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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
“Identity and its associated risk isn’t something businesses should be figuring out, it should just be something they install,” Alloy co-founder and CEO Tommy Nicholas said. “As Alloy grows into a multi-product platform for the full customer identity lifecycle, we can not only help make risk easier to understand, but also further industry innovation by making fintech products easier to build.”
The Series C round was led by Lightspeed Venture Partners’ Justin Overdorff and featured participation from current investors Canapi Ventures, Bessemer Venture Partners, Avid Ventures, and Felicis Ventures. Alloy said that the new capital will enable the firm to “invest” in its team, as well as help expand the company’s product offerings. Over the past year, Alloy’s solution has evolved from a platform that automates onboarding identity decision-making to one that now incorporates transaction monitoring. The company said that it will soon also feature richer data and risk signals to provide FIs with even greater insight into their customers.
Alloy’s API-based platform leverages more than 120 data source products to help companies and banks verify customer identities and monitor transactions. Processing more than 455,000 decisions a day on average, the company’s solution provides both identity verification and risk monitoring functionality in the same place, enabling both developer and product teams to maximize the platform’s resources. The result is a 50% reduction in manual review, and 80% automation rate for new account openings, and an automated customer approval rate of more than 80% for customers such as Novo, Brex, and HMBradley.
Headquartered in New York City and founded in 2015, Alloy was named one of the Best Fintechs to Work for in 2021 by American Banker, and boasts a workforce that is more than 50% female and has ethnic minority representation of nearly 40%. In August, Alloy announced its newest partnership, collaborating with Amerant Bank to automate identity verification in customer onboarding for the $8 billion, Florida-based community bank.
“Providing an exceptional experience for customers, both online and in-person, is at the core of our digital transformation strategy,” Amerant Bank Vice Chairman and CEO Jerry Plush said in a partnership announcement. “With the addition of Alloy, we’ll be able to still meet regulatory requirements, while ensuring a faster and more seamless onboarding and underwriting process that will benefit both customers and Amerant team members.”
On the final day of FinovateFall a few weeks ago, I had the opportunity to talk with James Wallis, Vice President of RippleX, Central Bank Engagements, and CBDCs, on the topic of blockchain technology, cryptocurrencies, and the potential traction both are gaining within mainstream finance.
Wallis offers an unqualified “yes!” in response to the question of whether or not digital assets and the technology that makes them possible are gaining in popularity with financial institutions. Pressed for examples that support his conviction, Wallis had more than a few examples to share with our attendees. Below, we excerpted a few highlights from his remarks on where to look and what to watch for as the financial sector begins to shift from crypto-curious toward a potentially more enduring embrace of the technology.
Trade Finance
“Traction is being gained. It has been steadily growing over the past four or five years. A few examples, or proof points, particularly in the blockchain space: there are a number of trade finance initiatives around the world, different consortiums are live and running, facilitating trade finance with different blockchain platforms.”
“With RippleNet we have a global network for cross-border payments, which is blockchain based, and we use a native crypto, XRP, to facilitate cross-border payments in what we call ‘on-demand liquidity’.”
Tokenization
“We’re seeing lots of different assets being tokenized, whether that’s NFTs, or securities, whether it’s currencies … That, I think, is a big trend. I think the World Economic Forum has predicted that something like 10% of the world’s GDP will be tokenized by 2027. I think that equates to around $24 trillion of goods and assets being tokenized.”
Central Bank Digital Currencies (CBDCs)
“It’s a very busy environment right now. I think there’s a clear distinction between research and proof of concept versus building out real systems. Among the ones that are furthest ahead in building out real systems, China is probably the biggest one of scale. They are still in pilot mode; they are not fully operational. But they have had a number of pilots in different cities around China, and also are looking now to do some pilots cross border, as well. On the other end of the scale in terms of size, you have the Bahamas with their sand dollar, which is up and running.”
“Others that have done a lot of great research and are fairly well along but have not really pulled the trigger to go live yet are in Sweden with their digital e-krona and then, of course, Singapore with the Monetary Authority there. They have had a number of different projects over the last several years.”
