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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
In a round led by New York-based growth equity firm Left Lane Capital, money management platform M1 Finance has raised $33 million in new capital. The Series B, which also featured the participation of Jump Capital, Clocktower Technology Ventures, as well as existing M1 investors, takes the company’s total funding to $53.2 million, according to Crunchbase.
The investment comes at the halfway mark of a year in which the company reached $1 billion in customer assets managed and added more than $650 million in customer deposits to its platform. The company noted that it achieved the $1 billion AUM milestone faster and with less funding than many of its competitors.
“We’ve built the premier personal finance platform that combines the best of digital investing, borrowing, and banking, and have done so on relatively little funding,” company CEO and founder Brian Barnes said. “That is a testament to the team and culture we have here. We’re just getting started and look forward to accelerating our growth with this new funding and strong new partners.”
The M1 personal finance platform consists of three main, integrated solutions to help users build wealth over the long-term, respond to intermediate-term financial challenges and needs, and manage near-term spending and saving. M1 Invest is the platform’s free investment solution that enables investors to build customized portfolios of stocks and exchange-traded funds (ETFs). The module features both fractional share functionality and advanced automation. M1 Borrow is the platform’s line-of-credit product, which offers rates between 2.0% and 3.5%. M1 Spend gives platform users an FDIC-insured digital checking account and debit card. This offering features a 1.00% APY and 1% cash-back on qualified purchases (with a subscription to the company’s M1 Plus upgrade).
“With M1, you can build an entire wealth strategy in only a few clicks, down to individual stocks and ETFs,” Barnes said. “We take it from there, handling all the day-to-day optimization, rebalancing, and re-investing according to your instructions so you can spend more time building strategies and less time executing them.”
Founded in 2015 and headquartered in Chicago, Illinois, M1 Finance demonstrated its platform at FinovateFall 2016.
Digital identity verification specialist Socure has introduced a new solution to help accelerate and scale customer acquisition. Intelligent KYC, launched last week, leverages advanced graph analytics, unsupervised machine learning, and a sizable volume of data sources to give businesses higher auto-approval rates compared to legacy identity verification systems, as well as fewer manual reviews.
“In the digital-first world, compliance teams need hyper-accuracy in their use of KYC tools without introducing more friction for customers or costly reviews for their operations teams,” Socure CEO Tom Thimot explained. “Intelligent KYC is the industry’s most sophisticated KYC solution and will push our clients far beyond check-box compliance.”
Available as both an individual solution as well as part of an end-to-end integrated, identity fraud engine, Intelligent KYC is especially suited for institutions serving underserved populations – from millennials with thin credit files to newly-arrived immigrants with no domestic credit record. Intelligent KYC leverages machine learning to access more than 310 million entities and three billion records from a wide variety of authoritative sources including credit header and inquiry, utility and telecommunications companies, and more.
Writing about the concept of Intelligent KYC on the Socure blog, privacy, data security, and fintech attorney and company advisor Annie C. Bai noted the emphasis that Socure’s solution places on precision accuracy in the initial phases of the KYC process. This accuracy, Bai explained, “is not only valuable for initial results but has downstream benefits as the cornerstone of understanding the customer.” Bai highlighted diversity in data, automated analytics, and user empowerment as three key differentiators between traditional legacy KYC and Socure’s latest offering.
“Socure’s market-leading identity fraud scores, (enable) an automated 90% customer acceptance rate, a 95% fraud capture rate, a 10% reduction in false positives, and over 50% reduction in manual reviews,” Bai wrote.
Founded in 2012 by Sunil Madhu, Socure most recently demonstrated its digital identity verification and fraud protection solution, Socure ID+, at FinovateFall in 2017. Recognized in March as one of America’s Best Startup Employers by Forbes, and named to Inc. Magazine’s Best Workplaces 2020 roster in May, Socure was also recently featured as a Gartner Cool Vendor in Artificial Intelligence for Banking and Investment Services.
Headquartered in New York City, Socure has raised nearly $62 million in funding from investors including ff Venture Capital, Scale Venture Partners, Commerce Ventures, and Flint Capital.
Crises, such as the current coronavirus pandemic, often bring out the best in us. But troubled times can also provide opportunities for unscrupulous and malevolent actors to take advantage of people’s anxieties and fears.
The hoarding of personal protective equipment that occurred early in the coronavirus crisis and the spread of crazy conspiracy theories about the origins of the virus have helped create a climate of fear and suspicion. This can make dealing reasonably and confidently with the crisis that much more challenging for all of us.
