Author: David Penn

How Banks Can Beat Big Tech

How Banks Can Beat Big Tech
By David Penn Posted on
Categories: CEO Interview, Urban FT

From Big Tech to Big Retail, banks and other traditional financial services providers are facing a unique and potentially existential challenge These companies are leveraging their technology-first platforms, powerful brands, and history of innovation to draw customers away from relying on banks for a growing amount of their financial and banking needs.

We caught up with Richard Steggall, CEO of Urban FT, to talk about the world that banks find themselves in today and what they need to do in order to better engage their customers and ward off the challenge from Big Tech and Big Retail.

A Finovate alum for more than six years, Urban FT offers a white-label, B2B digital banking platform and includes financial institutions, brokerages, insurance companies and non-traditional FSOs among its customers.

How big is the threat that banks – smaller banks in particular – face from Big Tech companies?

Richard Steggall: When it comes to the threat regional banks and credit unions face from big tech, we’re seeing a true David versus Goliath moment play out. There is unprecedented pressure mounting for small FIs to digitize – fast – and for the majority of FIs, the pace is much faster than what their capabilities and resources allow. As FIs continue to fall behind the tech curve in delivering on the convenience consumers demand, they’re losing customers in the payments arena to the ‘Fantastic Four’ in payments (Paypal, Stripe, Square and Adyen). And in the long term, FIs risk leaving the door wide open for tech giants like Apple, Amazon and Google to become our bankers.

According to a recent report from McKinsey,  in order for regional banks and credit unions to preserve their market share, they must find a way to digitally transform the end-to-end “customer journey” by the end of 2022. No matter how large of a budget an FI has, that certainly does not leave much time for the digital overhaul that’s needed to achieve this lofty goal. As the same report outlines, transaction banking trails nearly a decade behind the technology industry when it comes to practices in customer-management and sales. These delays make a successful digital transformation of the customer journey a decidedly formidable – but certainly not unfeasible – vision for small FIs.

How can banks leverage their strengths to better compete with tech giants that are entering the banking services space?

Steggall: As I mentioned, the financial services industry is in the midst of a David vs. Goliath scenario. With big tech continuing to invade financial services – such as the November 2020 relaunch of Google Pay – some are prematurely saying that small FIs will soon become casualties of war. But, in reality, we’re still in the early battles and there’s no clear frontrunner yet. While regional banks and credit unions may not boast the tech savvy of fintech giants nor deep pockets of large bank conglomerates, they have a potentially more powerful weapon: the hearts of customers.

Reinforced by close community ties and unmatched trust, small FIs are ideally positioned to deliver personalized, innovative user experiences (UXs) that unlock meaningful, local economic development value rather than line the pockets of predatory big tech elites. This area is their strength and they need to home in and capitalize on it.

Moreover, they can benefit from the chinks in the armor of their competitors, as big tech’s approach to financial services is far from flawless. According to a recent Ponemon study, 86% of consumers are “very concerned” about how tech companies are using their personal information. Moreover, in good news for FIs, consumers still overwhelmingly trust banks more with their data than other industries, according to a report from nCipher Security.

This is the opportune moment for small FIs to cut in, striking a balance of innovation and ethics in digitizing. While big tech hoards consumer data to bolster other revenue streams like advertising, FIs can “wow” customers by using ethically sourced data to drive responsible personalization and superior UXs that safeguard privacy.

How do banks make the best of their newly-created digital experiences in a post-COVID world in which human-to-human interaction is again possible, if not preferred?

Steggall: While regional banks and credit unions have a leg up in trust and transparency, they also need to understand where their own weaknesses and risks lie. This exposure is largely in the 3Ds: data, digitization and deployment (of technology).

Customer data is truly the holy grail because it allows FIs to better serve consumers no matter where they lie on the financial spectrum. For example, if an FI knows a customer has college-aged children, there is a strong opportunity to be the thought leader on student lending. But there’s a fine line; in an environment where consumers feel surveilled, catchphrases like “convenience”, “personalization” and “user experiences” may lose their appeal.

By upholding the old adage “with great power comes great responsibility”, FIs can rise above big tech and continue to learn about their customers in organic ways that don’t find them creeping in on online activity. Rather, the purpose of technology deployment is to infuse ethically enhanced human touchpoints in all processes, such as allowing customers to provide pertinent financial information voluntarily that might help an FI build a profile.

