Author: David Penn

BBVA Compass Teams Up with OnDeck to Better Score Small Biz Borrowers

By David Penn Posted on
Categories: BBVA Compass, Kabbage, Lending Club, On Deck Capital, Prosper

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The only thing keeping pace with the investment interest in alternative lenders from Prosper to Kabbage may be the growing partnership interest from banks.

Earlier this week we reported on the deal between Lending Club and Union Bank. Today we learn that BBVA Compass will be working with OnDeck to develop better ways to provide loans to its small business clients.

Specifically, BBVA Compass will be relying on OnDeck’s OnDeck Score. This technology allows banks and financial institutions to review thousands of relevant data points, including social data points, to help determine a would-be borrower’s suitability for a given loan.
This new initiative is a big deal for OnDeck, and represents the first such collaboration with a bank the size of BBVA Compass. Founded in 2007 and led by CEO Noah Breslow, OnDeck made headlines a month ago when it announced a $77 million funding round led by Tiger Capital. The company specializes in combining loan underwriting analysis with the merchant’s own business data to determine a potential borrower’s creditworthiness faster than traditional lenders.
The average loan from OnDeck is $40,000, and loans can run as high as $250,000. Terms range from as little as three months to two years. The company demoed its technology at FinovateSpring 2012.

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LendUp Gets $50 Million Credit Debt Facility

By David Penn Posted on
Categories: LendUp

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With so many venture capitalists throwing money at alternative lenders in recent days, is it any surprise that they’ve begun hurling credit cards at these innovators, as well?

LendUp announced today that it has raised a $50 million credit facility from Victory Park Capital. This comes just a few months after picking up $14 million from Google Ventures and QED Investors in November.

LendUp co-founder Sasha Orloff credits rapid growth for the fresh funding needs of his company. He points to month-over-month growth between 10-20%, as well as expansion into Louisiana, Mississippi, Missouri, Oklahoma, and Tennessee as evidence that LendUp will make good on its goal of launching in a new state every two weeks, and originating 300,000 loans this year.
A pioneer in socially responsible lending, LendUp provides a source of money for those typically unable to borrow through banks and credit unions. LendUp combines financial education, gamification, and better loan terms than those typically offered by traditional non-bank lenders to build a business that serves rather than avoids non-prime borrowers.
LendUp was founded in 2011, and launched its platform a year later. The company was part of FinovateSpring 2014 in San Jose, California, where they demoed their technology. Video of LendUp’s demo will be available soon.

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Leaf Appoints Sarah McCrary as CEO

Leaf Appoints Sarah McCrary as CEO
By David Penn Posted on
Categories: Leaf
SMcCrary_LeafnewCEO

Sarah McCrary has been appointed CEO of Leaf. She formerly held the position of Chief Operating Officer, and will replace outgoing co-founder and CEO Aron Schwarzkopf.

Becoming “the small business owner’s best friend” is how Sarah characterized her goals for Leaf, the mobile, point-of-sale tablet that gives merchants greater flexibility in choice of payment providers. 

The platform allows business owners to create a virtual store with customers, inventory, and employees, and features a variety of productivity apps geared toward small businesses. Many of these apps have been created by third-party developers.

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Sarah McCrary spent six years at Heartland Payment Systems, and another four at Allied Data Systems previous to her joining Leaf as COO. While at Heartland, she co-invented the company’s end-to-end encryption technology, E3. In a statement, Leaf says they hope to leverage her expertise and background to grow sales and drive technological innovation in a small business POS space.
Leaf’s relationship with Heartland Payment Systems is a close one. Heartland invested $20 million in the mobile POS platform developer last October, and is involved with both selling the platform and developing new Leaf apps.
Leaf demoed its technology as part of the FinovateSpring 2013 conference in San Francisco. See the company’s demo here.

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Lending Club Announces Partnership with Union Bank

By David Penn Posted on
Categories: Kabbage, Lending Club, Prosper

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Between the proliferation of lenders at FinovateSpring 2014 demoing in San Jose last week, and today’s funding announcements from alums Prosper and Kabbage, it is clear that lenders in the 21st century will continue to demand their space in the fintech headlines.

