David Penn, Author at Finovate

OTB Ventures Goes Big on CEE Startups; Analysts Share Insights on Indian Fintech

By David Penn Posted on February 21, 2020
Categories: Finovate Global, FIS, Infosys, Plaid

With a commitment of $100 million (€92.4 million), Poland-based OTB Ventures will spend the next few years helping back some of the most innovative tech startups in Central and Eastern Europe.

The investor, whose funding is backed by the European Investment Fund (EIF) will target “post-product startups” developing solutions for fintech, cybersecurity, AI, Big Data, Internet of Things (IoT), robotics and other advanced technologies. Known as the biggest venture capital fund in the CEE region, OTB Ventures said it wants companies with “unique intellectual property” and “disruptive ideas.”

“CEE is a cradle of talented engineers and IT specialists, pioneering innovative companies,” OTB managing partner and co-founder Marcin Hejka explained. We see a huge investment potential in these companies with up-and-running products and initial business traction in international markets. The purpose of our fund is to discover, develop, and realize this potential on a global scale.”

OTB Ventures includes AI and consumer analytics firm Cosmose, regtech innovator Silent Eight, and digital transformation solution provider – and Finovate alum – FintechOS – among its more recent investments. With its new fund, OTB plans to commit approximately $15 million to 16 companies, taking stakes of 10% to 15%. OTB’s largest investment in a single company to date was the $10 million in company invested in micro-satellite company Iceye in 2018.

Report Season for Indian Fintech: A number of analyst organizations have picked the second half of February to release their latest insights on fintech in India. In addition to the report from IBS Intelligence noted below, content marketing platform SEMrush released its Top Insights into Fintech Industry of India report this week.

Among the interesting top level takeaways from both reports is the importance of making sure that security and financial education keep pace with the growth of financial inclusion. As more people in frontier and periphery markets become comfortable with sharing their personal details and newly-forged financial identities online, the dangers of criminal exploitation and even simple misuse (poor password management habits, for example) grows, as well.

Here is our weekly look at fintech around the world.

Middle East and Northern Africa

Aafaq Islamic Finance to deploy core banking, Islamic banking, and payments solutions from Infosys.
Bahrain-based GFH Financial Group acquires 70% stake in pan-MENA payments technology company, Marshal.
National Bank of Yemen goes live with the ICS Banks Universal Banking Platform from ICSFS.

Central and Southern Asia

Pakistan-based mobile wallet Sadapay readies for launch.
Entrepreneur features fintechs apps that are helping SMEs in India go digital.
IBS Intelligence unveils its India fintech report.

Photo by **Vikas Sawant** from **Pexels**

Latin America and the Caribbean

The Central Bank of Brazil to enter the payments business with the launch of its new app, PIX, later this year. PIX will provide immediate settlement for all transactions.
TechCrunch profiles fintech startup Belvo and its aspiration to become the Plaid of Latin America.
Bank Innovation features Mexico City, Mexico-based digital bank Stori.

Asia-Pacific

Singapore-based, installment payment startup Hoolah expands to Malaysia.
Indonesian online lender UangTeman raises $10 million in new funding.
Get, a digital commerce platform based in Myanmar, acquires local lender Daung Capital.

Sub-Saharan Africa

Nigeria’s LAPO Microfinance Bank, the largest microfinance institution in the country, to deploy core banking, payments, and digital experience solutions from Oracle Financial.
African Banker examines the balance between financial inclusion and consumer protection as Kenya’s fintech boom expands.
Nigerian consumer lending platform Carbon announces $100,000 fund to support startups in insurance, health, and education.

Central and Eastern Europe

Poland-based OTB Ventures raises $100 million to back tech startups in the CEE region.
Wirecard partners with Raiffeisen Bank International to bring digital payments solutions to markets in 13 Eastern European countries.
Germany’s Opel Bank chooses FIS’ cloud-native, Modern Banking Platform. This marks the solution’s first deployment in Europe.

Top image designed by Freepik

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Grab to Get $700m from MUFG to Offer Insurance, Lending by Smartphone App

By David Penn Posted on February 21, 2020
Categories: Daily news

Grab, the Singapore-based ride-hailing company well en route to becoming a full-fledged fintech, as well, will get $700 million in new funding from MUFG Bank according to the Nikkei. The investment will be part of a collaboration designed to bring services like lending and insurance to markets in Southeast Asia via smartphone apps. MUFG Bank is a subsidiary of Japan’s Mitsubishi UFJ Financial Group.

