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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Payment processing company Cloverannounced a new capability for dine-in restaurants to offer their guests. The Fiserv-owned company launched Scan to Pay, a tool that enables diners to pay for their meal at their table without the help of their server.
Available on Clover Dining, Scan to Pay prints a QR code on the customer’s itemized bill. Once guests scan the code with their iPhone they can pay via Apple Pay without opening a separate payment app. After the transaction is complete, the server sees a notification on their Clover terminal that their customer has paid. This allows the customer to leave the restaurant without further interaction.
“As restaurants look for new ways to adapt to consumer trends and offer quality dining experiences, Scan to Pay puts the power of when to pay and leave into the hands of the restaurant guest, creating a better dining experience and reducing extra tasks for servers,” said John Beatty, co-founder of Clover. “Scan to Pay represents another step forward for Clover as we continue to build out our core technology capabilities and provide additional solutions that can help merchants grow their businesses and delight their guests.”
Restaurants using Clover Dining can access Scan to Pay without additional cost, though they are charged card not present (CNP) rates for Scan to Pay transactions.
While the potential user base is limited to iPhone users and further limited to those that have set up ApplePay, the user base for payment services such as Scan to Pay is growing. 9to5Mac recently reported that Apple Pay is used for 5% of card transactions across the globe. And by 2025, that number could reach 10%.
Clover was founded in 2010 and was acquired by First Data in 2013. First Data, in turn, was acquired by Fiserv in July of last year. Clover, which demoed at FinovateSpring 2012, offers a range of card present and CNP technologies and processes more than $100 billion in payment volume each year.
Automatic saving tools have been around since the dawn of the new millennium. You’re probably familiar with how they work; the tools allow users to contribute to savings goals on a regular basis using microtransfers. Some take a randomized approach to the contributions, transfering under $10 a few times a week from a user’s checking account to their savings account. Other tools round up the amount of everyday purchases and contribute the “spare change” to a savings account.
Though Bank of America’s autosave tool has been available since 2005, it wasn’t until the launch of investing app Acorns in 2012 that the industry picked up on the possibility of success for autosave and payment round-up tools.
Banks were quick to notice not only the positive consumer response to such tools but also the potential for more consumer deposits and increased debit card usage. While many banks offer a straightforward version of autosave, a handful offer more robust features, such as purchase round-ups, to entice users to keep a few more bucks in the bank. Below are autosave programs from six banks.
USAA’s Tracker
Tracker from USAA tries to make saving a bit more approachable with the use of a German Shepherd. The tool does not implement purchase round-ups, however. Instead Tracker randomly withdraws small amounts ranging from $2 to $9 from a user’s checking account one to four times per week. To keep the user involved, Tracker texts the user every day to inform them of their checking account balance.
Bank of America’s Keep the Change
Bank of America was well ahead of its time when it launched Keep the Change in 2005. The savings program rounds up consumers’ purchases to the nearest dollar and deposits the extra change into a separate savings account.
The tool is still available and is relatively unchanged today.
KeyBank’s EasyUp
KeyBank’s savings tool, EasyUp, is tied to a user’s debit card and works by automatically transfering $1 to a specified savings account every time a user makes a purchase. While customers can use the savings balance any way they choose, KeyBank specifically highlights using EasyUp to pay down debt faster.
Chime’s Automatic Savings
Chime, a U.S. challenger bank that was founded in 2013, uses the round-up concept to help users save money every time they make a purchase. In conjunction with this way to save, the bank also allows users to automatically transfer a percentage of each paycheck into their savings account. While this isn’t a new concept, Chime has built a user experience around the transfer capability and sends push notifications regarding savings progress to make it more accessible for users.
Qapital’s Rules
Qapital uses the concept of If This, Then That (IFTTT) to help users set up a structure around their savings transfers. The tool leverages behavioral economics to get users to save when certain actions are triggered. For example, accountholders can have Qapital set a small amount of money aside each time they visit the gym, every time it rains, or each time Donald Trump tweets.