Commercial bank interest rising
“I’ve seen personally a big uptick (in interest) in the last three or four months from commercial banks, household name banks wanting to understand more about what their role will be or could be in a CBDC. You know, when commercial banks start paying attention to something its because they’re either feeling there’s an opportunity to make more money or they feel there’s a threat against them.”
“A lot of early work was really wholesale: bank to bank transfers through central bank accounts. And that’s a valid use case. There’s been a trend in the last 12 months more towards retail, people looking at digital cash or other use cases around retail. Most of those, so far, have been domestic. In the Bahamas it’s really allowing people to send digital money to each other across the different islands there. But we are seeing an increase in interest, as is the Bank of International Settlements, in cross-border CBDCs: so how do you transact, say, with a digital U.S. dollar to a digital Euro to a digital yuan? I think use cases will just keep coming and coming, to be honest.”
In a round co-led by Alpha Edison and Morpheus Ventures, fintech-as-a-service platform Rize has secured $11.4 million in Series A funding. The company, founded by Justin Howell and Kirk Voltz six years ago as a B2C fintech firm, has since transitioned into a B2B platform dedicated to “making fintech infrastructure simple, accessible, and ubiquitous for all financial builders.”
The investment takes the Arlington, Virginia-based company’s total funding to $13.4 million.
Writing about the investment on the company’s blog, Howell put his company in the same cohort as fintech innovators – and Finovate alums – like Plaid and DriveWealth. These firms, like Rize, started out as consumer plays, but developed into fintech infrastructure companies as their understanding of challenge of “building intuitive financial user experiences” grew. Realizing that there was more to enhancing the user experience in financial services than UI/UX improvements, Howell and the Rize team concluded that the underlying financial infrastructure was the problem and Rize’s “uniquely flexible approach” could be part of the solution.
Rize’s platform leverages Synthetic Account technology to enable banks, fintechs, and brands to build a wide range of financial account types ranging from checking and savings accounts to brokerage, FBO, and business accounts. The technology also supports quick and secure money movement options including ACH and wires, as well as mobile check deposit and physical and virtual cards.
This summer, Rize unveiled its Developer Toolkit, which enables innovators to build a prototype financial services application in less than 30 minutes. The toolkit features a comprehensive suite of technologies – a self-service sandbox, a launchpad, a software development kit (SDK), a command line interface tool (CLI), and a boilerplate app – designed to help developers both focus on the core elements of their solution as well as get their solutions to market as quickly as possible.
“When we set out to become the best-in-class fintech infrastructure platform, we knew that meant heavily investing in the developer community,” the company said in July when the toolkit was launched. “Our mission is to get clients to market faster, with less effort – and that begins with not only providing great documentation, but creating tools that enhance our builder’s experience and significantly cuts down on development time.”
In today’s funding announcement, Howell said that the funds raised in the Series A would enable Rize to continue innovating on its core solutions, including its Developer Toolkit. The new capital will also support other initiatives such as improving the Rize Admin platform, UDAAP monitoring, and security systems. The funding will also support the launch of new offerings including brokerage accounts and new crypto and credit-related solutions.
In addition to Alpha Edison and Morpheus Ventures, Rize counts Raptor Group, Revolution’s Rise of the Rest Seed Fund, Third Prime, Red & Blue Ventures, Graham Holdings, Walkabout Ventures, and Rucker Park Capital among its investors.
This is a sponsored post in collaboration with Amanda Glincher, Director of Marketing, Fiserv
It’s no surprise that a digitally issued card shortens the time frame between when a consumer receives a new card and when they begin using it for spend. Yet, digital issuance is just one step on a digital-first journey and without a full strategy, that newly issued card might not bring with it the added spend issuers are expecting.
Yes, consumers want digital-first cards, but they are also in search of digital-first options when it comes to all of their other banking activities. From the first engagement someone has with a new financial institution, each traditional activity should have a digital counterpart.
Applications that win
The beginning of a banking relationship often begins with a consumer applying for an account. Creating an application process that is seamless and reduces barriers is the best way to start the cardholder’s digital experience. As noted in The Financial Brand, when an application takes more than five minutes to complete, abandonment rates increase to as high as 60%. To reduce abandonment and improve the customer experience, applications can be limited to the necessary data.
