Author: David Penn

Fear of Fraud Surrounds Wirecard’s Missing $2 Billion

Fear of Fraud Surrounds Wirecard’s Missing $2 Billion
By David Penn Posted on
Categories: Finovate Global

To speake of the woe that has befallen Wirecard …

The international fintech community received an unexpected jolt on Friday on news that the CEO of Wirecard, Markus Braun, was stepping down. Braun’s resignation comes amid reports that the German digital financial platform he has led since 2002 cannot account for $2.1 billion in cash, and a delay in the release of its 2019 financial report. Reuters reported that the company admits it could be have been “the victim of fraud of considerable proportions.”

Up until recently Wirecard appeared poised for success as a leading European payment processor for both consumers and businesses. The company reported revenues of $2.2 billion in 2018 and, by the fall of that year, had reached a valuation of $26.9 billion.

But suspicious of the company deepened early last year. A Financial Times report in January alleging suspicious financial activity in Singapore, and the announcement of an official investigation by Singapore authorities a month later, tarnished Wirecard’s image despite the company’s denials. This was followed by claims of further questionable financial activity – this time in Ireland – in October.

In this week’s news, auditors at EY, formerly known as Ernst & Young, were not able to locate cash at two Asian banks – Bank of the Philippine Islands and BDO Unibank – where Wirecard said $2 billion had been deposited. Both banks have denied having a business relationship with Wirecard. Moreover, documents indicating that such a relationship did exist, according to BDO, were falsified and bore forged signatures.

In a statement, Wirecard announced that James Freis, who was recently appointed to the company’s management board, will serve as interim CEO. the Federal Financial Supervisory Authority, known as BaFin, is investigating.

Here is our weekly look at fintech around the world.

Latin America and the Caribbean

  • Brazil-based SME lender BizCapital raises $12 million in Series B funding to support development of new products.
  • Banco Sabadell partners with IBM to enhances its digital banking operations in Mexico.
  • Banco Safra, based in Brazil, to deploy ACI Worldwide’s UP Retail Payments solution and UP Framework.

Asia-Pacific

  • Vietnam Plus reports surge in contactless payments in Vietnam.
  • Crowdfund Insider investigates the rise of Sharia fintech in Indonesia.
  • Malaysian fintech Curlec, which helps businesses manage recurring payments and cash flow, secures investment from 500 Startups.

Sub-Saharan Africa

  • South African open banking startup – and FinovateAfrica alum – truID announces seed funding.
  • Nigeria’s Chipper Cash secures $13.8 million in Series A funding.
  • WapiPay, a fintech based in Kenya and Singapore that provides platform-to-platform integration for virtual and global accounts, raises seed funding via accelerator network FutureHub.

Central and Eastern Europe

  • Estonia’s Planet42 announces $2.4 million seed round led by Change Ventures. The company helps facilitate automobile access for the underbanked in South Africa.
  • Russia’s Tinkoff teams up with online marketplace goods.ru.
  • Boku acquires Estonia-based mobile payments company Fortumo in deal valued at $45 million.

Middle East and Northern Africa

  • UAE-based Buy Now Pay Later e-commerce company Postpay introduces a trio of new installment payment options.
  • The Fintech Times takes a look at the state of the fintech and financial services industry in Lebanon.
  • Tpay Mobile, based in Dubai, acquires Turkish payments company Payguru.

Central and Southern Asia

  • Cryptocurrency exchange Binance joins the Indian Tech Association.
  • Kaspi, an e-commerce banking app based in Kazakhstan, to expand to Azerbaijan and other neighboring countries.
  • India Infoline launches #IIFLDisrupt, an initiative to help early-stage Indian fintechs during the COVID-19 crisis.
  • India-based Buy Now Pay Later company Tabby raises $7 million in funding to support expansion into Saudi Arabia.

