Credit Sesame Launches Digital Bank Account

Financial health platform Credit Sesame announced this week it has launched Sesame Cash, a debit card aimed to help consumers reach financial stability while optimizing credit.

The San Francisco-based company, which sees 500,000 new members every month, said that more than five million of its existing members want a digital banking service that integrates their cash and credit. Sesame Cash does just that.

“Through the use of advanced machine learning and AI, we’ve helped millions of consumers improve and manage their credit. However, we identified the disconnect between consumers’ cash and credit—how much cash you have, and how and when you use your cash has an impact on your credit health,” said Credit Sesame Founder and CEO Adrian Nazari. “With Sesame Cash, we are now bridging that gap and unlocking a whole new set of benefits and capabilities in a new product category. This underscores our mission and commitment to innovation and financial inclusion, and the importance we place in working with partners who share the same ethos.”

The Sesame Cash account includes a fee-free Mastercard debit card with no overdraft fees, no minimum balance, and no service fees. Cardholders have free access to more than 55,000 ATMs, the option for early payday, real-time transaction notifications, the ability to freeze or unfreeze the debit card, and virtual card integration with other mobile wallets.

Unique to Credit Sesame’s bank account are daily credit score updates, cash rewards for credit score improvement, and free identity theft protection.

Future advancements include a billpay service that helps users lower their interest payment and pay down debt faster, a roundup autosave tool, rewards programs, and budgeting tools.

This move by Credit Sesame comes at a time when many fintechs are launching debit accounts and high yield savings accounts in order to compete with traditional financial institutions for not only consumer deposits but also mindshare. One of the company’s closest rivals, Credit Karma, launched a high interest savings account last October that yields 1.30% (down from 2.03% at launch).

Credit Sesame’s decision to offer a debit card instead of a high yield savings account will ultimately prove to be a winning strategy. Many fintechs that have launched high interest accounts in the past couple of years have little differentiation now that the U.S. Federal Reserve has cut interest rates to 1.25%.

Deutsche Bank Wealth Management Taps QPLIX to Boost Digital Presence

Deutsche Bank Group is giving Deutsche Bank Wealth Management a boost today by teaming up with wealthtech firm QPLIX. The partnership also comes with an investment for QPLIX; Deutsche Bank has acquired a minority stake in the Germany-based company.

“With this cooperation, we are combining the innovative power and digital expertise of QPLIX with Deutsche Bank’s large client base and many years of experience in serving ultra-high net-worth clients,” said Kai Linde, co-founder and managing director of QPLIX.

With the collaboration, Deutsche Bank’s Wealth Management arm will use QPLIX to help clients manage and control investments among all asset classes, including illiquid investments such as real estate, on a digital platform. The bank will also tap QPLIX’s software for Deutsche Private Port, the digital investment office of Deutsche Bank Wealth Management.

For its part, QPLIX will leverage Deutsche Bank to offer its clients access to 100 data interfaces.

“With comprehensive asset mapping, we are meeting a need of our top clients and strengthening our market leadership in Germany,” said Deutsche Bank’s Head of Wealth Management Germany Frank Schriever.

AlphaPoint Garners Additional $5.6 Million in Funding

Digital asset exchange platform AlphaPoint has raised $5.6 million in funding. The news follows the company’s last round in 2018 when it pulled in $15 million. Today’s investment brings AlphaPoint’s total funding to $23.9 million.

AlphaPoint will use the cash to further develop its white label exchange and brokerage platform. The New York-based company will also work to create “sophisticated exchange features” such as margin trading, integrated advanced brokerage capabilities, and premium liquidity solutions.

“This capital injection enables AlphaPoint to continue delivering on our mission to enable access to digital assets globally. We are still in the early days of adoption and utilization of blockchain technology” said AlphaPoint CEO and Cofounder Igor Telyatnikov. “Stay tuned in 2020 as we will soon announce the release of a series of new liquidity, leverage, and lending products and solutions to our customers.”

AlphaPoint has also appointed two new members to its Board of Directors, Tim Scheve, President and CEO of Janney Montgomery Scott, and Jan Mayle, CEO and Founder of The Mayle Group. “The blockchain industry is evolving quickly and AlphaPoint is well positioned to help financial institutions cross the chasm and participate in the digital asset ecosystem,” said Mayle. “I look forward to lending my capital markets experience and helping AlphaPoint in its next chapter of growth.”