The Nikkei report has not been confirmed by MUFG or Grab, but Bloomberg notes in its coverage that the firms “intend to announce their alliance soon.” The partnership allegedly will consist of MUFG Bank overseeing lending and insurance operations, while Grab will leverage its AI and data analysis technology to analyze customer data to help MUFG match the right insurance and financing offerings with the right customers.

Grab is one of the top examples of a company leveraging its analytics and networking technology to expand beyond its original offering. Founded as a ride-hailing service in 2012, Grab is now developing a regional super app that combines a variety of services – including payments and financial services – along with rides. With a reported 166 million downloads in the region, the company operates in eight Southeast Asian countries, including Indonesia and Thailand. Grab has an estimated valuation of $14 billion, and includes SoftBank Group among its investors.

Ratna Sita Handayani, Senior Research Manager with Euromonitor International discussed the rise of the super app during her presentation at FinovateEurope earlier this month. Other examples of super apps in Asia include Tencent’s WeChat and Alibaba’s Alipay. Like Grab, Indonesia super app Gojek leverages its role in the everyday transportation lives of its consumers to expand its offerings – in Gojek’s case, for food delivery, hiring cleaning help, and billpay.

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Ally Financial to Acquire CardWorks in $2.65 Billion Deal

By David Penn Posted on February 19, 2020
Categories: Daily news, Mergers & Acquisitions

Digital financial services company Ally Financial announced this week that it will acquire non-prime credit card and consumer financing company CardWorks. The deal, which has been approved by both companies’ boards, is valued at $2.65 billion ($1.35 billion in cash and $1.3 billion in Ally stock).

The acquisition adds a top-20 U.S. credit card platform and a top-15 merchant acquiring business to Ally Financial’s direct bank deposit, auto financing, insurance, and commercial product lines. The combined entity will serve 11+ million customers in 50 states when the transaction is closed in Q3 of this year.

CardWorks founder, chairman, and CEO Don Berman praised Ally Financial as an “ideal partner” for the “people-centric, compliance-focused” and technology-enabled organization he built in 1987. “In leveraging Ally’s commitment to innovation and adaptiveness, the combined company will be well positioned to meet the financial needs of our ever-growing customer base and deliver sustainable growth and performance,” he said. After the deal is closed, Berman will join both Ally Financial’s Board of Directors as well as the company’s executive management team.

Detroit, Michigan-based Ally Financial was founded 101 years ago as the General Motors Acceptance Corporation (GMAC) and retained that name until 2010. The company is one of the largest auto financing firms in the U.S. by volume, and is a top-20 U.S. bank by assets ($180+ billion). Ally Financial trades on the NYSE under the ticker ALLY, and has a market capitalization of $10 billion.

Ally Financial also has an online bank, Ally Bank, which is headquartered in Sandy, Utah, and offers mortgage financing as well as deposit and other banking services. As part of the acquisition, CardWorks subsidiary Merrick Bank will merge into Ally Bank.

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From SuperApps and AI to Financial Inclusion 3.0

By David Penn Posted on February 18, 2020
Categories: FinovateEurope 2020

From the rise of the superapp to financial inclusion 3.0, the insights of our Fintech What’s Hot/What’s Not analysts at FinovateEurope last week continue to artfully disrupt our signature demo-only format.

Mixed in with live demonstrations of the latest innovations in payments and customer engagement (see our Best of Show coverage), our main stage analysts reminded us of the critical differences between machine learning and AI, the opportunities of 5G connectivity, and how open innovation helps companies maximize technological change.

Ratna Sita Handayani of Euromonitor International highlights the rapid growth of mobile payments in Asia.

Does the rise of the super app in Asia anticipate the future of apps in the West? Ratna Sita Handayani, Senior Research Manager with Euromonitor International, looked at the rapid growth in mobile payments in Asia, and the way that companies outside of traditional financial services such as ridesharing firm Grab have moved effectively into the payment space. Highlighting similar accomplishments from Japanese social media giant LINE and the continued rise of AliPay, Handayani considered how hyperlocalization and other strategies are helping these new offerings gain ground.

Promoting a “more autonomous, more distributed, and more ethical” fintech industry, Forrester VP and Research Director Oliwia Berdak encouraged innovators to move from thinking about the “next best product” to a value-for-value exchange in which interests align. Berdak compared many of the more limited fintech offerings of today with solutions such as smart contracts and even autonomous debt management that more fully take advantage of the latest technologies like advanced machine learning.