Given that banks will never out-tech the tech titans, what is the most constructive way for financial institutions to understand and invest in technology, especially digital technology?

Steggall: In terms of digitization and technology deployment, one of the most pressing issues facing small FIs is the disjointed manner in which they’ve been innovating. To date, most small FIs have contracted with various third-party fintech vendors to complement their traditional commercial offerings with piecemeal digital tools and services, including remote deposits, remote credit card processing and wealth management dashboards.

While FIs need to rapidly adopt fintech and digitize their service offering to keep pace with consumer demands, digital transformation has largely been happening within a temporary, makeshift model. Though this ‘band-aid’ approach to innovation has bought FIs some time, it hasn’t healed the fundamental problem that’s restraining digitization. Rather, this framework has inadvertently staggered an infinite and vast maze of third-party fintech platforms – all using different forms of connectivity and technology languages. Sometimes, tools are not even directly connected to the banking core. Moreover, the countless agreements require ongoing vendor due diligence, contract reviews and audits. This cumbersome approach to fintech has overwhelmed some FIs with a complex labyrinth, deepening the innovation gap for regional banks and credit unions, in particular.  

Small FIs must break free of this constrictive fintech investment model and focus on centralizing the digital ecosystem so they can become more malleable, agile, and nimble in responding to surging digital demands. Rather than let the labyrinth get more twisted, a fintech banking core can serve to connect core banking functions with digital technology. In the long term, an effective fintech core will help FIs better scale and maximize the investments they make in technology.

What role does Urban FT play in helping banks and other businesses close the technology gap?

Steggall: At Urban FT, our mission is succinct but powerful: “Dream Big, Deliver Exceptional.” We’re focused on empowering FIs – especially local and regional banks and credit unions –  to better scale continuous innovation so they can gain a competitive advantage and protect their market share from the likes of big tech. We see ourselves as the bridge between FIs and fintech innovation.

As an example of our commitment to help close the technology gap, our X-35 FinTech Core is an API-first, developer-friendly and cloud-based technology hub that operates alongside and in tandem with an FI’s banking core or payment processor. Essentially, it consolidates any existing tools and all fintech solutions an FI wants to deploy. By placing all solutions within one centralized platform, the full digital ecosystem becomes accessible as part of a singular vendor relationship that’s governed by one contractual relationship. X-35 has been designed to enable FIs of any size to rapidly and continuously launch to market truly innovative products. And now they can do this without the prohibitive expenses they were previously faced with.

Urban FT helps advance innovation once thought of as impossible for small FIs, providing both the foundation and the plumbing so that our clients can deliver tomorrow’s fintech innovations today.

Are there factors that tend to make a given company’s digitization initiative more likely to succeed than not? Do the success stories have a similar theme?

Steggall: While digital transformation certainly needs to be a priority for FIs of all sizes, innovation for the sake of innovating is not the answer. In today’s fast-paced marketplace, consumers are signaling desires for more human touchpoints and sometimes this touch can get lost in the midst of technology adoption – especially when resources are limited.

To create long-term value, small FIs should continue their humanized, high-touch approach to banking. This means deeply understanding the most pressing pain points their customers and potential customers are facing. Being a problem-solver will help FIs reach broader audiences, attract more customers, launch more services and clear more transactions. For example, at least 6% of the population – over 14.1 million adults – are unbanked in the United States. By exploring how to serve the unbanked and underbanked, FIs can tap into new segments of their communities and connect them with tailored services that improve their financial health.

In particular, a successful digital transformation requires an FI to think carefully about how two very different operating models – one current and one future state – should be integrated and operate in tandem under the same roof. Broadly speaking, there are three models for this integration: full integration, a digital center of excellence, and a separate digital department. For most small FIs, a fully integrated model is not scalable whereas a separate digital department does not engage enough of the organization. We see the most success when the digital center of excellence is set up, building a bridge to fintech innovation.

Photo by Mikhail Nilov from Pexels

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More Than $2.8 Billion Raised by 14 Alums in Q2 2021

More Than $2.8 Billion Raised by 14 Alums in Q2 2021
By David Penn Posted on
Categories: Funding, Fundings, Quarterly Funding

Finovate alums enjoyed their biggest Q2 fundraising to date. A total of 14 alums from both our Finovate and FinDEVr conferences raised in excess of $2.8 billion in equity funding over the course of April, May, and June of this year.

