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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Small business payments and accounting platform Autobooks unveiled a new initiative today that works directly with small businesses to help them receive credit card payments online.
The program, Get Paid with Autobooks, deposits transaction revenue directly into the business’ existing bank account. The tool was previously only available to small businesses via Autobooks’ existing bank partners. In fact, Autobooks partners with more than 50 banks and credit unions to help them compete with fintechs such as PayPal and Square by offering their small business clients an online payment acceptance tool.
Autobooks is waiving its $10 monthly fee for Get Paid through the end of this year. This offer comes at a time when many businesses have been pushed to accept payments online in order to provide a no-contact experience for their clients. Businesses will still be charged the standard 2.75% on each transaction.
Autobooks lowers the barrier of entry for businesses to accept payments by using a model called payment facilitation. “Non-bank providers such as PayPal, Square, and Stripe have long benefited from this model and it’s now time financial institutions can too,” said Autobooks CEO and Cofounder Steve Robert. “By providing a digital, self-service onboarding and automated underwriting process – a small business can now begin receiving payments directly into their existing checking account within a few minutes.”
Autobooks was founded in 2015 and has since raised $17.5 million in funding. The company offers banks a range of tools, including invoicing, accounting, and billpay, to help them support their small business customers.
China-based internet giant Tencent laid out $300 million to acquire a 5% stake in buy-now-pay-later firm Afterpay.
The move is part of a strategic partnership that will offer Afterpay easy access and collaboration opportunities with Tencent, a Hong Kong-based fintech giant with a $500 billion market capitalization. In comparison, Afterpay’s market capitalization on the Australian Stock Exchange tops just over $8 billion.
Afterpay was founded in 2014 by Nicholas Molnar and Anthony Eisen, who now serves as the company’s CEO. The Australia-based company has 4.6 million users and its revenues totaled over $160 million last year.
“Afterpay’s approach stands out to us not just for its attractive business model characteristics, but also because its service aligns so well with consumer trends we see developing globally in terms of Afterpay’s customer centric, interest free approach as well as its integrated retail presence and ability to add significant value for its merchant base,” said Tencent Chief Strategy Officer James Mitchell.
Tencent’s move comes shortly after its rival Ant Financial took a minority stake in Afterpay competitor Klarna. Afterpay has 3x the web traffic of Klarna and 1.5x the traffic of its other major competitor Affirm.
The buy-now-pay-later segment of fintech has been heating up this year, despite– or perhaps because of– the current economic and health crises. A few weeks back, Goldman Sachs launched MarcusPay, a tool to help borrowers make purchases ranging from $750 to $10,000 and pay for them over the course of 12 to 18 months.
After ten years in the investment space, online brokerage platform Motif will be shutting down operations on May 20.
The company notified users via email on April 17 in a message saying, “At this time, we’ve made the decision to cease operations and transfer your account to Folio Investments.”
Motif was founded in 2010 by Tariq Hilaly and former Microsoft executive Hardeep Walia, who debuted the company’s build-your-own motif concept at FinovateSpring 2013. Since its launch, the company amassed $127 million in funding from investors including Y Combinator, TechStars, and 500 Startups. In March, Motif reported $604 million in assets under management between individual accounts and institutional clients. The company also reported around $264 million in assets held in the ETFs it launched in conjunction with Goldman Sachs.
Last month, Motif deepened its ties with Goldman Sachs, ringing the opening bell of the New York Stock Exchange in celebration of launching five new ETFs in partnership with the bank.
As mentioned in Motif’s statement to its users, the company is transferring users’ accounts to Folio Investing. “We appreciate the opportunity we’ve had to work with you, and we are confident that your investment needs will be well-served by Folio,” the email said. Folio was founded in 2010 and offers 2,000 commission-free, window trades per month, most of the ETFs listed on the U.S. national securities exchange, 1,100 no-load mutual funds, and almost 125 pre-made portfolios.
While some Motif users have publicly complained about the company’s choice in the new provider, some fintech firms, including M1 Finance, have taken the opportunity to bring Motif’s users over to their platforms.
As ThinkAdvisor noted in a piece published last week, Motif’s news is a signal of what’s to come for smaller players in fintech. In fact, many analysts have noted that the recent pandemic and economic crisis will drive consolidation in the industry.