Today brings news that Lending Club has reached a deal that will allow Union Bank to sell loans from Lending Club. The two organizations will also work together to develop new credit products and services to be made available to customers of both companies. In a press release, Lending Club cited the combination of its low operating costs and Union Bank’s “strong balance sheet and large customer base” as one of the synergies contributing toward the deal.

One key question is what sort of new credit products are Lending Club and Union Bank discussing? Details remain few and far between as this point. But this could be a significant development. It has been a goal of Lending Club to sell its loans to banks and other financial institutions. But the potential of a customer-facing link to Lending Club at FIs like Union Bank would be a very worthwhile opportunity for the P2P lender.
Lending Club also recently announced raising $115 million in debt and equity, and an acquisition of Springstone Financial. Based in San Francisco, California, Lending Club has issued more than $4 billion in personal loans since the end of March 2014. The company has also more than doubled its annual loan volume annually since its 2007 launch. With more than $335 in total capital raised, Lending Club has been valued at nearly $3.8 billion.
Union Bank is the primary subsidiary of UnionBanCal Corporation, a financial holding company with assets of more than $107 billion. Union Bank operates more than 400 branches in seven states in the U.S., as well as two international offices.
The partnership between Lending Club and Union Bank was announced at the LendIt 2014 conference in San Francisco on Monday. The arrangement represents the largest such partnership Lending Club has inked to date, and comes in the wake of Wells Fargo’s decision to reverse, or at least clarify, a policy that banned its employees from participating in P2P lending platforms.

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Fidor AG is First Bank to Deploy Ripple Protocol

By David Penn Posted on
Categories: Fidor Bank, Ripple

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We don’t know who reported the news first, but Finovate was glad to be among the few who figured out late last week that Fidor Bank AG was using Ripple to move money in three different countries. 

And once we were able to track down the source of this exciting development in the world of alternative payments, we couldn’t wait to share it.

Today we get further confirmation as Ripple announces that Germany’s Fidor Bank is indeed the first bank to adopt the Ripple protocol. Ripple Labs CEO Chris Larsen celebrated the occasion by emphasizing the benefits of his technology, chiefly its ability to provide “real-time settlement in any currency … at highly competitive rates” anywhere in the world.

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Fidor will use Ripple in a number of ways, including inter- and intrabank payments between other financial institutions and its own branches. The Ripple integration will also allow the bank to offer its customers faster and less expensive money transfer options.
It will be interesting to see how much Fidor’s deployment of Ripple influences other financial institutions to pursue similar alternatives. In nothing Fidor’s adoption of Ripple in a panel discussion at the Finextra Future Money conference last week, the Anthemis Group’s Udayan Goyal did so in the context of saying that “Swift will be gone in 3 years.” He tweeted later:

SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is the leading provider of international interbank messaging. 
Developed by Ripple Labs, Ripple is an open-source, distributed payment protocol. The system allows anyone to transmit value anywhere in the world, securely and in real-time. Virtually free transactions and the lack of chargebacks make the technology attractive to merchants. And consumers can take advantage of the flexibility of Ripple to support everything from real and virtual currencies to non-currency value such as frequent flier miles and mobile minutes.
Ripple Labs won Silver in the “Best New Technology” category at the PYMNTS.com Innovation Awards this year, and has raised $9 million in funding. A Finovate alum, the company demoed its Ripple protocol at FinovateSpring 2013 in San Francisco.

