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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Yahoo has acquired social investing platform, Commonstock. Terms were not disclosed.
The acquisition will bring investor insights to the company’s Yahoo Finance brand.
Launched in 1997, Yahoo Finance has more than 150 million monthly users.
Yahoo has acquiredCommonstock, a San Francisco, California-based social investing network. Terms of the acquisition were not disclosed.
Yahoo Finance president Tapan Bhat said that the purchase would help create a “singular destination for all our customer’s financial needs.” He praised Commonstock for creating a “trusted community” and for “sharing high-quality insights and knowledge that help everyday investors create wealth.”
Specifically, the acquisition will add investor insights to the Yahoo Finance platform. Commonstock offers a social network, integrated with brokerages, where retail investors and traders can discuss trading and investing strategies, portfolio performance, and more. Commonstock provides features such as real-time alerts to let users know when investors they are following are making trades. This helps facilitate the exchange of investment strategies, fostering a collaborative investing climate. The network has more than $10 billion in connected assets.
David McDonough, Commonstock founder and CEO, said the acquisition was an opportunity to “build community and products on the largest consumer finance stage.” Note that Yahoo Finance currently has more than 150 million monthly users. McDonough added, “This acquisition will allow us to accelerate our mission at scale, emphasizing community-driven knowledge and ensuring the amplification of quality insights to separate signal from noise.”
The acquisition was personal for McDonough, who said that Yahoo Finance made a major impact on his career trajectory. In his statement, he credited the company’s message boards for helping him learn about the stock market during the financial crisis. He said that the combination of Yahoo’s reach and Commonstock’s expertise would be a significant value for investors.
Launched in 2020, Commonstock has raised more than $34 million in funding. The company includes Coatue, QED, Floodgate, Upside Ventures, Resolute Ventures, and Abstract Ventures among its investors. Individual investors ranging from Bill Ackman and Ari Emanuel to Turner Novak and Jill Carson also have backed the startup.
Yahoo Finance offers free stock quotes, timely business news, and portfolio management resources. Additionally, the platform provides mortgage rate data and other information to help individuals better manage their finances. Launched in 1997, Yahoo Finance is among the top 20 largest news and media websites. The platform began covering cryptocurrencies and cryptocurrency news in 2017.
A pair of Finovate alums – Backbase and SavvyMoney – have forged a new partnership.
The partnership will integrate SavvyMoney’s Credit Score Insights into the Backbase Engagement Banking Platform.
The integration will enable customers to access real-time credit scores from within their banking apps.
Engagement banking company Backbaseannounced a strategic partnership with credit score solutions firm and fellow Finovate alum SavvyMoney. The partnership will integrate SavvyMoney’s credit score solution, Credit Score Insights, into the Backbase Engagement Banking Platform. This will give community banks and credit unions the ability to provide their customers with real-time credit scores directly from their banking app.
“There’s a growing demand from consumers for guidance from their banking apps to help them make informed financial decisions,” Backbase VP of Product Management for the U.S. mid-market Brian McNutt said. He added that it was “crucial” that customers and members see community banks and credit unions as “trusted financial advisors,” and that doing so would help these FIs compete with their larger rivals. “That’s the idea behind our Fintech-as-a-Service offering,” he added, “to reduce our customers’ time-to-market and time-to-value, so FIs can focus on innovation.”
SavvyMoney’s Credit Score Insights helps FIs offer tailored financial recommendations and advice to their customers and members. The technology also helps FIs manage their marketing efforts to build hyper-personalized offers and deals. The increased value brought to banking apps courtesy of the Credit Score Insights integration also will help improve stickiness and app usage trends. At the same time, end users will benefit from a deeper understanding of the factors that contribute to their credit score. They will also be able to update their credit report, run credit score simulations, and build an action plan to set and meet credit score goals.
“As a company, we are committed to empowering individuals to achieve their financial goals and improve their overall financial well-being,” SavvyMoney President and CEO JB Orecchia said. “We’re thrilled to collaborate with Backbase to make crucial credit score functionality easily accessible via banking apps.”
Formerly known – and first appearing on the Finovate stage – as DebtGoal, the company rebranded as SavvyMoney in 2011. In the years since then, SavvyMoney has forged partnerships with more than 1,150 financial institutions and driven $3.8 billion in loans for clients courtesy of its SavvyMoney offer engine. The company unveiled its pre-approval marketing solution earlier this year – in partnership with Credit Union of Southern California (CU SoCal). SavvyMoney was named a “2023 Best Place to Work in the Bay Area” by Fintech Finance in May.
A Finovate alum since 2009, Backbase has won Best of Show on four different occasions. Most recently demoing its technology last September at FinovateFall, Backbase serves more than 120 financial institutions around the world. The company’s Engagement Banking Platform gives FIs a unified platform designed to respond to every step of the customer journey – from onboarding and servicing to loyalty and loan origination. Founded in 2003 and headquartered in Amsterdam, Backbase also recently announced partnerships with Vietnam’s Orient Commercial Joint Stock Bank (OCB) and business and IT consulting provider Valleysoft.