Unscrupulous and malevolent actors are also taking advantage of people’s financial anxieties and fears during this time. Our Fraudtech Digital Day – part of Finovate Fintech Halftime Review – will take a close look at how the cybersecurity threats before the crisis struck have intensified in many ways in the weeks and months since.
How big is the current cybersecurity problem for financial services firms and their customers? What technologies are being deployed to help financial firms and other businesses stay one step ahead of the fraudsters? How can businesses defend themselves against fraud while still providing the kind of seamless, digital experience consumers demand? These are some of the topics we’ll discuss as part of our FraudTech Digital Day.
To whet your cybersecurity whistle, we’re sharing excerpts from our conversation earlier this month with BioCatch co-founder and Chief Cyber Officer Uri Rivner. We spoke with Mr. Rivner about the new threats to cybersecurity that have arisen with the global public health crisis of COVID-19.
“Fraud isn’t going away and, in fact, we anticipate a surge in account takeover activity as criminals scale up their cash-out operations,” Rivner said. “They already have the data they need to steal more money, but they need to scale their infrastructure.”
BioCatch specializes in providing behavior-based authentication and threat detection solutions. Headquartered in New York and Israel, and founded in 2011, the company demonstrated its Passive Biometrics/Invisible Challenge technology at FinovateFall. BioCatch’s platform analyzes 2,000 behavioral parameters based on user-device interaction, and leverages this data to build real-time risk scores that provide continuous authentication and a superior defense against account fraud, social engineering scams, and more.
“We’ve taken a scientific field in cognitive studies, something that was working in the lab, and made it extremely practical for use in solving the biggest issues in online fraud,” Rivner explained. “(A)cross dozens of banks, credit card issuers and companies outside the financial sector, (we are) protecting over 100 million online and mobile users. We’ve tackled issues that were initially deemed impossible to solve.”
Here are some key takeaways from our conversation.
On the threat of increased fraud and cybercrime during the pandemic
If I had to pick one community that is definitely going to thrive during a global virus outbreak, it’s online fraudsters. They have a golden opportunity to scale their operations while entire companies move their fraud operations and analytics teams to a work from home model, which is not an easy process for, say, a major bank.
On the danger of identity theft and why behavioral-based authentication is key to fighting it
The most scalable fraud operation is opening credit card or personal loan accounts. All you need is to buy a bigger list of stolen identity records, and have a team of people opening accounts in other people’s names. Identity theft is reported to sky-rocket, and it can be quite dangerous, especially if it’s a new digital service that is launching these days. If a new digital service is targeted by a massive campaign, there will be more fraud applications than real applications – that’s disastrous.
Traditional defenses such as checking KYC (know your customer) data and device recognition no longer hold, and new technologies such as behavioral biometrics are used to stop such fraud campaigns and reduce false rejections due to high security bars.
On the role of enabling technologies and “the right kind of AI” to help fight fraud
Machine Learning can instantly look at thousands of features, resulting in an extremely accurate model that predicts fraud and can adapt itself when cyber criminals change their strategy. At BioCatch we have over 2,000 such features.
An important consideration though is that some machine learning models are a black box and don’t really provide insights into why a certain action is risky. BioCatch, for example, uses Explainable AI models to make sure customers can get the reasons why a score was high, as well as many negative and positive behavioral factors observed during a session.
In the wake of the tragic killing of George Floyd at the hands of a Minneapolis police officer, people around the world are showing remarkable support for the cause of African American equality. From every corner of the globe, and in cities and towns across America, people from all walks of life are increasingly committed to making sure that the slogan “Black Lives Matter” evolves from being a mere rallying cry to a new reality for millions of black Americans.
With this in mind, we want to share again our thoughts on ethnic diversity in our industry, fintech, where we are in terms of inclusivity, and where we need to go.
When the discussion of diversity in the tech world comes up, the conversation is typically oriented around gender diversity. But the call for greater inclusion in the tech world is not limited to gender; diversity along ethnic lines is also a goal that technology companies have increasingly begun to strive toward.
Perhaps the international nature of many technology enterprises, with tech entrepreneurs and tech talent truly arriving in Silicon Valley from all corners of the globe, serves to mask the relatively small number of tech firms in general, and fintech firms, in specific, that are run by Americans who are ethnic minorities. Indeed, an online search for “African Americans in fintech,” for example, is almost as likely to produce entrepreneurs from Nairobi, Kenya as from Newark, New Jersey.