Berdak urges a move “from myopic and disoriented” to “more autonomous and more ethical” in fintech.

This is necessary in large part, Berdak suggested, to help manage the cognitive load of all the information that technology delivers in the first place. In other words, we need technology to “take the human” out of the technological equation we’ve created.

Tosin Agbabiaka, an Early Stage Investor with Octopus Ventures, leveraged his own experience – from frontier through the periphery to an increasingly divided developed world – to paint a vivid portrait of Financial Inclusion 3.0. Agbabiaka provided a deep, nuanced understanding of the challenges of developing countries like Nigeria in the 1990s where basic financial access was a principal obstacle to progress (Financial Inclusion 1.0). He then explained the difficulty periphery nations have when boom times stall and a lack of liquidity threatens to turn financial crises into catastrophe – like Greece in the late 2010s (Financial Inclusion 2.0).

A look at the challenges and opportunities on the periphery during Financial Inclusion 2.0

If the first stage of financial inclusion is about optimizing for basic access, and the second stage is about optimizing for quality and efficiency, as Agbabiaka indicated, the third stage of financial inclusion is about optimizing for affordability. This is the world we see in North America and Europe where the benefits of a digital, interconnected economy exist in abundance, but are harder for a growing number to obtain. These are places characterized by gig economics and alternative financing in response to low wages, funding challenges for micro- and small businesses, and the debt burden of higher education.

This is a critical challenge for fintech, Agbabiaka suggested, but it is not a challenge that needs to be pursued out of a sense of social good alone. Financial inclusion 3.0 represents the union of access, quality, affordability and, to coin a phrase used by another analyst above, aligns the interests of the frontier, the periphery, and the center when it comes to technological innovation. In this world, as Agbabiaka explained, “those served benefit as much as the newly-served.”

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New SumUp Card Empowers SMEs as Business Payment Makers and Takers

By David Penn Posted on February 18, 2020
Categories: Daily news, SumUp

Photo by **Artem Beliaikin** from **Pexels**

The company that has helped bring fintech innovation to e-commerce with its mobile point-of-sale (mPOS), card reading solutions now offers merchants a card of their own.

SumUp announced this week the launch of the new SumUp Card. In partnership with Mastercard, the new card will make business payments easier for merchants, giving them both faster access to their funds, as well as enhance their ability to monitor their accounts.

When merchant cardholders accept payments via their SumUp readers, the payments will now flow directly to their SumUp Card. The card guarantees next-day payouts including on weekends, has no upfront cost or monthly fee, and offers free overseas payments. Available initially in the U.K., Italy, Germany, and France, the SumUp Card will be expanded to other markets over the course of the year.

The card comes in the wake of consultations with the company’s SME partners, as well as a successful beta-test with more than 25,000 merchants. The partnership with Mastercard reprises a collaboration the two firms undertook last summer which was designed to boost the number of electronic payment acceptance locations in 27 markets in Europe. The company noted in its statement that the card makes SumUp a more comprehensive solution for SMEs by facilitating “both the making and taking of payments.”

“Since launching our first reader, we have been dedicated to empowering merchants so they can focus on making their business as successful as possible,” SumUp co-founder Marc-Alexander Christ said. “We had this in mind when we designed our latest product, with the SumUp Card being a smart solution so we can continue being the driving force behind small businesses across the globe.” He referred to the new offering as “a small card for big ideas.”

SumUp was founded in 2001. The small business payments facilitator offers a variety of solutions that provide merchants with inexpensive payment acceptance options wherever their business is. The U.K.-based company has raised more than $425 million in total funding, most recently securing €330 million ($356 million) in debt financing. An alumni of FinovateEurope 2013, SumUp forged a partnership with German challenger bank Penta in December, and collaborated with U.K. challenger bank Starling Bank in July.

Read more about challenger banks in Europe in our recent features on top challenger banks in Germany and how venture capital is impacting the growth of the industry across the continent.

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How Far Can Venture Capital Take European Challenger Banks?

By David Penn Posted on February 18, 2020
Categories: Report series

As 2020 begins, there may be no hotter fintech theme, both globally and in Europe, than the rise of the challenger bank. As we reported recently, the race for digital banking licenses in Singapore, for example, has resulted in an increasingly-crowded field of at least two applicants for each available license. In Europe, investment in challenger banks has made steady year-over-year gains since 2014, reflecting not only the strength in interest in the sector, but also the confidence that digital banks are likely to be a major component of the European financial landscape of the 21st century.