Add to the convenience by allowing applicants to switch between devices to complete an application without losing their place in the application flow, especially in situations where any documentation or uploads are being requested.
Immediate access
Once you’ve approved a new account, increase usage rates by providing immediate access to a new card. In a world where our groceries are delivered within the hour and the world’s library of movies and music is available to stream in seconds, time really is of the essence with today’s consumer.
70% of digitally issued cards are used within five days, compared to a physical card that won’t even be delivered for 7-10 business days.
Make usage a breeze
“Manually entering my card details and verifying my identity is so fun” is a statement that has never been uttered. Once a card has been digitally issued, make using the card simple by enabling push-to-wallet. There are many benefits to giving cardholders this ability and it is among the most essential parts of a successful digital-first strategy. In addition to the seamless experience for the cardholder, push-to-wallet provides more opportunity for you to capture top-of-wallet for both the physical and digital wallet, as well as bypassing the marketing of competing cards.
In addition to the availability of the card, the ease-of-use enables consumers to go about their regular spending and utilize your card without missing a beat.
Bypassing the competition
While push-to-wallet is the more convenient way to add a card for a consumer, it’s also the simplest way for an issuer to avoid competition. A customer who chooses to manually add a card to Apple Wallet will be greeted by an offer to apply for an Apple Card. When a card is directly provisioned to a digital wallet, the cardholder bypasses the manual entry point at which they would be offered another product.
Sweetening the deal with offers and rewards
A list of retail discounts, benefits pamphlets, and APR offer checks are among the many mailings we receive from financial institutions. These offers are more accessible and beneficial to digitally savvy cardholders when they are offered, visible, and available in-app.
Not only is this a preferred way for customers to access offers, but a digital-first model allows financial institutions to make personalized offers in the moment – special financing opportunities and location-based discounts – enhancing the cardholder experience and capturing even more spend.
Give insight into all the places a card is stored
For existing cardholders, instant issuance of a replacement card can be made even more valuable by providing information on all the places the old card was stored. A list of existing retailers where their card is on file or is being used for recurring purchases allows cardholders to make sure the card is updated everywhere it needs to be – providing a smoother journey with uninterrupted spend.
Control in the palm of their hands
While card controls and alerts are a standard today, they are also an essential part of a digital journey. Allowing individuals to set limits on transaction types, locations, and amounts – and receive alerts – reduces fraud, minimizes inbound call center activity, and gives cardholders the security of managing their cards 24 hours a day. Controls can include the ability to turn cards on and off, set spending limits, create location boundaries, and report a missing card. Alerts allow cardholders to create notifications for a variety of scenarios, and to keep a close eye on the transactions charged to their account.
The importance of a fully digital journey
While all of these features are beneficial on their own, it is when they come together as part of a full digital strategy that they provide the most value to both the cardholder and the financial institution. Digital issuance is a key part of going digital-first, but it is the combination of this suite of digital-first tools that provide the best cardholder experience.
“We are clearly aligned in our mission to improve global banking and transaction settlement services that unlock the borderless banking and global economic opportunities for all,” Managing Director for Buckzy in EMEA Adrian Brown said. “Combining Buckzy’s network with M2P’s API platform delivers an outstanding customer experience and competitive advantage for customers.”
Buckzy’s network enables real-time, cross border payments around the world. The company’s technology gives both businesses and financial institutions the ability to expand their offerings via white-label solutions on a secure platform. Moreover, Buckzy’s ecosystem also empowers these organizations to make collections and receive payments in local currency. Headquartered in Toronto, Ontario, Canada and founded in 2018, Buckzy demonstrated its solution one year later at FinovateFall. At the conference, Buckzy Global CMO Lindsay Mulligan showed how the company’s technology powered instant, on-the-go digital wallet transfers and top ups, as well as multi-currency transfers and instant email money transfers with just a few clicks and without transaction fees.
Business Head of M2P Solutions for MENA, Vaanathi Mohanakrishnan, underscored the importance to the company of opening up these regional opportunities. “A lot of M2P’s strategy hinges on enabling fintechs to deliver solutions leveraging our infrastructure and partner network,” Mohanakrishnan explained. “We are excited to be partnering with Buckzy to deliver frictionless cross border payment experiences to customers in the MENA region.”