Importantly, there are tech firms that have won admiration for the diversity of their teams. Slack, for example, was widely praised for its diversity report which, released in 2017, showed that the company had achieved better gender diversity than its Silicon Valley peers. The report also revealed that Slack’s workforce had as much as 3x the number of underrepresented minorities (African American, Latino/Hispanic, and Native American) as its peers. An Atlantic article from 2018 pointed out that where Slack had minorities in 13% of all technical positions and 6% in leadership positions, companies like Google and Facebook had less than 4% of their technical positions filled by underrepresented minorities.
Clinc CEO and co-founder Jason Mars during his company’s Best of Show winning demonstration at FinovateFall 2016.
How has fintech fared when it comes to ethnic diversity in its technical and leadership ranks? Finovate has hosted a handful of fintech companies with African American leadership over the years – Clinc and its CEO and co-founder Jason Mars, DarcMatter and its COO and co-founder Natasha Bansgopaul, are two that come to mind. And the industry writ large may have more founders of color than many think: Forbes celebrated the release of its Forbes Fintech 50 roster last year by featuring Ryan Williams, the young, African American CEO of mortgagetech firm Cadre on the magazine’s cover. And venture capital firms like Backstage Capital have made investment in startups with founders of color – as well as women and members of the LGBT community – a priority.
Nevertheless, even as the number of African American and Latino/Hispanic tech founders and leaders has grown, it remains true that there are fewer African American and Latino/Hispanic founders and CEOs in fintech relative to other areas of technology, including education and health-related tech fields.
One of the biggest problems that companies lacking in diversity can face is that it can make them less capable of responding to the needs of diverse markets. Fintech analyst Mary Wisniewski wondered in a 2018 American Banker article “Are black millennials a blind spot for fintech firms?” and noted that while millennials in general have developed a healthy skepticism toward banks, this wariness is all the more pronounced in young people from communities of color. Among the solutions offered are more minority-owned financial institutions, and an increased emphasis on financial literacy and wellness as an engagement strategy for younger minorities.
In this regard, fintechs like GRIND may become more well-known and popular. Launched last year and based in South Central Los Angeles where it caters to the local African American community, GRIND offers FDIC-insured debit accounts, a mobile banking app, and the ability to get paid two days earlier if they set up direct deposit with GRIND. Another example of this kind of company is Finhabits, a bilingual (Spanish/English) mobile investment platform launched by Carlos Garcia in 2015. Garcia, an MIT graduate with experience with Merrill Lynch and Galileo Investment Management, explained that the issue for Latino and Hispanic communities was not their ability to save, but their lack of familiarity with investing. “Our day-to-day money management is good, but planning for 15 years ahead is not” he said in a 2017 profile.
As fintech continues to diversify itself as an industry, one good note is that it appears that fintech may be helping alleviate some of the issues in financial services caused, in part, by a lack of diversity. A recent report from the FDIC on consumer-lending discrimination in the fintech era, for example, suggested that technology may be playing a positive role in reducing the discrimination in credit faced by Latino/Hispanic and African-American consumers in particular. The report specifically pointed to “new entry of fintech platforms” as well as digital improvements by incumbents for increasing competition and declining rate discrimination.
The latest report from fintech enablement platform Hydrogen, which made its Finovate debut in 2018, takes a look at how the global public health crisis has accelerated the rise of payments-as-a-service. But it’s not just COVID-19; enabling technologies like blockchain and AI are helping play a major role in making PaaS a key space for both fintech disruptors and payment incumbents.
“While cash is still the leading form of payment at the point of sale, accounting for about 77% of all payments worldwide,” the report noted in its Executive Summary, “non-cash payment options such as e-wallets are gaining popularity, and the number of people using mobile payment apps in-store is forecasted to surpass one billion for the first time in 2020.”
Hydrogen’s report provides an overview of the PaaS market, how fintechs are driving innovation in the space, critical payment trends that will be accelerated by PaaS, and what industry experts and analysts are saying about the challenges they’ve overcome when innovating in the payments space and what they expect to see in payments over the balance of 2020 and beyond.
Access Hydrogen’s report on the rise of Payments-as-a-Service.
“Payments enablement platforms will be the bridge between the legacy cash infrastructure of yesterday, and the digital systems of tomorrow,” the report observed. Putting companies like Hydrogen at the center of this effort, the report anticipated that “this will create more competition, thus lowering costs for small and medium sized businesses (SMBs) and merchants, that can be passed onto consumers.”
