company.”
“I am very excited to join Stripe at a pivotal time for the company,” Suryadevara said. “Stripe’s mission to increase the GDP of the internet is more important now than ever.” She emphasized her enjoyment of “leading complex, large-scale businesses” adding that she hopes to “accelerate Stripe’s already steep growth trajectory.”
News of the new CFO encouraged some speculation that Stripe may be readying for an initial public offering. Company co-founder John Collison had said this is not the case.
Suryadevara’s hire comes shortly after Stripe made another major appointment: bringing on Mike Clayville as Chief Revenue Officer. Clayville arrives at the company having served as Vice President of Worldwide Commercial Sales and Business Development at Amazon Web Services (AWS).
In other recent Stripe news, the company announced that it was expanding its partnership with Jobber, a home service management provider that will leverage Stripe Capital to help its partner businesses get the financing they need to grow. Last month, Stripe teamed up with Irish online marketplace DoneDeal, enabling sellers on the platform to use Stripe for secure, contactless transactions.
San Francisco, California-based Stripe has raised $1.6 billion in funding, including $600 million announced in April as part of a Series G round that began last fall.
Whatever benefits the challenger bank revolution may bring to retail banking customers, the opportunities these neobanks provide to small businesses may be even more significant. In fact, there is a growing cadre of digital-first challengers who have decided to put innovating on behalf of small business banking at the top of their priorities.
One such company is Wise, a BBVA-backed challenger based in San Mateo, California, that announced the release of its premium checking account in the U.S. this week. The new offering, available for $10 a month, enables businesses to earn up to 1% APY on deposits through a combination of a 0.5% base APY and an additional 0.1% for every $1,000 purchase using a Wise debit card. Accountholders get 25 free ACH deposits and 25 free outgoing bank transfers a month, as well as additional payments services. Among the functionalities to be added are remote check deposit, the ability to send digital checks and international wires, and support for Quickbooks.
The new offering comes in the wake of the company’s first major fundraising: a $5.7 million seed round in April led by Base10 Partners and featuring the participation of several other investors including Abstract Ventures and Backend Capital. The company told TechCrunch earlier this year that it has 1,000 business customers, with average workforces ranging from 2 to 10 employees, and “between $500,000 and $5 million in ARR (annual recurring revenue).”
Finovate audiences met Wise last year when the company made its Finovate debut at our September conference in New York. At the event, Wise co-founders Arjun Thyagarajan (CEO) and Suresh Venkatraman (CTO) demonstrated the company’s “small business banking-in-a-box” solution, and previewed additional products and services for small businesses including payments and invoicing.
From left: Wise co-founders Arjun Thyagarajan (CEO) and Suresh Venkatraman (CTO) at FinovateFall 2019.
Thyagarajan founded Wise after a stint managing product for Mojio, a platform for connected cars. Before that he was a classic serial entrepreneur, launching a personal organizer (LivingOrganized), and a pair of password management platforms (TeamsID and Gpass). But a sense that he wasn’t “doing what I really wanted to do” led him to leave the “hot startup” in search of what he called “problems that needed solving.”
“My explorations led me to FinTech and I was pleasantly surprised with the rapid advancements in technology transforming the financial industry, especially in banking and payments,” Thyagarajan wrote on the company blog last summer, looking back on his decision to launch Wise. “It got me thinking: what if we could build a banking product that can deliver on the promise of putting the customer first … And solving real world problems.”
Thyagarajan’s reflections are similar to those his co-founder Venkatraman, who in a companion post observed that Wise’s own experience as a small business trying to secure quality banking services was vindication of the company’s mission.
“The day started innocently enough as we walked into a local bank with all our paperwork in hand,” he wrote. “That was the beginning of a chase around Silicon Valley to find a bank that would take our money and open up an account. Banks would reject us for all sorts of reasons or just ignore us.”
These days, with an new offering, a big investment and a major banking partner in BBVA in hand, it looks like the fintech world might be ready to wise up.
Branded payments provider Blackhawk Network has teamed up with open finance data and intelligence platform Moneyhub to ensure compliance with open banking standards. Via the partnership, Blackhawk Network will be able to validate third-party providers, connect to them through live applications, and enable them, with user consent, to access user data and initiate payments.
