Author: Julie Muhn (@julieschicktanz)

NerdWallet Launches its First Consumer Product

NerdWallet Launches its First Consumer Product
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news
  • NerdWallet is launching its first consumer-facing credit card called NerdUp.
  • Launched in partnership with Evolve Bank & Trust and Bond, NerdUp aims to help consumers build credit responsibly.
  • The NerdUp card comes with benefits consumers expect from traditional credit scores, such as 1% cashback and free credit scores.

NerdWallet is expanding from financial content production into consumer products this week. The California-based company announced today it is launching a credit card called NerdUp, its first consumer-facing financial product.

Banking-as-a-service offers the opportunity for any company to become a fintech company, and NerdWallet is a prime example of this. Through partnerships with Evolve Bank & Trust and FIS‘ Bond, NerdWallet’s NerdUp aims to help users build and improve their credit responsibly.

NerdWallet is focused on helping consumers and small businesses make smarter financial decisions, and the company’s new card has a handful of features that help cardholders build credit responsibly. First, the card does not charge a monthly fee; it is free to use. Second, NerdUp does not conduct a hard credit check, which means that nearly all U.S. adults can qualify. Third, the card only requires a minimum deposit of $100.

But just because it is meant for credit novices doesn’t mean that the NerdUp card is void of typical credit card benefits. NerdUp cardholders earn 1% cashback on purchases. Each month, the cashback earned is automatically added to user’s deposit account to boost their credit limit. NerdUp also offers users a free credit score, along with insights and tips to improve their financial situation. Additionally, since NerdUp requires users to pay off their balance every month, the NerdWallet’s credit card offers a 0% interest rate. This may seem like semantics, but it is a key feature for users trying to build their credit.

However, according to NerdWallet CEO and Co-Founder Tim Chen, the company may not add more financial products to its lineup. “We don’t strive to offer our own financial products, but in this case we saw an opportunity to address a gap in the market,” said Chen. A recent survey NerdWallet conducted with The Harris Poll found that 23% of Americans indicate that a lack of credit or bad credit prevents them from reaching their financial goals. In another study, 43% said their credit score has negatively impacted them in the past.

“With NerdUp, we believe we can create a win-win-win for consumers, traditional card issuers, and NerdWallet,” Chen added. “By leveraging our existing distribution channels to reduce costs, we are uniquely positioned to design and offer a product that passes lower costs on to consumers, with a secured card that requires a low minimum deposit, no annual fees, and no credit check while also offering cash back rewards, helping consumers build good credit behavior and unlock new credit opportunities.”

With its launch of NerdUp, NerdWallet is in good company with other credit-building credit cards. Credit Karma, Credit Sesame, Chime, Petal, and Experian all offer credit building programs that require the user to pre-fund their account. And another fintech, Neu, launched today with its credit card aimed to help college students build their credit.

With its seasoned brand and well-earned consumer trust, NerdWallet should do well with its new credit card. Founded in 2009, NerdWallet is a public company listed on the NASDAQ under the ticker NRDS. The company has a current market capitalization of $511 million.

Photo by Redowan Dhrubo on Unsplash

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Remembering Fintech Ghosts: Four Companies That Haunt Our Memories

Remembering Fintech Ghosts: Four Companies That Haunt Our Memories
By Julie Muhn (@julieschicktanz) Posted on
Categories: List series

Halloween is less than a week away, and with the scariest night of the year on the horizon, we wanted to settle in and tell some fintech ghost stories. These ghosts won’t be too spooky– they are more like a walk down memory lane than a visit to a haunted house.

Here’s a look at four fintech ghosts that have come and gone, but still haunt our memories:

Coin

Coin was founded in 2012, offering consumers a single, electronic payment card where they could store their multiple debit, credit, gift, loyalty, and membership card numbers. For $50, users could sign up for the waitlist, but many who paid upfront never received their card.

What happened

Coin had a very long waitlist, and while there was much initial excitement about the card, the enthusiasm faded for many after realizing they may never receive their card. The real death knell for Coin was that it only worked 80% to 90% of the time. As Finovate Founder Jim Bruene pointed out in his post about the card, “… no one wants to be that guy holding up the checkout line with his fancy black card.” Coin closed in 2016.