Gregg Hammerman has seen first hand what works when it comes to personalization. In fact, in 2012, he launched a company built around the entire premise of personalization.
Hammerman is now CEO of Larky, a mobile engagement platform that enables financial institutions to put the right message on an account holders’ lock screen at the right place and time. However, personalization and push notifications– while effective– can be difficult to implement. Not only do the timing and location have to be perfect, there is a careful balance between messaging and spam. On top of that, privacy is often a top concern for both financial institutions and their end users.
We caught up with Hammerman to tap his expertise on implementing a personalized user experience.
When it comes to personalization in fintech we often hear of sending offers to the right consumer at the right time in the right place. What is the most challenging aspect of this?
Hammerman: It’s critical to make sure that these communications are relevant, meaningful, and helpful to the consumer. We work closely with financial institutions to create experiences that use these communications to make people feel like they are part of a special club.
Three key things make our programs a success. First, we recommend segmenting an audience so you can tailor messaging for a person who has a mortgage, someone who recently purchased a car, a student with a new checking account, and other unique parameters that shape consumer habits. Second, scarcity is a powerful component. Consumers want to know that they have access to something special that isn’t available to everyone. Third, communications need to be fresh. Consumers want to see new messages and new experience opportunities on a regular basis.
What measures does Larky have in place to keep banks from fatiguing their customers with too many alerts and messages?
Hammerman: We work closely with our financial institution clients to give them complete control over how they communicate with their customers. The financial institution is always able to increase or decrease messaging frequency based on what is the best fit for their audience.
From an end-user perspective, account holders can snooze messages, turn off some types of notifications, and more. A lot of this discussion returns to making sure that these communications have high value. If every time I go for an auto repair, my financial institution tells me that I can save $100 because I’m a valued account holder, I’ll never fatigue from that message.
Thinking about geo-targeting, how does Larky balance a user’s privacy with the need to know their physical location?
Hammerman: Larky has been on the forefront of user privacy since our initial solution launched in 2013. We believe that users have the right to access any information that is collected or stored about them, and the right to obtain that information and have it destroyed if desired.
We are in compliance with all regulations from Europe and California. We plan to continue to lead and innovate on privacy. We don’t sell the data that passes through our servers. It’s not part of our business model. We have never and will never share any user information with any third parties.
Aside from knowing a consumer’s location and the best time to send a relevant offer, how else does Larky help banks with personalization?
Hammerman: We’re now working with financial institutions to leverage data from their other systems to help personalize communications. For example, we help improve new account holder onboarding with touchpoints that welcome and educate new clients and help them become more engaged with the financial institution.
We’re able to help financial institutions create campaigns that reach out to only their account holders who have an auto loan, just one account with the financial institution, recently started direct deposit of their paycheck, and much more. We’re finding that partnering with financial institutions to personalize the right message to the right consumer increases the impact of the campaign and includes account holder engagement.
Spain-based multinational bank Banco Santander announced today it has acquired a 50.1% stake in Ebury, an international payments, FX, and cash management firm.
Santander invested $435 million (£350 million) in the deal, which was first announced in November of last year. The bank plans to use Ebury to provide small-to-medium-sized businesses (SMBs) with global finance tools to expand internationally. In fact, Santander is using $87 million (£70 million) of its total investment in Ebury to boost the company’s international expansion efforts.
The investment will help support Santander’s Global Trade Services business, which helps SMBs access international markets through trade finance, supply chain, payments, and foreign exchange.
“The investment in Ebury is a significant strategic milestone for the bank, allowing us to boost our capabilities in an exciting market with high growth potential,” said Sergio Rial, Chairman of Santander Brazil and Chairman of Ebury. “This new acquisition will provide us with the capabilities to further increase the Global Trade Services business with a new world-class platform with which we expect a significant return on investment in the coming years.”
Headquartered in the U.K., Ebury currently operates in 17 countries and 140 currencies. With Santander’s help, the company plans to expand into additional markets in Latin America and Asia.
Facilitating this move, Santander will offer Ebury the opportunity to expand its client base. Ebury will have access to Santander’s international network of more than four million SMB’s across the globe, 200,000 of which operate across international borders.