TreviPay, a B2B payments and invoicing network, announced support for cross-currency sales between businesses.
The new capability will serve as an “enhanced trade credit” and will help businesses increase buyer loyalty.
Headquartered in Kansas, TreviPay made its Finovate debut last September at FinovateFall.
B2B payments and invoicing network TreviPay announced support for cross-currency sales between businesses. The new capability will enable TreviPay to facilitate transactions in which buyers want to be invoiced in and to pay with a currency that is different from the currency disbursed to the merchant. Referring to the capability as an “enhanced trade credit,” TreviPay believes it will help businesses boost buyer loyalty.
Brandon Spear, TreviPay CEO, pointed out that merchants operating on a global scale have unique challenges when it comes to their more diverse customer base. “Not all merchants are able to establish a bank account in every preferred currency of their customers,” Spear said. “TreviPay’s enhanced technology and cross-currency solution empowers geographical expansion and makes global trade more accessible to merchants across all sales channels.”
Founded in 1980 and headquartered in Overland Park, Kansas, TreviPay made its Finovate debut last year at FinovateFall. At the conference, the company showed how its Small Business Supplier Payments Network enables banks tap into the small business B2B trade credit market and expand their small business product offerings. In her presentation, TreviPay SVP and Head of Small Business Markets Rissi Lovern explained the financial burdens placed on small business suppliers as an opportunity for banks.
“Every day our small business suppliers act as a bank for their business customers,” Lovern said to the FinovateFall audience last September. “Oftentimes these business customers are much larger than they are. In fact, in the U.S., they extend five trillion dollars in trade credit annually, financing less than 15% of those extensions, and waiting an average of 51 days to get paid.”
Small business suppliers want real-time, risk-free, debt free payments, Lovern said. Business buyers, at the same time, demand trade credit because it is a key component of their working capital stack. TreviPay’s Small Business Supplier Payments Network responds to both needs.
In the year since its Finovate debut, TreviPay has teamed up with payments orchestration technology provider BlueSnap and acquired payments platform Apruve, and forged partnerships with SME cashflow specialist Cloudfloat and SaaS-based marketplace management solution Mirakl. More recently, the company announced a partnership with Samsung Electronics Australia. The deal will enable Samsung’s direct-to-consumer business to extend payment terms and invoice-based purchasing to B2B buyers.
“In today’s world, enabling merchants to extend credit to their buyers in a streamlined and convenient embedded payment experience is essential to compete globally and drive customer loyalty,” Spear said.
Operating in 32 countries and in 20 currencies, TreviPay processes more than $6 billion in transaction volume annually.
Will 2023 be known as the year AI came of age? With the advent of Generative AI and tools like ChatGPT, the technology world got an unexpected boost this year as interest in the potential for artificial intelligence soared.
What does the surge in interest and activity in AI mean for financial services? How can fintechs leverage the technology to help banks, credit unions, and other financial services organizations and institutions better serve their customers with more choice, more security, and more efficiency?
We caught up with Dr. Benjamin Harvey, founder and CEO of AI Squared. Headquartered in Washington, D.C., AI Squared made its Finovate debut earlier this year at FinovateSpring and will return to the Finovate stage next month for FinovateFall. The company specializes in integrating artificial intelligence and machine learning into existing apps. We discussed the rise of AI, the impact AI might have on financial services, and the work of AI Squared in helping businesses take advantage of the emerging technology.
We also talked about the challenges Harvey has faced as an African American entrepreneur and founder in the technology industry. As we commemorate Black Business Month here in August, we are also happy to share his insights and advice on what African American founders and entrepreneurs need to keep in mind when starting out.
Let’s start with a big picture question: what is overhyped about AI, what’s underhyped, and what are we getting right?
Benjamin Harvey: There’s a lot of hype around AI, and some of it is warranted, but not all. One of the most overhyped ideas is that AI will replace humans in the workforce on a large scale. While AI can automate certain tasks, it can’t replicate the creativity, empathy, and critical thinking that humans bring to the table. On the flip side, what’s underhyped is the potential for AI to be simple while being useful. Many AI products have incredible potential but are too complicated for widespread adoption. Simplifying AI and making it more accessible can unlock its true potential and bring about transformative change across industries.
What most observers and commentators are getting right about AI is that it’s here to stay. AI is not just a passing trend; it’s a technological revolution that’s reshaping the way we live and work.
Now let’s turn to your company. What problem does AI Squared solve and who does it solve it for?
Harvey: AI Squared is a platform designed for product owners, data scientists, and enterprise leaders. We empower users to accelerate both predictive and generative AI projects, measure their benefits, and drive significant revenue growth and cost reduction. Our solution is industry-agnostic and loved by our users.