BillGuard

BillGuard suffered a slower death than most fintech ghosts. Founded in 2010, the company offered consumers a mobile app to access spending analytics, credit scores, payment details, transaction maps, and data breach alerts.

What happened

The functionality BillGuard offered was perfectly suited for fintech’s personal financial management (PFM) era. The company had kept up with evolving consumer expectations of the time, adding fraud alerts and personalized offers. When peer-to-peer lending company Prosper acquired BillGuard for $30 million in 2015, the fintech community had high hopes for the tie-up, thinking Prosper would add PFM capabilities and become a Credit Karma competitor. Two years later, however, after rebranding the BillGuard app to Prosper Daily, Prosper shut down the financial wellness app, shuttering all of its potential and erasing users’ history.

iQuantifi

iQuantifi was founded in 2009 to enable financial institutions to offer a virtual financial advisor, adding wealth management to their offerings. In 2014, the company launched a consumer-facing virtual financial advisor tool to help users identify, prioritize, and achieve their financial goals with a personalized plan. The company had raised $3.7 million.

What happened

iQuantifi showed plenty of promise. The company had formed an aggregation partnership with MX to offer millennial users a lower-cost option to managing their finances. iQuantifi even earned a spot to participate in the Plug-and-Play fintech accelerator. In 2019, however, the company was charged with selling unregistered securities to investors that were ineligible to purchase shares in the offering. Between 2013 and 2019, iQuantifi raised $3.5 million from over 50 unaccredited investors. The U.S. Securities and Exchange Commission (SEC) ordered iQuantifi and its founder to cease and desist from committing violations and pay a $25,000 civil penalty. The company closed in 2019.

ZELF

ZELF was launched in 2019, right as the digital banking craze was taking off. The fintech was geared toward serving millennial and Gen Z users in the E.U. and U.S. ZELF billed itself as the “Bank of the Metaverse” where users could bank their gaming coins, NFTs, and fiat– all anonymously with no social security, ID, or selfie required.

What happened

ZELF is a good cautionary tale of what happens when you combine crypto, fiat, the metaverse, and anonymity. Because of blatant KYC and Patriot Act violations, the company’s partner bank, Evolve Bank & Trust, pulled the plug on ZELF a day-and-a-half after its official launch day. ZELF closed down in December 2022.

Photo by Daisy Anderson

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U.S. Bank Launches Avvance, a Point-of-Sale Lending Tool

U.S. Bank Launches Avvance, a Point-of-Sale Lending Tool
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, U.S. Bank
  • U.S. Bank launched Avvance, a point-of-sale lending tool for merchants.
  • Avvance allows merchants to offer installment loans on purchases ranging from $300 to $25,000.
  • U.S. Bank also offers a consumer-facing BNPL tool, ExtendPay, which it launched in 2021.

U.S. Bank launched an embedded point-of-sale lending solution this week. The new buy now, pay later (BNPL) tool, Avvance, helps businesses give shoppers options to finance their purchase during checkout after filling out a quick application.

Avvance is embedded into the checkout process and shows the buyer multiple personalized loan options, offering them the ability to pay over time. U.S. Bank backs the loans and doesn’t require the merchant to manage the payments after the sale is complete.

“Our point-of-sale lending product allows business owners the ability to offer affordable financing while they receive full payment at the time of sale,” said Executive Vice President of Buy Now, Pay Later and Point-of-Sale Lending at U.S. Bank and Elavon Mia Huntington. “U.S. Bank, the primary source of the consumer loans, manages all aspects from application to servicing, so business owners can focus on what they do best — running their business.”

Customers can use Avvance installment loans to finance purchases between $300 to $25,000. The financing terms range from 0% to 24.99% APR with repayment plans that range from three to 60 months. When a customer uses the tool to finance a purchase, U.S. Bank offers the merchant the full payment within 48 hours. While Avvance is free for merchants to offer, U.S. Bank charges a merchant discount rate fee for each Avvance loan that it processes. 

