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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
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This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.
Early-stage, next generation fintechs are the target of the new accelerator program launched by IBM this week: The IBM Hyper Protect Accelerator Powered by IBM LinxuOne. Selected companies will collaborate with IBM and its partners, IBM Alpha Zone, Queen City Fintech, and MEDICI as they work to turn their startups into “sustainable and scalable companies.”
A total of fifteen early-stage, pre-Series A startups from both fintech and healthtech will be selected for the program. The application window closes at the end of July, and companies are expected to be selected in September. Later that fall, startups will participate in an in-person workshop event where they will have the opportunity to demo their solutions before an audience of IBM partners, customers, and investors.
IBM will provide the companies with a virtual mentorship of monthly one-on-one and quarterly all-hands check-ins for two years after completing the program. The startups will also benefit from a one-year business mentorship, with monthly and quarterly consultations, and the opportunity for the startup to participate in a second in-person demo day.
Companies in the program will be able to access technical workshops from IBM, and take advantage of a 300+ member network of business mentors and technical support. Startups will also have access to up to $10,000 a month in IBM cloud technology credits that can be applied each month to access IBM Cloud Hyper Protect Services. Up to $120,000 in credit can be earned by startups by the end of the program.
IBM will leverage its LinuxONE server platform to power IBM Cloud Hyper Protect Services and provide the kind of highly secure environment necessary for fintech and healthtech companies that need to protect sensitive data in cloud native apps. The highly scalable platform will also ensure that program participants will enjoy maximum uptime and availability.
IBM has been a Finovate alum since 2016 when it demonstrated its Client Insight for Wealth Management solution. The company has also been a participant in our developers conferences, presenting the Implementation of the Hyperledger Project at IBM with Blockchain as a Service at FinDEVr Silicon Valley 2016. Most recently, IBM Security demonstrated its IBM Trusteer New Account Fraud solution at FinovateEurope 2018.
In a marriage between payments innovators from Sweden and Silicon Valley, Trustly has announced that it has agreed to merge with U.S.-based PayWithMyBank. The merger comes a little over a year after Nordic Capital announced taking a majority stake in Stockholm’s online banking payments provider.
“This transformative merger creates the first and only online banking payments network with transatlantic coverage and accelerates our path towards global coverage,” Trustly CEO Oscar Berglund said. He credited PayWithMyBank for being an online banking pioneer going back to 2000. “Together we’re thrilled to be able to offer merchants and billers a unique alternative to card payments,” Berglund said, “allowing them to accept payments from 600 million consumers across Europe and the U.S.”
According to Trustly spokesperson Meredith Popolo, the two companies will continue to operate under their own brands “for now.”
Just this week, we took a look at the rise in M&A activity among fintechs. The news that Trustly and PayWithMyBank will combine into a global payments entity with revenues of more than $120 million (€100 million) in 2018 serves as further evidence of this trend. The merger between payment specialists also supports the trend toward enabling consumers to pay directly from their bank accounts – cutting out the card networks altogether.
Trustly’s straightforward, three-step process makes it easy for consumers to shop and pay directly from their bank accounts. Via the Trustly option during checkout, users select their bank from a drop-down menu and log on as usual. Then they choose the account from which they want to pay, and confirm the payment with the authentication option of their choice. The technology helps merchants improve conversions and reduce churn while providing bank-grade security.
PayWithMyBank CEO Alexandre Gonthier pointed out that the idea to merge with Trustly was in some ways a function of demand. “Our large, U.S.-headquartered customers were all asking us to expand our consumer coverage globally beyond the U.S.,” Gonthier said. “So, joining forces with Trustly, the established leader in our space in Europe, was a natural strategic next step for PayWithMyBank, the emerging leader in the U.S.”
Redwood City, California-based PayWithMyBank was founded in 2012, and provides a high-UX conversion, high-payment authorization, low-cost, no-chargeback alternative to checks as well as other popular payment methods such as Visa, Mastercard, and PayPal. The firm’s client list includes Western Union, First Data, United Way, and a number of social media and telecommunications firms and utility companies.
As a result of the merger, Gonthier will serve as U.S. CEO, where he will oversee the U.S. market and report to Oscar Berglund, who will serve as Group CEO.
Founded in 2008, Trustly demonstrated the Direct Debit feature of its platform at FinovateEurope 2017. Direct Debit enables recurring charges and one-click payments on bank accounts, providing faster, safer transactions for customers and merchants.
