Author: Julie Muhn (@julieschicktanz)

U.S. Neobank Upgrade Launches Contactless Card

U.S. Neobank Upgrade Launches Contactless Card
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news

When Upgrade set out to create a new banking experience in 2017, there’s no way the company could have envisioned what 2020 would bring. Now, with social distancing measures in place across the globe, Upgrade’s launch of a contactless version of its credit card is just what the doctor ordered.

Furthermore, the California-based company is making the card available in digital form, supporting Apple Pay and Google Pay mobile wallets.

Upgrade first launched its card last year and has since made $500 million in new credit available to consumers every year. The company differentiates its card, which is issued by Sutton Bank, from traditional credit cards by combining monthly charges into installment plans that the borrower repays over 24 to 60 months. Upgrade structures the repayment this way to get its users into the habit of paying down their balance every month and avoid getting trapped in a continuous cycle of debt.

Further protecting consumers is the contactless element of Upgrade’s new card. “These new Upgrade Card features enable payments without any surface contact,” said Upgrade co-founder and CEO Renaud Laplanche. “While more customers have been shopping online since the start of the COVID-19 pandemic, many are still using their card in stores. We want to do what we can to keep our customers safe and give them a smarter way to pay.”

The Visa-branded Upgrade cards offer users credit lines from $500 to $20,000 and boast no fees.

Upgrade also offers personal loans for debt consolidation, credit card refinancing, home improvement, and major purchases. In partnership with Cross River Bank of New Jersey, which issues the funds, Upgrade has originated $2.5 billion in loans and cards since inception.

Upgrade is headquartered in San Francisco, California, with an operations center in Phoenix, Arizona, and technology centers in Chicago, Illinois, and Montreal, Canada. The company has raised $122 million.

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3 Ways to Avoid Occupy Wall Street 2.0

3 Ways to Avoid Occupy Wall Street 2.0
By Julie Muhn (@julieschicktanz) Posted on
Categories: List series

In a COVID-19 world, the rich may not necessarily be getting richer, but it has become clear that the virus is taking a toll on lower income populations. And with this, the global pandemic is shining a light on income disparity.

Do you remember the last movement to highlight income inequality?Occupy Wall Street. The movement started in September 2011 as groups assembled at major financial districts and banks to make their voices heard about income distribution, bank reform, student loan forgiveness, and capitalism in general. Nearly 200 protestors camped out in Zuccotti Park in New York’s financial district, ultimately costing the city $17 million.

So with the income inequality fresh on consumers’ minds, here are a few ideas on how banks and fintechs can be their ally instead of their perceived enemy.

Be flexible

While you don’t need to bend over backwards, offering some flexibility is key. And even though offering flexibility on payment plans can be essential, it’s not all consumers are looking for. Your call center, for example, is likely overloaded right now. Instead of having callers wait on hold, can you direct them to a chatbot or make an option for them to request a call back from an agent at a certain time?

Straying from traditional operations and bending some rules (in a compliant manner, of course!) can make a huge difference to a stressed-out consumer that is just looking for someone to understand their situation.

Be generous

You don’t have to forgive a customer’s mortgage payment for them to like you. Peer-to-peer payment company Venmo is doing a great job at engaging with its customers during this time. The company is depositing $20 into consumers’ accounts in exchange for their generosity toward healthcare workers or others in need.

Select an idea that works for your organization’s image. You can give away gift cards to Netflix or offer free gift cards to local restaurants for take away meals. The giveaways can be in under $10 and done at random or as a daily or weekly online drawing. For something more simple, you could host a larger cash giveaway with only one or two winners.

Show unity

Play a role in your community, even if it’s not an in-person effort. Advertise in the local paper that your staff is volunteering to drop off groceries for elderly citizens, display uplifting sayings to encourage passersby, or even place rolls of toilet paper on front steps of houses in nearby neighborhoods. If toilet paper isn’t your style, mail coloring sheets and simple art supplies to customers with small children. For smaller banks, publish the phone number of a representative who can help customers sort through financial issues.

Small actions can have big outcomes during a crisis like this. During a time when people are “looking for helpers” as Mr. Roger’s instructed, banks have a great opportunity to be the helpers in their community.