How has venture capital’s surging interest in challenger banks shaped the industry and does the flood of funding VCs are providing tell us anything about the future success of challenger banks in Europe?

From the €0.1 billion in VC investment in 2014 to the estimated €2.4 billion in VC investment in 2019, European challenger banks have been among the top recipients of regional venture capital in recent years – with sums comparable to that invested in payments companies. What is especially impressive about the growth in VC funding for challenger banks is the relatively smooth trend in positive funding growth over the year, with each year bringing in more investment dollars than the last.

In this way, investment dollars are following the customers. Research by AT Kearney indicates that European challenger banks have added more than 15 million customers since 2011, and that the industry will have as many as 85 million customers by 2023.

Quantifying the number of challenger banks in Europe overall is … challenging. In part, this is because there can be disagreement between which traditional banks with digital offerings can be considered truly challengers alongside fully, digital-only neobanks. Fintech Futures, Finovate’s sister publication, is developing its own database of challenger banks by nation; there are an estimated 80+ challenger banks in the U.K. alone.

These firms include a number of companies that have demonstrated their platforms on the Finovate stage – such as Revolut (U.K.), Klarna (Sweden), and Twisto (Czech Republic). And virtually every European country is represented by a significant (and often expanding) challenger bank – from N26 in Germany to bunq in the Netherlands, and from Bnext in Spain to Fire in Ireland. In addition to generous funding, these companies have been able to grow and scale thanks in large part to regulatory changes like PSD2 and the open banking movement that encourage data sharing and collaboration with incumbent financial institutions.

Challenger banks are also taking advantage of customer dissatisfaction with traditional banks; Koyo founder and CEO Thomas Olszewski noted that 2017 the biggest bank in the U.K. has an NPS (Net Promotional Score) of -24, with Germany’s biggest banks earning NPS scores of -8 and -22. NPS is a way to measure customer satisfaction via the likelihood of the customer recommending the company or service to another customer.

And, importantly, challenger banks are more likely to take advantage of the newest technologies for onboarding, and security, as well as provide the kind of digital customer experience (i.e., more mobile, more personalized; more social) that they have become accustomed to outside the world of finance.

Marcin Mazurek, founder of Inteliace Research, observed earlier this year that the eight bigger European neobanks – Revolut, N26, TransferWise, Monzo, Starling, Curve, and Tandem – had almost 27 million customers by the end of last year. “In fact, their number of clients has increased exponentially as the figure doubled every year since 2016,” he wrote. Mazurek credits the wave of VC funding to allow the strongest players in neobanking to get even stronger, suggesting that “investors are competing for the ‘privilege’ to fund top startups and not the other way around.”

Mazurek also highlights a few warning signs for the sector, noting that VC investment driven valuations of challenger banks to potentially extreme levels. He does the math to reveal the fact that the seven biggest neobanks in Europe have implied valuation-to-funding multiples of 4.8x. This leads him to caution that there is a significant “disconnect” between challenger banks, their lofty valuations, and the relatively modest revenue per customer the major challenger banks are achieving (Mazurek estimates that challenger banks made between $3 and $38 in revenues per customer in 2018 and 2019).

The way out for these challengers, according to Mazurek, is continued growth of the customer base. Investors, he said, are counting on future, “multi-million customer bases” to help close the valuation/revenue gap for neobanks. Another option is that these institutions will be successful in upselling their customers from the free and low-cost services and products they currently enjoy to more premium offerings. This may be all the more vital as fintechs explore “banking-as-a-service” offerings that will allow them to encroach on some of the territory newly-disrupted by challenger banks.

Indeed, the view increasingly seems to be that venture capital has played a major role in putting challenger banks on the map. They have provided them with the capital they need to develop new products and scale their businesses (an especially worthwhile option in Europe where a banking license from one EU central bank can enable a challenger bank to operate through Europe).

But at this point challenger banks may have reached a crossroads. At this point, the wisdom and mentorship venture capital provides may prove more worthwhile than their euros in determining which firms will grow and thrive.

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Moven Powers KSA-Based Neobank; Nigerian Fintech Scores $10 Million

By David Penn Posted on February 14, 2020
Categories: Avaloq, Daily news, Finovate Global, Moven

As Finovate goes increasingly global, so does our coverage of financial technology. Finovate Global is our weekly look at fintech innovation in developing economies in Asia, Africa, the Middle East, Latin America, and Central and Eastern Europe.

Central and Eastern Europe

Dusseldorf, Germany-based apoBank partners with Avaloq.
German challenger bank N26 announces withdrawal from the U.K. market.
Sifted highlights the “fastest growing fintech startups in Germany.”