More recently, Trustly announced a partnership with Collector Bank to bring instant payments to merchants in the Nordics. Last month, the company introduced its automated invoice payment solution, Pay Your Invoice, for both customers and merchants. With offices in Stockholm, Sliema, London, Orebro, Cologne, Barcelona, and Helsinki, the company celebrated adding its 300th employee this year.
A new strategic investment from ABN AMRO Digital Impact Fund “strengthens the current operational relationship” between the bank and Israel-based cybersecurity innovator ThetaRay, fund director Hugo Bongers said today. The investment, amount undisclosed, adds to the company’s reported $66.5 million in funding.
ThetaRay leverages its big data analytics platform and solutions to provide advanced cybersecurity and risk mitigation for financial services companies. The company, founded in 2013, demonstrated its technology at FinovateFall 2015, and showed how its approach to anomaly detection provides protection against unknown, next generation cyberattacks while delivering low-false positives. ThetaRay’s IntuitiveAI platform helps spot money laundering activity, fraud, and dangerously risky loans, as well as helps firms become more efficient operationally and identify new potential growth areas.
“We’re very proud that ABN AMRO, a customer that benefits from ThetaRay’s intuitive artificial intelligence technology to combat financial cybercrime and operational failures, has now also become an investor,” ThetaRay CEO Mark Gazit said. He praised the company as a “visionary” that recognizes the role of AI-enabled technologies to help financial services companies better serve their customers. “We see ABN AMRO Digital Impact Fund as a true partner for creating a safer world,” Gazit said.
ThetaRay is not the first Finovate alum to receive funding from ABN AMRO Digital Impact Fund. The €50 million corporate venture entity has also invested in Tink, BehavioSec, and Cloud Lending Solutions. The strategic nature of the firm’s investment in ThetaRay, however, brings with it specific dividends, according to Bongers. “ABN AMRO stands to benefit from access to the Israeli ecosystem of cybersecurity and financial crime detection firms, as well as the leading venture capital investors operating in this business, such as JVP (Jerusalem Venture Partners) and OurCrowd,” he said.
Named one of 10 Security Startups to Watch by Network World earlier this year, ThetaRay was honored by the 2019 Fortress Cyber Security Awards last month, earning recognition in the Software & Applications category. The company added veteran marketing talent in May, hiring former Arachnys and Axioma executive Steve Mann as its new CMO.
Bento Pay is a first of its kind digital payment solution that makes it easier for businesses to pay businesses. The technology marries the ease of use of digital, check-free consumer payments with enterprise-grade security and spend controls business owners and managers need.
B2B business payments solutions provider Bento for Business announced the new solution this morning. Available to customers in July, Bento Pay will only require the payee’s email address in order to send payments rather than force fund recipients to set up new accounts or share personal financial information. Funds can be received by single-use virtual card or an ACH transfer.
Highlighting the efficiency of banking and payments in the consumer area, Bento for Business CEO and co-founder Farhan Ahmad believes business payments can be made better. “Businesses today are demanding the same level of convenience and control,” he said. “They want to move away from complex, high-cost workflows towards a solution that is flexible and secure. Bento Pay users can smoothly and securely complete business payments to their suppliers while controlling their cash from one central place.”
As such, Bento Pay is a significant contribution to the company’s product suite, which now features debit and virtual cards, real-time payments, and ACH transfers. The new offering also validates the company’s evolution from a spending and expense management innovator into a holistic payments solution provider for small businesses.
“Until now, we’ve seen no meaningful revolution in the B2B fintech space that can viably address the underserved needs of SMBs,” Ahmad said. “We envisioned Bento as the financial operating platform of choice for SMBs, and the addition of real-time payment capabilities is a continuation of our vision.”
San Francisco, California-based Bento for Business demonstrated its first offering, the Bento Mastercard, a prepaid commercial card solution for SMEs, at FinovateSpring 2015. The card gives owners and managers the ability to empower employees and workers to make necessary business expenditures, while maintaining a high degree of control and transparency into all activity on the card.
Last month, Bento made a pair of major, C-level hires, adding Paula Bachman as Chief Financial Officer and Tracey Hansen as Chief Marketing Officer. Bachman is most recently from data analytics firm, Networked Insights. Hansen was formerly CMO of education software company, Renaissance Learning. This spring, the company announced a partnership with Visa that added a new payment card option for small business owners using the Bento for Business platform.
With $18.5 million in funding from investors including Comcast Ventures, Edison Partners, and MissionOG, Bento for Business was one of 15 investors to back Bipsync, a research automation platform for investors, at the beginning of the year. Bento was founded in 2014.