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Sila, a Startup Founded by Shamir Karkal to Rethink ACH, Raises $7.7 Million

Sila, a Startup Founded by Shamir Karkal to Rethink ACH, Raises $7.7 Million
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding

Blockchain-based payments company Sila announced today it has pulled in $7.7 million in Seed funding. The round was led by Madrona Venture Group and Oregon Venture Fund with contributions from Mucker Capital, 99 Tartans, Taavet Hinrikus, and Jerry Neumann.

Sila was co-founded in 2018 by Shamir Karkal, one of the entrepreneurs who co-founded Simple in 2009 and was responsible for integrating the challenger bank’s system into BBVA after it was acquired by the mega bank in 2014 for $117 million. Karkal now serves as Sila CEO.

The company will use today’s funds to accelerate growth, introduce new product features, and acquire more customers. As part of today’s deal, Madrona Venture’s Hope Cochran and Oregon Venture’s Rick Holt will join Sila’s board of directors.

The Portland, Oregon-based company has a single API that offers what it’s termed Infrastructure-as-a-Service. Overall, Sila helps companies authenticate consumers via a partnership with Alloy, connect with consumer bank accounts via a partnership with Plaid, and move money. All three of these capabilities come together to enable companies to create their own in-app, white-labeled digital wallet. Sila’s customers range from startups to established businesses working in finance, insurance, real estate, and blockchain.

To power the funds transfers, Sila is using SILA, its own ERC token that is pegged to the U.S. penny. Since the money is held in Evolve Bank and Trust, a traditional bank, all funds are FDIC insured.

“The global financial system is broken,” said Karkal. “(It) doesn’t serve consumers, small businesses, or the innovators trying to reach them. It is too expensive, inefficient, tightly regulated, and difficult to integrate into fintech applications.” Sila is addressing these challenges in multiple ways, one of which is its price point. The company’s pricing ranges from $0 per month plus fees for startups, to just under $10k per month plus fees for enterprises.

As for what’s next, Sila is currently working on adding support for card payments, business ID verification, and international payments. The company, however, has yet to disclose timing on these projects.

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Payroll Company Paylocity Acquires Video Platform Provider

Payroll Company Paylocity Acquires Video Platform Provider
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Mergers & Acquisitions

HR and payroll software solutions provider Paylocity made an acquisition today that will bring the company into the COVID-19 era. The Chicago, Illinois-based company announced it has purchased video platform provider VidGrid for an undisclosed amount.

Paylocity made the purchase to reinforce its services with VidGrid’s peer-to-peer learning courses. The company expects that adding workplace video communication tools will boost employee collaboration, engagement, and retention.

“We believe video will play a critical role in transforming workplace communication,” said Paylocity CEO Steve Beauchamp.

Today’s acquisition stems from Paylocity’s previous partnership with VidGrid that powered Paylocity’s learning management system (LMS), a tool that enables clients to learn from interactive videos featuring subject matter experts. “As part of our product expansion, we introduced our Learning Management System and worked with VidGrid to provide learning opportunities that the modern workforce expects,” Beauchamp said. “VidGrid’s approach aligns with our culture of caring deeply for our clients and we couldn’t be more excited to welcome their talented and innovative team to Paylocity.”

The acquisition– Paylocity’s first– comes at a time when traditionally in-person consultations and services have been pushed to online channels in order to comply with social distancing requirements. Secure video communications channels have proven to be invaluable during the COVID-19 era. Many experts are predicting consumers’ habits to pursue services online instead of in-person to continue even after it is once again deemed safe to gather in person.

Founded in 1997, Paylocity has more than 3,300 employees, more than 60% of whom work remotely (this was, of course, before everyone was required to do so). The company has more than 20,000 clients and 2,200 partners. Paylocity is publicly traded on NASDAQ under the ticker PCTY with a market capitalization of $4.71 billion.

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Open Banking in the Same Language

Open Banking in the Same Language
By Julie Muhn (@julieschicktanz) Posted on
Categories: Julie's Column

What happens when third party fintechs try to access banking data on behalf of their consumers, but each way has a different way of doing so?

That’s exactly what’s happening in the U.S. right now, and it’s a major factor in preventing the country from adopting an open banking culture. In an era when consumers conduct their banking activities with multiple providers, open banking not only safeguards consumer data but also places them in control of how they want their data used and for how long.

Speaking different languages

The lack of a consistent approach is also the reason why customers of some U.S. banks have been locked out of third party applications such as Robinhood and Digit. While these customers were prevented from using their own banking data, banks had good reason to lock out the third party providers, citing security concerns. Our piece Are U.S. Banks Leaning Towards Closed Banking? covers the drama in more detail.