Founded in 2013, AlphaPoint powers digital asset exchange networks for companies across the globe. The company also maintains the AlphaPoint Distributed Ledger Platform (ADLP), which interoperates with more than 20 ledger technologies to digitize financial instruments, create trading venues, and reduce operational overhead. AlphaPoint is headquartered in New York with offices in Philadelphia, San Francisco, and North Carolina.

A VC Perspective on Balancing Investment in “Classic Fintech” with New Ideas

It’s a venture capitalist’s job to distinguish between winners and losers. Most of the time, however, funding in fintech is not that black and white. Regional differences each have pros and cons, and there is a balance between chasing the newest fintech idea and investing in proven technologies the industry knows work well.

We spoke with Manuel Silva Martinez, partner and head of investments at Santander InnoVentures (SIV), about regional differences in fintech, what he has his eye on for this year, and which of SIV’s investments he’s most proud of.

The U.S., Europe, and China are major fintech hubs. Which region do you view as the frontrunner?

Manuel Silva Martinez: Each region has built fintech on their own singularities. The U.S. has built fintech on a strong direct-to-consumer culture to address an extremely fragmented banking sector that has underinvested in technology, but consumes technology from vendors.

Europe’s banks have been more innovative and have driven the agenda, while start-up innovation has been hindered by national clusters, making smaller companies unattractive for growth funds. Only now are we seeing companies with regional ambitions fueled by larger VCs challenging bank-driven innovation.

China’s banking regulation did not allow for much competition, so competing against state-owned banks did not make sense. Instead, innovation has happened at the fringes of the industry, boosted by the emergence of mobile, digital, ecommerce and new platforms.

While risking being excessively simplistic, I’d say the most disruptive new models come from China, the U.S. produces the best B2B technology, and Europe will be most changed by the emergence of new fintech client propositions.

Is there a fintech subsector in particular you have your eye on this year?

Martinez: We look across the entire fintech value chain but the quality of opportunities we see varies from theme to theme.

We have also been organically looking for opportunities in the capital markets; we are big proponents of B2B blockchain applications and have found that capital markets is the perfect space for that.

On a slightly more forward-looking note, we are developing a number of theses on how fintech interacts with important customer decisions, and on how those customer journeys are changing. This is making us look at opportunities in PropTech (as it relates to the mortgage cycle), Mobility (car ownership), Logistics (trade and supply chain finance) and EdTech (wealth and human capital), etc.

Overall, we try to keep very close to where ‘classic fintech’ is going while keeping an eye on how the industry is reshaping itself by challenging its boundaries and basic business models.

In a lot of industries location matters. Does the location of a fintech start-up influence your investment decision?

Martinez: It does and it does not. Today, knowledge and capital are more liquid than ever, and great companies can be built anywhere. This is a dramatic change from the old days where thriving ecosystems had to agglomerate capital, talent, and clients, which was self-limiting for smaller ecosystems to flourish. We go where the opportunities are, as opposed to waiting for them to come to us.

At the same time, we actively engage our companies and spend time with them, go through their strategy, chat with their teams – outside of the more formal Board setting. Thus, we would naturally be more engaged with companies where our team is located. We now have a small antenna team in San Francisco, London has been home to SIV since inception, and we are also traveling very recurrently in all the other major hubs in Europe that are just a short flight away.

What do you consider to be Santander’s most successful investment so far?

Martinez: Success is a very subjective concept. From a purely financial perspective, we are proud to be investors of companies that have made the headlines for reaching or aiming at unicorn status, like iZettle, Ripple, Kabbage, Creditas, Trulioo, Tradeshift, etc.

But we also look at success at the micro-level; I feel proud of how our actions, our support, whether through activating Santander or through our own skills and network, accelerate our companies. In that sense – and our CEOs are best to speak about this – I am particularly proud of how we have supported the likes of Autofi, Bonify, Crosslend, Elliptic or Roostify, among others, in driving growth and reaching their next level of success.

Equifax Adds Rental Payment History to Credit Insights

Consumer insights company Equifax is partnering with U.K.-based Credit Ladder, a rent reporting service.

Under the partnership, Equifax will leverage data from Credit Ladder to help tenants who pay their rent on time access fairer credit rates. This data is especially important in the U.K., where 29% of residents rent their residences. Of those, many have a limited borrowing history that results in thin credit files. This typically underserved group ultimately finds it difficult to gain access to reasonable rates for credit cards and loans.