In a Series E round led by MissionOG and General Atlantic, cloud-based digital banking platform provider Alkami Technology has raised $55 million in new funding. The investment takes the company’s total capital to more than $225 million, and will be used to help expand operations and fuel innovation at the Plano, Texas-based fintech.
Also participating in the round were existing investors including S3 Ventures and Argonaut Private Equity.
Company CEO Mike Hansen put the funding in the context of Alkami’s tenth anniversary, which the company will celebrate later this year. “We are very honored and excited about the support our existing investors evidenced again by this round,” Hansen said. “Their long-term commitment and support has allowed us to continue to boldly invest in innovation, people, and best-in-class service.” Hansen referred to the firm’s investors as “one of Alkami’s most potent sources of strength and results.”
Alkami Technology demonstrated its money management and financial awareness technology at FinovateSpring 2009 as iThryv – making the company one of Finovate’s oldest alums. Since then, the company has grown into a digital banking platform provider with more than 130 financial institution clients and more than six million registered users in the U.S.
General Atlantic Vice President Raph Osnoss credited Alkami’s “user experience, product features, platform architecture, and data security” for the company’s growth in the digital banking space. Alkami was featured in the 2018 Inc. 5000 Fastest Growing Companies roster, as well as in Deloitte’s 2018 Technology Fast 500 in North America. Recent partnerships for the company include a platform deployment with Alliance Catholic CU of Michigan ($40 million in assets), and a deal with Green Bay, Wisconsin-based Nicolat National Bank ($3 billion in assets).
Named one of the Best FinTechs to Work For by SourceMedia (publishers of American Banker), Alkami also has made two C-suite moves in recent months. The company appointed former Authentix CMO Holly Tsourides as Chief Marketing Officer in February and named former RealPage executive Bryan Hill as Chief Financial Officer in April.
Digital core banking technology company Five Degrees has partnered with Bankingblocks to help challenger banks and payment companies offer new banking solutions to their customers. The firm announced this week that it will leverage Five Degrees’ Matrix solution as its digital core banking platform in order to launch a wide variety of banking services to clients and partners around the world.
“We are looking forward to integrating additional services together into the Five Degrees platform over the coming 12 months to add even more value to our fintech customers,” said Bankingblocks CEO Daria Rippindale. “Five Degrees are the perfect core-banking platform for us, as their flexibility and modularity allow us to expand our banking and payment blocks easily and with speed.”
Bankingblocks provides a modular banking service to the fintech industry. The company combines a traditional European payment institution, agency banking, and acquiring licenses to provide a wide range of products and services including acquiring, alternative payments and banking services (IBANs), foreign exchange, clearing, and card issuing. Customers of Bankingblocks can also access solutions like integrated core banking platforms, front-end banking, and acquiring gateway services. The company’s modular approach enables customers to choose the specific configuration of financial services solutions they need, saving time and money and reducing the complexity of adding new digital offerings.
“It’s great to see how Bankingblocks is leveraging our digital core banking technology to provide ready to go modular banking services to existing and new fintechs,” Five Degrees CEO and co-founder Martijn Hohmann said. “Bankingblocks have built a great proposition by providing modular banking services and we are proud that we are supporting this with our digital core banking platform in the cloud.”
Five Degrees demonstrated its ability to build and configure a complete, end-to-end retail bank in the cloud at FinovateEurope 2019. The company’s “next-next-finish” process and UI enables professionals without IT experience to choose the type of app, the necessary modules, components, and activities, and have a bank-as-a-service ready to go in 45 minutes.
Earlier this year, we highlighted Five Degrees in our Earth Day feature on ways fintechs are helping businesses and consumers develop environmentally-friendly habits. Founded in 2010, the Netherlands-based company has raised $11.3 million (€10 million) in funding from investors including Karmijn Kapitaal and Velocity Capital Private Equity.
London-based fintech Paysend announced late last week that it had reached its fundraising goal of $5.3 million (£4.2 million) after a three-day campaign on Seedrs. The company noted that more than 200 investors have participated in funding round, which was led by VC’s Plug & Play, Digital Space Ventures, and Marcorp Fintech. The funding puts Paysend’s total capital at more than $25 million and gives the company a valuation of more than $158 million (£1.25 million).
“We believe that (transferring money) should be as easy and immediate as sending an email, and finally the digital age is being able to facilitate this,” Paysend CEO Ronald Millar explained. He blamed the banking and payments industry for “conditioning” customers into believing that the difficulty of transferring money justified the complex process that most bank customers endure. “I have always been a firm believer that earning money can be tough but spending shouldn’t be,” Millar said.