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Finovate Alums Earn Spots in CNBC’s 2020 Disruptor 50

Finovate Alums Earn Spots in CNBC’s 2020 Disruptor 50
By David Penn Posted on
Categories: Alumni News, Kabbage, Klarna, Marqeta, Ripple, SoFi, Trulioo

Six companies that have demonstrated their fintech innovations on the Finovate stage have been recognized this year by CNBC as part of their Disruptor 50 roster for 2020.

This year’s list, the eighth in the series, is marked by the high number of billion-dollar companies, or “unicorns.” Fully 36 of the firms in the 2020 CNBC Disruptor 50 have reached or surpassed the $1 billion valuation mark. Combined, the 50 companies have raised more than $74 billion in VC funding and achieved an implied market valuation of almost $277 billion.

The companies making the cut range in industry from cybersecurity and healthcare IT to education and, of course, fintech. In fact, the top-ranked company in the 2020 Disruptor 50 is none other than Stripe, the $36 billion payments platform founded in 2010. Stripe earned a #13 ranking in last year’s Disruptor 50 roster, and likely owes its first place appearance this year to a major $600 million funding raising – the company’s largest to date – and the economic and social consequences of the global health crisis.

“With many people throughout the world under lockdown to prevent the spread of Covid-19,” CNBC’s capsule on the company noted, “the move to shopping online has never been greater. That’s good news for digital payments platform Stripe.”

Stripe was not the only fintech to earn high marks from the 2020 Disruptor 50’s methodology. In addition to the half dozen Finovate alums below, some of the other fintechs on this year’s roster include:

  • Virtual bank WeLab (Hong Kong)
  • Digital mortgage company Better.com (New York City)
  • “Buy now pay later” e-commerce company Affirm (San Francisco, California)
  • Challenger bank Chime (San Francisco, California)
  • Banking app Dave (Los Angeles, California)
  • Microfinancier TALA (Santa Monica, California)
  • Trading and investing platform Robinhood (Menlo Park, California)

Also earning spots in this year’s list were a pair of insurtech companies, Lemonade and Root Insurance, as well as cybersecurity and biometric authentication firms SentinelOne and CLEAR, respectively.

Here’s a look at the Finovate alums that made this year’s list.

#5 Klarna

  • Founded: 2005
  • Headquarters: Stockholm, Sweden
  • CEO: Sebastian Siemiakowski
  • Valuation: $5.5 billion
  • Previous ranking: #8 in 2016

#8 SoFi

  • Founded: 2011
  • Headquarters: San Francisco, California
  • CEO: Antony Noto
  • Valuation: $4.8 billion
  • Previous ranking: #26 in 2019

#24 Kabbage

  • Founded: 2009
  • Headquarters: Atlanta, Georgia
  • CEO: Rob Frohwein
  • Valuation: $1.1 billion
  • Previous ranking: #14 in 2019

#27 Trulioo

  • Founded: 2011
  • Headquarters: Vancouver, British Columbia, Canada
  • CEO: Steve Munford
  • Valuation: N.A.
  • Previous ranking: #37 in 2017

#28 Ripple

  • Founded: 2012
  • Headquarters: San Francisco, California
  • CEO: Brad Garlinghouse
  • Valuation: $10 billion
  • Previous ranking: First appearance

#33 Marqeta

  • Founded: 2010
  • Headquarters: Oakland, California
  • CEO: Jason Gardner
  • Valuation: $4.3 billion
  • Previous ranking: First appearance

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Neobank Upgrade Secures $40 Million Investment from Santander

Neobank Upgrade Secures $40 Million Investment from Santander
By David Penn Posted on
Categories: Daily news

In a round led by Santander InnoVentures, Upgrade, the San Francisco, California-based neobank co-launched by LendingClub founder Renaud Laplanche, has raised $40 million in new funding. The Series D round takes the company’s total funding to $202 million, and gives the neobank a valuation of $1 billion.