Ebury’s current client base includes 43,000+ SMBs. The company has increased its revenues by an average of 50% per year over the past three years and in its last reporting period boosted revenues by over 60%.
“In just over ten years, Ebury has grown from a small fintech company to a business with over 1,000 employees,” said Ebury Co-Founders Juan Lobato and Salvador Garcia. “Now, thanks to the support of Santander, we will be able to expand the business even more internationally and enter new markets.”
With $1.14 trillion (EUR 1.05 trillion) in assets under management and 145 million customers, Banco Santander operates 12,000 branches and has 200,000 employees. Last year, the bank made a profit of almost $8 billion (EUR 8.3 billion), an increase of 2% compared to the previous year.
It’s no secret that small businesses have been struggling to secure funds with the Paycheck Protection Program (PPP). Banks have wrestled not only to determine eligibility but also with the clumsy online application process.
After seeing how both banks and businesses were grappling with the application process, digital transformation expert MX stepped in to help. Days after the PPP went live, MX developed and launched a free, open-sourced loan application portal that allows banks and credit unions to offer their SMB clients a way to apply for a PPP loan on their own. By removing one step of the process, the new portal also eliminates the need for banks to manually re-enter the SMBs’ loan applications and ultimately drops the application time from 30 minutes to 30 seconds.
In an interview with Yahoo! Finance (below) MX CEO Ryan Caldwell described how MX’s tool levels the playing field and help smaller banks compete with larger banks in bringing home PPP funds for SMB clients.
This tool sparked the attention of Citizens Bank of Edmond, an Oklahoma-based bank with $260 million in assets. The bank has a front-row seat to the struggle of applying for PPP loans and teamed up with MX to create a self-serve application portal for its small business customers. Citizens Bank is one of 50 financial institutions leveraging MX’s SBA loan portal tool.
“Entrepreneurs and small businesses across the country are struggling due to the devastating impact of COVID-19 and it’s critical that we get stimulus funds into their hands as soon as possible,” said MX CTO and Co-Founder Brandon Dewitt. “Together with Citizens Bank of Edmond, we’re able to speed up the loan application process by providing small business owners with a self-service portal to apply for PPP loans, and providing loan officers a way to quickly approve and automatically submit applications for thousands of small business owners.”
After the money fueling the PPP loans dried up about a week ago, the program’s coffers were refilled yesterday morning with $310 billion in new funds to help keep small businesses afloat. “Speeding up the loan application process for small businesses can mean the difference between these businesses surviving and thriving or closing their doors and laying off employees,” said Jill Castilla, President and CEO of Citizens Bank of Edmond. Castilla emphasized that MX’s portal prepared Citizens Bank to ready its operations and give its SMB clients a leg up. “By partnering with MX, we’ve been able to launch the new SBA portal for round two of stimulus funds, ensuring that our small business customers have the best possible experience as they apply for and get approved for crucial stimulus funds.”
Caldwell expects this second wave of PPP funding will bring banks 10x more loan applications than they saw in the first round. He made it clear that the banks that will be best prepared to serve their customers with this new tranche of PPP funds will be the ones that are putting data to use by aggregating business’ financial data– even without a prior banking relationship– in order to understand their risk. “Banks are realizing that not having access to that data already built into their platform not only limits them on a daily basis but surely limits them in a crisis like this,” Caldwell said.
MX is a longtime Finovate veteran, having won Best of Show for seven of its demos, including one for the company’s most recent appearance at FinovateFall 2019. Check out the award-winning demo below:
Fintech giant FISunveiled a new venture arm today. The Florida-based company is targeting a goal to invest $150 million in fintechs over the course of the next three years.
The investment arm will focus on early-to-growth stage startups across the fintech sector and will centralize around emerging technologies such as AI and machine learning, digital enablement and automation, data and analytics, security and privacy, distributed ledger technology, and financial inclusion.
FIS launched the new venture arm to “nurture a growing ecosystem of innovators within and outside the company” as well as to complement its other initiatives including the FIS FinTech Accelerator program, the FIS Innovatein48 research and development competition, and its innovation labs.
“At a time when many other fintech firms are scaling back their investments, FIS is deepening its commitment to stay at the forefront of innovative technologies that can help our clients accelerate digital transformation and emerge even stronger from the current pandemic,” said FIS Chief Growth Officer Asif Ramji. “FIS Ventures is a significant new component of our investment strategy to identify and bring to market innovative new technologies that advance the way the world pays, banks, and invests.”