Delivering real-time cross-border payments to 47 countries, Buckzy Payments was recently named to the CIX Top 20 Early roster of innovative Canadian technology companies. With offices in the U.S. and India, as well as Toronto, the company has raised $3 million in funding from investors including Dash40 Ventures, Mistral Venture Partners, and Revel Partners.
A new partnership between Finovate alum Signifyd and Capital One will bring the fraud prevention specialist’s Authorization Rate Optimization solution to the bank’s payment ecosystem. The integration will help boost authorization rates and reduce the number of orders on Capital One credit cards that are inaccurately declined due to suspected fraud. This will increase revenue for retailers, as well as enhance customer lifetime value. Capital One will benefit from stronger cardholder loyalty, while cardholders will enjoy a more secure, online shopping experience with less friction.
“We are so pleased to partner with Capital One to solve a strategic issue for the ecommerce world,” Signifyd CEO Ra Ramanand said. “The very largest ecommerce sites globally can work directly with issuers to optimize their auth rates, but what do other merchants do? They come to Signifyd because we can optimize payment acceptance through our deep product integrations across the financial ecosystem.”
Signifyd’s Authorization Rate Optimization technology will be integrated with Capital One’s Enhanced Decisioning Data API. This will give Capital One enhanced data and fraud insights to help establish whether or not a given transaction should be approved or declined at the bank authorization stage. The solution provides identity intelligence across the entire shopper journey, delivering instant insights from the Signifyd Commerce Network at checkout, and helping authorization rates go up and the number of false declines go down.
An increase in false declines are, in some ways, the predicable outcome of the arms race between retailers and fraudsters. As fraud becomes more sophisticated, with more attacks and intrusions taking place earlier in the transaction process, both banks and merchants have found themselves increasingly declining payment at the authorization stage. The Economist reported that up to one in eight e-commerce dollars are currently declined during payment authorization, and the Aite Group reported that 62% of the merchants it surveyed admitted that their false decline rates have gone up in the last two years.
“There is no reason (why) merchants and banks should miss the opportunity to create seamless customer experiences at checkout,” Signifyd General Manager, Payment Solutions Okan Ozaltin said. “Working directly with issuing banks such as Capital One means Signifyd can offer the kind of ecommerce protection that makes life better for merchants and their loyal customers.”
Making its Finovate debut at FinovateSpring in 2013, Signifyd has become a leading, enterprise-grade fraud prevention platform. This year, the company was recognized by G2 in its 2021 Summer Report as a leader in the space as well as being first in market presence. Founded in 2011 and headquartered in Palo Alto, California, Signifyd has raised $390 million in funding, including a $205 million Series E round closed in April that was led by Owl Rock Capital. In addition to its partnership with Capital One – itself an alum of Finovate’s developer conference FinDEVr – Signifyd has teamed up in recent months with B2B payments specialist Adflex and, this spring, launched its Return Abuse Prevention Solution, which helps retailers better manage the $43 billion problem of fraudsters who abuse the refund and return system.
“Unfortunately, fraudsters and a subset of consumers are becoming more aggressive and ingenious when it comes to taking advantage of return policies meant to make life easier for shoppers,” Signifyd Vice President of Product Gayathri Somanath said when the solution was introduced. “Return Abuse Prevention relies on Signifyd’s network data, machine learning models and our new Decision Center module to give retailers the tools they need to stay ahead of this increasing, revenue-crushing trend.”
FinovateFall 2021 wrapped up a little over a week ago. Our return to live fintech conferencing produced one of our largest number of Best of Show winners (nine) to date. The event also gave us the one of the highest percentage of non-U.S. based Best of Show winners for a FinovateFall event.
This week’s Finovate Global Alumni Profile gives us an opportunity to take a closer look at the quartet of international fintechs that wowed our audiences with their latest innovations in New York City last week.
A Finovate alum since 2016, Bambu has made most of its Finovate appearances at our international shows in Hong Kong, South Africa, Dubai, and Berlin. The company is a multiple-time Best of Show winner, earning its first award in its second Finovate appearance at FinovateAsia in 2017, its second Best of Show award a year later at our conference in Capetown, and its third Best of Show trophy just last week in New York.