We address a critical issue in the AI industry: 90% of AI and ML models never make it into production or use, largely due to the time and cost involved. AI Squared tackles this problem head-on, reducing the time to production and use of AI and ML models from an average of 8 months to 8 hours or less. We provide a secure environment for accelerating AI projects, enabling users to measure benefits, use no/low code solutions, and deliver trustworthy AI results. By streamlining the AI deployment process, we help organizations harness their data to drive game-changing AI capabilities, driving innovation and growth.
How does AI Squared solve this problem better than other companies, other solutions?
Harvey: We understand that the key to successful AI adoption is seamless integration into existing workflows. Our solution is designed to fit effortlessly into the applications that our customers already use on a daily basis. By embedding AI capabilities directly into these familiar tools, we eliminate the need for users to switch between different platforms, thereby reducing friction and increasing efficiency. This approach not only enhances the user experience, but also drives greater AI adoption across the organization. Our technology is versatile and accessible, making it a valuable asset for teams at all levels, from operational staff to executive leadership. The result is a more informed, agile, and productive organization that can leverage AI to its full potential.
What is your primary market? What has their response to your technology been like?
Harvey: Our primary market is financial services and the response has been overwhelmingly positive! Financial services organizations are constantly seeking ways to improve efficiency, reduce costs, and enhance customer experiences. And our platform has been proven to address these needs by accelerating the deployment of AI and ML models, making it easier for these organizations to harness the power of their data.
When clients see how we can reduce AI implementation from 8 months to 8 hours they’re blown away. We’re proud to say that we’ve turned our clients into our biggest champions. The value we provide goes beyond just the technology; it’s about the tangible benefits that our platform brings to their operations. They appreciate the speed at which they can now bring AI projects to fruition, the ease of integration with their existing systems, and the measurable ROI that our platform delivers.
Are there any deployments or features of your technology that are especially noteworthy?
Harvey: First and foremost, we prioritize data security and privacy. Unlike many other AI platforms, we don’t store or copy our customers’ data. This is a crucial differentiator, especially for organizations in highly regulated industries like financial services, where data privacy and security are paramount.
We offer flexible deployment options to suit the specific needs of our customers. Our on-premises deployment ensures that all data remains within the customer’s own infrastructure, providing an added layer of security. For those who prefer a cloud-based solution, we offer a multi-tenant deployment that still maintains robust data privacy and security measures.
One of our standout features is our Human-in-the-Loop (HITL) capability. This feature allows human verification and corrections to be made to the data generated by Generative AI before it’s used in critical business applications. This ensures a high level of accuracy and reliability in the data, which is essential for making informed business decisions. Our HITL feature is particularly valuable for organizations that need to ensure the utmost accuracy in their AI-generated data, such as those in the financial services sector where even small errors can have significant consequences.
You and many of your team have significant backgrounds in academia and the government. How has the transition into a more entrepreneurial space been?
Harvey: The transition from academia and government to the entrepreneurial space has been both challenging and rewarding. Initially, it was a bit of a culture shock to shift from a focus on the technical aspects of AI to a more value-driven approach. In academia and government, the emphasis is often on the theoretical and technical aspects of AI, whereas in the entrepreneurial space, the focus is on delivering tangible value to customers.
But once we got past the initial adjustment, we found that our diverse backgrounds gave us a unique perspective and a competitive edge. While our experience in academia has equipped us with a deep understanding of the technical intricacies of AI, our government experience has given us insights into the importance of security and compliance, especially when dealing with sensitive data.
We’ve been able to leverage these insights to develop a platform that not only delivers powerful AI capabilities but also addresses the specific pain points and challenges faced by our customers. Our approach is rooted in a deep understanding of both the technical and practical aspects of AI, and we’re able to offer solutions that are tailored to the unique needs of each customer.
Left to right: AI Squared’s Benjamin Harvey, Alvin McClerkin (COO), and Michelle Bonat (CTO) at FinovateSpring.
We also want to showcase AI Squared as part of our Black Business Month commemoration. What challenges have you faced as a Black founder and entrepreneur? What advice would you give?
Harvey: Launching a company as a Black entrepreneur, particularly in the AI/technology space, comes with its own unique set of challenges. One of the most significant hurdles is the lack of resources and representation in the industry. As a Black founder, I often found myself navigating uncharted territory without the benefit of a robust network or role models to look up to. However, I believe that these challenges can be overcome with determination, persistence, and a strong support system.
My advice to aspiring Black tech founders is to build a solid network of mentors, advisors, and peers who can provide guidance and support along the way. Don’t be discouraged by setbacks or rejections; instead, use them as learning opportunities to refine your approach and strategy. Do your homework, stay informed about industry trends, and be prepared to articulate the value proposition of your technology clearly and convincingly. Most importantly, reach out to other Black founders and executives who have walked the path before you. Their insights and experiences can be invaluable as you navigate the complexities of the tech startup ecosystem.
Remember, you are not alone in this journey. There is a growing community of Black tech founders and professionals who are eager to support and uplift each other. By working together, we can break down barriers, create more inclusive opportunities, and pave the way for future generations of Black tech entrepreneurs.