What’s needed is a standardized regulation for data sharing. Banks can’t trust third parties and what they may do with customer data. With new regulations such as CCPA and GDPR, banks are required to keep track of how their clients’ data is used. Once a third party possesses customer data, the bank can no longer guarantee it will be used and stored properly.

Aligning the approach

So how does the fintech industry get everyone on the same page when it comes to data sharing?

The Financial Data Exchange (FDX) was created to solve that very same problem. “FDX is member-driven and governed by majority vote and we’re united by a common mission and purpose: providing secure and convenient financial data sharing,” said FDX Managing Director Don Cardinal. “Our Working Groups are inclusive, transparent and benefit from our members’ decades of experience and professionalism.”

FDX is a non-profit organization that is creating what is essentially a playbook of data communications rules for banks and third party fintechs. FDX currently counts 102 organizations– only one third of which are banks– that vote on an agreed upon global standard for data sharing.

Keeping the end consumer in mind

Importantly, FDX not only helps its member organizations speak the same language, the alignment trickles down to benefit end consumers as well. That’s because FDX helps place consumers in control of their own data, allowing them to decide which organizations can use their data and for how long. Aiding in this transparency, some banks have created dashboards that allow customers to view and edit which apps have access to their data.

To promote more consumer awareness, FDX is working to create a certification stack that would indicate to consumers whether a bank, fintech, or organization is part of FDX. You can think of this similar to a bluetooth logo on a device that informs consumers that a product has undergone the Bluetooth Qualification Program.

So when can we expect mainstream adoption of FDX?

“While we cannot give an exact date, we know from similar innovations (online banking, billpay, mobile banking, EMV chip cards) that we are moving from the Innovator to the Early Adopter stage and that acceleration of adoption will accelerate once we pass the mid-market peak,” said Cardinal. “To date, our members have moved nearly 12 million U.S. consumers over to the FDX API.”

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Chime is Making Up for the U.S. Government’s Slow Stimulus Payments

Chime is Making Up for the U.S. Government’s Slow Stimulus Payments
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news

With many U.S. citizens out of work these days, some are struggling to put food on the table. Recognizing this need, the U.S. government has agreed to come to their aid by issuing $1,200 checks to every adult earning less than $75,000 per year and $500 per child. The actualization of this effort, however, has been slow. While some families haven’t been able to work in weeks, they will not receive their check for another two-to-three weeks.

Because of this lag time, U.S. challenger bank Chime is supporting its user base by helping select members access their stimulus money early. So far, the bank has provided a group of randomly selected 1,000 of its members that meet certain criteria to immediately receive an additional $1,200 in their account while they wait for the government’s funds to come through.

“…these randomly selected members will have access to spend an amount equaling their estimated government payment 2-3 weeks early and be able to use that money right away on everyday needs such as groceries and bill payments with their Chime card,” the company noted in its blog post announcement.

The California-based company is using SpotMe, Chime’s free overdraft protection service that allows eligible users to hold a negative balance of up to $100 while they wait for their next paycheck. Instead of charging interest on this microloan, however, Chime requests users to “pay it forward.” As stated on the company’s website, “When your SpotMe negative balance is repaid, we’ll give you the option to leave us an optional tip to pay it forward. Whether or not you tip won’t affect your SpotMe eligibility. SpotMe is a fee-free service, and friendly tips from our community help it stay that way!”

So who is funding all of this? Chime is leveraging its relationships with The Bancorp Bank and Stride Bank, as well as its investors (and specifically Mark Cuban), to forward the funds.

With a valuation of $5.8 billion as of December 2019, Chime has raised nearly $809 million. Last fall, rumors indicated that the company had 5 million customers and CNBC reported last December that Chime was adding 150,000 accounts each month.

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Lunar’s $22 Million Boosts Series B Funding Total to $50 Million

Lunar’s $22 Million Boosts Series B Funding Total to $50 Million
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding

Nordic challenger bank Lunar announced a new tranche of funding today, boosting its Series B round. The new $21.6 million (€20 million) installment adds to the $28 million (€26 million) the digital bank disclosed in August of last year.

Today’s investment brings the company’s Series B round to $49.6 million (€46 million) and raises its total funding to $74.7 million. Leading the extension round is Seed Capital, with participation from Greyhound, Socii, Augustinus, and Unity Technologies founder David Helgason.