Bambu offers a next-generation B2B roboadvisory platform for both financial institutions and fintech disruptors. Powered by the company’s proprietary algorithms and machine learning technology, Bambu’s cloud-based platform has 300,000 end users in ten countries around the world. This summer, the company announced the acquisition of investment management technology provider Tradesocio, a move that will help expand Bambu’s reach internationally.
“After five years of building solid foundations, Bambu is now entering a phase of rapid growth,” Bambu CEO Ned Phillips said when the acquisition was announced in July. “This deal helps us in three key areas: it expands our product offering into stocks and crypto, it gives us a wider global footprint, and enables us to scale our team effectively to match exponential demand. We believe this positions us well for our Series C and ambitions of becoming the global leader in WealthTech.”
Headquartered in Stockholm, Sweden, Dreams earned its second Best of Show award last week at FinovateFall. The company, founded in 2014, is among the more recent Finovate alums, joining our roster last year for our all-digital FinovateEurope conference.
Dreams offers engagement banking solutions that leverage insights from cognitive and behavioral science to enhance financial wellbeing. Launched as a B2C offering, the company has expanded into the B2B2C space, offering its solutions to banks to help them boost digital engagement with their customers. This year at FinovateFall, Dreams demonstrated the savings module of its white-label banking platform, which features debt management and micro-investing functionality, as well as new social/viral features.
Over the past year, Dreams has announced partnerships with Singapore-based financial services software provider Silverlake Symmetri and Ukrainian commercial bank UKRSIBBANK, a subsidiary of BNP Paribas Group.
“Our financial wellbeing platform – which is built upon behavioural science and personal finance management principles – will provide the perfect tool for UKRSIBBANK to help its customers make better financial choices and become more sustainable in the way they handle their finances,” Dreams CEO and founder Henrik Rosvall said when the collaboration was announced. “This partnership will also help UKRSIBBANK safeguard the loyalty of its customers and futureproof its digital banking offering against a growing number of challenger banks and fintechs.”
Hailing from Toronto, Ontario, Canada, digital adoption platform Horizn was launched in 2012. The company is dedicated to helping financial institutions leverage micro-learning, social technology, gamification, and advanced analytics to enhance employee performance, fuel client adoption of new technologies, and boost revenues. With a global reach of more than 40 countries in North and South America, Asia, and Europe, the company has enabled its clients to realize 85% employee adoption rates and a 20% increase in mobile platform usage.
Horizn made its Finovate debut in 2017 at FinovateEurope in London. The company earned its first Best of Show honors at FinovateEurope in Berlin three years later, and picked up its second Best of Show award the following year at our all-digital event FinovateFall 2020. “It’s great to see Finovate recognize the impact that Horizn is having on banks worldwide,” company CEO Janice Diner said last year. “While COVID-19 may have accelerated the shift to digital, Horizn ensures bank customers stay digital.”
In addition to their Best of Show winning technology demonstrations, Horizn has also provided Finovate with some of its most compelling keynote speakers. Both Diner and Senior Vice President for Global Sales Steve Frook have shared their insights during the Conference Days component of our Finovate events. Frook’s FinovateEurope presentation, Landing Your First Bank Customer, was a highlight of our Berlin conference last year. And Janice Diner’s epigrammatic reminder that “if you build it they will come is a myth” remains as a good a piece advice for fledgling fintechs as you’ll ever hear.
The rise of fintech in Latin America has been one of the most impressive developments in global financial services in recent years. This is partly why the Best of Show award won by Uruguayan fintech Infocorp last week at FinovateFall feels so special.
Making its Finovate debut in the spring of 2017, Infocorp demonstrated its IC Campaigns platform that enables financial institutions to coordinate marketing and commercial operations via all available channels to better identify the optimal, next action for each client. The technology takes the omnichannel banking and seamless user experience requirements of modern banks to another level by helping institutions set up shorter-cycled, more agile campaigns that deliver increased conversion rates and higher ROI. Last week at FinovateFall, Infocorp introduced its Mobile Native App, a new solution that brings hyper-personalized experiences for every user in a single bank app.