Speaking of African-Americans, AI Squared is headquartered in Washington, D.C. What is the technology scene like there?
Harvey: D.C. is a hotbed of tech innovation, especially in security and intelligence. Being close to the Federal Government and defense agencies, we’re in a unique spot to work on projects that matter for national security. It’s a vibrant scene here, with big tech firms, cool startups, and research hubs all mixing it up. We’re a tight-knit community, always meeting up, sharing ideas, and pushing each other to innovate.
The best part is that if your tech is good enough for national security, it’s good enough for anything. We’re talking finance, healthcare, consumer goods – you name it. Being in D.C. gives us the credibility to branch out into these sectors. It’s an exciting place to be, and we’re happy to be part of it.
You demoed your technology at FinovateSpring earlier this year. What was that experience like for you?
Harvey: The experience of demoing our technology at FinovateSpring was exciting and valuable for us. It provided us with a unique platform to showcase our product to a large audience of stakeholders, and to connect with key decision-makers in the financial services industry. We got valuable feedback on our product.
But the demo wasn’t without its challenges. Some technical difficulties with signing in and that, combined with the strict time constraints of the event, impacted our demo. These are things that tend to happen when demo-ing in a new forum. But it’s in our DNA to adapt and we did – and received positive feedback from attendees and made valuable connections that have since led to fruitful discussions. Overall, the experience was a great opportunity for us to showcase our technology, connect with industry leaders, and learn from the challenges we faced.
What can we expect from AI Squared over the balance of 2023 and into next year?
Harvey: Our primary goal for AI Squared is to continue delivering exceptional value to our customers, with a focus on the financial services sector. We’re committed to optimizing our product to enhance the customer experience and build strong, lasting relationships. As we approach the end of 2023, we are on track to exceed our internal goals, thanks to the dedication of our team.
Looking ahead to next year, we have ambitious plans for growth. We’re preparing to raise our next round of funding with a strategic team of investors who share our vision. This funding will enable us to continue providing world-class service and products. We’re also planning to expand our product offerings and explore new markets. We are excited about the opportunities that lie ahead and look forward to sharing our progress with you!
Cybersecurity company VU and digital payments solutions innovator NovoPayment announced a strategic partnership today.
The alliance will make VU’s fraud protection technology available to users of NovoPayment’s banking-as-a-service platform.
Headquartered in Miami, Florida, NovoPayment was co-founded by CEO Anabel Pérez in 2007.
Cybersecurity firm VU will join the 60-partner application network of digital payments solutions company NovoPayment. Headquartered in Miami, Florida, NovoPayment offers a banking-as-a-service platform that leverages its network of open APIs, partnerships, and third-party integration to help its customers scale and adapt.
“Collaborating with NovoPayment allows us to expand our vision and address new challenges in the field of cybersecurity in the financial sector,” VU founder and CEO Sebastián Stranieri said. “Together we are committed to generating a positive impact by creating digital solutions to improve the quality of life for citizens and organizations.”
NovoPayment offers services within three principal categories: digital banking, payment infrastructure, and card solutions. The company helps its clients enhance their existing systems to generate new deposits, transaction streams, and customer experiences. In addition to its Miami HQ, NovoPayment maintains offices in Mexico, Colombia, Peru, Chile, and Ecuador, enabling the company to serve a range of customers across the Americas. The company’s clients include financial institutions and acquirers, as well as neobanks and fintechs.
“This alliance will enable us to enhance our payment solutions, providing users with an even safer and more reliable experience,” NovoPayment CEO and co-founder Anabel Pérez said. “We are excited to work with VU, a leader in cybersecurity, to ensure the peace of mind of our clients in the digital world.”
NovoPayment’s partnership with VU comes a little over a month after the company unveiled enhancements to its Orchestra technology. Orchestra is an advanced, cloud-based middleware orchestration layer of its BaaS platform. The technology helps financial institutions modernize their infrastructure and now features enhancements that add capabilities and new API-based use cases. Perez called Orchestra “a streamlined, convenient way to unify user experiences and fast-track innovation while ensuring compliance.”
Earlier this year, NovoPayment and Forrester Research published research on digitization trends at smaller banks and credit unions. In the report, the authors highlighted the compatibility with existing infrastructure as a major hurdle for digitization. Another challenge was the lack of staff to support customer-service based digital strategies. The report concluded that strategic partnerships can help smaller FIs bridge the gap between themselves and their larger competitors.
Mahalo Banking and Larky have announced an expanded partnership to enhance account holder engagement for Mahalo clients.
The partnership will integrate Larky’s nudge platform into Mahalo’s online banking platform.
Larky made its Finovate debut in 2014. Mahalo Banking will make its Finovate debut next month at FinovateFall.
An expanded partnership between a pair of Finovate alums is designed to help boost account holder engagement. Mahalo Banking, a banking solution provider for credit unions, and account holder engagement technology company Larky announced this week that they are building on their relationship by integrating Larky’s nudge technology into Mahalo’s online banking platform.