“Using Moneyhub’s compliance solution means that we can adopt the industry best-practice approach to PSD2 in authorizing our unique prepaid card offering,” Stacey Richards, who handles Product Management for Blackhawk Network, explained. “We share the fundamental desire to deliver a transformative experience for the end-user with Moneyhub, and we look forward to working with the team to deliver on our ambitious vision for the future.”
Blackhawk Network helps businesses leverage branded payments to reach more customers, build engagement and loyalty, and increase revenue. A Finovate alum since 2012, the company has more than 3,000 workers around the world, and serves 26 countries with its branded payment solutions. Blackhawk features 1,000+ brands in categories ranging from dining and entertainment to retail and home improvement. The Pleasanton, California-based company went public in 2013, and was acquired by Silver Lake and P2 Capital Partners in 2018 in a deal valued at $3.5 billion.
More recently, Blackhawk acquired Edge Loyalty Systems, an Australian sales promotions and loyalty firm, for $23 million (A$32.2 million). This spring, the company purchased SVM Cards for an undisclosed sum.
Moneyhub’s partnership with Blackhawk is the company’s third collaboration this year. In June, Moneyhub teamed up with Lumio, a money management app. The following month, the company partnered with investment performance analytics firm, ARQ.
“Our Open Banking expertise means that we are able to deliver a comprehensive compliance solution to Blackhawk Network, ensuring that it remains a leader in the market and delivers excellence to current and future clients,” Moneyhub CTO Dave Tonge said. “Our growing product offering and the multi-use nature of our proposition means that we are able to work alongside Blackhawk Network and help support their growth and aspirations.”
Founded in 2011 and based in Bristol, U.K., Moneyhub made its Finovate debut at our European conference in 2015. Nationwide Building Society is the company’s primary investor, having led a corporate round for Moneyhub in the fall of 2018.
The news that eBay is teaming up with LendingPoint to help finance small merchants on its platform is the latest example of how technology marketplaces are going the extra mile to look after the merchants who make their platforms possible.
“We are committed to empowering entrepreneurs to make their dreams a reality and we are continuing to partner with our sellers to provide them with the tools they need to thrive,” Vice President of Global Payments at eBay Alyssa Cutright said.
The new program is called eBay Seller Capital powered by LendingPoint, and will provide eBay sellers with access to installment loans with flexible terms of up to 48 months. Currently being run as a pilot effort, the program offers funding of up to $25,000, with no origination or early payback fees.
“LendingPoint’s purpose is to accelerate and democratize commerce,” LendingPoint CEO and co-founder Tom Burnside said. He called eBay sellers “some of the world’s most dynamic ecommerce players,” and both companies have noted that the partnership is a first step toward providing the platform’s merchants with more and better tools to manage and grow their businesses.
Headquartered in Atlanta, Georgia, and founded in 2014, LendingPoint began the year with news that it had closed on $246 million in securitizations. More recently, the company launched its Lending Operating System SDKn, which integrates into existing payment platforms to provide businesses with a consumer financing solution with a variety of fulfillment options ranging from virtual cards to money transfers.
The news from eBay comes a few weeks after InstaPay announced a new financing solution that provides third-party sellers on Amazon – who often wait up to two weeks to be paid by the platform – with a daily payment that helps them better manage their cash flow. Google removed commission fees for merchants enrolled in its Buy on Google program last month, and said it is opening up its platform to third party providers PayPal and Shopify.
In a late-breaking announcement on Thursday, Intercontinental Exchange (ICE) announced that it has agreed to purchase mortgagetech platform provider Ellie Mae from Thoma Bravo. Valued at $11 billion, Ellie Mae will add to Intercontinental Exchange’s growing presence as a major workflow solutions provider for the U.S. residential mortgage industry. This growth includes ICE’s acquisition of a majority stake in MERS in 2016, and the comany’s acquisition of Simplifile three years later.
Ellie Mae President and CEO Jonathan Corr referred to these other players and the chance to collaborate with them in his remarks about the acquisition agreement. “We are excited to be joining the Intercontinental Exchange family and having the opportunity to work closely with Simplifile and MERS in helping our industry to realize the true digital mortgage,” Corr said. “We have been on a journey, as we have long said, ‘to automate everything automatable’ for the mortgage industry, and joining ICE, which has followed a parallel journey in global exchanges, will allow us to further accelerate realizing our vision.”