Hydrogen helps developers build complex fintech applications quickly and with a single integrated platform. The company’s solution offers a suite of REST APIs to support custom app development and a no code environment to enable developers to configure white label apps without any coding required. Founded in 2017 by Michael and Matthew Kane, Hydrogen is headquartered in New York City.
Earlier this month, Hydrogen announced that it was teaming up with fellow Finovate alum IDology to help businesses run KYC checks on their end users. In April, the company announced that it was integrating with Amazon Web Services’ Key Management Service, having made a similar move with Azure’s KMS a few weeks before. Other partnerships forged by Hydrgen this year include collaborations with Tink, Salt Edge, and Zillow.
Courtesy of a round featuring new investor WSV – a joint venture fund of Walden International and Korean firm SKTA – online financing solutions marketplace BankBazaar has raised $6 million in new equity funding. The company will use the capital, which adds to an existing Series D round, to help market its contactless personal finance solutions as it continues its expansion in India.
In a blog post at the company’s website, company CEO Adhil Shetty noted that the current global public health crisis is fueling pre-existing trends in favor of contactless transactions. “In the post COVID-19 world, the demand for contactless finance is going to grow exponentially,” Shetty said. “(T)his round of funding will help us accelerate our plans to implement contactless access to credit.” He added that the investment, which also featured participation from the company’s existing investors Amazon, Sequoia India, Experian, and Eight Roads, represents an endorsement of the company’s “vision of contactless finance as the future of personal finance” as well as BankBazaar’s ability to make that happen.
An alum of FinovateAsia (learn about our upcoming all digital FinovateAsia event next month), BankBazaar offers an unbiased online marketplace for instant, customized rate quotes on a variety of credit products from loans to credit cards. The company, called “the Credit Karma of India” by WSV General Partner Andrew Kau, is headquartered in Chennai, India, and was founded in 2008.
Also adding new capital to its coffers is Tink, the open banking enablement platform based in Stockholm, Sweden. The company, most recently demoing its technology on our stage at FinovateEurope last year, announced this week that it has received a strategic investment from PayPal. This week’s funding, amount not disclosed, represents the second time PayPal has invested in the company; PayPal made its first strategic investment in Tink in June 2019.
As part of the agreement, PayPal will integrate Tink’s open banking and account aggregation technology into some of its customer-facing user experiences. The extended agreement between the two companies now includes all countries within the European Economic Area (EEA).
“PayPal is one of the world’s leading finech companies, serving more than 330 million consumers and merchants in more than 200 markets worldwide,” Tink co-founder and CEO Daniel Kjellén said. He added, “as Europe’s leading open banking platform, we are looking forward to continuing to support PayPal as they extend and enhance their services across the whole of Europe.”
It is an understatement to say that Tink has had a big year on the capital-raising front. The company began the year closing a $100 million round led by a pair of new investors Dawn Capital of London and HMI Capital of San Francisco. In addition to the company’s funding news, Tink partnered with Nordea to integrate its technology into the bank’s mobile app, acquired Spanish account aggregation specialist – and fellow Finovate alum – Eurobits Technologies, and teamed up with BNP Paribas to become the firm’s preferred partner in Europe.
Here is our weekly look at fintech around the world.
Central and Southern Asia
DBS Bank India teams up with TCIL to facilitate real-time payments for truck drivers.
Hindustan Times profiles Hyderabad-based fintech Quickcredit.
Latin America and the Caribbean
Latin American open banking startup Belvo raises $10 million in new funding from Founders Fund and Kaszek Ventures.
On-demand insurance technology leader Trov partners with Seguros Sura Brazil to bring on-demand insurance to Brazil.
Santander InnoVentures leads $5 million funding round for Latin American alternative lender a55.
Asia-Pacific
A few weeks ago we wrote about the rise of QR-code payments in many markets around the world. This week brings news that Japan’s JCB has partnered with FIS to power its cross-border QR code payments, initially between Vietnam and Thailand.
Aleta Planet and Zhongguo Remittance partner to launch new online money transfer service, Aleta China Express, to make it easier to send money from Singapore to China.
Gojek, an Indonesian ride hailing service turned payments and financial services superapp, earns investment from Facebook and PayPal.
Sub-Saharan Africa
Nigerian digital bank Sparkle launched this week after securing its license from the Central Bank of Nigeria.
Forbes profiles Fara Ashiru Jituboh, co-founder, CEO, and CTO of Nigeria-based financial services “super-connector” Okra.