“Our partnership with Larky enables us to offer our credit union clients an invaluable tool for member engagement at a time when the market needs new approaches to nurture and grow depositor relationships,” Mahalo Banking co-founder and COO Denny Howell said.
The integration with Larky’s nudge platform will give account holders notifications about the different product and service offerings from their financial institution. Notifications also alert account holders to contextually relevant information about their branch. Financial institutions benefit from access to analytics and A/B testing to learn how their customer and member engagement programs are working. Mahalo customers will also be able to access Larky’s nudgeScore. This solution leverages AI to predict the performance of new push notifications.
“We’re thrilled to expand our partnership with Mahalo, opening doors for their clients to harness the power of our nudge platform’s tailored and proactive engagement capabilities,” Larky VP of Growth Scott Brown said. “This reinforced partnership interweaves the unique assets of both organizations, bolstering the digital banking landscape for consumers and fostering expansion for community based financial institutions.”
August has been a busy month for the Ann Arbor, Michigan based company. Larky just reported that Innovations FCU has gone live with its customer engagement platform. And a few days ago, Larky announced a collaboration with credit union technology partner Trellance and Michigan State University Federal Credit Union (MSUFCU). The goal of the partnership is to build a unique, data-centric solution that leverages enhanced, AI-driven segmentation and targeting for MSUFCU. This will enable MSUFCU to create and execute more engaging campaigns to boost tap rates and increase engagement.
Founded in 2012 and headquartered in Ann Arbor, Michigan, Larky made its Finovate debut at FinovateFall in 2014.
Mahalo Banking will be making its first Finovate appearance next month at FinovateFall. The company is a Credit Union Service Organization (CUSO) that serves as a banking partner for credit unions. The company’s platform features deep integrations into credit union cores to provide robust features sets across all delivery platforms in order to deliver a true omni-channel experience. Mahalo is also unique insofar as its platform features functionality to support customers with cognitive distinctions such as dyslexia, autism, epilepsy, visual impairments, and more.
Like Larky, Mahalo also has been on a furious partnership-making pace this year. Last month, Mahalo announced a partnership with Gerber Federal Credit Union, a Michigan-based financial institution with $225 million in assets. In June, Mahalo teamed up with RiverLand FCU, an FI based in New Orleans with more than $300 million in assets. Also, in May, Mahalo announced new partnerships with two credit unions: ParkView FCU and Rock Valley Credit Union. ParkView FCU is based in Harrisonburg, Virginia, and has $350 million in assets. Rock Valley Credit Union is headquartered in Loves, Park, Illinois, and has assets of $150 million.
Mahalo Banking is based in Troy, Michigan. Jim Stickley is CEO.
Courtesy of a just-secured regulatory approval from the National Futures Association, Coinbase’s U.S. customers will soon get the opportunity to trade futures contracts on cryptocurrencies. Coinbase’s Coinbase Financial Markets has been granted authority to operate as a Futures Commission Merchant (FCM) and offer eligible customers in the U.S. access to crypto futures trading on the Coinbase platform.
In a blog post at the Coinbase website, company Head of Institutional Product, Greg Tusar called the approval a “watershed moment” in the project to bring regulated cryptocurrency products to U.S. customers. The ruling comes as Coinbase is at odds with other regulatory bodies – such as the SEC – over its operating practices.
The ruling also comes at a time when the crypto derivatives market around the world has climbed to 75% of all crypto trading volume. Tusar called this market “a critical trader access point.” This is because crypto derivatives enable traders to participate with more leverage and less upfront capital, as well as give cryptocurrency holders the ability to express long and short positions, and hedge risk.
“Where regulations are clear and sensible, we will work with regulators to receive the authorizations needed to offer products that align with our purpose of using crypto to update the financial system to advance economic freedom and opportunity,” Tusar wrote.
Coinbase made its Finovate debut in 2014. The San Francisco, California-based fintech was founded in 2012.
eToro’s Crypto Trends
Social trading and investment platform eToro announced a new partnership to help its customers stay on top of the latest information about cryptocurrencies. The firm has teamed up with analysis company Reflexivity Research in a content partnership called “BTC etc.” that will provide a weekly overview of the cryptocurrency market as well as a monthly podcast. The weekly overview will focus on key trends. The podcast will feature experts from eToro, Reflexivity Research, and the broader cryptocurrency industry.
“As a crypto pioneer, we see it as our responsibility to provide accessible, timely, and relevant content for our users,” eToro Editor in Chief Mati Alon said. “As the market matures, cryptoassets deserve the same level of attention and coverage as other financial assets. We are excited to collaborate with Reflexivity to increase understanding of crypto.”
A Finovate alum since 2011, eToro has won Best of Show at each of its six Finovate appearances. The company offers trading and investing in stocks, options, and exchange-traded funds (ETFs), as well as cryptocurrencies. eToro offers 0% commissions, the ability to trade fractional shares, and a social network to enable traders and investors to benefit from the wisdom of the platform’s top performers.