Middle East and Northern Africa

A partnership between Moven and STC Pay seeks to launch a new challenger bank in Saudi Arabia.
The biggest bank in the country by assets, the National Bank of Egypt (NBE), has joined the RippleNet payment network.
Wamda interviews more than 600 startups as part of its examination of pre-seed startups in the MENA region.

Central and Southern Asia

Uber establishes its Uber Money team at India’s Hyderabad Tech Centre.
Deal Street Asia looks at how fintechs in India are re-invigorating banking.
BusinessWorld reviews ways fintech in India can help “bridge the gap” between banks and the public.

Latin America and the Caribbean

In a round led by DOMO Invest, Brazilian P2P marketplace IOUU locks in $1.3 million in its latest funding round.
Chile-based investment platform Fintual teams up with Invermerica in new foray into Mexican market.
Brazilian fintech Bloxs Investimentos raises $690,000 in new funding to build out its collective investment platform.

Asia-Pacific

Vietnam’s central bank refuses to cap foreign ownership of e-payment companies at 49%.
Fintech News Singapore features “6 Agri-Fintech Startups in Asia to Follow in 2020.”
Thailand-based “crowdfunding bonds” fintech PeerPower announces pre-Series A round funding.

Sub-Saharan Africa

Nigerian fintech Aella Credit secures $10 million in debt financing.
CNBC Africa looks at how fintechs can help South African consumers avoid “credit traps.”
VentureBurn highlights the work of South African financial inclusion specialist Meerkat.

Top image designed by Freepik

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FinovateEurope Best of Show Winners Announced

By David Penn Posted on February 13, 2020
Categories: Best of Show, Dorsum, FinovateEurope 2020, Glia, Horizn, iProov, Sonect, W.UP

The votes are in and the people have spoken! Congratulations to the winners of Best of Show at FinovateEurope in Berlin, Germany!

Dorsum for its Communication HUB that provides real-time, private, banking customer engagement through automated notifications and instant human and AI chat possibilities. Video.

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

Horizn for its focus on equipping frontline employees and customers directly with the knowledge to improve customer experience and increase digital adoption. Video.

iProov for its solutions – used in production globally by governments and banks – that use biometrics to authenticate users online. Video.

Sonect for its easy-to-use and accessible for everyone, everywhere global platform for cash transactions. Video.

W.UP for its banking personalization platform that turns data into better banking. Video.

Thanks to all the demoing companies that took the time and effort to demonstrate their innovations live on stage. Thanks also the City of Berlin for being such a wonderful host for our first conference of the new year and new decade. We are already looking forward to returning in 2021!

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 three 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 six 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 2019 conferences are below:

FinovateEurope 2015

FinovateSpring 2015

FinovateFall 2015

FinovateEurope 2016

FinovateSpring 2016

FinovateFall 2016

FinovateAsia 2016

FinovateEurope 2017

FinovateSpring 2017

FinovateFall 2017

FinovateAsia 2017

FinovateMiddleEast 2018

FinovateEurope 2018

FinovateSpring 2018

FinovateFall 2018

FinovateAsia 2018

FinovateAfrica 2018

FinovateEurope 2019

FinovateSpring 2019

FinovateFall 2019

FinovateAsia 2019

FinovateMiddleEast 2019

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Platformification in Financial Services and the Power of the Customer in the Age of AI

By David Penn Posted on February 11, 2020
Categories: FinovateEurope 2020

Photo by **Immortal shots** from **Pexels**

Why is platformification an important development in financial services? And what will happen to financial services companies when financial decisions are made less by people, than by their trusted, AI-enabled personal assistants?

Answers to these questions were among the most compelling content on Day One at FinovateEurope this week. Our morning session, featured a pair of presenters, Nicolai Schattgen, founder and CEO of Match-Maker Ventures, and author and entrepreneur Steven Van Belleghem. Both speakers’ insights on platformification and the relationship between the customer and major enabling technologies like AI, respectively, were especially well-received by our FinovateEurope audience.

Opening his conversation on the role of the platform in financial services, Schattgen explained that platforms thrive in areas of low transparency and high transaction costs. He used the example of Airbnb, asking audience members to consider how Airbnb as a platform has helped revolutionize the industry of global online property rental. Calling this ability to transform opaque and expensive markets into accessible, consumer-friendly opportunities “the platform economy rules,” Schattgen implored the audience to understand that “the world will never be as slow as today” and that financial services companies and fintechs alike could receive “massive benefits” from the platform economy.

