Author: Julie Muhn (@julieschicktanz)

How Samsung’s Payment Card Made it to the U.K.

How Samsung’s Payment Card Made it to the U.K.
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni profile, Samsung

After teasing the launch of its debit card in the U.S. earlier this year, Samsung announced that its digital debit card, the Samsung Pay Card, is now available in the U.K.

To make the launch possible, Samsung has teamed up with Curve, a fintech that consolidates all of a user’s existing Mastercard and Visa payment cards. The London-based company makes all of a user’s cards contactless and compatible with Samsung Pay.

Users will receive access to Curve features such as peer-to-peer money transfers, instant notifications about spending, competitive foreign exchange rates, 1% cash back on purchases made with a select group of three merchants, and 5% cash back on purchases made at Samsung.com. Samsung Pay Card users will also be able to use Curve’s Go Back in Time feature that allows them to switch payments from one card to another for up to 14 days after the purchase was made.

The deal is a win-win for both companies; Samsung will benefit from Curve’s e-money license with the U.K. Financial Conduct Authority, and Curve will gain from an increase in users. Interestingly, however, existing Curve users cannot also apply for a Samsung Pay card. As other sources have pointed out, the reason for this exclusion isn’t entirely clear.

“At Samsung we believe in the power of innovation and, through our partnership with Curve, the Samsung Pay Card brings a series of pioneering features that will change the way that our customers manage their spending, with their Samsung smartphone and smartwatch at the heart of it,” said Conor Pierce, Corporate VP of Samsung U.K. and Ireland. “This is the future of banking and we look forward to continuing this journey with our customers.”

Photo by Kote Puerto on Unsplash

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FIS Unveils Subscription Model for Core Banking

FIS Unveils Subscription Model for Core Banking
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, FIS

Fintech giant FIS has adopted the subscription model that has proven popular in selling everything from wine to digital media to diapers. The Florida-based company launched a subscription core banking solution today called ClearEdge.

ClearEdge is geared specifically to serve community banks and offers a bundle of technologies to help them modernize their operations and provide a better customer experience. The flat-fee, month-to-month subscription model doesn’t require lengthy terms and it eliminates liquidated damages and exclusivity requirements.

“We are committed to making it as easy as possible for our qualifying community bank clients to access the advanced technology they need to offer modern, differentiated products and services to their customers,” said Head of Global Core and Channels, Americas at FIS Rob Lee. “ClearEdge takes that commitment to the next level with a powerful offering that we believe will be a game-changer for many community banks.”

“The ability to bundle solutions relative to our business needs creates the opportunity for us to be more creative and flexible while better controlling our back-office expense,” said John Dickson, chief operations officer at Coastal Community Bank. “Plus, it just makes sense in today’s volatile market.”

As the bank-fintech partnership ecosystem strengthens and the uncertainty of the COVID-19 economic environment persists, we can expect to see more subscription-type models from tech providers. The increased flexibility, combined with the ability to pick-and-choose solutions that are tailored to each individual organization, is a model that is better suited to modern banking requirements.

Photo by Yoann Boyer on Unsplash

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How Empowering the Underbanked Will Create the Next Big Investment Opportunity

How Empowering the Underbanked Will Create the Next Big Investment Opportunity
By Julie Muhn (@julieschicktanz) Posted on
Categories: Guest Post

The following is a guest post by Borys Pikalov Head of Analytics and Cofounder at Stobox.

One of the greatest challenges in fintech is reaching the unbanked. Accessing poor communities is operationally complicated and their use of financial services is very limited.

Microfinancing institutions are only a partial solution and traditional loans do not work as an investment vehicle because they are risky for both parties: banks don’t want to give, and poor don’t want to take. To solve this puzzle we may use two creative concepts from financial engineering.

Individual investment contract

Instead of taking a loan, people promise part of their future income in exchange for money. This reduces the risk for farmers in case they cannot pay off the debt. This is already being practiced when corporations provide education grants to poor students in exchange for future employment.