Lunar’s free bank account includes transfers, payments, debit card, billpay, and access to in-app budgeting tools. The Premium accounts offer a fancier-looking card, three personal accounts, travel insurance, virtual cards, and more at a cost of just under $7 (69 krona) per month. The challenger bank also offers a business bank account for $194 per year that integrates with third-party software providers comes with commercial lending opportunities.

Lunar was founded in 2015 and received its banking license in August of last year from the Danish Financial Supervisory Authority. In all, the company touts 150,000 users. Ken Villum Klausen is founder and CEO.

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Azimo Partners with Siam Commercial Bank

Azimo Partners with Siam Commercial Bank
By Julie Muhn (@julieschicktanz) Posted on
Categories: Azimo, Daily news

Foreign exchange platform Azimo announced today that it will facilitate payments on behalf of Thailand’s largest commercial bank, Siam Commercial Bank (SCB).

SCB clients will benefit from Azimo’s digital money transfer program that uses RippleNet, a blockchain-based money transfer service. Using RippleNet, Azimo will be able to instantly deliver payments from Europe to SCB client accounts.

The partnership leverages a program called PromptPay, which offers Thailand residents a PromptPay ID to serve as a proxy for their bank account number. PromptPay was launched in 2017 as part of the Bank of Thailand’s E-Payment initiative.

According to Azimo CEO Richard Ambrose, “Transfers can be set up in minutes from a smartphone. The fees are low and the rates are great, so our customers will be spared the extortionate charges levied by many competitors.”

Azimo counts more than one million customers of its digital money transfer platform, which allows users to send money from 25 countries to more than 200 countries and territories worldwide.

Last year, the company increased its transfer volume by 60% year-over-year. Today’s move with SCB should boost that growth even further; Thailand is one of the top destinations for remittances. The country receives $6.7 billion from around the globe each year.

Headquartered in London, U.K., Azimo was founded in 2012. The FinovateEurope alum brought in $21.7 million (€20 million) in debt financing last month, bringing its total combined debt and equity funding to $88 million.

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Update: FinovateSpring is Now FinovateWest 2020

Update: FinovateSpring is Now FinovateWest 2020
By Julie Muhn (@julieschicktanz) Posted on
Categories: FinovateSpring 2020, FinovateWest 2020

–Update 4/2/20–

In order to reflect the new timeline of the event, we have changed the name from FinovateSpring 2020 to FinovateWest 2020. The show will take place November 23 through 24 at the Hilton in San Francisco’s Union Square. Registration is now open (if you were already registered for the event our team has been in contact with you via email).

Over the past 12 years, many of you have come to feel like family to us, and we hope you are all doing what is needed to keep yourselves and your family safe.

As part of an effort to keep everyone safe, and to comply with current governmental recommendations surrounding COVID-19, we have rescheduled FinovateWest 2020 to take place November 23 through 24.

The venue will remain the same at the Hilton San Francisco Union Square. Attendees who have booked as part of Finovate’s room block will not incur any cancellation fees from the hotel. The hotel is in the process of moving attendees in our block to the new dates and attendees will receive a confirmation when the move has been completed. If you need to change your new reservation, please contact the hotel directly.

We will be in touch with respective parties – speakers, sponsors, and demo companies – with more detailed information about arrangements for the new dates. If you have any questions please contact us to discuss further.

We remain grateful for your continued support and understanding and very much look forward to welcoming you in November.

In the meantime, please let us know if there is anything we can do to foster innovation and community in the fintech sector. Our industry was created to fulfill unmet needs of society. We know that in these crucial months ahead, innovators in this space will continue to do so.

We’re all in this together, and we each have a role in continuing the heartbeat of fintech across the globe.

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IdentityMind Global Acquired by Acuant

IdentityMind Global Acquired by Acuant
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, IdentityMind Global, Mergers & Acquisitions

Digital identity company IdentityMind Global has agreed to be acquired by identity verification company Acuant five months after the two initially formed a partnership. Terms of the agreement were not disclosed.

The deal offers Acuant access to IdentityMind’s digital identity product, a SaaS platform that builds, maintains, and analyzes digital identities and helps companies perform risk-based authentication, regulatory identification, and detect and prevent synthetic and stolen identities.