The plan? Financial services companies must accept the shifting realities of their markets, including the preferences of customers. They must believe in what they do as innovators; as Schattgen put it, “you’ve got to be IN it.” This includes committing the appropriate amounts of both capital and mindshare from leadership. It is not something that can be effectively outsourced. Lastly, Schattgen encouraged partnerships, and praised the value of collaborations between “corporates” and “startups” to drive business value by combining leadership with innovation.

A little later in the day, a special address from Steven Van Belleghem was an entertaining and informative journey from the land of selfies, 4G, and Instagram to the precipice of a world driven by powerful enabling technologies like AI and machine learning, quantum computing, 5G, and robotics. Author of Customers The Day After Tomorrow, Belleghem discussed these technologies in the context of how they will change the relationship between customers and the products and services they buy – from the favorite and trusted brands to impulse purchases – once they are mature and widely distributed throughout the economy.

He refers to this future as B2A – business-to-assistant, as in virtual assistant, and asks the question of what companies will do to retain customers in a world in which customers rely on enabling technologies to either help them make purchasing decisions or to make those same purchasing decisions on their own.

In other words, Belleghem asks, what if the customer is no longer part of the decision flow? In much the same way that Facebook has become effective for its ability to filter information, Belleghem notes that algo-driven, B2A commerce will create product filters and digital shelves that are significantly more personalized and less diverse than brick-and-mortar shelves. The implications for brands of all kinds are significant.

Belleghem sees two possible futures as a result of this. In one future, mega platforms create centralized systems that serve as gatekeepers and distribution networks leveraging an AI-enabled understanding of consumers’ past and likely future buying preferences. In another future, customers access their preferred brands directly via a strong and user-friendly, automated interface. Belleghem he has no crystal ball to tell him which path is the one we are more likely to pursue as a society. Nevertheless, he recommends that businesses spend a significant amount of time on brand-building, and said understanding that managing a customer’s top three resources: time, money, and energy – and especially “time” – can be a gamechanger when it comes to determining which product or service is the one a customer will stick with over the long term.

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Varo Money Takes Giant Leap Toward National Bank Charter

By David Penn Posted on February 10, 2020
Categories: Daily news

For all the excitement about challenger banking ex-U.S., there may be more going on in the alternative banking scene in America than many think.

Mobile banking company Varo Money, for example, announced this week that it has received approval for deposit insurance from the Federal Deposit Insurance Corporation (FDIC). This is a significant step on the company’s journey toward obtaining a national bank charter and moves Varo to the final stage of the approval process, the company said in a statement.

Varo Money CEO Colin Walsh said that the goal of earning a license to operate nationally was “part of Varo’s vision from the very beginning.” Walsh noted that the bank charter would help Varo also meet its goal of boosting financial inclusion. “Becoming a fully chartered bank will give us greater opportunity to deliver products and services that positively impact the lives of everyday people around the country,” he said.

Founded in 2015 and headquartered in San Francisco, California, Varo Money offers a mobile banking account with high-yield savings, direct deposit, and no account fees. The company had a big 2019 – forging partnerships with Galileo Processing, Socure, Cachet Financial, Bancorp Bank, and iHeartMedia in the second half of the year alone. Varo also raised a significant chunk of change in 2019 – picking up a $100 million investment from Warburg Pincus, Gopher Asset Management, and The Rise Fund that drove the company’s total capital to more than $178 million.

En route to earnings its national banking charter, Varo still needs to complete certain organizational requirements, as well as meet terms of both the OCC’s (Office of the Comptroller of the Currency) and the FDIC’s Federal Reserve membership. The company said that once it earns its charter it will expand its offerings to include products like credit cards, loans, and savings solutions.

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“And In This Corner …” A Look at Germany’s Top 10 Challenger Banks

By David Penn Posted on February 10, 2020
Categories: List series

How is the battle of the challenger banks manifesting itself in Germany? As FinovateEurope gets started in Berlin this week, we take a look at some of the top challenger banks in the country.

Bitwala – Based in Berlin, Germany, Bitwala leverages blockchain technology to offer a banking experience for holders of both fiat and cryptocurrencies. Co-founded by Benjamin Jones, Jorg von Minckwitz, and Jan Goslicki in 2015, Bitwala has raised more than $21 million in funding. Late last summer, the challenger bank launched its all-in-one mobile bitcoin app, enabling customers in 30+ countries to open a German bank account with an integrated Bitcoin wallet and trading functionality.