Inforcorp CEO Ana Inés Echavarren spoke to the importance of “the mobile challenge” in a conversation with fintech analyst and thought leader Jim Marous in the weeks leading up to Infocorp’s return to the Finovate stage in September. “Everywhere the mobile channel is the one of choice now among users,” she explained. “Adoptions have gone up in all the implementations that we have in all the countries that we know of.” As far as Echavarren is concerned, this means that there has been a “mindset shift” in which the mobile experience and the user experience increasingly have become synonymous. To this end, Echavarren said, “we are no longer talking about the bank application, but about the user application.”
Founded in 1994 and headquartered in Montevideo, Infocorp has more than 40 successful deployments, 10+ million active users on its platform, and processes more than 120 million transactions a year.
Here is our look at fintech innovation around the world.
It’s becoming easier and easier to earn awards from everyday – or every month – transactions. Bilt, a fintech that enables renters to accrue points that can be redeemed for rewards, announced this week that it has raised $60 million in new funding. The investment, which included Mastercard and Wells Fargo among its chief contributors, gives the company a valuation of $350 million.
Also participating in the funding were some of the country’s biggest real estate companies including AvalonBay Communities, The Blackstone Group, Douglas Elliman, Equity Residential, GID-Winsor Communities, LENx, The Moinian Group, Morgan Properties, Starwood Capital Group, and Related.
Tenants can earn points by either renting from a member of the Bilt Rewards Alliance of more than two million rental homes or by making transactions using the Bilt Mastercard. Points can be used in a wide variety of ways, including travel, fitness club membership, paying rent, or even as part of a down payment to help pave the path to homeownership. Via the Bilt Mastercard, cardholders can earn up to 50,000 points a year toward rent, and earn an unlimited amount of points that can be used on other transactions.
Bilt sees major opportunity in a market that consists of approximately 109 million renters who pay an estimated $500 billion in rent every year. The company said that it will use the additional funding to help scale its loyalty program, giving more renters the opportunity to get something more than shelter from what is typically an individual’s “largest expense every single month,” according to Jain.
Is there a better person to lead a conversation about bold leadership in fintech than Luvleen Sidhu? Chair, founder, and CEO of BM Technologies, Sidhu was the youngest female founder and CEO to take a company public when her firm listed on the New York Stock Exchange at the beginning of the year.
“I am proud to see BM Technologies take this historic step and enter the public markets,” Sidhu said in January. “We are delighted to be one of the first neo banking fintechs to go public. We are also EBITDA positive today, which serves to set us apart from other neo banking fintechs in the market.”
Formerly known as BankMobile, BM Technologies currently has more than two million account holders, and provides disbursement services at 700+ college campuses in the U.S., reaching one out of every three students in the country. The BaaS innovator was among the fintechs to earn recognition at the recently announced Finovate Awards, taking home top honors in the Best Fintech Partnership category for its collaboration with T-Mobile.
Beyond the Arc’s Steven Ramirez hosted a fireside chat with Luvleen Sidhu as part of the FinovateFall conference in New York last week. Below are a few excerpts from their conversation.
On what it takes to be a bold leader today
For me, being a bold leader really comes down to a few key things that, in my opinion, a bold leader would demonstrate. So that is being able to have a compelling and unique and unifying vision and purpose. (It is) being able to get people to buy into that, to be energized by that, committed to that. (It is also) being able to have superior execution, because you can have a great idea and be in the clouds, but unless you are working on improving, iterating, and being agile and adaptive to the times, you’re not going to succeed.
On the inspiration behind her company’s “bold bet” in 2016
We launched in 2015 as a direct-to-consumer strategy – like the Chimes, the Varos, the N26s of the world are doing now. We found out pretty early on that our pillar of being able to have a profitable, sustainable model as fast as possible wasn’t happening. The CAC was really high. We weren’t getting the sort of engagement and direct deposit customers which are critical in banking to actually get. So we took a bold bet in 2016 where we took a B2B2C approach and started implementing banking as a service, which is our strategy today.