Founded in 1997 – and acquired by Thoma Bravo in February of last year in a deal valued at $3.7 billion – Ellie Mae offers a digital lending platform to help mortgage lenders originate more loans, reduce origination costs, and shorten the time to close. An alum of both our developers conference, FinDEVr, and making its Finovate debut in 2017, Ellie Mae reports that its customers save an average of $813 per loan, and close loans seven days faster, producing an average annual ROI of 698%.
During its time as part of Thoma Bravo, Ellie Mae recorded “nearly double revenue” while improving profitability, partnered with firms like AI Foundry to further streamline the mortgage origination process, and acquired fellow mortgagetech company Capsilon. Both AI Foundry and Capsilon are also Finovate alums.
“We partnered with Jonathan Corr, Joe Tyrrell, and the Ellie Mae team to advance their vision to automate the residential mortgage industry while also using Thoma Bravo’s deep software expertise to greatly improve the company’s operations and accelerate growth,” Thoma Bravo Managing Partner Holden Spaht said. “We are confident that being part of ICE will enable Ellie Mae to continue transforming an industry still in the early innings of digitization, and we look forward to following Ellie Mae’s continued success as part of ICE for many years to come.”
A Fortune 500 company formed in 2000, Intercontinental Exchange owns financial and commodity exchanges, operating 12 such regulated institutions in the United States, Europe, and Canada. The Atlanta, Georgia-based company also owns and operates six central clearing houses around the world. With revenues of $6.5 billion in 2019, Intercontinental Exchange is publicly traded on the NYSE under the ticker ICE. The firm has a market capitalization of $54 billion.
This week for Finovate Global, we caught up with Mohammed Aziz, co-founder and CEO of Dapi, a fintech startup that offers a suite of open banking APIs to help connect customer bank accounts, initiate payments, and access data in real-time. Founded in 2019, the company currently operate in six countries in the Middle East and Africa, and is headquartered in both San Francisco, California, and the UAE.
We talked about the opportunity for open banking to fuel innovation in financial services in emerging economies, as well as the overall environment for fintech innovation in the MENA region. We also discussed the impact of the COVID-19 crisis on pre-existing trends such as digitization.
Finovate: Dapi is the third company you’ve founded, but your first fintech. What made you want to focus on the opportunities in this industry? What do you bring to fintech from your experience in other areas?
Mohammed Aziz: Dapi was the result of a problem that I personally faced when trying to build “Spendy” a hybrid between a peer to peer payment application and a personal financial management app. We were unable to build out Spendy for most emerging markets due to the lack of bank connectivity which got us super keen to build out the underlying infrastructure that would power the future of fintech in these markets.
Finovate: Tell us about Dapi. What problem does your company solve and who are your primary customers?
Aziz: Dapi’s mission is to provide the building blocks for a thriving fintech ecosystem in emerging markets around the world. Our API serves as the bridge between financial applications and banks, empowering developers to create digital wallets, budget trackers, investment applications and more. Our clients are developers working on fintech applications, businesses hoping to include financial services in their mobile and web offerings, and anyone that wants to include bank functionality within their digital offerings.
Finovate: Your business strategy relies on an embrace of open banking in the MENA region. How strong is the movement toward open banking there?
Aziz: The MENA region is a very exciting space to be operating in right now. Fintech is only beginning to develop here and the market is pretty much untapped, so we are hoping to serve as an influence towards the region embracing open banking and all the opportunities that come with that. I would also like to point out that we are able to activate and build connectivity regardless of open banking being present or not. We like to take the approach that companies like Plaid in the US or Truelayer in the UK did, whereby they were connected to banks despite frameworks and regulation being in place.
Finovate: Aside from open banking, what are some of the other exciting trends in the fintech industry in the Middle East/Abu Dhabi right now?
Aziz: There’s a general trend of growing interest for the kinds of applications that financial technology empowers, from digital wallets and peer to peer applications to investment platforms and digital banks. The market is new and rapidly evolving.
Finovate: We talk about the Middle East and North Africa as a region. But there is a great deal of variation among countries in MENA. How does this impact your ability to market your technology in the area?
Aziz: Beyond market considerations, the regulation surrounding the use of APIs in financial applications varies greatly from country to country. This is a new and mostly unregulated space, but we have had to consider completely separate approaches to integrating our services in the UAE as opposed to KSA, for example. Culture is also another important factor, as it varies between countries and impacts the products that you would want to launch along with the go-to-market approach.
Finovate: How has COVID-19 impacted the fintech industry in the region? Early in the crisis, we heard news from countries like Iran, but not as much since. How are businesses, especially fintech businesses, faring?