Simple’s Round-Up Rules
Simple’s saving program, Round-up Rules, works similarly to Bank of America’s Keep the Change tool by depositing the “spare change” from each of a customer’s purchases into a separate savings account. The one difference with Simple’s savings tool, however, is that it waits until the spare change adds up to or exceeds $5 before transfering the cash into the savings account.
Digital banking and client lifecycle management solutions provider Fenergobrought in $80 million in funding today, bringing its total raised to $155 million and boosting its valuation to $800 million.
The funds come from new investor ABN AMRO Ventures and existing investor DXC Technology, which have taken a 10% stake in Fenergo. “We are very happy to add Fenergo to our investment portfolio,” said Hugo Bongers, Director at ABN AMRO Ventures. “This investment will contribute to ABN AMRO’s strategic priority to build a future proof bank and fight financial crime. We are impressed with the management team and solution Fenergo offers. In addition, this gives us additional exposure to a group of tier one investors.”
Fenergo will use the funds to bolster its products and hinted that the money will also fuel future company and product acquisitions.
Founded in 2009, Fenergo aims to help financial institutions revamp their client onboarding process by creating a seamless user experience while maintaining regulatory compliance. Demand for the company’s modern onboarding tools can be seen in the growth of its bottom line; last year, Fenergo grew its revenue by 21%.
The Dublin-based company boasts 70 clients, including two of its investors, ABN AMRO and BNP Paribas. Also on the list are ANZ, PNC, Banc of California, National Australia Bank, Canadian Imperial Bank of Commerce, UBS Asset Management, Anglo Gulf Trading Bank, Royal Bank of Canada, First Abu Dhabi Bank, Tricor, Exos Financial and Mizuho.
Mastercardannounced today it has received approval from the People’s Bank of China (PBOC) to set up a domestic bankcard clearing institution in China. PBOC has given Mastercard, along with its partner NetsUnion Clearing Corp (NUCC), one year to begin clearing activity in China.
This move comes after a long period of restricted payment card operations in China. For the past ten years, foreign payment card companies could only tap into China’s credit card market via partnership with state-run UnionPay.
“China is a vital market for us and we have reiterated our unwavering commitment to helping drive a safer, more inclusive and seamless payments ecosystem for Chinese consumers and businesses,” said Mastercard President and CEO Ajay Banga. “We remain focused on working with the Chinese government and local partners to grow the overall payments infrastructure.”
According to Bloomberg, which estimates the payments market in China to be $27 trillion, the country has 8.2 billion bank cards in circulation 90% of which are debit cards.
Thanks to a recent trade deal with the U.S., China has ended the monopoly of state-run payments and so far has already opened its doors to American Express and PayPal after the payments company took a 70% stake in China-based GoPay.
Customers have been getting a lot of attention in the financial services industry lately, and for good reason. After all, they’re the ones who are interacting with and relying on banking services on a monthly, weekly, and daily basis. And many times they are even the ones footing the bill!
Fortunately, there are fintechs in the business of helping financial services companies connect with their customers. Take Unblu, for example. The Switzerland-based company launched in 2008 as a conversational platform for financial services companies.
Unblu allows banks and relationship managers to interact with their customers across multiple channels and mediums in order to keep the conversation natural, comfortable, and compliant. Customers can open a chat discussion, host a video call, or schedule a co-browsing session with a view of existing websites and screens to enhance the conversation of the customer’s view.
The company offers four products. The first, Conversational Banking, provides interactivity that allows for a seamless flow of questions, answers, ideas, and scheduling. Retail Banking and Private Banking allow the organization to enhance the user experience while better capturing leads for upsell and cross-sell opportunities. Lastly, the insurance offering provides the capability to submit claims and compare different products.
Key to the Unblu platform are the safety and compliance aspects. Not only does Unblu protect clients’ data, it also protects their information during screensharing by masking sensitive information. Organizations are safeguarded as well, with archived interaction logs and audit trails of client communications.
Last year Unblu opened an office in Frankfurt, Germany. The move aimed to support geographic expansion and marks the company’s third international office location– in addition to the U.S. and U.K.– outside of its Switzerland headquarters. And Unblu’s growth continues to compound. The company counts more than 120 financial services firms as clients– almost triple the number of clients Unblu had in 2017.