6DOT60 introduces its digital rands platform in South Africa.
Central and Eastern Europe
Cloud banking platform Mambupartners with low-code platform provider VeriTran.
Sovcombank of Russia unveils online mortgage loans.
Alior Bank looks for for mobile-banking focused startups to fill the ranks of this year’s ten-week accelerator program.
Middle East and Northern Africa
MoneyGram announces strategic partnership with Al Rajhi Bank, the largest Islamic bank in the world, to support money transfer services in Saudi Arabia.
Dubai-based fintech JinglePay goes live as the latest neobank in the UAE.
OneSpan to provide mobile app security for Turkish bank, DenizBank.
“As a matter of fact, I went to the doctor and he said that I was above normal. Or, as he put it, ‘abnormal.'” Andrew “Squiggy” Squiggman, Laverne & Shirley, 1976.
Whether you consider yourself “above normal” or just another banking consumer with unique needs, Arival Bank, which launched in 2018 as a spin-off venture from Life.SREDA, has you covered. The bank announced today that it is launching its Arival beta account to provide banking services to “abnormal customers.”
“Too many clients today are rejected by traditional even digital banks because they are viewed as ‘abnormal’, ‘too risky,’ or ‘unusual,” Arival Bank COO Jeremy Berger noted in a blog post announcing the beta launch. “International startups, new tech ventures, crypto-related businesses, investment funds, e-residency businesses, freelancers, charities, expats, digital influencers, bloggers, gamers and streamers, and many others are rejected by traditional and even digital banks. It’s only a matter of time (before) the demand from abnormal customers will outgrow that of traditional customers.”
Arival is introducing an online bank account that is tailored to the needs of businesses and entrepreneurs like these. The company is opening the beta release to 3,000+ early signups from its waiting list. Arival will be adding a business bank account and an individual bank account soon, and said that it is already accepting applications for both accounts. Beta participants also will get an early look at Arival’s banking platform, ArivalOS, with no fees for the first 90 days.
A Best of Show winner in its Finovate debut at FinovateAsia in 2018, Arival was founded to help underbanked businesses maximize the opportunities of digital banking. Powered by open API fintech banking, the company’s ArivalOS provides a digital banking platform that integrates a comprehensive suite of third-party fintech solutions and services geared toward the needs of SMEs and entrepreneurs. Headquartered in Singapore and co-founded in 2017 by Vladislav Solodkiy (CEO) and Igor Pesin (CFO), Arival raised more than $2.3 million in its equity crowdfunding campaign last fall, earning a pre-money valuation north of $14.8 million.
Lili, a New York-based mobile banking startup geared toward freelancers and gig economy workers, has picked up an investment of $10 million. Group 11 led the seed funding round, which also featured participation from Foundation Capital, AltaIR Capital, Primary Venture Partners, and Torch Capital.
The company, founded by Lilac Bar David (CEO) and Liran Zelkha (CTO), will use the funding to help support new product development, as well as expand the company’s customer base and add talent to Lili’s operations, marketing, and product teams.
“Lili is redefining banking for freelancers and we’re thrilled to be partnering with the team,” Group 11 founding partner Dovi Frances said. “As the future of work continues to evolve more quickly than ever in these uncertain times, Lilac and Liran’s forward-looking vision is changing how modern workers manage their finances, while saving them valuable time and money.”
Lili offers banking, expense management, and tax savings tools, a free checking account, and a Visa business debit card. No minimum balance is required and no account fees are charged. Account holders who authorize direct deposit can get their salary up to two days faster than they would with a traditional bank account, and the company’s business debit card can be used anywhere Visa debit cards are accepted. Free ATM withdrawals are available at more than 32,000 locations.
The company said that its technology can save freelancers “up to 60 hours and $1,700 per year” when they use Lili as their main account. In its statement, Lili noted that “tens of thousands of freelancers” across the U.S. are using the company’s app.
Last month, Fundera named Lili the Best Bank Account for Freelancers of 2020. Founded in 2018, the company’s FDIC-insured banking service was launched a year later with the backing of Choice Financial Group.
Wealth management technology provider Finantix announced today that it has appointed Christine Ciriani as its new CEO. Company co-founder and former CEO Ralf Emmerich will transition to the role of Executive Chairman.