“We are thrilled to welcome Santander InnoVentures as a new shareholder,” said Laplanche, who is Upgrade’s CEO. “Our strategy of partnering with banks and credit unions of all sizes is delivering tremendous value to our partners and customers, and we are delighted to add one of the world’s largest banks to our partner roster.”

Also participating in the Series D were new investors Ventura Capital and Uncorrelated Ventures, as well as existing investors Union Square Ventures, Ribbit, Vy Capital, and Silicon Valley Bank.

Opening its doors in 2017, Upgrade specializes in providing financing for mainstream consumers via its card and personal loan products. The company, which also provides free credit monitoring and financial education tools, has provided more than $3 billion in consumer credit via its solutions. More than ten million consumers have applied for either the company’s Upgrade card or loan.

“We’re excited to support Upgrade in their next stage of growth,” senior advisor at Santander InnoVentures Chris Gottschalk said. “Upgrade is building a neobank with credit at its heart, which we believe is a smart strategy as credit represents 70% of banking revenue globally and is often the main reason customers seek banking services.”

In addition to helping drive growth at the company, the funding will support the upcoming launch of a new mobile banking product, the Upgrade Account. Named “Best Place to Work in the Bay Area” by the San Francisco Business Times and Silicon Valley Business Journal for three years in a row, Upgrade launched its first contactless-enabled Upgrade Card – as well as a digital form of the card facilitate mobile payments via Apple Pay and Google Pay – in April.

Upgrade’s personal credit lines and personal loans are issued by partner Cross River Bank. The firm’s Upgrade Card is issued by Sutton Bank, via a license from Visa.

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COVID-19, Diversity, and Innovations in Inclusivity

COVID-19, Diversity, and Innovations in Inclusivity
By David Penn Posted on
Categories: Innovation Series

With a growing consciousness worldwide on the topic of systemic racism, corporations are doing everything from pro-diversity affirmations (arguably not enough) to mass board resignations (arguably far too much) in order to stay (or get) on the right side of public opinion on a key issue for many of their customers.

We took a look at some of the ways those fighting in favor of a more inclusive financial services and fintech sector can learn from the successes of the women’s movement a few days ago. Here, we offer a few more specific examples of not just what financial institutions can do to help promote ethnic diversity in their companies, but also what financial institutions and fintechs are actually doing.

Celebrate Diversity

With Juneteenth taking place this Friday, some financial institutions have decided to treat the date – which marks the moment African slaves in Texas in 1865 learned of the Emancipation Proclamation – as the official occasion many African Americans have always believed it to be. Fifth Third Bancorp and Truist Financial are among a number of companies that have elected to recognize Juneteenth as a holiday for their employees and customers.

“As we consider the tremendous significance of this day and what it represents, it also reminds us of how far we still must go to have equality and inclusion for all,” Greg D. Carmichael, chairman, president and CEO of Fifth Third Bancorp said earlier this week. “As we observe Juneteeth, each of us should pause, reflect, and contemplate its significance and what it meant 155 years ago, what it means today, and how we might take action to make tomorrow better for everyone.”

Fifth Third will close its offices early on Friday, shutting down at 2pm local time. And while a number of other major financial institutions have made similar commemorations, Fifth Third is believed to be the first FI to offer its employees Juneteenth as a paid holiday.

Show the Money

The $40 million Netflix CEO Reed Hastings and his wife Patty Quillin have announced they will donate to the United Negro College Fund, and a pair of historically black colleges Spelman and Morehouse, is an example of the kind of “put your money where your mouth is” act that many pro-diversity advocates have called for.

Some of the biggest financial services companies and banks in the United States have unveiled similar initiatives. Citi, for example, announced that it will direct $8 million to the NAACP Legal Defense Fund, the Lawyers’ Committee for Civil Rights, the National Urban League, and the National Fair Housing Alliance.

Also pulling out the checkbook in the name of diversity are firms like Bank of America, which announced a $1 billion/four year commitment to help local communities of color at a time when the COVID-19 crisis is making a disproportionate impact on black and brown Americans.