EToro has become increasingly bullish on the prospects for cryptocurrencies. The company’s Global Markets Strategist Ben Laidler was quoted earlier this week highlighting three key developments that could put cryptocurrencies back on track by making it easier for institutions to participate in the market.
CBDCs Gain Ground in Brazil, Raise Doubts in Canada
The arguments for and against central bank digital currencies (CBDCs) got an international airing of sorts in recent days.
In Brazil, the country’s central bank has given its CBDC an official name – and logo. Commonly referred to as the “digital real,” the Brazilian Central Bank has decided to call its new digital currency, the Drex. The name refers to both the assets colloquial name, “Real Digital,” with an “e” for “electronic” and an “x” to represent a variety of notions including the concept of “modernity and connection.”
“Drex arrives to make life easier for Brazilians” a press release from the country’s central bank pronounced. “It will provide a secure and regulated environment for developing new businesses and more democratic access to the benefits of the economy’s digitization, both for individuals and entrepreneurs.”
Among the projected use cases for the digital currency are government benefit payouts, which would use a tokenized version of the currency. The bank also believes that the Drex will help accelerate digitalization in the financial sector and ultimately promote financial inclusion.
Meanwhile, some five thousand miles north, the concept of central bank digital currencies is getting a much cooler reception. A new report from the Bank of Canada cast a dim light on the prospect of mass CBDC adoption by Canadians. The blame was placed on the wide number of payment options Canadian consumers and businesses already have.
The staff discussion paper, “Unmet Payment Needs and a Central Bank Digital Currency,” envisions a hypothetical cashless environment, and then considers how a CBDC would solve unmet payment needs in such a society.
The report concludes that for a CBDC to benefit those who have unmet payment needs, the digital currency would first have to secure widespread adoption among the majority of the population. This would be necessary to ensure sufficient digital currency adoption by merchants. The challenge is that insofar as the majority of consumers “already have access to a range of payment options,” it would be unlikely for a significant enough number of these consumers to both widely adopt the digital currency as well as use the CBDC at scale.
The insights from the paper should prove valuable to those who support digital currencies, especially to the degree that digital currencies allegedly support financial inclusion. “The minority of consumers with unmet payment needs will be able to benefit from a CBDC,” the report writers conclude, “if the majority of consumers experience material benefits and therefore drive its use.”
Credit Sesame launched a new solution to help individuals improve their credit.
The new offering, Sesame Credit Builder, is a Mastercard debit card designed to make it easier to build positive payment histories.
Today’s launch comes two years after the company first unveiled its credit builder banking technology.
Financial wellness platform Credit Sesame has introduced a new tool to help individuals improve their credit. The new offering, Sesame Credit Builder, is a Mastercard debit card that leverages everyday spending and recurring services to build positive payment histories.
“The new Sesame Credit Builder Mastercard brings inclusion and breaks down the barriers for everyone and (e)specially people with low or limited credit history to build better credit history,” Credit Sesame founder and CEO Adrian Nazari said. “We are making it easy for more Americans to get credit for the money they spend and the payments they make.”
Sesame Credit Builder arrives nearly two years after Credit Sesame first announced general availability of its credit builder banking technology. Today’s offering works like this: individuals must open a virtual secured account with Community Federal Savings Bank (CFSB), which issues the prepaid debit card. Cardholders then begin building credit by depositing money into their Sesame Cash account and making transactions with their debit card. Card purchases create a balance on the cardholder’s virtual secured account. An equal amount of funds is set aside in the cardholder’s Sesame Cash account, which serves as a security deposit to pay off the balance at the end of the month. This approach ensures that cardholders will always have sufficient funds to pay off their balance, thus helping build a positive payment history.
Credit Sesame does not guarantee that any individual’s credit score will improve. The company notes that other factors, including timely bill payments and low credit card balances, also contribute significantly to credit scores.
Nevertheless, according to Tim Montgomery, SVP, Digital Partnerships, North America, Mastercard, technologies like Credit Sesame’s Credit Builder have a significant role to play. “Credit Sesame aims to democratize financial wellness and empower consumers to take charge of their own financial health,” Montgomery said. “Sesame Credit Builder can do just that and help even more consumers improve their credit.”
Founded in 2010, Credit Sesame made its Finovate debut that same year. In the years since, Credit Sesame has grown into a major, financial wellness platform that has helped millions of consumers improve their credit scores and save money on the cost of credit.
Last fall, the company announced a series of major executive hires. Joining the Mountain View, California-based fintech were Bronwyn Syiek as President, Marcus Beisel as Chief Product Officer, Tim Kamienski as Chief Marketing Officer, and David Bagatelle as Chief Banking Officer.
Credit Sesame has raised more than $171 million in funding. The company includes Healthcare of Ontario Pension Plan (HOOPP) and Menlo Ventures among its investors.
Currency risk management company Finofo launched today.
The Calgary-based startup announced that the first phase of its launch is the release of its cross-border payments tools.
Finofo raised $1.25 million ($1.6 million CAD) in pre-seed funding in January.