Loan securitization

Instead of taking a single loan from banks, real estate developers issue debt securities and sell them to many institutions. Thus, the loan is divided into many small parts that may be traded on a secondary market, which spreads the risk for parties giving the credit. For conventional real estate loans, the maximum debt-to-value ratio is ~60%, while for securitized loans it is ~90%, which means that 50% higher risk is acceptable.

Personal securities

Combining these two concepts we arrive at personal securities – individual investment contracts issued in the form of securities that can be divided into small parts and traded on a secondary market. There is already an example of a personal securities offering in use: a software developer offered a part of his future income in order to move to Silicon Valley. 

The use of personal securities can solve the risk puzzle of investing in poor communities. However, there are a number of practical problems to be solved in order for personal securities to be an efficient solution. 

First of all, personal securities should be powered by proper technology. Offering many securities to many investors in dozens of different countries requires robust and scalable infrastructure. Blockchain technology is widely considered suitable for these purposes. In the last few years, providers of securities tokenization made serious progress and now enable convenient mass operations with securities. For example, the blockchain was used to reduce the entry threshold in a $22 million venture fund by 2,0000 times– from $1,000,000 to $500.

Another problem is the operational complexity. Using personal securities would require reaching poor communities, doing the legal groundwork of signing investment contracts, choosing investment opportunities, and gathering and distributing income. This requires wide collaboration between existing banking providers, governments, nonprofits, and startups. 

A solution may be to organize everything as an investment fund that would issue securities to investors worldwide and use the proceeds to organize the investment process and do the investment itself. Pooling investment into funds can further reduce the risk for investors. It is better to do pilot projects to test the best structures.

The next big investment opportunity

Giving money to poor communities is the next big investment opportunity. It would not only directly benefit investors but also all businesses that can sell to poor communities. It can vastly improve the financial outcomes of developing countries. Most importantly, it can assist in finally ending extreme poverty and providing people with a dignified life.

Borys Pikalov is Cofounder and Head of Business Analytics at Stobox, an award-winning advisory and technology company in the field of securities tokenization. Pikalov has done 2500+ hours of research in the digital securities industry. Co-author of the book “How to Attract Investments with STO: A Practical Guide”. He is currently advising the government of Ukraine about developing an ecosystem for virtual assets.

Photo by Katrine Bengtsson on Unsplash

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PayActiv Receives $100 Million in Funding for Earned Wage Access Tech

PayActiv Receives $100 Million in Funding for Earned Wage Access Tech
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding, PayActiv

Earned wage access startup PayActiv closed $100 million today for its technology that helps companies offer their employees their pay on a daily basis rather than wait for their bi-weekly paycheck.

The Series C round was led by Eldridge and includes existing investors Generation Partners and the Ziegler Link•Age Fund II. The investment brings PayActiv’s total funding to $134 million.

The company will use the funds to expand its client base, which currently consists of 1,400+ businesses and organizations representing more than four million employees. Walmart, Wayfair, and Ibex Global are some of the major employers in PayActiv’s portfolio.

“American families are facing more financial stress than they have in generations,” said PayActiv CEO and Co-Founder Safwan Shah. “The timing gap between work and wages is the main reason workers get hit with punitive late fees, overdraft fees and other penalties. Cumulatively, these fees reduce wages by seven percent every month. The PayActiv platform is the only system where everyone wins: employers lift worker morale with little to no cost and huge dividends; employees get wages when they actually need them most; and cash re-enters the economy faster, making communities financially healthier.”

PayActiv was founded in 2011 and has emerged as a major financial wellness tool for employers. In addition to offering flexibility around how frequently employees receive payment, PayActiv also gives employees multiple options of how they receive payment. Workers can opt for direct cash pickup, a PayActiv prepaid card, an instant Visa or Mastercard debit card load, an ACH payment, or use their wages to pay bills, make purchases on Amazon, or purchase rides on Uber.

The company also offers financial wellness and planning tools that help employees to save, budget, and manage their money. Additionally, PayActiv announced today that it will offer employers a retirement benefit in partnership with Security Benefit, a retirement services provider based in Kansas.