The company said the funds will be used to fuel Paysend’s international expansion goals, including new partnerships with FIs. Paysend is currently active in 70 countries around the world, and Millar noted that the company is adding new customers at a pace of 2,000 a day. In fact, Paysend’s funding announcement comes as the company reports adding another six countries to its money transfer network. India, South Africa, Sri Lanka, Nepal, Pakistan, and Turkey are all slated to be brought onboard this year.
“We are on a major expansion path,” Millar told The Courier UK. “We’ve just launched the global account and we want to continue to grow the business and establish the operational team and launch more marketing.”
Founded in 2016 and headquartered in London, U.K., Paysend demonstrated its Global Account at FinovateSpring 2018. The solution enables users to store both fiat and crypto currencies in their wallet, exchange funds between currencies, send funds to other Global Accounts, and make payments from their account both online and in-person. The account comes with a prepaid card (both physical and virtual) that can be linked to the currencies in the user’s wallet, enabling them to make everyday transactions in the currency of their choice as easily as spending with a debit card. Users can also use their Global Account card to withdraw cash in 125 currencies.
Paysend has more than 750,000 users of its technology, and facilitates more than two million transactions a month. In May, the company announced the launch of its new payments app, Paysend Link, which enables users to send money to anyone, anywhere using only the recipient’s mobile phone number. Also in May, Paysend reported that its new stablecoin would be available on the Stellar Network this summer.
As Finovate goes increasingly global, so does our coverage of financial technology. Finovate Global: Fintech News from Around the World 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 Southern Asia
ACI Worldwideinvests in Mumbai, India-based payments innovator, Mindgate Solutions.
Pakistan’s Bank of Khyber to deploy new core banking system from Temenos.
Infosysearns recognition as a ‘leader’ in the IDC MarketSpace: Worldwide IT Service Management (ITSM) Implementation Services 2019 Vendor Assessment.
Latin America and the Caribbean
Brazilian fintech Creditas picks up $200 million investment from Japan’s Softbank, boosting the company’s valuation to $700 million.
Crowdfund Insider reveals the 3 Biggest Fintech Trends Shaping Latin America.
Amero-Isatek to open its first brick and mortar cryptocurrency exchange in Mexico’s Nuevo Leon, Monterrey.
Asia-Pacific
Splititpartners with EFTPay to bring installment payments to merchants in Hong Kong and Macau.
Vietnam’s MSB (Maritime Bank) picks SunTec for its customer centricity system.
Morocco-based BMCE Bank of Africa to leverage technology from Temenos to drive new corporate banking and trade finance operation in China.
Sub-Saharan Africa
Global Finance investigates the rise of Africa’s entrepreneurial class in the private banking industry.
Finextra looks at three reasons why fintech is driving change in Africa.
Standard Bank introduces new Mastercard-powered ditital trade solution, SimplyBlu, for SMEs in South Africa.
Central and Eastern Europe
Wallet, the PFM app from Prague-based fintech BudgetBakers, earns license from Czech National Bank to join the bank’s APIs.
New lending platform for “multi-credit” services, Omnicredit, goes live in Romania.
Global Finance interviews Alexey Krgulov, Acting Director of Digital Business Platform with Sberbank.
Middle East and Northern Africa
Turkey’s Isbank partners with Russian PSP Yandex.Checkout to support e-commerce between the two companies.
Disrupt Africa features MerQ, an Egyptian startup that leverages AI to promote financial literacy.
AMEinfo publishes its report on banking and fintech in the Middle East and Africa.
One of the big questions about first quarter funding for Finovate alums over the past few years asked: which is the truer barometer of the fintech funding environment: the post-election parsimony of Q1 2017 or the billion+ investment rebound of Q1 2018?
We now have our answer: Alums in the first quarter of 2019 racked in more than $468 million in funding. This figure more than doubles the Q1 2017 total, and represents financings from 20 companies that have demoed at our conferences in the past (both Finovate and FinDEVr). Q1 2019 totals are less than that of the previous two first quarters in 2016 and 2015, but on a “per alum funded” basis this year’s first quarter is comparable to all but 2018’s historic start.
Unlike some quarters in which overall totals are boosted by a single outsized investment (Credit Karma’s $500 million fundraising in Q1 of last year comes to mind), the first quarter investments for alums this year were in the moderate range. That said, adding up to $428 million, this quarter’s top 10 equity investments make up a sizable 91.5% of the quarter’s total funding.