“I am delighted to take up this leadership position at Finantix,” Ciriani said in a statement. She praised the company’s “award-winning” solutions for wealth managers, banks, and insurance companies, as well as Finantix’s “client-first culture” and strong teams. She pledged to continue working “to ensure that both our integrated and point solutions are rapidly adopted in the market to deliver the data-enabled, digitally-connected, and content-rich services today’s clients demand.”
Ciriani will continue to serve as the company’s Chief Commercial Officer, a position she has held since the fall of 2019. The wealth management and professional services veteran came to Finantix in February of that year, joining Finantix’s board of directors as a non-executive director as part of the Motive Partners investment in the company. During her time at Finantix, Ciriani has helped drive talent acquisition, commercial strategy, and market positioning, overseeing expansion in Switzerland, Japan, and Australia. She also has been praised for her role in the company’s acquisition of AI and data science-based solution provider InCube earlier this year.
“Under Christine’s leadership and working with our management team, we have successfully accelerated the process of expanding our extensive portfolio of innovative products,” Emmerich said. He added that the leadership shift would enable Finantix to maximize the next phase of its evolution as a leading provider of technology solutions for the wealth management, banking, and insurance industries.
“Now is the ideal time for me to hand over the reins to Christine so she can continue to build on the strong foundations we have created.” Emmerich said.
The C-suite news follows the launch of Finantix’s latest Digital Collaboration Hub. A client servicing solution, the Hub enables institutions to establish omni-device, multi-media collaboration channels with virtual private lounges that can be used to digitally enhance client interactions. Market updates and advisories, as well as onboarding and document exchange are among the client-oriented activities possible via the Hub. Banco Itaú International is one of the FIs that has deployed the technology, offering the Hub to its U.S. and Swiss clients.
A Finovate alum since 2011, when the company debuted at FinovateEurope, Finantix was founded in 1994 and is headquartered in Venezia, Vento, Italy. Acquired by Motive Partners in December 2018, Finantix wonBest Front Office Solution at the WealthBriefing Swiss Awards 2020 in February.
Digital identity technology plays an increasingly large role in financial services, and the current global public health crisis has accelerated this trend.
We spoke with Dean Nicolls, VP of Marketing for Jumio, to learn what the digital identity innovator is doing to help banks and other enterprises leverage this technology for their businesses. We also take a look at how the technology has been deployed to help deal with with coronavirus pandemic.
Finovate: Jumio announced that it is providing free identity verification services for organizations involved in COVID-19 relief. Which organizations qualify and why is Jumio launching this effort?
Dean Nicolls: Jumio launched Jumio Go for Good in March 2020 to help organizations involved in relief and assistance during this global health crisis quickly and accurately identity proof their patients, students and workers to ensure critical services can be delivered and trusted. Powered by AI, Jumio Go provides enterprises with a real-time, secure and reliable way to verify remote users, ensuring the person enrolling or logging in is who they claim to be online.
Jumio Go is becoming increasingly important in helping organizations across a wide range of industries reliably onboard and serve a number of important use cases (e.g., new account onboarding, fraud detection, AML/KYC compliance), where verification speed is critical. With Jumio Go, identity verification decisions are rendered in seconds, not minutes or hours, which translates to significantly higher conversions, lower fraud rates, and improved customer satisfaction.
Through September 30, 2020, Jumio will provide free identity verification services via its AI-powered, fully automated solution, Jumio Go, to any qualifying organization directly involved in helping with COVID-19 relief including (but not limited to): healthcare, online learning, and the general population.
Finovate: What services are included in this offering?
Nicolls: Jumio Go For Good is powered by Jumio Go, the only fully automated digital identity verification solution on the market capable of defending against bots, advanced spoofing attacks and sophisticated deepfakes, which are often leveraged for fraud.
By leveraging AI, Jumio Go works to prohibit bad actors from fabricating online accounts. As deepfakes, bots, and sophisticated spoofing attacks continue to rise, Jumio has integrated certified liveness detection to detect when photos, videos or even realistic 3D masks are used instead of actual selfies to create online accounts. Additionally, Jumio Go provides organizations with a real-time, secure, and reliable way to authenticate remote users, ensuring the person enrolling into a new service is who they claim to be in the real world.
Finovate: Identity verification has become an issue for small businesses seeking COVID-19 relief-related funding. What is the specific problem these businesses are facing and how can digital identity verification solutions help?