Demand for earned wage access tools are on the rise, especially in today’s post-COVID economy. Sending employees their paychecks on a daily basis can help them avoid overdraft fees and high interest financing options such as payday loans and credit card debt.

“The future of pay is not a two-week cycle,” said Eldridge Co-founder, Chairman, and CEO Todd Boehly. “By simply giving people access to their wages as they earn them, PayActiv increases the velocity of money, stimulating the economy and serving employers and employees by driving costs down and efficiencies up.”

Photo by DISRUPTIVO on Unsplash

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Innovating in a World of Exponential Change

Innovating in a World of Exponential Change
By Julie Muhn (@julieschicktanz) Posted on
Categories: FinovateFall 2020, Speaker series

Describing the opportunity to use AI to create tools and solutions that make society better off, Pablos Holman (pictured right) said, “we get the chance to work for the humans yet to come.”

I like the way of looking at a controversial technology in such a positive light. Instead of focusing on the potential of AI to displace us at our jobs or make our lives unfair in some ways, maybe it is better to examine how we can use AI to craft products, technologies, and services that make our world better to live in.

To do this we need to ask ourselves and the community we work in, “All of this technology is in our hands, what do we want to accomplish with it?” It’s important to ask questions like these in the fintech sector, so that the industry can control how we use new technologies such as AI. As Holman puts it, “Speculate about the possibilities, focus on the positives.”

Holman is a hacker, inventor, entrepreneur, and technology futurist who is on a quest to solve the world’s problems through the innovation of technology. He will be the keynote speaker kicking off FinovateFall on September 14, offering his thoughts on innovating in the post-COVID landscape.

He is certainly a speaker you won’t want to miss. Holman has helped build spaceships; the world’s smallest PC; artificial intelligence agent systems; and the Hackerbot, a robot that can steal passwords on a Wi-Fi network. He is a world-renowned expert in the fast moving 3D printing space, and is currently working on printing the food of the future among other things.

Holman will discuss some of the invention projects under way at the Intellectual Ventures Lab, and their efforts to create an Invention Capital market. He will also be showing off some of the super powers that hackers possess.

FinovateFall Digital will run September 14 through 18 and will be broadcast live in Eastern Standard time. There’s still time to register (at a discount!) so take advantage and book your ticket today.

Photo by Sinjin Thomas on Unsplash

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Yapily Ever After: American Express Facilitates Bank Transfers in European Markets

Yapily Ever After: American Express Facilitates Bank Transfers in European Markets
By Julie Muhn (@julieschicktanz) Posted on
Categories: American Express, Daily news

Have you ever heard of open-banking-infrastructure-as-a-service? American Express has, and it has tapped U.K.-based Yapily as the provider.

The open banking infrastructure company has signed an agreement with American Express to take the financial service giant’s open banking payment initiation product, Pay with Bank Transfer, to select European markets. Yapily’s API will enable Amex’s end users to complete a payment without being redirected to a different channel or website.

Pay with Bank Transfer is self-explanatory– it leverages open banking to enable users to transact via bank transfer. The payment method uses biometric authentication and instant payment APIs for faster, more simple, and secure payments.

“The partnership is the first real step to bringing open banking payments to everyone across Europe and the U.K.,” said Yapily CEO and founder Stefano Vaccino. “Now, a significant number of international merchants will finally be able to access, and benefit from, an open banking API.”

Yapily was founded in 2017 to help financial service providers leverage the open banking opportunity by connecting them with banks. The company enables its clients to access data in 15 countries across Europe, and at more than 180 financial institutions. Yapily has raised $18.4 million.

Photo by Jan Tinneberg on Unsplash

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Blend Boosts Valuation to $1.7 Billion After New Funding Round

Blend Boosts Valuation to $1.7 Billion After New Funding Round
By Julie Muhn (@julieschicktanz) Posted on
Categories: Blend, Daily news, Funding

Mortgagetech has historically been one of the last sectors of fintech to see innovation. However, with digitization en vogue because of COVID-19, there has been an uptick in interest in companies looking to make closing on a home mortgage easier.