For those who wondered if the second quarter of 2021 would represent a continuation of the strong performance Finovate alums recorded in Q1 of 2021, the answer is an unqualified “yes.” In fact, Q2 2021 funding not only exceeded all previous second quarter tallies; the sum also rivaled all previous first quarter alumni funding totals, as well.

Previous quarterly comparisons

  • Q2 2020: More than $975 million raised by 15 alums
  • Q2 2019: More than $1.8 billion raised by 29 alums
  • Q2 2018: More than $1.5 billion raised by 25 alums
  • Q2 2017: More than $726 million raised by 25 alums
  • Q2 2016: More than $510 million raised by 23 alums

Most of the funding in the second quarter came in the month of June, both in terms of the amounts raised and the number of alums involved. Modest second quarters are no surprise, and this year’s slow April – with only a pair of alums announcing funding – is reminiscent of last year’s slow May in which only three alums announced funding.

Top Equity Investments for Q2 2021

  • NuBank: $750 million
  • Plaid: $425 million
  • Trulioo: $394 million
  • Klarna: $369 million
  • Scalable Capital: $180 million
  • Paysend: $125 million
  • SmartAsset: $110 million
  • TipRanks: $77 million
  • Arkose Labs: $70 million
  • Credit Sesame: $51 million

Four big fundraisings dominated the second quarter for Finovate alums. NuBank’s $750 million was the clear standout, but impressive sums were raised by three other alums – Klarna, Plaid, and Trulioo – in Q2 also. Altogether, the top ten equity investments for Finovate alums in the second quarter represented $2.55 billion or more than 91% of the total raised by alums in Q2 2021.

Here is our detailed alum funding report for Q2 2021.

April: More than $440 million raised by two alums

May: More than $303 million raised by four alums

June: More than $2.1 billion raised by eight alums

If you are a Finovate alum that raised money in the second quarter of 2021 and do not see your company listed, please drop us a note at research@finovate.com. We would love to share the good news! Funding received prior to becoming an alum not included.

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Cross River Bank Helps Bring Fly Now Pay Later Trip Financing to the U.S.

Cross River Bank Helps Bring Fly Now Pay Later Trip Financing to the U.S.
By David Penn Posted on
Categories: Daily news, Partnership Outlook

There may be few businesses more excited about the prospect of a post-COVID era than those in the travel industry – which makes the news of a collaboration between U.K.-based Fly Now Pay Later and BaaS provider Cross River Bank all the more musical to homebound ears. The partnership will enable Fly Now Pay Later to leverage Cross River Bank’s FDIC license to offer its travel financing solution in the United States. The company’s financing solution, available at checkout as well as via the Fly Now Pay Later’s Anywhere app, will enable U.S. travelers to book trips and spread the cost of travel over time.

“The recovery of travel is likely to be gradual, but when it happens, we hope that by giving people the freedom to book a trip and pay at a pace that works for them, will help spur reservations,” Fly Now Pay Later CEO Jasper Dykes said in May during the company’s recent funding announcement. “There are tens of thousands of people who have families around the world who need a frictionless way to finance their flights. By removing financial boundaries, we hope to open the post-COVID-19 world for travelers and reconnect people with their friends and families around the globe.”

For Cross River Bank, the partnership announcement with Fly Now Pay Later comes only a few weeks after the company completed its acquisition of data and analytics firm PeerIQ. In addition to supporting Cross River’s mission to provide greater access to financial services and enable greater financial inclusion, the acquisition will enable Cross River to expand its offerings to include end-to-end SaaS solutions, advanced portfolio analytics, as well as further data aggregation capability and risk management tools. In June, Cross River Bank also unveiled Cross River Digital Ventures, a venture capital division that will invest in companies innovating in lending, payments, investing, and fintech that offer “strategic value” to both Cross River and the technology industry more broadly.

“By providing strategic support to early-stage companies we can build on the Cross River momentum to fuel and strengthen the next wave of fintech innovation,” Cross River Head of Corporate Development Hillel Olivestone said. “These are promising startups that align with Cross River’s mission and values, and we look forward to working with them to grow and expand the fintech ecosystem.”

Photo by Anton Atanasov from Pexels

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Open Finance Platform Moneyhub Secures $18 Million to Fuel Expansion

Open Finance Platform Moneyhub Secures $18 Million to Fuel Expansion
By David Penn Posted on
Categories: Alumni News, Alumni profile, Daily news, Funding, Moneyhub

In its biggest investment round to date, U.K.-based Open Finance platform Moneyhub has secured $18 million in funding to support its expansion into new markets. The round was led by Sir Peter Wood, founder of Direct Line and Esure, via his new investment vehicle, SPWOne.