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Finovate Alumni News — May 5, 2014

By David Penn Posted on
Categories: DeMyst Data, FinovateSpring 2014, FutureAdvisor, ID.me, Jumio, Kashoo, LearnVest, Mint.com, Xero
  • Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Finovate-F-Logo.jpgCheck out our Twitter highlights of FinovateSpring 2014 – from the opening demo to Best of Show.
  • LearnVest, Mint, and FutureAdvisor featured in Wall Street Journal column on managing your own money.
  • Forbes highlights Demyst.Data, showing how Big Data can be used to determine loan suitability for the underbanked.
  • Xconomy profiles authentication specialist, Jumio. Video of Jumio’s FinovateSpring 2014 demo will be available soon at Finovate.com.
  • Kashoo and Xero are among the cloud accounting apps reviewed in a new ebook by the Sleeter Group.
  • American Banker features Ondot Systems’ use of debit on/off controls via mobile device.
  • Backbase launches Backbase Engage, an out-of-the-box digital banking solution for FIs.
  • CUneXus proceeds to Innotribe Startup Challenge 2014 Semifinals.
  • Tradeshift extends “App” ecosystem and offers co-investment to encourage development on its platform.
  • Wearable tech company GTX now using Stockr to communicate directly with the investors.
  • Motherboard looks at Zighra’s next-gen kinetic ID that will recognize users by how they swipe on their phone.
  • MoneyDesktop named 1 of 8 of Utah’s Most Innovative Products.
  • SafetyPay partners with UOL BoaCompra, a leader in monetizing online games for Latin America.
  • VentureBeat looks at a government program that awards grants to companies working on an “Identity Ecosystem,” bringing to mind FinovateSpring 2014 alum, ID.me.
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.

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FinovateSpring 2014: Tales from the Twitterverse

By David Penn Posted on
Categories: FinovateSpring 2014

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Anyone who doubts that financial technology is a people-business need look no further than the two-day Twitter-fest that accompanied FinovateSpring 2014 in San Jose this year.

For both those lucky enough to be able to be at Finovate in person, as well as the even larger community of fintech fans tracking the event remotely, #Finovate is a great way to experience the show.

Maybe your Twitter preferences lie more with the serious issues like the true value of gamification or the mobile opportunities in auto loans. Perhaps you prefer to join your fellow Tweeters in speculation on the Worst Website in the World. However you like your Twitter tweeted, rest assured that out of the thousands who follow us @Finovate, there is likely to be far more than one take on financial innovation in 2014 that’s worth taking home.

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Finovate Alumni News- May 2, 2014

By David Penn Posted on
Categories: Banno, Jack Henry, MasterCard, PayPal, SafetyPay
  • Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Finovate-F-Logo.jpgMasterCard announces Australian launch of mobile payment app for education expenses.
  • PayPal partners with checkout app MyCheck.
  • SafetyPay teams up with Brazil’s UOL Boa Compra to bring online payments to gamers in Latin America.
  • SEC filings show Jack Henry’ & Associates’ $28 million cash expense for Banno acquisition.
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.

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Finovate Alumni News- May 1, 2014

By David Penn Posted on
Categories: Backbase, FinovateSpring 2014, TSYS, Xero
  • Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Finovate-F-Logo.jpgEight companies earned Best of Show awards at FinovateSpring 2014 in San Jose. 
  • Backbase launches Backbase Engage, an omni-channel, out-of-the-box, banking platform.
  • PYMNTS.com interviews the CEO of TSYS acquisition, ProPay.
  • Xero’s B2B cloud payment solution now live in Australia thanks to a partnership with ASB Bank.
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.

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Kreditech Puts Big Data Scoring to Work to Improve Credit Decisioning

Kreditech Puts Big Data Scoring to Work to Improve Credit Decisioning
By David Penn Posted on
Categories: FinovateSpring 2014, Kreditech
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This post is part of our live coverage of FinovateSpring 2014.

All the way from Hamburg, Germany, here is the team from Kreditech with its proprietary big-data scoring and underwriting technology.