Consorsbank – Founded in 2014 – and sporting an origin story that goes back to 1994 – Consorsbank is owned by BNP Paribas SA Niederlassung Deutschland. The bank offers a current account and two free debit cards, as well as a securities trading account with fee-free trading in ETFs and funds. In 2018, Consorsbank introduced its new installment loan product, and last year, the company went live with both Apple Pay and Google Pay.

Fidor Bank – Headquartered in Munich, Fidor Bank was founded in 2009, and serves both retail and business banking customers. The firm was acquired by Groupe BPCE of France in 2016, one year after Fidor Bank began operations in the U.K. Fidor offers a business account and card solutions, as well as financing products including installment loans and lines of credit. The bank also facilitates customer investment in foreign currencies and online savings bonds. Fidor Bank celebrated its 10th anniversary last May, and currently has 250,000 private and 40,000 business customers.

Fyrst -Bonn-based Fyrst Bank is the latest challenger bank in Germany to offer financial services to freelancers and the self-employed. Launched in 2019, Fyrst charges no account management fees and offers integrated accounting and invoice management, instant payment transfers and inexpensive financing options. Fyrst is backed by DB Privat- and Firmenkundenbank AG, and is a division of Postbank.

Insha – Founded in 2018 and proclaiming itself to be the first interest-free mobile bank in Europe upon its launch a year later, Insha is a spin-off from Turkey’s Albaraka Turk Participation Bank. Insha is headquarted in Berlin and offers a mobile account and Insha Mastercard debit card, money transfers, and financial wellness tools inSave and inSight to help customers manage their money better. Insha also provides a zakat calculator to help Islamic customers accurately determine the amount of their annual zakat obligation.

Kontist – A bank that specializes in serving freelancers and workers in the gig economy, Kontist is based in Berlin and was founded in 2015. The challenger bank calls itself the only bank that calculates and sets aside taxes in real-time – responding to a major pain point for workers with irregular or untraditional sources of income. Kontist offers its customers a mobile app and business account, and supports its customers accounting by keeping banking and bookkeeping in “permanent sync.” Kontist also provides a Mastercard Business debit card. The company is a strategic partner of solarisBank.

N26 – Berlin-based N26 provides mobile and online banking services to customers throughout the E.U. Earning its banking license in 2016 and rebranding from Number 26 to N26Bank, the company has raised $683 million in funding, including a $470 million Series D completed last summer. This funding was accompanied by the bank’s expansion to the U.S. With a valuation of more than $2.7 billion, N26 is regarded as one of the most valuable challenger banks in Europe.

Penta – Founded in 2016, Penta provides banking services – including expense management, accounting, and corporate cards – for SMEs and startup companies. Penta customers can establish sub-accounts to more readily monitor various business cash flows, and take advantage of a variety of small business financing options. Headquartered in Berlin, and acquired by finleap in spring of 2019, Penta introduced its all-in-one founder’s package, Kompass, in January. Kompass includes a set of legal documents and guidelines to help ensure successful company launch.

solarisBank – A self-described technology company with a banking license, solarisBank was founded in 2016, and has both its own banking license as well as a banking platform to help other firms to offer their own financial solutions. The Berlin-based firm offers a suite of RESTful APIs to enable its partners to integrate its modular financial services solutions within their own product line. solarisBank announced a partnership with Penta last fall to support the business banking platform’s expansion into Italy. In December, the bank launched its subsidiary, Digital Assets, to provide a custody solution that takes advantage of the growing ownership of cryptocurrencies and other digital assets.

Tomorrow – Tomorrow offers a current account that gives customers the opportunity to make a positive difference on the environment. The bank finances renewable energy and organic agriculture, as well as other climate-supporting initiatives. The challenger bank’s account features a digital budget with automatic categorization, and real-time, push notifications for every transaction. Tomorrow was founded by Inas Nureldin, Michael Schweikart and Jacob Berndt and is based out of Hamburg. Tomorrow closed its first round of funding in 2019, pulling in €8.5 million from impact investors.

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Paystand Secures $20 Million; Opentech Teams Up with Swiss Bankers

By David Penn Posted on February 9, 2020
Categories: Daily news

Photo by **Markus Spiske temporausch.com** from **Pexels**

Blockchain-powered payments platform Paystand has raised $20 million in Series B funding. The investment, which the company will use to grow its products and services, as well as sales, marketing, and engineering teams, featured the participation of both new and existing investors.