“It is incredibly rewarding to be able to deliver results to both investors and clients in this truly transformational landscape,” Moneyhub CEO Samantha Seaton said. “It is a fantastic vote of confidence from Sir Peter and his team, who are renowned for foreseeing game-changing growth opportunities – and a ringing endorsement of our team and our strategy for applying new technology where the rules of engagement have been turned upside down.”

A Finovate alum for more than four years, Moneyhub demoed the SmartAsset feature of its solution at FinovateEurope 2017. At the event, the company showed how SmartAsset’s AI-driven, intelligent messaging functionality helps users better manage their finances. In the years since, Moneyhub has grown into a leading open finance and data intelligence platform that offers both API and white label solutions to help businesses leverage personalization to enhance the customer experience. In the U.K., Moneyhub currently provides customer-permissioned financial data access to more than 200 financial services providers via 584 connections with an additional 3,500 connections in Europe.

Moneyhub’s funding announcement comes on the heels of a new partnership with Triodos Bank, a sustainable bank that supports working toward positive social, environmental, and cultural change. Founded in 1980, Triodos Bank serves more than 700,000 banking customers in the U.K., Germany, Spain, the Netherlands, and Belgium. The bank has lent more than £8 billion to support projects around the world that are dedicated toward “benefitting the people and (the) planet.” Triodos Bank also co-founded the Global Alliance for Banking on Values (GABV), a 63-bank network designed to promote sustainable banking.

“We are pleased that our customers will now be able to integrate their everyday banking with Moneyhub’s app and enjoy the many benefits of Open Banking, such as helping them to easily track spending and set budgets to help manage money,” Triodos Bank U.K. head of retail banking Gareth Griffiths said.

In addition to its partnership with Triodos Bank, Moneyhub teamed up with mortgage market insights and intelligence firm Hometrack, shared branch banking innovator OneBanks, and adtech specialist Zedosh this summer; partnered with financial health platform Level Financial Technology and charitable fundraising app Kynder this spring; and began the year collaborating with professional services company Aon and ESG investment platform The Big Exchange.

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Strands and Credolab Bring Smart Money Management to Banks

Strands and Credolab Bring Smart Money Management to Banks
By David Penn Posted on
Categories: Backbase, CredoLab, FICO, Finovate Global, SplitIt, Strands, Temenos

Barcelona, Spain-based Strands and Singapore’s credolab announced a partnership this week that will give banks a new solution to help their customers make better decisions with their finances. The collaboration will embed credolab’s credit scoring technology into Strands personal finance management platform, giving banks the real-time ability to obtain relevant customer insights with embedded risk assessments.

“Strands’ expertise in developing customizable digital money management solutions for banks will add great value to our clients globally,” credolab founder and CEO Peter Barcak said. “We are confident that our embedded technology will help Strands develop solutions to promote a more delightful way of banking that empowers customers with meaningful interactions, and makes them happier, more loyal, and more profitable.”

In their joint statement, Strands and credolab noted that retail banks often face challenges when it comes to improving customer engagement and providing long-term value to their customers. They blame a lack of relevant data, as well as the inability to generate significant insights into customer behavior and preferences. The integrated solution will serve as a “one-stop shop” for banks to realize new potential revenue sources by helping their customers be smarter with their money.

“By partnering with credolab, Strands is in a stronger position to deliver state of the art financial management solutions to banks worldwide,” Strands CEO Erik Brieva said. “This collaboration will allow us to embed next generation scoring technology into our AI-driven product suite, meeting financial institutions’ increasing demand for smart, highly customizable, and scalable FinTech white-label solutions.”

Credolab demonstrated its CredoScore technology at FinovateAsia 2018. This spring, the company has announced a collaboration with regional credit risk and decision analytics company Qarar to help the UAE-based company enhance its credit risk scoring processes.

Strands made its most recent Finovate appearance last month at FinovateAsia Digital. Teaming up with Tearsheet to publish its guide to “Banking as a Service,” in May, Strands began the year with news that CEO Brieva had been named to Analytics Insight’s Top 10 Most Inspiring CEOs.

Here is our look at fintech innovation around the world.