Avvance’s benefits are similar to those of other BNPL tools on the market. It can encourage the customer to make a purchase they otherwise would not, increase their purchase amount, and help reduce cart abandonment. “With Avvance, business owners have the ability to attract new customers while increasing their buying power, resulting in increased sales,” Huntington explained.

Interestingly, U.S. Bank is marketing Avvance as a point-of-sale financing tool, rather than a BNPL tool. This may be because it wants to target an older generation than BNPL typically reaches. Avvance also differentiates itself from typical BNPL tools when it comes to the base purchase amount required. While customers must spend at least $300 with Avvance, many BNPL tools have no minimum purchase requirement.

Avvance isn’t U.S. Bank’s first BNPL tool. The bank launched ExtendPay in 2021– the height of fintech’s BNPL craze– to offer its credit card holders a way to split purchases over $100 into a series of fixed payments ranging from three to 24 months. U.S. Bank doesn’t charge interest on ExtendPay purchases, but it does charge a fixed monthly fee.

Photo by Mikael Blomkvist

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Former JP Morgan Exec Launches Refunds-as-a-Service Startup

Former JP Morgan Exec Launches Refunds-as-a-Service Startup
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news
  • TodayPay, a new “refunds-as-a-service” startup, has launched out of stealth mode this week.
  • TodayPay is founded by former JP Morgan executive Jeremy Balkin.
  • TodayPay’s technology decouples the refund from the return logistics to pay customers their refund instantly in their TodayPay mobile wallet.

Jeremy Balkin is leveraging his expertise in the financial services industry to launch a new fintech. The former JP Morgan executive announced this week that TodayPay, what he is calling a “refunds-as-a-service startup,” has exited stealth mode.

At its core, TodayPay helps merchants give their customers instant refunds when they initiate a return. The service also offers the customer multiple options of how they want to receive the funds instead of simply defaulting back to the original payment method.

“I built TodayPay because I’ve seen firsthand how the speed of a payment can change somebody’s life,” said TodayPay Founder Balkin. “There’s over a trillion dollars of value exchanged every year in the form of refunds, yet there’s been almost zero innovation improving the refund customer experience.”

TodayPay offers four main products:

  • Better Refund, an API that decouples the refund from the return logistics to pay customers their refund instantly, while allowing merchants seven days to pay.
  • Refund Now Pay Later, which provides merchants with a pre-qualified credit line of up to $300,000 with up to 90 days to repay the funds. TodayPay takes on the risk of the return so that the merchant can focus on their working capital.
  • instarefund, a consumer facing widget embedded into a merchant’s existing return flow that helps them control the customer experience.
  • Management Portal, a merchant-facing dashboard to help businesses manage all transactions in one place and automate refunds and returns management.

These products may improve the returns experience for merchants, however, TodayPay adds a bit more friction onto the customer experience. That’s because customers receive their refund payment in a TodayPay digital wallet. While the digital wallet is already set up via the customer’s phone number, they still have to log into their TodayPay digital wallet to choose how they’d like to redeem their refund– into their bank account, onto their debit card, or via a gift card.

While TodayPay was in stealth mode, it built relationships to be integrated into Shopify, BigCommerce, Woo, and Magento. The company is backed by Soma Capital, and is working with Astra, Marqeta, and Visa for the digital wallet piece.

Photo by engin akyurt on Unsplash

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New Startup Showcase: Warp Takes on Payroll

New Startup Showcase: Warp Takes on Payroll
By Julie Muhn (@julieschicktanz) Posted on
Categories: Startups

I’ve always loved following innovations in the payments space. It is the one fintech sub-sector that touches everyone– regardless of net worth, social standing, or geography. And when it comes to payments, there is plenty of room for disruption, especially in payroll.

In this month’s new startup showcase, I’m taking a closer look into Warp, which was launched earlier this year by Ayush Sharma. At its core, Warp is seeking to help founders run their startups by offering them a way to outsource payroll operations– and the headaches that go along with payments and tax compliance.

At the root of the problem Warp is trying to solve is the wide variety of tax laws, both across the globe and within the U.S. These laws make it difficult for founders to navigate payroll for their remote workforce, especially when employees are located across multiple U.S. states or international boundaries. Because each region has different tax laws, founders can spend hours navigating poorly designed government websites to ensure they are complying with local laws.