“Underlying economic and social disparities that exist have accelerated and intensified during the global pandemic,” Bank of America CEO Brian Moynihan said earlier this month when the initiative was announced. “The events of the past week have created a sense of true urgency that has arisen across our nation, particularly in view of the racial injustices we have seen in the communities where we work and live. We all need to do more.”

People Who Need People

Honoring the past is important. And putting real resources to work to make opportunities possible for historically excluded groups is a critical component in achieving a more inclusive world. But, without putting too fine a point to it, the best way to promote diversity is to hire more diverse people.

Analysts looking at the barriers to increasing diversity have cited three chief hurdles: (1) finding diverse candidates to interview, (2) retaining diverse employees, and (3) getting diverse candidates past interview stage. And while the second two issues have a lot to do with the culture of a company, something that may not substantially improve until after diversity and inclusivity gains are made, the first challenge – finding good candidates – is one all companies and organizations should pledge to overcome.

For many companies, this may mean looking in typically overlooked places for otherwise untapped talent. Student organizations, including a very active African American collegiate and post-collegiate fraternity and sorority system, can be a an excellent way to reach today many of the people who will be leaders in their communities tomorrow. Diversity-oriented venture capital firms – such as Harlem Capital Partners, the Black Angel Tech Fund, and Base Ventures – are excellent sources for insight into black and brown entrepreneurship in the technology sector.

As Chamath Palihaptiya, venture capitalist and founder of Social Capital, wrote almost five years ago:

We need to recapture our potential and open the doors. Invite more people into the decision making: young people, Blacks, Latinos, females, LGBT and others who aren’t necessarily part of the obvious majority.  Surround ourselves with a more diverse set of experiences and maybe we will prioritize a more diverse set of things. Maybe we will find more courage to do the hard things.

Half a decade later, many of us in the technology community in general and the fintech world in specific are still waiting. But it appears increasingly the case that, for now, our communities are ready to act.

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Expensify Unveils New Virtual Travel Assistant Concierge Travel

Expensify Unveils New Virtual Travel Assistant Concierge Travel
By David Penn Posted on
Categories: Alumni News, Expensify

Expense management platform Expensify launched its latest solution today. The offering, Concierge Travel, is a virtual travel assistant that makes it easier for travelers to build their itineraries and plan their excursions in the COVID-19 era.

“While most of us are avoiding travel right now, there are still essential workers whose trips can’t be cancelled or postponed,” Expensify CEO and founder David Barrett explained. “We want to help them travel in the safest possible way.”

Concierge Travel is available to Expensify cardholders and can be used to book flights, make hotel reservations, reserve rental cars and more – free of charge. All bookings via Concierge Travel also feature complimentary safety alerts and travel risk advisories from Global Rescue. The free Global Rescue membership offers a range of services for travelers including transportation to the cardholder’s hospital of choice in an emergency, as well as health and security assessments and entry and exit requirements for international travelers.

“With Concierge Travel, your free Global Rescue membership provides world-class safety and medical services,” Barrett added. “On top of that, Concierge lets you know about any COVID-related travel restrictions in advance, including specific stay-at-home orders in place, social distancing measures, and other info on the city you’re visiting.”

A Finovate alum since 2009, Expensify demonstrated the technology behind its expense management platform at our developers conference, FinDEVr Silicon Valley, in 2016. The company introduced its corporate card last fall, offering spending controls and expense management in a single solution that in some ways harkens back to the firm’s origins more than a decade ago.

“Expensify started as a corporate card way back in 2008 before we decided to focus on expense,” Barrett said when the card was launched, “so it’s fun to see the product come full circle with a card that naturally extends our existing platform.”

Founded in 2008 and headquartered in San Francisco, California, Expensify has raised $38.2 million in funding according to Crunchbase. The company includes Redpoint Ventures, OpenView, PJC, and Canadian Imperial Bank of Commerce (CIBC) among its investors.