Asia-Pacific

Sub-Saharan Africa

Central and Eastern Europe

Middle East and Northern Africa

Central and Southern Asia

Latin American and the Caribbean

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Karat Financial Banks $26 Million for its Credit Card for Digital Creatives

Karat Financial Banks $26 Million for its Credit Card for Digital Creatives
By David Penn Posted on
Categories: Daily news, Funding

This week in our Finovate Fintech Halftime Review eMagazine, Senior Analyst Julie Muhn explored the trend of niche banking. Niche banking leverages the current explosion in identity-awareness to create unique and tailored banking experiences for members of a growing number of different communities.

The news that Karat Financial, a Los Angeles, California-based company that offers a credit card designed for digital creatives, has raised $26 million in Series A funding is the latest indication that this trend may only be growing stronger.

Launching its “Black Card for Creatives” last year, Karat is targeting the digital influencer economy of YouTubers, Twitch livestreamers, and others who often struggle to translate their online earnings into creditworthiness in the eyes of traditional lenders and banks. And while this challenge extends to a broader population than just digital creatives, there is no small benefit for a banking services company in being associated with one of the more vibrant developments in 21st e-commerce and entertainment.

Karat offers a business card with cash back rewards, and zero-cost credit advances for sponsorship payments. The corporate card acts much like an American Express card, with balances paid off monthly. This lack of interest charges – as well as Karat’s no-fee policy – helps keep the cost of using the card as low as possible, a priority for digital creatives with potentially volatile revenue sources.

To this point, in lieu of a traditional bank application, Karat wants to know about Instagram followers and sponsorship deals, YouTube subscriber counts and Twitch donations in order to get digital creatives the access to credit that is commensurate with their success as online influencers.

Karat was founded by Eric Wei, a former product manager at Instagram, and Will Kim. This week’s Series A round – which consisted of $15 million in debt financing and $11 million in venture funding – was led by Union Square Ventures and featured participation from GGV Capital and SignalFire.

Photo by Castorly Stock from Pexels

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Opportunities for AI in Financial Services in Asia

Opportunities for AI in Financial Services in Asia
By David Penn Posted on
Categories: Crayon Data, DreamQuark, FinovateAsia 2021, Report series

FinovateAsia 2021 is over. But we’re keeping the doors open and the lights on for a few more days to let those of you who attended our digital fintech conference last month to check out any of the keynote addresses and panel discussions that you might have missed. The platform will remain available to FinovateAsia 2021 attendees until July 6th.

One of the hot topics in Asia – like in the rest of the world – is the rise of artificial intelligence, or AI, and its potential impact on fintech and financial services. At FinovateAsia this year, DreamQuark’s Mikko Hietanen and David Destemberg led a virtual meeting on how to use AI in order to help customer to select ESG investments. Among our demoing companies, Singapore-based Crayon Data demonstrated its AI-led platform, maya.ai, that enables enterprises to create highly personalized experiences for their customers.

The latest Big Read on AI in financial services in Asia comes from TechWireAsia, which reviewed a report from McKinsey titled AI in banking: Can banks meet the challenge? as a way of opening up the discussion. The TechWireAsia overview has been making the rounds throughout the fintech Twitterverse, and its support of McKinsey’s conclusions – that banks, including those in the Asia-Pacific, need to be wary of competition from digital challengers that may be quicker to embrace AI – reminds us of how big the stakes are for traditional financial services providers.

Importantly, innovations in AI are not limited to front- or customer-facing solutions. In fact, in Southeast Asia – countries like the Philippines, Indonesia, Malaysia, and Singapore – some of the biggest gains for AI technology deployment have been in backend operations. This is an area where banks can experiment and test new, AI-powered, solutions – and even develop a more AI-friendly culture, if necessary – before attempting to deploy more customer-facing, (and potentially brand-impacting) AI-based technologies.

That said, as far as the McKinsey report is concerned, for those financial institutions that do pursue what the report calls an “AI-bank” strategy, the rewards could be huge. McKinsey estimates that AI “can potentially unlock $1 trillion of incremental value for banks, annually.” This value is represented in more than 25 different AI use cases capable of helping banks grow revenues, lower costs, and “uncover new and previously unrealized opportunities” due to an AI-given ability to generate key customer insights from massive volumes of data.

And while offering much in the way of a carrot for banks to move carefully and quickly to adopt AI-based technologies, the McKinsey report does wield a stick, as well. “Banks that fail to make AI central to their core strategy and operations,” the report reads, “will risk being overtaken by competition and deserted by their customers.” The report highlights four key trends – rising customer expectations, the accelerating pace of AI adoption by financial institutions, the challenge of digital ecosystems, and competition from Big Tech – that are most likely to compel banks and financial services companies to act.