On practicing bold leadership on an individual level
I think it’s contagious. When you’re bringing that innovative sort of passionate mindset and energy to work, then you engender that with everyone that you work with. It creates this ripple effect and you get others to buy in and work with you and you create a lot of tremendous momentum from that. I think it’s (important to) remain keen to continuous learning. This space is moving so fast. We can’t rest on our laurels for more than six months (before) you’ve got to innovate again. And so it’s people that make sure that they’re looking at what their customers are saying – and responding to that – but also looking at the competitive environment, how is it changing, how is it evolving … (That’s) how you remain competitive in the space.
A new partnership between American Express and New York City-based fintech Extend will give small businesses in the U.S. new options when it comes to using and deploying virtual cards. Specifically, U.S. companies with eligible American Express Business Cards will be able to use Extend’s technology to enroll and create virtual cards in as little as five minutes.
American Express EVP for Global Commercial Services Dean Henry highlighted the increased use of virtual cards during the pandemic – and the continued interest companies have in using the technology to facilitate contactless payments. “With today’s announcement, our Business Cards can work even harder for our Card Members through this quick and easy virtual Card option,” Henry explained. “This gives our Card Members enhanced flexibility and control across their day-to-day business spending, including for B2B purchases and enabling their employees to pay for expenses.”
The statistics on virtual card use by businesses support Henry’s assessment. A study conducted by American Express indicated that 39% of U.S. businesses expect to increase their use of virtual cards over the next 12 months. With regard to the specific benefits available via the new offering from Extend and American Express, there are at least seven – not including touchless payment ability – worth highlighting. These advantages include fast onboarding, flexibility and ease of use, spending controls due to the use of tokenization, better security and protection against fraud, streamlined expense reporting, automated card issuance, and the ability to earn rewards.
The two companies also noted in their partnership announcement that they planned to offer additional features and expand functionality in the future. Among the new functionalities anticipated is the ability to add American Express virtual cards to mobile wallets to facilitate in-store transactions.
“This market is rapidly growing as businesses realize just how versatile and effective virtual Cards can be,” Extend CEO Andrew Jamison said, “whether it’s managing subscription payments, equipping employees with secure company cards, or developing custom payment solutions with our APIs.”
Founded in 2017, Extend made its Finovate debut two years later at FinovateSpring in San Francisco, California. That same year, the Manhattan-based company raised $11 million in Series A funding in a round led by Point72 Ventures and the FinTech Collective, giving the firm a total capital of $14 million. More recently, the virtual card platform company forged partnerships with Mastercard and TSYS in the fall of 2020, and with City National Bank in January of this year.
American Express joined the Finovate alum club via its 2015 presentation at our developers conference FinDEVr Silicon Valley. At the event, members of the company’s engineering team discussed the evolving role of B2B payments in the e-commerce ecosystem, and how American Express was “bringing commercial payments to the cloud.”
A strategic partnership between Finovate alums Q2 and Plaid will give 18 million consumers across more than 500 banks and credit unions the ability to access 5,500+ fintech apps and other digital banking features. The alliance, announced today, combines Q2’s digital banking platform and Plaid’s open finance platform, Plaid Exchange. The goal is to provide customers with a secure and reliable way to both connect accounts to digital apps and services, as well as give them the tools to manage these connections.
“At Plaid, we believe all consumers should have access to digital financial services, regardless of where they bank, and the Q2 team shares this same mission,” Plaid director of strategic partnerships Reed Bouchelle said.
The partnership also will enable Q2’s financial institution customers to leverage Plaid’s APIs to give accountholders fast, easy, and secure digital account funding. New customers will be able to save time and effort by linking their bank accounts during the account opening process to fund new accounts in seconds rather than days.
“Our partnership extends beyond data access,” Bouchelle continued. “With Plaid, Q2 financial institutions will enable consumers to more easily fund new accounts and see a holistic view of spending and net worth across all of their financial accounts,” he said. Bouchelle credited a quartet of Plaid solutions – Exchange, Auth, Identity, and Transactions – for ensuring the comprehensive nature of the new functionality.