As evidence, U.S.-based Blend is gaining attention today for a fresh round of funding and a new valuation. The company landed $75 million in Series F funding, bringing its total raised to $365 million and increasing its valuation to almost $1.7 billion.

The round was led by Canapi Ventures. Existing investors Temasek, General Atlantic, 8VC, Greylock, and Emergence also participated.

“Financial institutions have traditionally taken time to modernize legacy systems, but digital is now table stakes. Shelter in place and social distancing mandates have forced banks and other lenders to accelerate digital transformation plans from years to months,” said Jeffrey Reitman, a partner at Canapi Ventures. “Blend is at the forefront of this innovation, offering flexible digital solutions to help lenders like Wells Fargo, U.S. Bank, Truist, M&T Bank, and other key regional banking institutions meet their accelerated timelines and their customers’ changing needs.”

Blend, a banking-as-a-service company that aims to create a “less stressful, more accessible lending experience,” will use the funds to expand its products and broaden its strategy. Specifically, Blend will likely bolster the consumer banking and auto loans offerings it launched late last year.

“Our goal is to deliver software that gives lenders the flexibility to meet the evolving needs of consumers,” said Marc Greenberg, head of finance at Blend. “We’re committed to being the digital layer that enables millions of people to gain access to the capital they need, while helping our customers be there as trusted advisors for every milestone in a consumer’s financial journey.”

Among Blend’s new launches this year are a digital closing solution for mortgages and home equity loans, a mobile app for loan officers, and new reporting tools for lenders. Since the start of 2020, Blend has brought on 130+ new employees and helped its bank clients process more than $771 billion in consumer loans– over $3.5 billion each day.

Photo by Irina Murza on Unsplash

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Standard Chartered Ties Up with Microsoft

Standard Chartered Ties Up with Microsoft
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Standard Chartered Bank

Adding to the big-bank-to-big-tech partnerships announced in recent weeks, Standard Chartered secured a three-year partnership with Microsoft today.

The bank will leverage Microsoft to take a multicloud approach that will port its significant applications to the cloud. Specifically, Standard Chartered is planning to make its core banking and trading systems and digital ventures such as virtual banking and banking as-a-service cloud-based by 2025.

“Cloud is a cornerstone of Standard Chartered’s strategy to meet the present and future banking needs of our clients,” said Group Chief Information Officer of Standard Chartered, Michael Gorriz. “Using cloud services improves our ability to be agile and innovative, while increasing our operational efficiency and resilience. As disruption in the financial industry continues, we can focus on client benefits by deploying our solutions quicker and allowing for faster integration of new business models and partners.” Gorriz added that today’s partnership is a “major milestone” in Standard Chartered’s journey to become cloud-first.

Standard Chartered will pilot the launch by moving its trade finance systems to Microsoft Azure. The move is expected to facilitate cross-border trade at the bank.

The partnership extends to Microsoft’s workplace tools. Standard Chartered’s 84,000 employees will be working on Office 365 and communicating via Microsoft Teams.

This news comes during a time of widespread digital transformation across the banking sector. Banks and fintechs are seeking to move their operations to the cloud to update their infrastructure and create a better customer experience. There are two factors driving this change: the global health crisis that has moved many in-person interactions to online channels and the rise of competition from challenger banks.

“Cloud computing is an enabler for financial institutions to modernize their infrastructure and systems, to gain the agility they need to respond to competitive pressures, regulatory environments and customer demand,” said Bill Borden, Corporate Vice President of Worldwide Financial Services at Microsoft. “We are committed to helping Standard Chartered Bank in its ongoing digital transformation journey as it strives to address evolving customer needs and build the next generation of banking experiences.”

Photo by Franck V. on Unsplash

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A First Look at Inspired Capital-Backed Orum

A First Look at Inspired Capital-Backed Orum
By Julie Muhn (@julieschicktanz) Posted on
Categories: Julie's Column

For better or for worse, modern society has adapted to expect things instantly. We want a quick lunch delivery, a fast Uber pick-up, and we expect Netflix to buffer our movies in microseconds. Even Amazon’s two-day shipping takes too long.