Photo by Amy Chandra from Pexels

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Human Resources Management Innovator Gusto Teams Up with Xendoo

Human Resources Management Innovator Gusto Teams Up with Xendoo
By David Penn Posted on
Categories: Alumni News, Daily news, Gusto

Cloud-based payroll benefits and human resource management innovator Gusto announced a partnership with online accounting and bookkeeping firm Xendoo to help launch Xendoo Payroll. Gusto Head of Partnerships Somrat Nyogi described the partnership as part of an overall trend toward digitization of key business operations. “Through our partnership, Xendoo is combining payroll and bookkeeping services to deliver financial peace of mind to small business owners,” Nyogi said.

Not only is this week’s partnership announcement part of a relationship between the two companies that goes back “for years,” but the collaboration, according to Xendoo CEO and founder Lil Roberts, also anticipates the beginning of a “long-term deeper tech partnership” between the two firms.

“Partnering with Gusto was a natural decision as we both strive for the same outcome: taking the stress out of finances for small business owners so they can focus on what matters most – growing their businesses,” Roberts explained. “Integrating Gusto’s embedded payroll into our new Xendoo Payroll solution will allow us to better serve our customers and expand our offering to create an all-in-one-place solution for the SMB community.” 

Available via API, Gusto Embedded Payroll enables developers to embed and customize payroll functionality into their platforms. In addition to Xendoo’s launch, Gusto reported that “more than a dozen” companies already have begun to deploy the new payroll solution. Moreover, these firms will be able to leverage their new payroll functionality to gain deeper insights into their customers and discover opportunities to provide additional services. Among those first out-of-the-gate with Gusto Embedded Payroll is SMB banking platform Novo, which will become one of the first platforms of its kind to offer integrated payroll services.

“Payroll is one of the biggest expenses for small businesses, and being able to integrate it more deeply into the whole financial picture opens up many opportunities to optimize cash flow and operations,” Novo VP of Product Matt Hamilton said. “We’re excited about working with Gusto to provide the most flexible payroll experience to our businesses.”

Making its Finovate debut as ZenPayroll in 2014, Gusto was founded in 2011 and is headquartered in San Francisco, California. From its origins as a payroll services startup, Gusto has grown into a small business human resources management platform that helps companies with employee onboarding, benefits, insurance, and other HR operations. Plans start as low as $45/month and more than 100,000 businesses are on the Gusto platform.

Gusto has raised more than $516 million in funding, and includes Fidelity Management and Research Company, and Generation Investment Management among its most recent investors. Earlier this month, the company announced its first acquisition, a startup called Ardius that automates tax compliance for companies with R&D tax credits. Joshua Reeves is Gusto CEO.

Photo by Enric Cruz López from Pexels

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True North: A Celebration of Canadian Fintech

True North: A Celebration of Canadian Fintech
By David Penn Posted on
Categories: Boss Insights, Cinchy, Coconut Software, Dbilia, Flybits, FormHero, JUDI.AI, List series

Canada Day is this week, July 1st. The holiday – colloquially considered by some to be Canada’s “birthday” – celebrates the decision of three provinces in 1867 – modern-day Nova Scotia, New Brunswick, Ontario, and Quebec – to unify and form the country we now know and love as Canada.

Last year, we launched our inaugural recognition of fintech companies – Finovate alums all – who were founded in or operate out of Canada. From Calgary, Edmonton, and Montreal to Ottawa, Toronto, and Vancouver, Canadian fintechs have gained a reputation for cutting-edge innovation in everything from helping small businesses secure critical financing during the COVID pandemic to advancing new use cases for the latest cryptocraze: non-fungible tokens (NFTs).

Today, we honor Canada Day with a salute to those Canadian fintechs that have joined the Finovate family since our last reporting from the Great White North.

Boss Insights (Toronto, Ontario) – demo – Business-data-as-a-service innovator bridging the data gap between banks and their business customers.

Coconut Software (Saskatoon, Saskatchewan) – demo – Customer engagement platform for financial institutions to enhance the digital and physical engagement of both staff and customers.

Dbilia (Vancouver, British Colombia) – demo – A digital memorabilia marketplace that leverages Blockchain technology and NFTs to empower creatives and enable fans to purchase their work. Best of Show winner.