A 2023 Y Combinator alum, Warp currently offers full-service payroll for U.S. employees and files and pays all federal, state, and local taxes. The company also helps startups pay contract workers and generates 1099 end-of-year paperwork. For domestic payouts, Warp automates payroll registrations and monitors for compliance. Companies that need to send payment across international borders can use Warp to pay contractors in more than 150 countries, with tools that generate compliant contract agreements in seconds.

Beyond payments, the New York-based company even does some light lifting when it comes to HR tasks. The company’s technology provides healthcare options with automated payroll deductions, generates offer letters, onboards new employees, approves invoices and reimbursements, and helps startups track PTO and time submissions.

Warp offers three pricing options from $49 per month (plus $20 per person) to $99 per month (plus $35 per person). Among the company’s competitors are Gusto, Rippling, and Deel.

Warp has received a total of $2.7 million in funding. The company received $500k from Y Combinator and $2.2 million from Abstract Ventures, HOF Capital, Shrug Capital, and others.

Photo by Jan Van Bizar

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Marqeta Introduces Embedded Credit Experiences

Marqeta Introduces Embedded Credit Experiences
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, Marqeta
  • Marqeta launched a new credit card issuing platform to help brands offer embedded credit programs.
  • Using the new tool, fintechs and non-financial services companies can launch both consumer and commercial credit programs.
  • Marqeta’s new card program will allow brands to own the entire customer experience without having to send the customer to a bank website to access card information.

Card issuer Marqeta unveiled its new credit card issuing platform today. The new offering serves as a one-stop shop to help companies launch embedded card programs for both consumer and commercial users.

Marqeta’s new credit platform helps brands promote customer loyalty by enabling personalized rewards and can support any card type and any format. According to Marqeta CEO Simon Khalaf, the new platform will help brands “reimagine what a credit card can be” and engage with consumers “in a whole new way.”

As part of that reimagining, Marqeta’s new platform serves as a single location where fintechs and non-financial services companies can build a credit product that suits their consumers’ unique needs and embed the experiences within their existing app. Specifically, brands can own the entire customer experience and won’t need to send cardholders to a bank’s website to access card information.

The credit platform also provides a rewards engine that helps brands build reward programs that adapt to cardholder needs and preference. Additionally, Marqeta offers brands access to real-time customer data to help further customize cardholder products and– for commercial cardholders– provides a range of flexible funding models such as Net 30 Charge Cards, Receivables Purchase, and Revolving Credit.

“The possibility is huge,” Khalaf added, “but the incumbent solutions are simply not giving consumers what they need. We want our credit card platform to completely change the consumer experience and the brand loyalty equation.”

Today’s development comes courtesy of Marqeta’s January 2023 acquisition of Power Finance for $275 million. Power Finance was founded in 2021 to offer brands a credit card program management service. Power Finance’s platform allowed companies to outsource credit card management, customer experience, application decisioning, transaction processing, and more.

Founded in 2010, Marqeta enables clients to manage their own card programs and banking tools. The company offers configurable and flexible payment tools and customizes payment cards for their end customers. Marqeta is a publicly traded company listed on the NASDAQ under the ticker MQ. The company has a market capitalization of $2.83 billion.

Photo by Cup of Couple

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The CFPB Formally Proposes 1033 Open Banking Rule

The CFPB Formally Proposes 1033 Open Banking Rule
By Julie Muhn (@julieschicktanz) Posted on
Categories: Regulations

The U.S. Consumer Financial Protection Bureau (CFPB) took a step in the direction of formalizing open banking regulation today. The agency proposed a rule that would shift the financial services industry toward open banking, giving consumers control over their financial data.

The rule proposed today marks the CFPB’s first proposal to implement Section 1033 of the Consumer Financial Protection Act. Under Section 1033, the CFPB is charged with implementing personal financial data sharing standards and protections.

For the 100 million consumers that have authorized a third party to access their account data, this is welcome news. The rule would require banks to share consumer data (with the consumer’s permission, of course) with third parties in order to promote competition. It would also prevent companies from misusing or wrongfully monetizing consumers’ personal financial data.