Nicolls: Small businesses across America are feeling the financial stress from shelter-in-place restrictions that have millions of people taking refuge from the outbreak by staying at home and working remotely. Recent changes have brought about a new question for the financial industry: how can lenders properly evaluate small businesses when they can’t physically walk into their office? For reference, SBA lenders are those who work with the Small Business Administration and provide financial assistance to small businesses through government-backed loans. The implementation of online identity verification solutions helps SBA lenders vet small business owners to ensure they follow compliance mandates (KYC/AML) by verifying their digital identities. Instead of requiring small-business owners to visit a local branch office, they can verify their online identity from the safety of their home, allowing lenders to effectively manage the influx of requests, and small-business owners the peace of mind knowing they’re being supported at this time.
In the future, identity verification solutions will become crucial for SBA lenders to establish trust remotely with an increasing number of remote users who simply do not want to visit a branch office. Jumio Go verifies government-issued IDs and ensures that the individual in the selfie matches the picture on the ID. A biometric-based approach to authentication helps expedite onboarding while also deterring fraud by as much as 90%.
As the number of SBA lenders continues to increase, online identity verification will rapidly become a vital competitive advantage in terms of quickly distributing capital to small-business owners and nonprofits on the front lines, while also preventing cyberattacks.
Finovate: What are the key technologies behind identity verification solutions such as those offered by Jumio? AI? Advanced machine learning? What capabilities do these technologies enable that would not be possible otherwise?
Nicolls: Jumio launched Jumio Go, the company’s first real-time, fully automated identity verification solution, in November 2019. It is designed to remove friction from the user onboarding process, while preventing online identity fraud and meeting AML and KYC compliance mandates. Jumio leverages the power of informed AI and equips modern enterprises with instant online identity verification that delivers a simple and intuitive experience for good customers.
There are three critical ingredients to informed AI:
Data Breadth: Jumio has verified 250 million digital identities to date. This gives Jumio a big leg-up in developing smarter algorithms. Not only is the data set very large, but it’s also very deep. Jumio’s database has seen large volumes of each one of the more than 3,500 ID document types/subtypes from more than 200 countries and territories.
Ground Truth: Jumio has leveraged supervised AI from the very beginning. This means Jumio employs identity verification experts who tag every identity verification based on an analysis of the security features and physical characteristics of an ID and selfie. These verification experts have spent thousands of hours reviewing and verifying government-issued IDs from all over the world which helps train our algorithms and make them iteratively smarter.
Production Data: Jumio’s AI algorithms are trained on real-world production data, not purchased data sets. Jumio AI models are trained on images of ID documents and selfies where the images may be blurry, dimly lit, or have excessive glare which means our models are more robust and scalable than models trained on perfectly captured photos. This also helps us avoid bias since the data has been tagged by trained verification experts.
Finovate: Where is adoption of identity verification technology most robust? Are there industries where the technology would be especially valuable, but adoption rates have been slower than expected? If so, which industries and what challenges to adoption are they facing?
Nicolls: Traditional banks have been surprisingly slow to adopt online identity verification and take digital transformation seriously. When you’re talking about traditional banks, there are numerous divisions including retail banking, private banking (for high net worth individuals), business banking and brokerage accounts. While all banks need to comply with KYC/AML checks when new accounts are created and have defined customer identification programs (CIP) in place, the methods they employ to establish a consumer’s digital identity are varied. Many traditional banks leverage non-documentary approaches to corroborate identity and this often involves pinging third-party databases or credit bureaus based on self-reported information from the consumer (e.g., name, address and date of birth).
Unfortunately, these methods are not overly reliable. In fact, Gartner recommends that identity proofing solutions that rely on shared secret verification, such as out-of-wallet knowledge questions, or memorable personal data, be phased out. The concept of high-memorability, low-availability data has become archaic since the rise of social media and the subsequent plethora of breached data available through underground organizations. By requiring a picture of a government-issued ID, and pairing it with a corroborating selfie (which should include an element of liveness detection), banks can have much higher levels of identity assurance than traditional approaches and can deter as much as 90% of attempted fraud.
Finovate: Lastly, are there any upcoming announcements or initiatives coming in the next few weeks that we should be looking out for?
Nicolls: Jumio is launching a new suite of address services that can be used to validate and corroborate addresses with independent, third-party sources. Historically, Jumio has only relied on the ID document itself and a corroborating selfie as the fraud signals. Jumio Address Services actually consist of two distinct services:
Jumio Address Validation:Determines if the address extracted from a government-issued ID (e.g., passport, driver’s license, ID card) exists in the real world.
Jumio Proof of Residence: Checks to see if the person being verified actually lives at the physical address extracted from their ID document. In the U.S., if the user moved, we would return whether the address provided matches the most recent address on file.