Aziz: The COVID-19 pandemic and its push towards social distancing and remote work has actually increased interest in digitization of financial services. For example, there have been a number of announcements within the UAE that the country will be moving towards enabling more online payments and other financial services without the need to physically go to a bank.
Finovate: You participated in the Y Combinator program. What was that experience like? What advice do you have for startups with the opportunity to pursue a similar path with a top-notch accelerator?
Aziz: Y Combinator has been a phenomenal experience for us. It really put us out there on the map and helped expand our network in silicon valley. From our experience, investors and VCs in the US are not usually convinced about investing in early stage MENA startups, but YC really helps establish that credibility.
Finovate: Tell us about your experience of setting up your business in Abu Dhabi.
Aziz: Abu Dhabi is an exciting place to work, since it is a rapidly growing and developing market, as mentioned above. Furthermore, we have received a lot of support from our involvement in ADGM and Hub71, which provided resources for us to establish and grow our operations in these beginning stages.
Finovate: What can we expect from Dapi over the balance of 2020 and beyond?
Aziz: We are very excited to continue growing and expanding into a variety of developing markets, beyond the UAE. At the same time, we have a number of exciting partnerships in our sights for the UAE, which we hope will bring our vision of a strong fintech ecosystem in the MENA region closer to reality.
Here is our look at fintech around the world.
Asia-Pacific
Singapore-based MatchMove launches cross-border remittance platform for businesses.
Clik, a payment aggregator and merchant acquirer based in Cambodia, raises $3.7 million in seed funding.
Leading Asian financial services platform GoBear teams up with UnionBank to launch lending-as-a-service solution in the Philippines; announces new Chief Financial Officer.
Sub-Saharan Africa
Fiservinks partnership with Absa Regional Operations (ARO) to enhance credit card management and processing in nine African countries.
Ecobank Group unveils the finalists for its fintech challenge, now in its third year. Ten African startups from seven different countries made the cut out of an applicant pool of more than 600.
Salaam Gateway looks at the development of Islamic fintech in Kenya.
Central and Eastern Europe
Onfido to streamline digital identity verification for Poland’s Alior Bank.
Russia’s Tinkoff Banklaunches new charitable program, Cashback to Give Back.
Austrian regtech kompany lands $7.14 million in funding.
Middle East and Northern Africa
Salt Edgepartners with Jordan Ahli Bank Cyprus, making it one of the first banking groups in Cyprus to achieve PSD2 compliance.
Israeli fintech Approve.com raises $5 million in seed funding for its technology that automates the procurement process.
Infosys Finacle to deploy its Liquidity Management platform with National Bank of Bahrain.
Central and Southern Asia
Uzbekistan’s People’s Bank partners with Finastra to automate its risk management business.
TerraPay collaborates with Bank Alfalah to enable instant money transfers to Pakistan.
Indian B2B fintech Signzy announces plans to hire “close to 70” employees over the next six moths in response to increased demand.
Latin America and the Caribbean
Feedzaiexpands partnership with PayU, enabling the company to enhance its fraud prevention capabilities in Latin America and the EMEA region.
TechCrunch profiles Mozper, a digital banking service based in Latin America that caters to parents and Gen Z kids.
MercadoLibre announces plans to launch branded credit cards in Brazil and Chile “in the near future.”
Paystand’sZero Card, launched today, offers businesses a touchless, prepaid corporate expense ePayable solution that leverages Paystand’s zero-fee payment network to eliminate the cost of transaction fees.
Geared to help mid-market businesses in particular, which often require a high degree of flexibility and control over their budgets, the Zero Card streamlines expense management operations such as invoice processing, expense reporting, and payment execution. The prepaid virtual expense card also enables businesses to manage, track, and control spending in real-time. The offering includes fraud prevention controls and the ability to capture and add critical remittance data to transactions to make expense reporting and reconciliation easier.
“The Paystand Zero Card combines the consumer-like experience of peer-to-peer payments with the speed and security of Paystand’s no-fee payment network,” Paystand CEO Jeremy Almond said. “We completely re-engineered the corporate card so businesses can move away from reactive spend management tactics to a place where they have visibility of spend before it happens.”
One of the aspects of the Zero Card the company is touting is the way it brings a common payment infrastructure to accounts payable and accounts receivable operations. In its statement, the company referred to this disconnect as “one of the biggest challenges in B2B payments today,” which pits payers and receivers against one another as “technology and process improvements for one group often lead to inefficiency and friction for the other.”