“With the right consumer protections in place, a shift toward open and decentralized banking can supercharge competition, improve financial products and services, and discourage junk fees,” said CFPB Director Rohit Chopra. “Today, we are proposing a rule to give consumers the power to walk away from bad service and choose the financial institutions that offer the best products and prices.”

The rule would also benefit the financial services industry as a whole by providing detailed technical standards on how consumer data sharing should work. The standards will contain safeguards to ensure industry standards are fair, open, and inclusive.

“Today, we’re celebrating a moment that our members – and millions of consumers across the country – have been waiting for: the CFPB’s release of its proposed rule creating a legally binding consumer financial data right,” said Financial Data and Technology Association Executive Director Steve Boms. “We strongly support the proposed rule, which will put consumers in full control of their financial data and empower them to choose the financial provider best suited to meet their unique needs. The proposed rule will create more competition and choice in the financial services marketplace, ultimately leading to better consumer outcomes.”

Not everyone in the industry sees the Section 1033 rule making proposal in a positive light, however. A handful of large incumbent institutions have long been of the opinion that their consumers’ financial data belongs to them and should not be shared with third parties. When banks offer third parties access to consumer data, they see it as losing out to competition.

The move comes two years after the CFPB first touched on the topic of open banking by issuing an advanced notice of proposed rule making to create formal regulation around open banking in the U.S. And while it is exciting to see the CFPB move in the direction of open banking, the formalization of rules around the topic becomes technical and complicated, given the range in size of the players involved. The agency is currently accepting comments on its proposal until December 29, 2023.

Photo by takahiro taguchi on Unsplash

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J.P. Morgan Payments Taps Trulioo for Identity Verification

J.P. Morgan Payments Taps Trulioo for Identity Verification
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, Trulioo
  • J.P. Morgan Payments has selected Trulioo for identity verification tools.
  • Trulioo’s Person Match and Identity Document Verification will offer verification of consumers and businesses.
  • J.P. Morgan Payments processes more than $9 trillion in payments each day in over 160 countries and 120 currencies.

Trulioo announced today that J.P. Morgan Payments has tapped it for fraud prevention. JPM Payments will leverage Trulioo’s consumer and business verification tools.

“We chose [Trulioo] because of its breadth of personally identifiable data sources, impressive match rates, and global footprint,” said J.P. Morgan Payments Managing Director- Global Head of Trust & Safety Ryan Schmiedl. “Trulioo has the trusted authentication and verification experience we want to offer clients and additional layers of protection from fraud during the onboarding experience and beyond.”

JPM, which processes more than $9 trillion in payments each day in over 160 countries and 120 currencies, will leverage Trulioo’s global payments and trust and safety models. Specifically, JPM will use Trulioo’s Person Match and Identity Document Verification to offer verification of both consumers and businesses.

“With real-time access to hundreds of government registries, public records, data sources and document types, we can verify people and businesses globally, leaving no space for bad actors and, ultimately, help J.P. Morgan clients adhere to the highest of standards, no matter where their clients operate,” said Trulioo CEO Steve Munford.

Canada-based Trulioo, which was founded in 2011, helps organization navigate compliance by offering real-time verification of more than five billion people and 700 million business entities worldwide. Last month, Trulioo added intelligent transaction routing to its identity verification orchestration platform. The company has raised $475 million.

Photo by Eren Li

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Statement Raises $12 Million for AI-Powered Treasury Tools

Statement Raises $12 Million for AI-Powered Treasury Tools
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding
  • Statement has raised $12 million in Seed funding.
  • The funds come from Glilot Capital Partners, Citi, Mensch Capital Partners, Titan Capital, and Operator Partners.
  • The company will use the funds to bolster its market launch strategies, speed up product development, and hire additional employees.

Cash flow intelligence company Statement has raised $12 million in Seed funding this week for its cash flow management platform. Today’s funds come from Glilot Capital Partners, Citi, Mensch Capital Partners, Titan Capital, and Operator Partners.

According to TechCrunch, which broke the news, Statement will use the $12 million to bolster its market launch strategies and speed up product development. To fuel this growth, the New York-based company said it plans to expand its team to 35 employees by the end of 2024.