If you happen to be at FinovateEurope this week, you’re in luck! Unblu will take the stage during the second demo session on Wednesday, 12 February at the Intercontinental Berlin. There’s still time to register so book now!
Top U.K.-based challenger bank Starling Bank raised $77.5 million (£60 million) from existing investors Merian Global Investors and JTC.
Today’s investment brings Starling’s total funding to $417 million (£323 million).
“The support of our existing investors represents a huge endorsement of our business strategy, as we continue to ramp up our growth,” said Anne Boden, Starling Bank founder and CEO. “We’re constantly innovating and have big ambitions to turn Starling into a world-leading digital bank.”
Starling will use the funding to support “rapid expansion” efforts and to create products and services that compete with traditional financial institutions. Helping motivate its employees to push for this expansion, the bank is awarding shares to its staff.
“We could not do this without the support of our 800 employees, who work so hard to provide a better banking experience for our customers, giving them more control over their finances. So I’m thrilled to be giving shares to them,” said Boden.
Since launching its banking app in 2017, Starling has amassed 1.25 million accounts and holds $1.61 billion (£1.25 billion) in assets under management. The bank was founded in 2014 and is headquartered in London with offices in Southampton, Cardiff, and Dublin.
Business spending and expense management platform Divvy is opening up new financing possibilities this week for its business clients with the launch of Divvy Capital.
The new funding option is done via invoice financing. Divvy enables its business customers to “float” their invoices for terms of one, two, or three months. Repayment is straightforward and there is a single, flat fee with APRs ranging from 10.8% to 11.4%.
The Utah-based company describes the new offering as a “flexible, lightweight” funding option that is separate from the Divvy Credit Card, which gives businesses both a physical and virtual Mastercard that offers 1% cash back plus 15% to 50% off select travel expenses.
https://youtu.be/2yVnRpFNrmo
Since all of Divvy’s current business clients are automatically pre-approved, there is no need to wait on credit approvals and funds are disbursed in near-real time. The company has been testing the new financing model for the last six months and it is now opening it up to its wider customer base.
“Divvy Capital is our most important public move in that direction,” the company stated in its press release, adding, “but stay tuned—2020 is full of many more big announcements to come.” A look at the Divvy Capital page reveals that the company is planning to launch short-term loans of up to $50,000 for terms of up to 12 months and and option that allows businesses to float a portion of their credit card balance for a fixed fee.
Financial services startup SoFi is partnering with The Bancorp to serve as the company’s backend banking provider and card issuer for SoFi Money.
The company launched SoFi Money last year to serve as an alternative banking product. SoFi’s challenger bank features include spending and budgeting tools, billpay, remote deposit capture, peer-to-peer payments, and a high interest cash management account.
Accountholders also have access to SoFi’s flagship borrowing products such as student loan refinancing, private student loans, personal loans, and home loans. As a competitive edge, SoFi also offers member benefits such as career coaching and VIP access to the SoFi Stadium, courtesy of last month’s partnership with Mastercard.
A rendering of the SoFi Stadium, set to open this summer in Inglewood, CA
The Bancorp is one of the top private-label debit and prepaid card issuers in the U.S. for Visa, MasterCard, Discover, and UnionPay. The company has more than 75 million prepaid cards in distribution and processes 1.1 billion transactions each year.
“As a true pioneer in the fintech space, SoFi has been setting and surpassing industry standards by providing outstanding products and services to its members,” said Damian Kozlowski, President and CEO of The Bancorp. “We are incredibly proud to be selected as a key partner that will support SoFi’s mission to deliver innovative products and services to new and existing members.”
The five-day World Economic Forum wrapped up late last month. The event, based in Davos, Switzerland, hosted some of the brightest minds in the world to speak on some of the biggest issues facing our society today.
We combed through the agenda to bring you a view of the discussions through a fintech lens. Here’s a summary of some of the most interesting fintech-related topics covered at the global event.