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What Can Fintechs Do to Compete with the Apple Card

What Can Fintechs Do to Compete with the Apple Card
By David Penn Posted on
Categories: FinovateAsia Digital 2020, Guest Post

Some of the biggest disruptions in financial services are coming from some of the least likely places. The challenger bank revolution, for one, is bringing new levels of competition to “old” finance.

The rise of challenger banks will be one of chief topics of our upcoming, all-digital FinovateAsia event next month. Helping drive that conversation will be Araminta Robertson of Mint Studios, a speaker, podcaster, and fintech writer who will moderate our Challenger Bank Power Panel on July 6th.

By way of introduction, we’ve invited Ms. Robertson to address another disruptive elephant in the financial services room: the rise of financial services offerings from popular technology companies with deep pockets and powerful brands.

Everyone working in the financial sector held their breath when Apple announced it was releasing a credit card.

Araminta Robertson

People have been discussing for years when the Big Tech companies will enter the world of financial service. In 2019, it became true. Apple released a credit card in the U.S. that allows you to sign up through your phone, connects with all your Apple devices and offers 2% cashback on transactions. Customers can immediately start using their Apple Card and even use the balance to send money to friends and family members. On top of that, customers can track all their spending on their phone and aren’t charged any late fees, international fees or general accounts fees.

How fintechs can compete with Apple

Fintechs, specifically challenger banks, are going to have to find new ways to up their game. Although some may not need to compete directly with Apple just yet (the Apple Card is only available in the U.S.), fintechs should start looking at strategies that will prepare them for a much more ambitious market. This is because Apple will soon be setting the bar for the industry, and customers will be expecting the same level of privacy, customer experience and quality of features as they get with Big Tech products. Here are a few approaches fintechs can consider in order to stand out.

Take branding seriously

To start with, it’s unlikely people will buy an Apple phone just to use the Apple card. This means that the Apple card will be primarily be used by iPhone and Apple fans. The good news is there is a large segment of the population that does not use Apple products and services or iPhones – and many who don’t want to be associated with the brand or would never trust Apple with their money.

This means that fintechs still have a chance to create their own brand, community, and customer base and should, therefore, take branding seriously.

Not only can fintechs use branding to stand out more, but with the appropriate licenses, they can offer other financial features that a Big Tech cannot. The Apple card does not allow users to invest in the stock market, buy cryptocurrencies, or perform bank-related actions. This is because Apple does not have a banking license, and will likely never hold one: becoming a bank is expensive, cumbersome, and not very profitable for a Big Tech.

Ted Rossman from CreditCards.com says so himself: he thinks people will only sign up to the Apple card because they love Apple. At the moment, they don’t offer any features that you can’t find somewhere else. Although they may offer unique features in the future, fintechs can still use this opportunity to position themselves as a trustworthy banking solution that is 100% devoted to managing people’s money securely. Apple does not have the flexibility to adjust its branding to a more banking-friendly image.

Focus on the underserved

The issue with Apple and the Apple Card is that it excludes a large section of the population. In fact, Apple as a brand does not work well with “financial inclusion”; if their phone costs $500, they can hardly say they are proponents of financial inclusion.

This is an important point because many challenger banks and fintechs have financial inclusion and literacy as a core principle, and are focusing on helping the underserved – it’s what drives them to create accessible products, offer lower fees and build a community around financial education. Those fintechs that are consumer-focused and take financial inclusion seriously can use this as a competitive advantage to build a brand that takes into account the underbanked. 

Apple will not become a brand that provides for the underserved anytime soon, so that’s a market that will always be open for fintechs.

Encourage localization

As mentioned above, Apple will raise the bar and set the standard worldwide. However, it also means that their products and features are more generalized and meet a broader spectrum of audiences.