Canadian currency risk management startup Finofolaunched publicly today. The company, headquartered in Calgary, Alberta, calls its platform an “all-in-one” solution for businesses’ financial needs and has unveiled tools for cross-border payments as its first offering.
In an extended blog post Finofo co-founder Prateek Sodhi announced the company’s launch and its mission to help businesses manage currency risk. Sodhi underscored the challenge of managing currency risk, calling it a “multifaceted task that requires specialized talent in finance.” He noted that larger companies can often afford to hire the specialized talent required to effectively manage currency risk. However, Sodhi said, “most regular businesses are left grappling with these complexities with a team consisting mainly of trained accountants and corporate finance specialists.”
To this end, Finofo has built a digital platform that leverages advanced algorithms to examine the intricacies of currency fluctuations for individual businesses. If currency fluctuations become an issue, the platform quantifies the value of the risk. This enables the platform to develop tools and strategies, specific to individual businesses and their financial condition, to manage this risk.
The launch of Finofo, according to Sodhi, will take place in three stages. The first stage, announced today, includes the platform’s cross-border payments tools. These tools enable businesses to send or receive money in more than 40 currencies across 180 countries. Businesses will also be able to use Finofo to convert money into different currencies and automate accounts payable.
The second stage of the launch will involve development of the company’s smart hedge engine. This solution will help streamline currency hedging trade execution to reduce the price risk of currencies during the trading process. Future initiatives include financial planning and analysis solutions to help businesses conduct real-time foreign-exchange risk analytics.
“We’re not interested in merely selling financial instruments,” Sodhi wrote this week. “Instead, we leverage our unique technology to help businesses understand if, when, and how much they need them.”
In addition to its launch announcement, Finofo also disclosed that it raised $1.25 million ($1.6 million CAD) in pre-seed funding back in January. The round was led by Motivate Venture Capital. SaaS Venture Capital, Desjardins Financial Holding, and Sweet Spot Capital also participated.
CB Insights shared its State of Fintech Q2 2023 report last month. The top takeaways? Fintech funding continues to take a hit, with the report noting that both funding and deals globally have retreated to “levels not seen since 2017.”
But wait, there’s more. Mega-round funding, deals valued at $100 million or more, fell to a six-year low. And payments – which were memorably referred to by the VCs on our Smart Money Power Panel at FinovateFall last year as “the gift that keeps on giving” – stopped giving. CB Insights reports that funding for payments-related companies fell 75% quarter over quarter. It was the largest decrease for any fintech sector.
What about upsides? The report noted increases in fintech funding in Latin America and the Caribbean, the only region to see significant gains. CB Insights also highlighted the fact that the five exits in the quarter all came from fintechs based outside of the U.S.
Read the whole report. There are a number of interesting observations, some of which give some reason for optimism in the second half of the year. For one, early-stage companies dominated deal volume in Q2 2023. The strength of fintech funding in Latin America, mentioned above, was also a promising sign. Some of this deal-making involved cryptocurrency and DeFi related firms – and geographies like the Cayman Islands that are outside traditional Latin American fintech powerhouses Mexico and Brazil. But much of the investment in Latin America was driven by strong trends like digitization and financial inclusion. Investors have also been encouraged by the success of fintechs like Brazil’s Nubank. The report also saw positives in the market for companies going public in Asia last quarter.
For more on CB Insights’ examination of fintech funding so far in 2023, also check out the firm’s Fintech Midyear Review: The Data Behind the 6 Year Low webinar released last week. Lead Fintech Analyst Anisha Kothapa puts the current fintech landscape into context, and highlights where investors see opportunity around the world – and why.
“I think some of the biggest drivers of capital being invested in (Latin America) is due to, one, financial inclusion,” Kothapa explained. “There are many unbanked and underbanked people in Latin America that need innovative financial solutions. The second is that the region has seen rapid digital adoption, especially with the use of smart phones, and growing internet connectivity. The third thing is around a more favorable regulatory environment.”
By the way, Finovate’s weekly Finovate Global column is a great source of news on fintech developments around the world. With regard to Latin America in particular, recent columns have focused on fintech innovation in Brazil and Colombia.
New York-based digital mortgage lender Better.com is going public.
The company will combine with Auora Acquisition Corporation via SPAC “on or about August 22.”
The transaction between Better and Aurora has been more than two years in the making. The companies first announced the deal in May 2021.
Time to party like its 2021? The week begins with news that digital mortgage lender Better.com’s proposal to combine with Aurora Acquisition Corporation via SPAC has secured shareholder approval. The new Better.com will go public “on or about August 22, 2023.”
When finalized, the transaction will provide the combined entity with a minimum of $550 million and as much as $750 million in new capital. The company will trade on the NASDAQ under the tickers “BETR” and “BETRW.”
Founded in 2014 by CEO Vishal Garg, Better has been trying to close its SPAC deal for years. The transaction had been extended three times since 2021, amid concerns over market conditions, financial losses, and regulatory controversies. Among the bad press Better.com dealt with during this stretch was the infamous Zoom meeting in December 2021 during which Garg announced a layoff of approximately 900 employees. The CEO and founder also allegedly admitted that the company has “probably pissed away $200 million.”