While digital identity was a hot topic at the beginning of the year, it is even more so now that much of consumer interaction is being pushed from in-person to online channels.

“Never before has identity been so critical to building and maintaining a stable and productive economy,” said Acuant CEO Yossi Zekri. “Businesses must rely on trusted identities to successfully transact, fight fraud and stay compliant. Our Trusted Identity Platform, now with IdentityMind’s orchestration layer, creates a new standard in identity verification.”

Acuant has offered identity verification solutions for 20 years. Since then, the California-based company has completed more than one billion trusted transactions in over 196 countries. Today’s deal is Acuant’s second acquisition after purchasing AssureTec Technologies in 2016.

IdentityMind was founded in 2013 and has raised $21.5 million across three rounds of funding. The company most recently demoed at FinovateSpring 2018, showcasing its GDPR compliant KYC plug-in.

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How Lending-as-a-Service Can Impact Small Businesses in Need

How Lending-as-a-Service Can Impact Small Businesses in Need
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni profile, StreetShares

One of the brutal facts of the COVID-19 outbreak is that it will be difficult for small businesses to survive. The self-distancing and shelter-in-place orders, while temporary, are taxing for already cash-strapped merchants.

Adding to the hardship, small businesses may find it especially difficult to get a much-needed loan from their local bank or credit union since many have closed physical branches to encourage social distancing. And while banks offer many services online, only 1% are capable of extending a loan digitally.

This is where lending-as-a-service steps in. The technology works like a plug-and-play option that allows financial institutions to launch mobile and web financing applications, exchange documents digitally, and issue funds within a few days. While third party fintechs already offer digital lending services, many banks are years away from being able to develop and integrate their own online lending service.

When banks implement lending-as-a-service, they are in a better position to serve small businesses that need cash flow quickly. It means that instead of turning to unfamiliar third party financing solutions, businesses can maintain their relationship with their primary bank as they get back on their feet after the crisis.

Military veteran-focused small business lending platform StreetShares began selling a lending-as-a-service offering for banks last September after it launched the product at FinovateFall. Using the new service, banks can lend up to $250,000 in funding to small businesses via a process that takes place completely online using the applicant’s web or mobile device.

StreetShares’ lending-as-a-service program offers lenders a 100% digital loan application, instant underwriting, as well as loan servicing and tracking. The program doesn’t require software integration and can go live in under 30 days.

The company’s lending-as-a-service solution has already seen success, having amassed 30 clients, including banks, credit unions, and alternative lenders. Here’s the good news– StreetShares is waiving its software subscription fees through the end of the year for banks who fund small businesses impacted by the coronavirus.

The company is calling this initiative Main Street Heroes. Since banking has transformed to an almost completely digital industry, the new initiative enables lenders to add a completely digital lending tool and serve businesses they otherwise may have had to turn away.

“In the wake of the coronavirus, business owners and regulators are both asking lenders to do more to help Main Street,” said StreetShares CEO Mark Rockefeller. “But most banks and credit unions simply have no ability to make these loans digitally. StreetShares has the needed technology and can power lenders to be the heroes that Main Street needs right now.”

StreetShares was founded in 2013 and is headquartered in Reston, Virginia. Mark Rockefeller is CEO.

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Plaid to Power Microsoft’s New PFM Tool

Plaid to Power Microsoft’s New PFM Tool
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Plaid

Further proving that every company is a fintech company, Plaid has formed a partnership with Microsoft.

Plaid will integrate with Microsoft Excel to help give the budget spreadsheet a major upgrade. Launching under the guise of Money in Excel, the new tool will use Plaid to import users’ financial information, bringing an automated approach to financial management.

With access to 11,000 financial institutions across the U.S., Canada, and Europe, Plaid is able to import the user’s entire financial picture in real time.

Money in Excel offers budgeting features typical of most PFM applications. Users can see a monthly overview of their spending habits, analyze recurring expenses, and understand their net worth.

Money in Excel is launching as part of the new Microsoft 365 subscription service that will go live on April 21. The subscriptions range from $6.99 per month to $9.99 per month and include real-time editing in Word, advanced PowerPoint layout and speech coaching, and access to creative content.

Plaid works with thousands of third-party fintech apps such as Transferwise, Betterment, and Venmo to connect with their users’ financial institutions. The company made headlines at the beginning of 2020 after it announced it had been acquired by Visa for $5.3 billion.

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