FormHero (Toronto, Ontario) – demo – A low-code SaaS platform that helps enterprises build intuitive, digital front-end experiences to help them manage and orchestrate complex data collection.

JUDI.ai (Vancouver, British Colombia) – demo – An AI-driven analytics platform to enhance small business lenders’ loan origination processes with instant cash flow analysis, automated underwriting, as well as continuous monthly monitoring and real-time reporting.

We also saw the return of Flybits this spring. The Toronto-based company demonstrated its MyCard solution that consolidates all of a bank’s products and services on the bank’s existing mobile app and provides dynamic recommendations tailored to the customer’s needs.

Looking to FinovateFall in September, what can we expect from fintech’s Canadian contingent? This week we introduced the first wave of demoing companies for our annual fall fintech event and were happy to see that Finovate veteran Cinchy, from Toronto, Ontario, will be back. With FinovateFall marking the return of live demos after more than a year in a digital-only format, we can’t wait to see what other innovative Canadian fintechs will join in the fun.

Photo by Andre Furtado from Pexels

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Investment App Stash Grabs Financial Literacy Platform PayGrade

Investment App Stash Grabs Financial Literacy Platform PayGrade
By David Penn Posted on
Categories: Alumni News, Alumni profile, Daily news, Mergers & Acquisitions, Stash

Along with the fanfare surrounding so-called meme stocks and the “power of the individual trader” last year, there was a dark side. Investing and trading platforms that had embraced gamification were being accused of not fully preparing their customers for the dangers involved in stock trading – especially in volatile, illiquid stocks. Critics demanded that these platforms spend more time – and money, if necessary – educating their customers for their own benefit as well as for the good of the investing and trading industry, which has recovered impressively since the dot.com bust 20 years ago.

This is the spirit in which we take the news that Stash, a New York-based, mobile-first investment platform that made its Finovate debut in 2017, has acquired financial literacy platform PayGrade. The terms of the deal were not disclosed, but the acquisition marks Stash’s first acquisition and its biggest fintech news headline since a whopping $125 million Series G fundraising back in February.

Brandon Kreig, CEO and co-founder of Stash said that the acquisition was an example of the company’s mission to “empower everyday Americans to invest for the future.” He noted that personal finance education is not emphasized in American schools – with 43 out of 50 states not requiring coursework in personal financial management – and that an overwhelming number of American adults – as much as 80% – live “paycheck to paycheck.”

“With PayGrade,” Kreig explained, “Stash will provide teachers, parents, and children with interactive tools to learn effective money management skills that will last a lifetime.”

Stash enables users to begin investing on its platform with as little as $1 a month. The company’s “Stash Beginner” program allows investing – including fractional share investing – as well as banking, portfolio recommendations, savings strategies, and a Stock-Back card that helps users earn stock every time they use the card for shopping. Stash also offers Growth and Plus plans that add features such as portfolios for children, premium research, and enhanced bonuses for using the Stash Stock-Back card.

Purchasing PayGrade is not the only way that Stash will support the cause of financial literacy this year. Stash’s acquisition news arrived just a few days before the company announced that it was partnering with the Suh Family Foundation and the Big Yard Foundation to launch a financial literacy program over the summer. Dubbed the Stash101 Summer School, the program will be conducted in partnership with Portland Public Schools and will give 160 middle school students an introduction to vital money management and wealth building.

“From investing and banking to education and retirement planning, we believe everyone has the power to achieve greater financial freedom—one step at a time.” Krieg said. “We’re thrilled to deepen our commitment to childhood education through Stash101 and this special summer school program in Portland with the Suhs and Big Yard. It’s going to be a tremendous four weeks for the kids.”

Stash101 is part of the Portland Interscholastic League Trajectory Math Program, which provides additional learning resources for historically underserved students. The course will include a simulated economy experience in which the students will complete tasks like renting desks, while earning a salary and learning about the difference between savings and credit. The classes will be held between July 6 and July 27 at a pair of schools in the Portland School system.

Photo by Anna Nekrashevich from Pexels

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Raisin Teams Up with Texas Bank to Launch its Savings-as-a-Service Solution in the U.S.

Raisin Teams Up with Texas Bank to Launch its Savings-as-a-Service Solution in the U.S.
By David Penn Posted on
Categories: Daily news

Technology supergeniuses and uber-popular podcasters aren’t the only ones choosing to set up shop in the Lone Star State these days. German savings marketplace Raisin has gone live with its first U.S. partner bank – Dallas, Texas-based MapleMark Bank – launching its term deposit products o MapleMark’s digital platform.