“We made a promise to reboot commercial finance because it’s insecure, inefficient, and built on trustless networks and technology,” Paystand CEO Jeremy Almond said. “Today markets another step towards realizing that vision and transforming enterprise finance.”

Paystand seeks to do for complicated commercial payments what Venmo has done for P2P transactions. By digitizing and automating a company’s cash cycle, Paystand’s payments-as-a-service platform helps businesses become more capital efficient, streamlines back office operations, and allows them to offer innovative payment experiences.

Paystand participated in our developer’s conference, FinDEVr Silicon Valley, in 2014. With offices in both Scotts Valley, California, and Guadalajara, Mexico, the company has added 80 new large enterprise customers in the last 24 months.

Last week we shared news of FinovateEurope alum Opentech and its partnership with Mastercard.

Now we can add that Swiss Bankers Prepaid Services has teamed up with Opentech to launch its latest money sending service, Send. The new offering is based on Opentech’s OpenPay Send solution which, as we learned last week, leverages the Mastercard Send platform to give users a convenient, “use-case agnostic” way to transfer money to locations around the world.

Swiss Bankers’ Send can be readily activated after a quick KYC process that only takes a few minutes via the mobile app. The solution is is available to all Swiss citizens who are Swiss Bankers cardholders.

Highlighting the rise of P2P payments as a preference for both domestic and international payments, Swiss Bankers CEO Hans-Jorg Widiger praised the partnership with Opentech. “Seizing this opportunity is a crucial step for us to remark and consolidate our positioning as a customer-driven, trustable and innovative company,” he said. “With Send we faced this challenge, relying on our long-dated partnership with Mastercard and Opentech to provide our customers with a distinctive solution in line with our quality standards.”

See Opentech demo its OpenPay Send solution at FinovateEurope this week in Berlin, Germany. Get your tickets today.

Here is our weekly roundup of the latest news from our Finovate alumni.

Sensibill announces Tom Shen as its new chairman.
Identity verification and authentication solution provider Jumio partners with CIMB Bank Philippines.
U.K. open banking platform AccountScore teams up with SME lender Simply.
Kabbage unveils new SME cash flow management offering, Kabbage Payments.
Veridium introduces its facial recognition technology, vFace.
International Money Express (Intermex) chooses Ripple to power cross-border payments between the U.S. and Mexico.

Check out our latest round of FinovateEurope Sneak Peeks featuring SONECT, EcoTree, Lokky, Quppy, Bambu, Altilia, Authlete, Bankish, ANNA, and MODIFI!

Azimo secures €20 million ($22 million) in debt financing from European Investment Bank.
CollegeBacker goes live with its free mobile app that helps low and middle-income families prepare for higher education costs.
ETFLogic launches the latest version of its Insights Analytics Platform.
Yseop unveils Augmented Analyst, a new, automated report generation platform for the enterprise that leverages Natural Language Generation (NLG).
Feedzai helps SafetyPay protect its customers from fraud with its AI-powered technology.
Best of Show winner Zogo picks up Finsiders ‘Risk Taker’ Award for Charlotte, North Carolina-based fintechs.

Alumni Features and Profiles

Sofi Secures The Bancorp as Debit Card Issuer – Financial services startup SoFi is partnering with The Bancorp to serve as the company’s backend banking provider and card issuer for SoFi Money.

Fiserv Partners with Hong Kong Digital Bank Pioneer ZA Bank – ZA Bank, will use the company’s VisionPLUS global payment software, which supports the entire card payment lifecycle from origination and issuance to settlement and customer service.

Worldline to Acquire Ingenico in $8.6 Billion Deal – The combination of Worldline and Ingenico will create the world’s fourth largest payment services provider with 20,000 workers in 50 countries serving nearly one million merchants and 1,200 financial institutions.

Also on Finovate.com

Everything Fintech at Davos 2020 – We combed through the agenda to bring you a view of the discussions through a fintech lens. Here’s a summary of some of the most interesting fintech-related topics covered at the global event.

Finovate Launches New Gender Diversity Stream at FinovateEurope – FinovateEurope is innovative for us in a number of ways. This year we will debut our Women in Fintech stream.

Fintech and the Case for Senior-Based Solutions – Ensuring that the online and mobile worlds are a safer place for seniors is one of the important contributions that technology can make.

Can Amazon Help Goldman Sachs Get its Groove Back? – According to reporting in both the Financial Times and on CNBC, Amazon and Goldman Sachs are discussing a partnership that would enable the investment bank to offer loans directly to merchants via Amazon’s platform.

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