Recognizing the value of the real-time economy, Orum launched its flagship product, Foresight, last week. The new tool helps banks move money in real time for instant account funding, overdraft protection, and consumer-focused pre-delinquency tools.

Instead of leveraging the blockchain for real-time transfers like Ripple does, however, Orum takes a different route. The startup uses AI to predict the availability of funds within an account and pre-authorizes transactions, incurring limited risk.

“At Orum, we are creating a paradigm shift for the way money moves,” said Orum founder and CEO Stephany Kirkpatrick. “We are leaving behind siloed accounts and manual transactions and building toward fully automated and point-to-point money movement. Technology has created an on-demand economy, but our money has yet to catch up.”

In addition to Kirkpatrick, Orum’s team includes former N26 employee Ryan Cooke and former Stash VP Christine Hurtubise.

Along with Orum’s new product announcement, the New York-based company landed $5.2 million in Seed funding led by Homebrew with contributions from Inspired Capital, Acrew, Bain, Clocktower, Box Group, and angel investors. Impressively, the round was both opened and closed during a pandemic.

“Today’s tools for immediate money movement leave enterprises decades behind what customers demand. Orum is tackling this challenge head on,” said Homebrew Partner Satya Patel. “We’re excited about Orum’s vision. The early demand they’ve seen—both from cutting-edge fintechs and incumbent financial institutions—speaks for itself. It’s clear the market understands the value of moving money in a new, more efficient way.”

According to Crunchbase, Orum is already working with 50 customers and has a waiting list.

The incumbents in the real-time payment (RTP) space in the U.S. have seen some traction, however none have seen widespread adoption. Aside from Ripple, other players working on RTP solutions include The Clearing House, which launched its RTP scheme in 2017 and now counts 32 banks and 19 technology providers as clients. According to Forbes, however, fewer than half of these members are operational on the RTP platform.

The U.S. Federal Reserve is also in on the game, having announced its own RTP scheme, FedNow, last year. Since its announcement, there has been much debate within the fintech industry over whether or not the government can effectively compete with the private sector with real time payments. However, given the lack of traction in the area, the Federal Reserve ultimately decided to pursue FedNow. In true government fashion, however, the offering is not slated to launch until 2023 or 2024.

Remember how society expects everything to happen instantly? The slow traction of incumbent players in the RTP space isn’t meeting expectations. That said, there is a lot of room for Orum in the RTP space and I think we’ll be hearing about a lot more traction from them in the second half of this year.

Photo by Volodymyr Hryshchenko on Unsplash

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Wirex Inches Toward U.S. Launch

Wirex Inches Toward U.S. Launch
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news

2020 may be a tough year overall, but it has been quite good to the cryptocurrency space. PayPal announced plans for a cryptocurrency offering, Visa revealed plans to incorporate cryptocurrencies into its payment network, and Mastercard expanded its existing cryptocurrency program.

Late last week, another development took shape: cryptocurrency payments platform Wirex announced it received its first money transmission license in the U.S. The license, issued by the State of Georgia Department of Banking and Finance, comes two years after Wirex received its e-money license from the U.K. Financial Conduct Authority.

Receiving the license is a major step in the direction of a U.S. launch. In fact, Wirex said it will formally launch in the U.S. “in the coming months.”

“We are very excited to receive our license as a money transmission business for the State of Georgia,” said Wirex CEO and co-founder Pavel Matveev. “With the sector growing rapidly, approval of this license is an important step in Wirex’s endeavor to ensure the company complies with money transmission regulations and cryptocurrency laws worldwide. This is an important step in realizing our vision to grow cryptocurrency adoption and use with a mainstream audience in the U.S.”

Wirex was founded in 2014 and helps its 3 million customers in 130 countries buy, hold, and exchange fiat money and cryptocurrencies. Among the company’s offerings is a contactless, crypto-compatible debit card that enables customers to transact at the 54+ million locations where Visa is accepted. Wirex is also known for Cryptoback, a cryptocurrency rewards scheme that offers up to 1.5% back, paid in Bitcoin, to customers who use their Wirex card in-store.