This is where fintechs in different countries can gain a competitive advantage by partnering up with local businesses, offering location-specific services, and building a brand that is more regional. Spanish citizens will likely appreciate a neobank that partners with the local food delivery apps, offers a unique Spanish bank card, and a specific Spanish saving product. In addition, local fintechs may be able to take advantage of country-specific regulations that may favor local companies rather than international conglomerates.

Although Apple will be able to localize the more it grows, it will only be able to do so to a certain extent. In many cases, we may find that locals would rather use a product that serves them extremely well in their own country rather than one that works pretty well in several countries. Having said that, Apple aggregates tons of data every year and there is no telling what kind of features may attract locals as well.

Although Apple is one of the most innovative and forward-thinking Big Tech companies in the world, local fintechs still have a chance to build their own brand and community. If anything, this may propel fintechs to up their game and keep adapting their products to customer demand.

Araminta Robertson is a writer and content strategist at Mint Studios. She helps fintech companies from all around the world use content marketing to create a community, build trust, and acquire quality customers. She has worked with some of the fastest growing fintech startups in SE Asia and London, U.K., and regularly speaks at conferences and events.

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COVID-19, Biometric Authentication, and the Low-Touch Economy

COVID-19, Biometric Authentication, and the Low-Touch Economy
By David Penn Posted on
Categories: Alumni profile, Redrock Biometrics

Facial recognition may be the hottest form of biometric authentication. But it’s far from the only – or even the most effective – biometric authentication method for all instances. In fact, as far as Redrock Biometrics is concerned, a superior alternative may lie in the palm of your hand.

“The PalmID solution far outperforms competitive touchless technologies, such as facial recognition, in terms of accuracy and reliability,” Redrock Biometrics co-founder Hua Yang said in a statement announcing the company’s latest partnership a few weeks ago. “It is the best available solution for touchless identity management, authentication and security.”

Founded in 2015 and headquartered in San Francisco, California, Redrock Biometrics is the developer of PalmID, a palm-scanning authentication solution that provides accurate, robust, no-additional-hardware-required biometric authentication via camera-bearing devices – ranging from smartphone, tablets, and laptops, to payment terminals (including ATMs), IOT devices, and even cars.

And at a time of social distancing and a preference for as much contact-free activity as possible, authentication technologies like PalmID are likely to be seen as increasingly attractive options. Add to this the challenge of face-based authentication in a world of mask-wearing employees and consumers, and the case for palm-based authentication becomes all the more compelling.

Identity management solution provider Q5id is the latest company to deploy Redrock Biometrics’ technology. Q5id, based in Beaverton, Oregon, announced last month that it would integrate PalmID into its biometric enrollment and authentication solutions. Q5id works with institutions in multiple verticals, including financial services, telecommunications, education, and e-commerce, to provide identity verification services via multi-factor authentication, live video, and active voice authentication. The fact that palm-scanning technologies are particularly hard to fool, according to Q5id chairman and CEO Steve Larson, is one of the reasons why the company partnered with Redrock. The solution’s high accuracy rate – and lack of a hardware requirement (compared to fingerprint scanners, for example) were additional selling points for the technology.

Redrock Biometrics’ PalmID works with both standard RGB and infrared cameras. The company notes that from a distance of approximately six inches, the average smartphone, laptop, or ATM camera can capture a good quality image of the unique skin patterns of the users palm. The captured image then undergoes a two-step process. First, the PalmID Capture Module uses machine learning technology to convert the RGB video input stream into a palm image that is ready for authentication. Second, the PalmID Matching Module, in real-time, matches the captured image against stored references. The technology uses proprietary algorithms to test images against large databases of palm images to prevent false positives.