Shaping the Future of Financial and Monetary Systems The majority of this session wrestled with digital transformation. One of the overarching themes in this discussion as it related to digital transformation was the idea that we’ve recently reached a major inflection point in the banking industry. That is, banks are no longer adding products and services to their existing models, but the very nature of how they operate is beginning to change. And as these changes happen, banks can only move as fast as their customers are willing to move alongside them.
Shaping the Future of the Digital Economy This panel represented a range of industries. Specific to the financial services industry, PayPal CEO Dan Schulman said he expects the fintech industry to see more innovation in the next five years than it has seen in the last 30. The cause of this development speed comes down to AI. Along with AI, digital transformation was another hot topic. The panel agreed that digital transformation has opened up new opportunities and in many cases requires firms to revamp their entire business model.
From Token Assets to a Token Economy This session sought to answer the question, “how can tokenization make illiquid assets accessible without creating new financial risks?” The panelists explained how tokenization makes fractional ownership possible with physical goods, such as a famous painting or a piece of real estate. One overarching theme that pulsed throughout the discussion is that global regulation is behind in the tokenized asset realm. So while technology may be advanced enough for a tokenized asset economy, we are still many years away from it being commonplace.
How to Implement Responsible AI The World Economic Forum has teamed up with the government of Singapore to create a model framework of governance for the use of AI. This panel discussed the new framework and how it addresses the explainability of AI, which aims to be simple enough for all players to understand. As a part of the effort, the group has also released a toolkit for boards of directors to understand how to conduct AI oversight.
The Real-World Impact of 5G This session hosted representatives from Verizon, Qualcomm, and ABB. The group addressed political and policy issues around security and trust. Secondary to the conversation were social concerns. The first considered if 5G will cause a digital divide between societies that have 5G and those that do not. The other social concerns addressed were potential climate change and health concerns.
Global Cybersecurity Outlook The general consensus of this panel is that we are currently losing the battle of cybersecurity. The panelists looked at who is ultimately responsible to act as the authority to govern fraudsters, discussed the balance between security and consumer privacy, and considered whether businesses’ cybersecurity spending is happening in the right areas. Finally, the panelists concurred that security is not an IT problem, but that it is a business problem and everyone at the organization should be a security expert to some extent.
Creating a Credible and Trusted Digital Currency This discussion looked at opportunities, challenges, and concerns around digital currencies. The panel acknowledged that digital currency adoption has a certain and definite future. Representatives addressed real use cases, including cross-border payments, financial inclusion, and fraud prevention. Among the discussion points were stablecoin competition, central banks’ participation, as well as cultural effects. Much of the dialogue circled back to digital currencies issued by central banks (CBDCs).
If you ask Balázs Vinnai, president of W.UP, one size does not fit all when it comes to banking. In fact, his company’s entire premise is built around creating a personalized user experience.
Earlier this month we chatted with Vinnai about the struggle that banks face when it comes to tailoring their user experience to suit each customer individually.
Balázs Vinnai
Finovate: Why do you think banks have such a difficult time creating a personalized user experience?
Vinnai: There are several reasons: patched-up IT systems, outdated vendors, a lack of entrepreneurial spirit, just to name a few. But legacy thinking is by far the biggest culprit. Many incumbents still think that digital transformation is about buying the right technology and streamlining a few processes. That’s part of it, of course, but mostly it’s about understanding customers as much as possible and catering to their very needs.
Finovate: What is one small step banks can take to improve their customer experience?
Vinnai: Stop looking at their customer base as a faceless mass. Banking customers are individuals with unique needs and problems, goals and habits. With the help of advanced data analysis, banks can do much more than segment or micro-segment them. They can create segments-of-one and laser-target each and every customer with the right financial solutions.
Finovate: How does improving the customer experience ripple out to add value into other areas of a bank, such as fraud prevention?
Vinnai: Personalization in general is becoming a means of survival instead of added value. Completely rethinking how customer experience is delivered might seem a bit radical today but, in the long run, failing to do so will have more severe consequences. A Gartner study says that by 2030 as many as 80% of traditional financial service providers will go out of business if they can’t catch up with digital-savvy competitors.
Finovate: Tell us about what W.UP does and what sets the company apart from its fintech competitors.