Top 10 Equity Investments
Stash: $65 million
Tink: $63 million
Coverhound: $58 million
Nutmeg: $58 million
Personal Capital: $50 million
Mambu: $34 million
Featurespace: $32.2 million
Socure: $30 million
SpyCloud: $21 million
Zafin: $17.2 million
Here is our detailed alum funding report for Q1 2019.
January: More than $111 million raised by five alums
If you are a Finovate alum that raised money in the first quarter of 2019 and do not see your company listed, please drop us a note at research@finovate.com. We would love to share the good news! Funding received prior to becoming an alum not included.
The new Secure Agreement Automation cloud solution from OneSpanoffers fully-digital account opening while fighting application fraud. Launched this week, the technology leverages open APIs to deliver identity verification, eSignature, workflow, and an end-to-end audit trail in a single account opening solution.
“The battle for banking consumers is being waged based on the quality of the digital experience, which demands both ease of use to reduce abandonment rates and strong security to lessen account fraud,” OneSpan CEO Scott Clements explained. “Secure Agreement Automation represents the fulfillment of OneSpan’s promise to help financial institutions reduce costs and increase growth by establishing trusted identities, devices, and transactions throughout the customer journey.”
The cloud-based solution automates new customer acquisition, identifying qualified customers by running applications through its identity verification hub. This hub relies on credit checks, multifactor authentication, and biometric tools like facial recognition to limit false positives and customer abandonment. The connection to OneSpan’s Trusted Identity (TID) platform means FIs can add capabilities like risk analytics and intelligent adaptive authentication.
Aite Group Fraud and AML practice Research Director Julie Conroy called OneSpan’s Secure Agreement Automation offering part of a “win-win” set of solutions that companies are providing to banks to make customer onboarding faster and more secure. “Even as application fraud attacks continue to escalate, research shows that improving the customer experience continues to be the number one drive of business cases as financial institutions invest in new account onboarding solutions,” Conroy said.
With 10,000+ customers, including more than half of the top 100 global banks, OneSpan rebranded from VASCO back in May of last year. As VASCO, the company participated in FinovateFall 2017, demoing digital lending and document management technology from its recent acquisition eSignLive.
Last month, OneSpan picked up the 2019 Global Customer Value Leadership Award from Frost & Sullivan for its Intelligent Adaptive Authentication solution. Also in May, the company announced that the largest community bank in the Washington, D.C. metro area, EagleBank, had deployed OneSpan’s mobile authentication technology. Other 2019 partnerships for the company include collaborations with United Bulgarian Bank and cloud portal ezidox.
Headquartered in Chicago, Illinois, OneSpan is a publicly-traded company on the Nasdaq exchange under the ticker OSPN. The company has a market capitalization of $557 million.
A new partnership between U.K.-based payment and loyalty marketing platform Yoyo and Mastercard’s mobile payment service, Pay by Bank (PbBa), will bring a new, secure and fast payment option – and merchant-specific, personalized rewards – to high street retail.
The new offering is expected for later in the year for both retail and bank customers. It will enable users to make transactions using Pay by Bank in physical stores, and earn retail specific loyalty, rewards, and other personalized offers.
“We are delighted to be working with Mastercard and Pay by Bank app,” Yoyo CEO Michael Rolph said. “We’ve always believed that adding both security and value to the payments process is crucial for the future of bricks and mortar retail, and this partnership is going to significantly enhance the customer experience for PbBa users.”
Pay by Bank was developed by Mastercard’s Vocalink division and enables consumers to make payments from their bank account via their mobile banking app without requiring additional password verification. Launched in 2016, the app offers bank grade security which, combined with Yoyo’s double tokenization technology, keeps payment data and user identity protected.
“The combined Yoyo and Pay by Bank app proposition will provide both customers and retailers with added speed and security at the point of sale,” Rolph said, “as well as an omnichannel payment and loyalty experience that is unrivaled in the market.”
With more than 1.5 million users – including 750,000+ active monthly users – and processing three million transactions a month, Yoyo demonstrated its retailer-specific bank card loyalty offering at FinovateEurope earlier this year. Just a few weeks ago the company announced that former Mastercard executive David Yates would join Yoyo as chairman.
In April, the company partnered with PAUL UK to help the French bakery launch its first mobile payments and loyalty app. Yoyo began 2019 teaming up with SOHO Coffee to build a payments and loyalty solution for the artisan coffee chain.
Founded in 2013, Yoyo has raised $60.3 million in funding. SOSV and Hard Yaka are among the company’s investors.