With these new add-on features, customers can use this data as additional fraud signals that help enterprises know if the person creating a new account is in fact who they claim to be. These services will be sold with our current identity verification solutions to provide a more holistic picture of an online user.
Founded in 2010 and headquartered in Palo Alto, California, Jumio has been a Finovate alum since its debut at FinovateFall in 2013. In the company’s most recent appearance on the Finovate stage at FinovateAsia in 2018, Jumio demonstrated how its Netverify Identity Verification solution used liveness detection to prove an individual’s physical “presence” at the moment of the transaction.
In a round led by Gallatin Point Capital and The Rise Fund, mobile banking startup Varo Money has secured $241 million in new funding. The investment in the San Francisco, California-based fintech, which featured participation from HarbourVest and Progressive Insurance, takes Varo’s total capital to $419.4 million.
The funding comes at a time when Varo Money is closing in on the opportunity to be the first, fully-digital U.S. bank to earn a national charter – as early as this summer. The charter would enable the company to add credit cards, loans, and other savings products to its offerings.
This most recent investment will help Varo further develop its mobile banking solutions. In a statement, Varo Money co-founder Colin Walsh underscored growing consumer preferences in favor of digital banking services, and said that the company, founded in 2015, has been “laser-focused” on becoming the first fully digital bank in order to take advantage of this kind of opportunity from the start.
The investment also will accelerate the company’s goal of bringing better banking services to the underbanked. “Varo was founded first and foremost to make a powerful impact on systemic financial inequality in communities across the country,” Walsh said. “As the first fully digital bank, Varo will bring our mission of financial inclusion to life and create more financially resilient – and thus healthier and stronger – communities. This new investment will enable us to complete the chartering process and leverage our modern banking technology to build on our track record of innovation and inclusion,” he added.
Varo Money offers a high-yield savings account with an annual percentage yield of up to 2.8% for five-digit savers, as well as a Varo Visa Debit Card. The company also offers an online bank account with no overdraft or monthly fees charged, and no minimum balance required. Accountholders can authorize direct deposit with their Varo accounts to get their paychecks up to two days early, and can send money instantly and without fees to other Varo accounts. Deposits are FDIC insured to $250,000 courtesy of Varo’s partnership with The Bancorp Bank, and accountholders have access to fee-free ATM withdrawals at more than 55,000 ATMs worldwide.
Illuma Labs, creator of the real-time audio authentication platform for secure voice communications, Illuma Shield, has received a joint investment from The Veridian Group (a CUSO of Veridian Cedit Union) and Texas Dow Employees Credit Union (TDECU). Terms of the funding were not disclosed.
The investment comes as a result of Illuma Labs’ participation in VentureTech, an annual program that helps fintechs seeking funding to secure investment opportunities from within the credit union industry. Illuma was part of VentureTech’s 2019 cohort, which also featured fellow Finovate alums Wizely Finance, Terafina, Plinqit, and Pinkaloo. VentureTech was launched by The Veridian Group, Open Technology Solutions, and CUNA Strategic Services in 2018, and will hold its third event this fall.
“Instead of waiting for technology to come to market, VentureTech allows the credit union industry to be proactive in building its competitive advantage in the digital space,” President of The Veridian Group, Nick Evens explained at last year’s conference, which saw Illuma Labs take home top honors. “By recognizing and investing in promising fintech, we’re providing innovative, digital-first solutions that will drive the Movement forward.”
Iowa-based Veridian Credit Union, the FI served by The Veridian Group, has more than 244,000 members and $4.5 billion in assets. Texas Dow Employees Credit Union, with $3.7 billion in assets and more than 263,000 members, is the biggest credit union in the Houston, Texas area, and the fourth largest CU in the state.
Founded in 2016 and making its Finovate debut last year at FinovateSpring, Illuma Labs provides real-time voice authentication for customers around the world. With a technology that has its origins in R&D projects with the U.S. Department of Homeland Security Science and Technology Directorate, the company’s solutions support secure communications in verticals ranging from financial services and insurance to e-commerce. Illuma Shield, the company’s flagship solution, leverages signal processing, machine learning, and AI to offer call centers a real-time voice authentication solution that analyzes voices in natural conversation and provides a high authentication accuracy rate in a short period of time.
Headquartered in Plano, Texas, Illuma Labs was founded in 2016 by Milind Borkar (CEO) and Jeremy Whittington (CTO).