The fintech industry will look back at 2020 as a year of change in many areas, including digital transformation, payments, and in-person services. However, one of the most impactful changes taking shape this year is the broader acceptance and usage of cryptocurrencies.

Part of the evidence here is the formation of partnerships between crypto companies such as Wirex and traditional incumbents such as Mastercard. Last month, the two struck a deal that allows Wirex to directly issue cards on Mastercard’s network.

Wirex has received $3.2 million in funding and became profitable earlier this year.

Photo by Henry Boulind on Unsplash

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Bnext Adds $13 Million to Series A Round

Bnext Adds $13 Million to Series A Round
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding

Place another notch in the belt of the challenger banking crowd. This week banking alternative Bnext extended its Series A round by $13.08 million (€11 million), adding to the $26.7 million (€22.5 million) the bank brought in last October.

Bnext’s Series A round now stands at $39.2 million (€33 million) and its total funding is now in excess of $47 million (€40 million). Existing investors DN Capital, Redalpine, Speedinvest, Founders Future, Enern, Digital Horizons, Kreos Capital, and Cometa contributed to this week’s follow-on round.

Bnext will use the funds to further its growth in its home territory of Spain, as well as build its presence in Latin America by focusing on its expansion into Mexico. The bank initially launched in Mexico at the beginning of this year and now has 60,000 users in the region.

“At Bnext we have always had a clear objective: to be a banking alternative that allows our users to end the bad experiences of traditional banks,” said Bnext CEO Guillermo Vicandi. “Since its launch, our growth has been constant both in services and products and in users, and we are proud to have the support of the best investors to design and execute a strategy that allows us to achieve our objective. Our position to change the banking sector in the Spanish-speaking world is unbeatable and we have a duty to take advantage of it.”

The challenger bank has amassed 400,000 clients since it launched in 2018 and currently processes $119 million (€100 million) per month in transactions. Last month Bnext launched its Premium account and added to its Rewards program.

Photo by Gaelle Marcel on Unsplash

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Banking-BigTech Deals Are on the Rise: Citi Partners with Amazon

Banking-BigTech Deals Are on the Rise: Citi Partners with Amazon
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni profile, Citi

Point of sale financing is all the rage in fintech right now. Consumers are looking to continue buying habits despite lower income and merchants are vying for ways to boost consumer spending.

So when it comes to one of the biggest online merchants launching a buy-now-pay-later offering, its a big deal. It is, anyway for Citi, which struck up a partnership with Amazon this week to provide a buy-now-pay-later option for Citi credit cardholders.

The tool is called the Citi Flex Plan and offers Citi credit cardholders a way to pay for larger purchases over time. Loan terms range from three to 48 months with terms ranging from 6.74% APR to 8.74% APR depending on the amount financed. Borrowers face no credit inquiries, no incremental fees, and are not required to fill out a formal application.

“Amazon is one of the most popular destinations for our customers to shop and redeem ThankYou Points,” said CEO of Citi U.S. Consumer Bank Anand Selva. “We want to meet them where they are with another instant, convenient and easy payment option.”

Essentially, Citi cardholders have two forms of credit in one when they shop on Amazon. How do the logistics work? When they place their order, the total purchase amount will be deducted from their available credit. The monthly payment– the amount that varies based on the purchase price– is due to Citi at each billing cycle.

After Citi initiated a partnership with Google in 2019 and yesterday’s news of six more traditional banks following suit, today’s announcement comes as no surprise. Challenger banks are on the rise, and consumers are opening new accounts with these alternative banking providers at a faster rate than before.

By providing its customers with the new buy-now-pay-later option, a traditional financial services provider such as Citi is appealing to the lower income group that is most attracted to challenger banks. The bank is also helping to position its card at the top of consumers’ virtual wallets when they shop at Amazon. This is key since more than one-third of active Citi cardmembers made at least one purchase on Amazon in the past year.

Additionally, partnering with a big tech company helps Citi align more with the tech side of banking. And indeed, the bank has been closer to the forefront of fintech than many of its rivals. At our developers conference Citi showcased its developer hub and sandbox.

Photo by Morning Brew on Unsplash

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