And FIS Ventures has made it clear that the funding relationship is not just about the money. The company will form strategic partnerships with each funding recipient. In turn, the companies will not only benefit financially but will also gain from FIS’ reach, scale, operating expertise, customer-base, and channel partners.
FIS Ventures’ first investment went to Flutterwave, a Nigeria-based payment acceptance platform.
Founded in 1968, FIS is a Fortune 500 company and is a member of Standard & Poor’s 500 Index. The company demoed at Finovate in 2016. In the third quarter of last year FIS made one of the biggest acquisitions of the year, purchasing Worldpay for $34 billion.
Shortly after adding ETH, XRP, and three stablecoins to its platform, blockchain payment services provider BitPay announced today it has added one more to the mix.
BitPay is collaborating with digital asset exchange platform Binance to add the Malta-based company’s stablecoin, BUSD, to its platform. The new addition will enable BitPay’s 2 million users to top up their BitPay card and wallet using BUSD and will also allow the company’s merchant clients to accept BUSD as a form of payment in cross-border transactions.
Binance’s BUSD, which is pegged to the U.S. dollar, offers merchants across the globe a currency that is as stable as the dollar but offers the beneficial aspects, such as security and efficiency, of blockchain-based payments.
“The partnership with Binance is about more than supporting another stablecoin, it is about making cross border payments simple and easy for both businesses by leveraging the global influence of Binance Exchange,” said Stephen Pair, CEO of BitPay. “With BUSD, BitPay expands blockchain payment choices for all our customers across the global payments space who want the flexibility of paying on the blockchain with the stability of the U.S. dollar.”
“Stablecoin is the forerunner of blockchain-powered payments by its nature. Partnering with BitPay will enable merchants and businesses from around the world to accept BUSD,” said Binance Founder and CEO Changpeng Zhao. “We believe a growing number of merchants and businesses will start adopting crypto, and we are glad to provide the payment solution together with BitPay, making the process simpler and easier.”
Bitpay has processed more than $2.8 billion since it launched in 2011 and now operates a $250 billion crypto marketplace. The Atlanta, Georgia-based company offers bank deposits in 38 countries. Among Bitpay’s clients are Microsoft, Newegg, AT&T, and Dish Networks.
Founded in 2017, Binance ranks among the top digital asset exchanges by volume and number of users. On average, the company facilitates around $2 billion in trades each day and has more than 15 million users.
Support for BUSD in BitPay’s wallet goes live today. The company will launch support for merchants “in the coming days.”
Payment automation solutions company AvidXchangeannounced this week it added $128 million to its Series F funding round. When included with the $260 million the company raised earlier this year, the oversubscribed round tops $388 million.
The round includes funds from new investors Lone Pine Capital, Schonfeld Strategic Advisors, and clients of Neuberger Berman. Existing investors, including Pivot Investment Partners, Mastercard, and Sixth Street Partners also participated.
AvidXchange will use the funds to fuel strategic growth initiatives and innovation.
“With only 40 percent of U.S. businesses automating their accounts payable processes, we continue to solve a real problem for companies that still rely on paper invoices and checks, fundamentally changing the way they pay their bills” said AvidXchange Co-founder and CEO Michael Praeger. “This has become even more evident as we see businesses implementing continuity plans and shifting to work from home models, making automation essential to support mission critical processes and keep operations running.”
AvidXchange offers solutions to help businesses manage the entire payments process– from invoice to payment– in a completely digital manner. The firm also facilitates payment fulfillment and manages supplier relationships to help companies focus on their business.
AvidXchange’s SaaS-based technology solves a huge pain point for U.S. businesses, as a full 60% of them still pay bills with paper checks.
While there is no word on an updated valuation for AvidXchange, the company was thought to be valued at $2 billion in January of this year.
Commerce monetization company Empyrannounced this week it has been acquired by its long-time partner Augeo, a loyalty and engagement firm. Financial terms of the deal were undisclosed.
Under the agreement, Empyr will rebrand as Figg, combining Augeo’s card-linking technology with Empyr’s publisher experience. Figg will benefit from Augeo’s existing 60 million users and $300 billion in transaction volume for loyalty offers.