Balázs Vinnai: W.UP is a personalization platform that allows banks to understand and meet their customers’ needs in real time. It comes with pre-built use cases that are easy to set up and tailor to banking systems, processes, and goals. What makes it different from other AI-driven tools is that not only does it give customers a better insight into their finances, but it can also spot and offer solutions for key money moments and complex life situations.
Finovate: Last year was considered to be “the year of the customer” in fintech. Do you think that mentality will continue into 2020?
Vinnai: I think every day should be about the customer in banking and fintech alike, no matter what year it is. And it shouldn’t just be an empty motto or mission statement. It’s time incumbents and challengers teamed up and walked the talk together.
Check out W.UP’s Best of Show-winning demo at FinovateEurope 2019 and don’t miss the company’s upcoming appearance at FinovateEurope on 11 through 13 February in Berlin.
Token issuance and asset servicing platform TokenSoft announced the launch of TokenSoft Investment Accounts today. The new accounts offer financial institutions a way to give their clients who invest in security tokens self-managed investment wallets.
“We’re excited to bring a multi-signature wallet security packaged in a self-controlled, easy to manage brokerage-style experience to the over 100,000 investors using our platform,” said TokenSoft CEO Mason Borda.
The new investment accounts offer investors a more traditional, brokerage-style experience; access to dividend distributions; and automated reinvestment. Additionally, issuers will receive support for compliant security token standards and integrated reporting and disclosures.
“The ability for non-technical individuals to self-custody is going to change the way assets under management models work in traditional finance,” said Jordan Davis, VP of Business Development at TokenSoft. “Wallets like TokenSoft Investment Accounts will put pressure on financial institutions to provide better client servicing, value-add services, and investment management tools to earn investors’ business. People will be able to add or remove service providers from accessing their assets the same way you can add or remove profiles from your Netflix subscription.”
TokenSoft’s mission is to accelerate the adoption of the blockchain in financial markets. The company launched its white-label token securities issuance platform in 2017 to help companies tokenize their assets in an economy that does not have the infrastructure to support such transactions. Below are a few use case scenarios:
Venture capital firms can tokenize portions of their limited partnership interest
Banks can tokenize their assets under management, creating a stablecoin
Startups can tokenize their equity to offer investors and employees fractional ownership
Among TokenSoft’s clients are Andra Capital’s Silicon Valley and Arca Investment Management Firm. The company was founded by James Poole and Mason Borda and is headquartered in San Francisco, California.
Blockchain-based financing company Figure announced today it has scooped up Asiff Hirji, former COO of Coinbase, as its new President.
In his tenure at Coinbase, Hirji helped the company grow its revenue to more than $1 billion and boost its valuation to $8 billion. He also served as Operating Partner at Andreesen Horowitz and was COO at TD Ameritrade. Prior to those positions, he held senior leadership roles at TPG Capital, Saxo Bank, HP, and Bain Capital.
“Asiff has already been a critical advisor to me on how we manage the growth of Figure in order to drive the transformation of financial services across categories and around the world,” said CEO Mike Cagney. “His deep experience in the financial services industry and his long history of helping companies drive and manage growth are both going to be important to the growth of Figure and the creation of our new merchant bank.”
Figure was founded in 2018 by former SoFi Founder and CEO Mike Cagney. The company provides direct-to-consumer solutions to help consumers optimize their finances via three products, a home equity line of credit, mortgage refinance, and student loan refinance. The company leverages the blockchain to process the loans and offers a simple application process to provide funds in a matter of days, not weeks.
In his new role, Hirji is responsible for building a new bank division that will enable banks to leverage Provenance, Figure’s blockchain-based transactions platform.
“Blockchain will crash the costs of financial services, making products more affordable and available to all. Figure is one of the very few companies actually turning that promise into reality,” said Hirji. “The opportunity now is to scale to more financial products and open this capability to all financial institutions. I feel fortunate to be able to help make the promise of blockchain a reality.”
Since the company’s launch, Figure has now become the fourth largest originator of HELOC loans in the U.S. The company has raised $1.2 billion in combined debt and equity and is headquartered in San Francisco, California.