“The self-learning proprietary algorithm scores on applicant’s creditworthiness within less than a minute. Without having to go to a bank, the customer can apply for his loan online or mobile, whenever and wherever. If accepted the loan is paid out to their bank account within 10 minutes. Compared to traditional rating organizations like Schufa or FICO, the Kreditech Algorithm only studies the financial situation of the customer in the moment of the application and does not use historical data.
The technology is therefore flexible and can quickly enter and adapt to new markets. There are 5 billion people in the world that have no access to financial products, and our technology is able to provide that to them.”
Presenting: Sebastian Diemer (CEO & Founder) and Alexander Graubner-Müller (CTO & Founder)

Product Launch: September 2012 (in first market Poland)
Metrics: 10,000 data points per loan application; less than 1 minute average decision time per loan application; >$15M revenue run rate (as of March 2014); >$55M issued loans run rate (as of March 2014); <10% average loan loss in all established, profitable core markets (Poland, Spain, Russia, Czech); industry average emerging markets: >30%; 70% – 90% growth per quarter; over 600,000 applications processed in total; various credit products available in Poland, Spain, Czech, Russia, Australia & Mexico; releasing further retail banking products in 2014 (e.g. Prepaid Credit Cards, e-Wallets0; over 80 full-time employees from 26 different countries; Kreditech is launching in 4 to 6 countries in 2014; company (groupwide) profitable by Mid 2014; $22.5M raised by most influential European business angels (Samwer Brothers, Michael Brehm, Stefan Glaenzer, Heiko Hubertz, etc.) and funds (Global Founders Capital, Point Nine Capital, Kreos Capital, Greycorp, etc.)
Product distribution strategy: Direct to Consumer (B2C)
HQ: Hamburg, Germany
Founded: February 2012
Website: kreditech.com
Twitter: @kreditech

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LOYAL3 Social IPO Platform Democratizes the Investment Process

LOYAL3 Social IPO Platform Democratizes the Investment Process
By David Penn Posted on
Categories: FinovateSpring 2014, LOYAL3
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This post is part of our live coverage of FinovateSpring 2014.

Our next presenter from nearby San Francisco is LOYAL3, demoing their Social IPO Platform.

“The LOYAL3 Social IPO Platform opens up IPO access to large numbers of individuals like never before. LOYAL3 partners with pre-IPO companies to give them a way to include consumers, employees, partners, and fans in their IPO. Through LOYAL3, people can start investing in an IPO with just $100 and pay no fees to purchase the IPO stock. 
LOYAL3’s IPO platform augments and complements the traditional IPO investing process by providing a way for small investors to participate in IPOs at the same price per share and at the same time as Wall Street institutions and their largest customers.”
Presenting: Barry Schneider (CEO)
Product Launch: October 2013
Metrics: To date, LOYAL3 has 102 employees and raised more than $60 million in funding
Product distribution strategy: Direct to Consumer (B2C), Direct to Business (B2B)
HQ: San Francisco, California
Founded: November 2008
Website: loyal3.com
Twitter: @LOYAL3

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Nearex Launches Xip, a Micropayment Cash Alternative for Day-to-Day Transactions

Nearex Launches Xip, a Micropayment Cash Alternative for Day-to-Day Transactions
By David Penn Posted on
Categories: FinovateSpring 2014, Nearex
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This post is part of our live coverage of FinovateSpring 2014.

All the way from Singapore, here is the team from Nearex, demoing the Xip Micropayment System:

“The Xip Micropayment System harnesses the widespread presence of mobile phones and rising use of mobile money to create an affordable, simple-to-use cash alternative for all kinds of day-to-day payments.
At the core of the solution is XipPOS for merchants, a low cost credit card size Mobile POS that has its own GSM radio core. It is highly portable, ruggedized, and uses NFC for contactless transactions. The consumers are given XipTAG, a personalized NFC card or sticker connected to their Mobile Money account. Payments are made by simply tapping XipTAG on the Xip POS. The existing mobile phone of the consumer is used as the acknowledgement interface. A cloud-based mediation server facilitates easy scaling and highly secured integration of Xip within a wide range of mobile money and banking environments.
XipPOS can be used individually by small merchants or easily integrated to meet the sophisticated demands of multi-outlet, multi-till retail establishments.”

Presenting: Mayank Sharma (CEO) and Arun Tanksali (CTO)


Product Launch: April 2014
Metrics: $1 million raised to date
Product distribution strategy: Direct to Business (B2B), through financial institutions, through other fintech companies and platforms

HQ: Singapore
Founded: December 2012
Website: nearex.com

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