In contrast, the Zero Card is designed for both accounts payable and accounts receivable, natively connecting both AP and AR to keep costs low, ensure swift and secure payments, and effectively bridge what the company calls “the payables gap for B2B payments”
Challenges like the payables gap, according to Paystand VP of Marketing Mark Fisher, are why he believes B2B payments have “a long way to go before it achieves the ease and speed of consumer payments.” Fisher credited the Zero Card for helping B2B payments catch up. “When money moves over our network,” he said, “it’s instant, automated, and comes at no cost. That’s good for businesses and that’s good for the economy overall.”
Founded in 2013 and headquartered in San Francisco, California, Paystand secured $20 million in funding in February in a round led by DNX Ventures. Mitch Kitamura, Managing Director at the firm put the company’s latest offering in the broader context of the “cashless transformation” led by fintech innovators like Paystand. In a statement, he referred to the Zero Card as “a critical step … in driving more seamless interaction between businesses to help realize the true economic value of digital infrastructure.”
If there are any lingering doubts about the power (and popularity) of the Buy Now Pay Later (BNPL) movement, installment payments platform Splitit has 71.5 million reasons to cast those doubts aside.
The New York-based company, which made its Finovate debut as PayItSimple in 2014, announced that it has raised $71.5 million in a private placement and share purchase plan (SPP). With institutional investors such as Woodson Capital Management, the company plans to use the capital to “accelerate sales and marketing, plus (make) further investments in product and technology” according to a statement. Splitit boasts more than 1,000 ecommerce merchants using its technology, and 300,000+ shoppers with an average order value of $893.
Splitit’s fundraising comes as the company reports record Q2 growth, including processing more than $65 million in merchant sales volume, and growth of 1.76x quarter over quarter and 2.6x year over year. In discussing the company’s success, CEO Brad Paterson credited a new willingness on the part of consumers to “maximize their existing credit to preserve cash flow” while at the same time not incurring additional new debt.
Paterson also noted that while the COVID-19 crisis has helped move digital transformation in ecommerce toward the top of the agenda, it was important for those involved in payments to make it easier for merchants to accommodate their customer’s cash management requirements.
As such, it’s hard not wonder if, once again, crisis is responsible for accelerating innovation. After all, one of the initial innovations in retail, the layaway program, emerged during the Great Depression as a way to maintain at least a minimal level of consumption of non-essential goods during a severe economic retraction. By enabling customers to pay for items in small increments over time and then receive those items once they had been fully paid for, the growing retail economy was able to survive an extended period of historically low demand.
The buy now pay later phenomenon is layaway in reverse, allowing customers to gain the benefits of the purchase immediately and moderating the impact of the cost by paying for that purchase over time. But the goal – to accelerate consumer activity and expand the ability of people to spend – remains the same. The only difference is that layaway tended to disappear once credit cards became ubiquitous, while buy now pay later appears to be rising at a time when we are realizing that affordable consumer financing might not be as ubiquitous as we thought.
For Finovate fans, Klarna has been the pioneer in the Buy Now Pay Later space, with fellow alums like Sezzle also earning recognition for its interest-free buy now pay later option. Founded in 2005 and 2016, respectively, both companies are reminders of how fintechs have been providing consumers with alternative financing options well before the coronavirus hit.
That said, it is clear that COVID-19 has stimulated interest in Buy Now Pay Later options. The Business of Finance reported earlier this week that BNPL had become “fashion’s go-to during the pandemic.” Also this week, American Express announced that it would extend its buy now pay later service to more of its cards. The Wall Street Journal featured Australian Buy Now Pay Later specialist Afterpay at the beginning of this month in the wake of the firm’s announcement that it had signed up more than 1.6 million U.S. users since the onset of the coronavirus in March. And Shopify announced this month that merchants on its platform would have access to BNPL financing from installment payment company Affirm. Affirm looks like it is ready to maximize the Buy Now Pay Later moment with an initial public offering, according to reporting in the Wall Street Journal.
Even the big banks are getting into the Buy Now Pay Later game. Goldman Sachs has introduced a new, installment payment feature called MarcusPay – in partnership with JetBlue Airways – as part of a bigger “build-out” of its Marcus by Goldman Sachs digital banking platform. This week, Citi partnered with Amazon to launch its own BNPL offering Citi Flex Plan.