PalmID has also been deployed recently to help provide an identity verification solution for mass transit and payments. The company partnered with FalconPro Technology in May, adding its PalmID software to a FalconPro camera module to create a simultaneous palm print and palm vein image capture. The goal is to create a large-scale authentication solution; pilot projects using the technology will be conducted in both the payments and public transit industries, according to FalconPro Technology CEO Xun You. FalconPro is a founding member of the Chinese Automatic Fare Collection System Association, and provides QR-code based digital ticketing systems for rail systems throughout China. The company sees its partnership with Redrock as potentially enabling it to “expand (its) product offering beyond barcode technology.”

Also this year, Redrock Biometrics forged a partnership with passwordless authentication solution provider HYPR, which will add the company’s PalmID technology to its platform. Redrock has also waived the license fee for its PalmID software for all essential businesses using the technology during the global public health crisis.

“COVID-19 quarantine made us acutely aware that touching devices represents a threat to our lives,” Redrock co-founder Lenny Kontsevich said. “People become touch-phobic and their faces are covered by masks, which creates a need for a touchless palm solution.”

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Sensibill Unveils Partnership with JPMorgan Chase

Sensibill Unveils Partnership with JPMorgan Chase
By David Penn Posted on
Categories: Sensibill

Digital receipt management specialist – and FinovateFall Best of Show winner – Sensibill has forged a new partnership that will put its receipt capture and management solution in the hands of more banking customers.

JPMorgan has agreed to integrate Sensibill’s technology into its Chase Mobile Banking app, making it easier for the firm’s customers to manage expenses, provide proof of purchase for insurance claims, and monitor spending “at a granular level.”

The offering will be made available to the 38 million active users of Chase’s mobile app as part of a progressive rollout later this year. As the U.S. consumer and commercial banking business of JPMorgan Chase & Co., Chase has 4,900+ branches in 38 states and the District of Columbia, as well as a network of 16,000 ATMs.

“Chase has created a digital banking experience that makes it easier for consumers and businesses to manage their finances,” co-founder and Sensibill CEO Corey Gross said. “Through our partners with Chase, millions of customers will have access to a best-in-class product that solves the hassle of expense and receipt management.”

Sensibill’s smart receipt management enables users to capture any physical receipt or invoice by taking a photo or forwarding an email. The solution leverages optical character recognition (OCR) and AI to turn receipt images into categorizable data that can be downloaded into expense reports, spreadsheets, or other digital documents. Sensibill makes it easier to organize and add context to expenses, and includes functionality to link receipts to card transactions for SKU-level visibility into spending.

The technology also helps financial institutions enhance their customer engagement by leveraging digital receipt data to offer more personalized solutions. Sensibill’s 75 financial institution partners in North America and the U.K. have used the technology to spot small businesses that may be ready to migrate from a personal to a business account, identify non-card spending patterns to better guide their own product offerings, and build brand loyalty.

Founded in 2013, Sensibill has raised $55.4 million in funding according to Crunchbase. The company, based in Toronto, Ontario, Canada, includes Radical Ventures, First Ascent Ventures, Information Venture Partners, Impression Ventures, and Mistral Venture Partners among its investors.

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M1 Finance Raises $33 Million in Series B Funding

M1 Finance Raises $33 Million in Series B Funding
By David Penn Posted on
Categories: Funding, M1 Finance

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.

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Socure Unveils New Digital Identity Verification Solution Intelligent KYC

Socure Unveils New Digital Identity Verification Solution Intelligent KYC
By David Penn Posted on
Categories: Alumni News, Socure
Photo by Alexander Vayionis from Pexels

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.

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COVID-19 and the Fight Against Cyberfraud

COVID-19 and the Fight Against Cyberfraud
By David Penn Posted on
Categories: BioCatch, Finovate Fintech Halftime Review

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. 

Read the rest of our conversation with Uri Rivner. And learn more about how to join us for our Finovate Fintech Halftime Review at our digital event hub.

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Lift Every Voice: Fintech’s Other Diversity Challenge

Lift Every Voice: Fintech’s Other Diversity Challenge
By David Penn Posted on
Categories: David's column

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.

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