Empyr launched in 2011 and has since raised $48.2 million in funding. The company’s API relies on data partnerships with VISA, Mastercard, and American Express to power card-linked loyalty rewards for offline businesses.
“While the timing might seem counter-intuitive, we believe there is an urgent need to bring advanced technology and more encompassing advertiser offer content to consumers seeking greater value,” said Augeo CEO David Kristal. “Some retail sectors like grocery, household essentials and health-related products are near capacity, while the travel industry, hospitality, restaurants and many local service businesses are battling to stay afloat. As things begin to improve, Figg will be uniquely positioned to connect consumers with advertisers to help accelerate commerce in the U.S. market.”
Valor Siren Ventures provided an undisclosed amount of financial support. “This is a compelling combination, to have VSV lead with new capital invigorating the operational and technology investments made by Augeo and Empyr in recent years,” added Bill Ruh, former Chairman of Empyr.
Kristal, who is also Executive Chairman of Figg, said the company chose the name Figg because it reflects its mission. “Figs define persistence and reflect the enduring quality that we felt spoke to our adaptability, sustenance and resolve,” he said.
The name also demonstrates the company’s adaptability, which is especially relevant in a time of pandemic. “Augeo was first launched during challenging times, and that experience has fortified our ability to press through adversity and grow. Today, we are looking through this current challenging time toward the “next normal.” We have a unique strategic focus around cash preservation coupled with ingenuity, adaptability and where possible, growth,” added Kristal.
Since the U.S. government launched the Paycheck Protection Program (PPP) to help keep small businesses afloat as they grapple with the economic effects of COVID-19, the program has received plenty of criticism.
Banks were vastly underprepared and under-informed about the program, which made them ill-equipped to support their customers. Adding to headaches, small business applicants were often left wondering if their application was approved and if and when they would receive funds.
Now on April 16, the program’s $349 billion has dried up. In some ways, this is a sign of success. Small businesses across the U.S. have been granted access to funds that otherwise they would now have via PPP loans. So where did the $349 billion go?
We checked in with data aggregation site covidloantracker.com which offers the following stats:
11,300+ small businesses have applied for loans
4% of small businesses have received their PPP funds
Average loan size was $216,000
The median PPP loan size is $98,500
Average payment speed is 8.2 days
The banks who distributed these loans primarily consisted of small, regional banks, which issued 76% of the funds. JP Morgan Chase paid out 10% and Wells Fargo and Bank of America each distributed 1%.
While small businesses from all 50 states received funds, more than half (54%) of the PPP fund recipients hail from Texas, while 21% came from Georgia, 30% from California, 18% from Wisconsin, and 16% from Illinois.
As for what’s next, Congress is currently working on adding more funds to the program. The cash should be available to small businesses “soon.”
Application security company Arxan Technologiesannounced yesterday that it has joined forces with two other industry firms, CollabNet VersionOne and XebiaLabs, to form a new entity, Digital.ai. Financial terms were not disclosed.
The three businesses will combine their expertise– business agility, software delivery, and application security– into a single platform. Overall, Digital.ai seeks to aid companies pursuing digital transformation to deliver digital experiences that customers trust.
“Digital.ai enables enterprises to focus on business outcomes instead of outputs, unifying value creation, delivery, and protection practices to drive efficiencies and create engaging, secure digital experiences that customers value and trust,” said Digital.ai CEO Ashok Reddy. “Now more than ever, it is critical that organizations leverage the power of business agility to optimize processes and make decisions rooted in customer centricity. Doing so will result in higher quality, more secure products that are delivered faster and drive stronger customer and employee engagement.”
Arxan’s approach to security is to protect apps “from the inside out.” The company protects the app’s binary code, JavaScript, and cryptographic keys to guard common entry points from fraudster attacks.
Digital.ai serves companies across multiple sectors including automotive, finance, digital media, gaming, insurance, medical devices, and more. The company’s customers include ABN AMRO Bank, KeyBank, KLM/Air France, Siemens, and Toyota.
Today’s news comes almost 20 years after Arxan’s launch. The San Francisco-based company was founded in 2001 by Hoi Chang and Mikhail Atallah. Since then, Joe Sander has taken the role as CEO.