With regard to finances, Better.com reported a net loss of $888.8 million in 2022. In the first quarter of this year, the company acknowledged losses of $89.9 million. Better.com also reported a decline in the number of loans funded year-over-year. The firm funded 18,559 loans in Q1 of 2022. Better.com funded 2,347 loans in the first quarter of this year.
In one response to these challenges, the company has made significant changes to its real estate strategy. Better.com announced in June that it would begin partnering with outside agents as referral partners in its Better Real Estate subsidiary. This pivot away from in-house licensed real estate teams to this new model is designed to help the subsidiary lower costs. The company also indicated that the change will help it deal with the challenge of lower mortgage volumes. Better Real Estate, which receives a significant number of its leads from its parent company’s mortgage operation, provided Better.com with $23.1 million in revenue in 2022.
Better has also introduced new solutions along its main line of business. The company began the year with the launch of One Day Mortgage. The new offering f gives borrowers a mortgage commitment letter within 24 hours of applying for a loan.
The Reserve Bank of India (RBI) announced a number of new fintech initiatives this week. Among the more interesting was a plan to bring AI-powered, conversational payments to the country’s UPI (Unified Payments Interface) system.
The National Payments Corporation of India (NPCI) launched the platform in 2016. Today, UPI has more than 300 million monthly active users in India. There are also 500 million merchants who use the platform to accept payments. With UPI, users can link multiple bank accounts to a single mobile app, and then make real-time, P2P transactions via mobile device or smartphone. Analysts expect daily transaction volume on UPI to reach one billion by 2026-2027.
The proposal would enable users to initiate payments from within both chat and messaging apps. “As Artificial Intelligence (AI) is becoming increasingly integrated into the digital economy, conversational instructions hold immense potential in enhancing ease of use, and consequently reach, of the UPI system,” the RBI press release read. “It is, therefore, proposed to launch an innovative payment mode viz., ‘Conversational Payments’ on UPI, that will enable users to engage in a conversation with an AI-powered system to initiate and complete transactions in a safe and secure environment.”
Conversational Payments will be available initially in Hindi and English, with other Indian languages to be added. The technology will be available via smartphones and feature phone-based UPI channels, which the Reserve Bank of India believes will lead to broader adoption and further financial inclusion. To this end, the RBI has also proposed to bring Near Field Communications (NFC) technology to its UPI-Lite on-device wallet. Launched last fall, UPI-Lite is designed to facilitate small value transactions and now processes more than ten million transactions a month.
An investment of $50 million has given Indian debt collection software-as-a-service (SaaS) platform Credgenics a valuation of $340 million. Accel, Westbridge Capital, Tanglin Ventures, Beams Fintech Fund, and other strategic investors participated in the Series B round.
Company co-founder and CEO Rishabh Goel said that the capital would do more than just help the firm expand into new markets. “This funding not only accelerates our growth, but also enables us to make a meaningful impact on the economic landscape of countries, unlocking new opportunities for financial well-being,” Goel said.
Founded in 2019, Credgenics currently serves more than 100 private banks, non-bank financial companies, fintechs, and asset reconstruction companies. The company’s debt resolution platform provides a suite of solutions including digital collections, collections analytics, litigation management, agent performance management, and a field collections mobile app. The technology leverages AI-driven intelligent automation and machine learning to bring greater efficiency to the collections process.
Credgenics handles 11 million retail loan accounts and touched an overall loan book worth $60 billion in fiscal year 2023. The company became operationally profitable this spring. This summer, Credegnics announced a partnership with Indonesia-based lender Investree. The company also was recognized as the Best Selling Loan Collections Platform in IBS Intelligence India Sales League Table for the second year in a row.
Minister of State for Corporate Affairs (independent charge) Rao Inderjit Singh provided the report to Parliament as part of the Startup India initiative. Launched by the Department for Promotion of Industry and Internal Trade in 2016, this initiative establishes the criteria that confers recognition by the Department. These factors include data of incorporation, as well as revenue and profit benchmarks.
Singh pointed to the “Fintech Entity Framework” as an example of one of the actions taken by the government – in this case the International Financial Services Centres Authority (IFSCA) – to promote the country’s fintech startup ecosystem. This framework includes a comprehensive scheme of grants for startups, sandboxes, proof-of-concepts (PoC), accelerators, and more.
Singh also credited the government for the success of an initiative which streamlined beneficiary account opening and direct benefit transfers, and improved access to multiple financial services applications. The initiative is called the Pradhan Mantri Jan Dhan Yojana (PMJDY), meaning “The Prime Minister’s Public Finance Scheme,” and it set a new world record for account openings upon its launch in 2014. This spring, the initiative reached a major milestone of more than $28 billion (₹2 lakh crore) in deposits.
Here is our look at fintech innovation around the world.