Q2 Chief Technology Officer Adam Blue highlighted the needs of financial institutions serving diverse communities in emphasizing the importance of the partnership with Plaid. “To stay competitive in the market, and provide unparalleled customer experiences,” Blue said, “FIs need to offer the services their customers expect. By integrating Q2’s digital banking platform with Plaid Exchange, Q2’s financial institutions will be able to effectively partner with fintechs while providing improved end-user experiences to their customers.”
Austin, Texas-based Q2 was founded in 2004 and made its Finovate debut (as Q2ebanking) at FinovateSpring seven years later. The digital banking and lending solution provider went public in spring of 2014 under the ticker symbol QTWO, and currently has a market capitalization of $4.8 billion. The company’s Plaid partnership announcement comes just weeks after Q2 inked a deal with Stanford Federal Credit Union ($3.6 billion in assets; 77,000 members) to deploy both its digital banking platform and its Q2 Innovation Studio. Q2 also recently announced core processing partnerships with b1BANK ($3.9 billion in assets), Citizens Bank of Edmond ($350 million in assets), and fellow Finovate alum Moven.
Financial data network Plaid works with more than 11,000 financial institutions to ensure broad access to the thousands of digital financial services built on its platform. Making its Finovate debut in 2014 as a presenter at FinDEVr SiliconValley where the company demonstrated its “API for Financial Infrastructure,” Plaid has become synonymous with the movement to democratize digital finance. The company secured a Series D extension – amount undisclosed – from American Express and JP Morgan in August and, later that month, announced a new partnership with advanced bank-to-bank transfer solutions company Astra. Earlier this month, Plaid announced a collaboration with Silicon Valley Bank to make the institution the first to offer ACH account token integration with its technology.
“With Silicon Valley Bank,” Plaid Head of Revenue and Partnerships Paul Williamson said when the partnership was announced, “thousands of fintech innovators now have access to an integrated payment processing solution that combines the power of SVB and Plaid to deliver seamless, convenient digital finance experiences.”
Plaid was founded in 2013 by William Hockey and Zachary Perret (CEO). The company achieved unicorn status in 2018 after securing a $250 million Series C investment that gave the San Francisco, California-based firm a valuation of $2.65 billion.
In a round led by Valar Ventures, Neo Financial, a fintech based in Alberta, Calgary and Manitoba, Winnipeg, has raised $50 million ($64 million CAD) in new equity funding. The fresh capital takes the Canadian company’s total funding to $89 million ($114 million CAD), and will help enable the company to add talent and launch new integrated fintech partnerships with retailers.
“Reimagining the way Canadians bank is no easy feat, but it’s a challenge that our team is taking head on,” Neo co-founder and CEO Andrew Chau said. “This raise is validation of not only the problem Neo is tackling, but (also) our team’s ability to solve it.”
Going live last year, Neo offered a high-interest savings account, and a no-fee Mastercard that offers up to 6% cash back at partnering companies and at least 1% cashback across all other spending, called Neo Card. Since its 2020 launch Neo has inked partnerships with more than 4,000 retailers, including a strategic partnership with Hudson’s Bay to power the company’s new Hudson’s Bay Mastercard offering. Today’s funding announcement comes on the heels of Neo’s purchase of office space in Winnipeg’s Exchange District, enabling the company to open a second headquarters in the city.
Joining today’s Series B were new investors Greenoaks Capital – which has backed fintechs and ecommerce innovators like Robinhood and Stripe – as well as South Korean challenger bank Toss, a unicorn valued at more than $7.3 billion ($9.4 billion CAD). Other investors included Breyer Capital, Golden Ventures, Afore Capitaal, Inovia Capital, Thornvest, and Maple VC. In addition to leading Neo’s Series B round, announced today, Valar Ventures also led the company’s previous round of funding – a $19.5 million (CAD $25 million) Series A round – in December 2020.
“As one of the largest Series B raises for a Canadian fintech, this new round of funding will allow us to continue building innovative products and features for all Canadians and businesses,” Chau said. “It’s an exciting time to grow our team from both our Calgary and Winnipeg offices.”
Neo Financial was founded by two of the co-founders of SkipTheDishes, an online restaurant food delivery firm launched in 2012. SkipTheDishes was acquired by JustEast four years later for $200 million.