Launched last year by co-founders Idan Vlodinger and Shahar Lahav, Statement offers what it calls a “Cash Intelligence Platform” that provides enterprises a single, cohesive overview of their financial data in real time. The platform, which automatically categorizes transactions, connects with multiple banks and ERP systems to reflect real-time cash positions, show working capital analytics, automate accounts receivable reconciliation, and forecast cashflow using AI.

“Statement saves the office of the CFO hundreds of hours per month on manual data collection and enrichment, and hundreds of thousands to millions of dollars by being able to manage their money faster and better,” Vlodinger told TechCrunch. “CFOs deserve to work with great software, with a fantastic user interface, that has real-time data, and have the systems ‘speak’ to each other with true data reconciliation, so they can focus on growing their businesses.”

Armed with increasingly powerful AI-tools, more companies have been operating in this treasury management space, which used to be thought of as simply business financial management (BFM). Other companies offering financial management tools include Kyriba, international cash management provider Neo and HighRadius, which reached unicorn status in 2020.

Photo by Pixabay

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3 Reasons Youth Banking Tools are Having a Moment

3 Reasons Youth Banking Tools are Having a Moment
By Julie Muhn (@julieschicktanz) Posted on
Categories: List series, Youth market

Banks have discussed ways to target the youth market for years. Capturing a customer under the age of 18 builds brand loyalty at a young age, increases a customer’s potential lifetime value, leads to cross-selling opportunities as they age, and increases the parent users’ engagement.

While these benefits are well-known across the fintech space, the youth market can be difficult to tap into; banking tools for minors are not yet widespread. Things may be changing, however. Developments in the youth banking market have been peppering the news this year, starting with Acorns’ acquisition of GoHenry in April. Things have really started to pick up this fall, however. Here’s a timeline:

  • August 10: Greenlight launched a new solution to help teens begin building credit.
  • September 22: Invstr launched Invstr Jr., a digital bank and investing account for users under the age of 18.
  • September 25: The Reseda Group partnered with financial literacy platform Goalsetter to offer a white-labeled version of the app for its members.
  • October 3: Acorns announced the launch of a new premium tier that integrates access to GoHenry.
  • October 3: Youth investing platform Stockpile teamed up with Green Dot to offer debit cards to its users under the age of 18.

It appears that youth banking tools may be having a moment. But why now? Below are a few reasons behind the recent flurry of activity in the space.

Transfer of wealth

It’s been well-publicized that the largest transfer of wealth in history is currently taking place. In fact, Cerulli Associates estimates that in the next 25 years, older generations will transfer a total of $84 trillion to younger generations. As a result, these young recipients– many under the age of 18– will need a safe account to hold and grow their newfound wealth. Youth savings accounts and investing tools are a good starting place.

Millennials maturing as parents

A decade ago, much of the discussions in the fintech industry centered around how to serve new millennial clients. Millennials are a digital-savvy generation and now range between 27 and 42 years of age. This mobile-first generation is more likely to seek out banking tools for their kids online rather than take them into a branch to open their first savings account. The recent spate of banking and investing tools all suit the need for digital-first accounts for minors.

Competition

Success invites competition. As more companies succeed in gaining users in the youth banking space, more will join in. That’s why we’ve seen not only new players enter into the space, but also established institutions create new tools to serve the market. As these tools continue to generate attention by launching new features, entering new partnerships, and adding new clients, other fintechs will begin to enter the market.

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Nova Credit Lands $45 Million in Funding for Alternative Credit Scoring

Nova Credit Lands $45 Million in Funding for Alternative Credit Scoring
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding
  • Nova Credit has received $45 million in Series C funding in a round led by Canapi Ventures.
  • The investment boosts Nova Credit’s total funding to $79 million.
  • Today’s funds will be used to broaden its product offering and scale its cash flow underwriting and income verification tool Cash Atlas.

Borderless credit data company Nova Credit has brought in $45 million in Series C funding this week. The investment– which was led by Canapi Ventures with participation from Kleiner Perkins, General Catalyst, Index Ventures, Y Combinator, Avid Ventures, Geodesic Capital, Harmonic Capital, Radiate Capital, and Socium Ventures– boosts the company’s total raised to $79 million.