“Together with MapleMark Bank, Raisin U.S. is pursuing Raisin’s core mission of breaking down barriers to better savings and investments,” Raisin CEO Tamaz Georgadze said. “The U.S. deposit market hasn’t seen an innovation in decades. As a pioneer in the deposits space across Europe, it made sense for us to enter the American market by modernizing one of the most important and popular U.S. deposit product categories.”

Raisin made its choice of MapleMark known back in April. The integration of Raisin’s savings-as-a-service technology will enable MapleMark to engage new customers beyond its current private banking base. Raisin’s solution will allow MapleMark’s affluent clients to access personalized certificate-of-deposit products easily without having to open multiple, potentially unrelated banking accounts just to meet their cash savings goals. MapleMark Chief Financial Officer Willy Wolfe said that the partnership was a “win-win” for both the bank and its customers, and changed what historically had been a long, complex, and expensive undertaking into a process that is “instantaneous and simple.”

“Being able to generate cost-effective individualized deposit products at the click of a button advances MapleMark’s digital positioning in a highly competitive field, while also simplifying funding for the bank,” Wolfe explained.

Raisin’s solution enables financial institutions and their clients to personalize term deposits, including a schedule of projected outflows. Banks and customers can also choose to customize market-linked products to add exposure to potential upside from the market while still benefitting from the protection of a time deposit. Raisin’s pre-built term solutions for ladder, liquidity, and market-linked products are available to customers, as well.

Founded in 2012 and launched from its Berlin, Germany headquarters a year later, Raisin has place $32 billion for 335,000 customers in more than 30 European countries and more than 100 partner banks. Named one of Europe’s top five fintechs for 2019 and 2020, Raisin has raised $206 million in funding from investors including PayPal Ventures and Thrive Capital.

Photo by Elle Hughes from Pexels

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Partner Power: Interface.ai Brings Intelligent Virtual Assistants to Dover FCU

Partner Power: Interface.ai Brings Intelligent Virtual Assistants to Dover FCU
By David Penn Posted on
Categories: Alumni News, Daily news, Interface.ai, Partnership Outlook

The 43,000+ members of Dover Federal Credit Union (DFCU) are the latest beneficiaries of the marriage between AI and customer care that has been a growing feature of the customer experience in financial services. The Delaware-based institution, with more than $600 million in assets, has teamed up with interface.ai to leverage the company’s Intelligent Virtual Assistant (IVA) in its call center operations initially, before expanding the technology to DFCU’s website, online, and banking services.

“The IVA will enable us to create a seamless experience for members across all of our contact channels,” DFCU VP of Marketing & Digital Experience Tyler Kuhn said. “It will also help to continue to create efficiencies across the organization. With the ability of the technology to continuously learn and improve, we will be able to adapt to new member needs and evolve. Working with interface.ai also allows us to retain our personal touch in every conversation through their neutral voice-enabled system that makes every voice-interaction with the IVA, human-like.”

In the partnership announcement, Kuhn recalled pandemic-era call center volumes that were twice as large as usual and had a major impact on DFCU’s ability to serve its members at a time of crisis. Finding no traditional solution to the challenge, Kuhn said that interface.ai’s IVA had a number of key features that DFCU needed in order to effectively respond to its members. Focusing on these critical issues – eliminating support bottlenecks, improving operational efficiencies, and enhancing the overall member experience – according to Kuhn, is what led DFCU to interface.ai.

“In our search, we discovered that interface.ai’s IVA would enable us to instantly respond to member inquiries around the clock, while maintaining high service levels – ultimately leading to enhanced member experiences and further optimizing our operational costs by creating efficiencies across the organization,” Kuhn explained.

Interface.ai won Best of Show in its Finovate debut last year, demonstrating its out-of-the-box, “personal teller” that uses human-level, natural language to enable call centers to automate 60% of their calls in 60 days. Since then, interface.ai has forged a number of partnerships with banks and credit unions including collaborations with Pasadena Service Federal Credit Union in May, with America’s Credit Union based in Washington State in April and, in December, with Dallas, Texas-based Neighborhood Credit Union.

Founded in 2018, interface.ai is headquartered in San Mateo, California. Srinivas Njay is founder and CEO.

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