The company will use the funds to broaden its product offering beyond cross-border credit reporting and scale its cash flow underwriting and income verification tool Cash Atlas. Along with Cash Atlas, Nova Credit also offers Credit Passport, an API that translates an international credit report into a local-equivalent credit score to allow newcomers to the U.S. to use the credit score of their home country.

To power these two products, Nova Credit leverages open finance to analyze consumer-permissioned transaction data for underwriting purposes. With insight from a prospective borrower’s cash flow, the company can underwrite the more than 60 million new-to-credit, new-to-country, and other thin-file consumers.

“Open finance data has been available for decades, but the industry has failed to assemble it into a suite of products that lenders can easily use to improve their customer onboarding and credit workflows,” said Nova Credit Co-founder and CEO Misha Esipov. “For years, Nova Credit has pioneered the use of consumer-permissioned data to enable the world’s most reputable businesses to approve more customers without compromising their risk and compliance standards.”

Nova Credit has seen growth in terms of revenues, partners, and geography since closing its $50 million Series B round in 2020. In the past three years, the California-based company has grown its revenue 10x and has added HSBC, Verizon, Scotiabank, Earnest, and Yardi to its partner roster, and has expanded its product reach to 20 countries outside the U.S., including Canada, the U.K., the UAE, and Singapore. 

In the future, Nova Credit plans to introduce new solutions ranging from new-to-credit and thin-file underwriting to customized KYC and verification solutions. “While cross-border credit remains critical to our strategy, we’re excited to broaden our offering and tackle a new set of industry challenges long unsolved,” explained Esipov. “This new capital fortifies our position to continue being a dependable partner to the many banks and lenders we serve and accelerates the pace of innovation in an industry very much in need of change.”

Photo by Dany Kurniawan

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When the CFPB States Banks Cannot Charge for “Basic” Customer Service

When the CFPB States Banks Cannot Charge for “Basic” Customer Service
By Julie Muhn (@julieschicktanz) Posted on
Categories: Julie's Column

The Consumer Financial Protection Bureau (CFPB) issued its first advisory opinion offering guidance on section 1034(c) of the Consumer Financial Protection Act (CFPA), which originally became effective in 2011. Section 1034(c) requires banks to reply for consumer requests for information and not charge them for customer service responses regarding their bank account. The CFPB calls charges such as these “junk fees.”

The issue stems from instances when the consumer needs to gather basic account information required for them to fix problems with their account or manage their finances. With today’s advisory opinion, the CFPB is seeking to stop large banks for charging their customers for requesting essential information they are entitled to under federal law. These “reasonable requests” include asking for original account agreements or information about recurring withdrawals from an account.

“While small relationship banks pride themselves on customer service, many large banks erect obstacle courses and impose junk fees to answer basic questions,” said CFPB Director Rohit Chopra. “While the biggest banks have abandoned the relationship banking model, federal law still requires them to answer certain customer inquiries completely, accurately, and in a timely manner.”

Who is impacted

The opinion applies to insured depository institutions and credit unions that offer or provide consumer financial products or services and that have total assets of more than $10 billion, as well as their affiliates.

What does it require

Banks and credit unions must comply with consumers’ requests for information regarding a financial product or service that they obtained from the institution. This includes supporting written documentation regarding customer accounts.

Why now

Because many households do not have a single, personal banker they can turn to for answers, they are often subject to phone trees and AI-powered chatbots to find information. As more banks attempt to save costs by swapping human agents for generative-AI-powered bots, some consumers may have to spend extra time sorting through irrelevant material and waiting on hold to get the answer they need.

“Large banks and credit unions possess information that is vital to meet these customer needs,” the advisory opinion states. “Too often, however, it can be difficult and time consuming for individual consumers to obtain a clear answer to questions or resolve an account issue.”

What is not included

While consumers have a right to receive information about their account, there are some expections. Banks and credit unions do not need to offer:

  • Confidential information such as an algorithm used to derive credit or risk scores
  • Information collected for the purpose of preventing fraud or money laundering
  • Information required to be kept confidential by law
  • Any nonpublic information, including confidential supervisory information

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