“The inclusion of rental data in credit assessments is a huge lift to improve financial inclusion and fairer access to the right financial products. This data insight provides lenders with a much more reflective picture of the amount renters can afford to borrow,” said Janice Rudd, Data Director at Equifax. “Renters who make full and timely monthly payments should see a significant benefit in proving their ability to repay a commitment, just like mortgage payers. We’re pleased to work with CreditLadder to unlock better financial outcomes for consumers and lenders alike.”

CreditLadder was founded in 2016 and currently has “thousands” of tenants reporting their rental payment history on its platform. CEO Sheraz Dar said that the company’s mission is to “deliver financial fairness” to users and help them access credit when they are ready. “Working with Equifax to add tenants’ payment track records to their reports is a major enhancement for our users, and for our platform,” Dar said.

CreditLadder, which is also partnered with credit reporting agency Experian, provides its rent reporting services for free for both landlords and tenants. The company also offers a paid product, CreditLadder Plus that comes with mobile phone insurance and discounts at retailers including Argos, Caffe Nero, and Tesco. CreditLadder Plus costs users around $11.50 (£8.99) per month or $102 (£79) per year.

Morningstar to Buy PlanPlus Global

Investment research firm Morningstar announced today it has agreed to acquire PlanPlus Global, a Canada-based financial planning software firm that was founded in 1990.

The Chicago-based company is eyeing PlanPlus Global not only for its financial planning and risk profiling software but also for its geographic location. Morningstar, which just months ago agreed to buy Australia-based AdviserLogic, has been seeking to expand its financial planning services to advisors across the globe.

Morningstar Canada President and CEO Scott Mackenzie said, “This is an investment for growth in the financial-planning arena, and we look forward to the rich expertise and long-standing relationships PlanPlus Global employees will bring to the Morningstar family.”

Morningstar will offer PlanPlus Global’s FinaMetrica Profiler as a standalone product but will also integrate it into its existing solutions, including Morningstar Advisor Workstation and Morningstar Enterprise Components. Morningstar will also use PlanPlus Global’s financial-planning solution, ProPlanner, to bolster its current offerings in Canada.

“When it comes to finding a large, strategic fintech partner that can help us scale our solutions in the marketplace and enhance the value to our users globally, Morningstar is the perfect fit,” said Shawn Brayman, founder and CEO of PlanPlus Global. Brayman and his team of 40 employees will join Morningstar’s workforce of 5,230.

Terms of the deal, which is expected to close next quarter, were not disclosed.

How a Banking License Evolved Neo’s Vision

Neo was founded in 2017 with a vision, as described by CEO Laurent Descout, “to create a platform that can replace the old fashioned banking platform. A true ‘one-stop shop’ that offers all the financial products a corporate client needs to operate in a global environment.”

The Spain-based company demoed its business account platform at FinovateEurope. At the event Descout, along with the company’s Chief Product Officer Emmanuel Anton, showcased how Neo offers a single place where businesses can manage their collections and payments across 30 currencies.

Neo also showed the audience (check out the video below) its FX hedging engine that enables businesses to hedge their FX risk over 90 currencies. The company offers a range of FX instruments, such as forwards, swaps, and options, as well as pre-designed hedging strategies.

Last July Neo received authorization from the Bank of Spain to become a PSD2-compliant payment institution. The new license will enable Neo to offer multicurrency business accounts, allowing companies to pay, store, and receive 25 different currencies. Among those are exotic currencies such as CNY, SAR, MXN, and TRY. Neo reports that it will add 15 currencies to the list soon.

The new banking license converts Neo’s website into a gateway of business-focused services. In addition to Neo’s flagship FX hedging solutions and the new multicurrency payments and collections tools, users have access to treasury management tools that allow clients to reduce costs and digitize their treasury department. Porting their treasury management tools to a digital environment allows businesses to automate tasks and reduce the human errors that result from manual input.

Neo has also made other recent developments, as well. The company has added new liquidity providers in its liquidity pool to offer users better prices. It also started offering hedging maturities up to 24 months and began offering currency deposits for clients holding USD, GBP, and PLN. Additionally, Neo landed a partnership with BPIFrance to build an FX offering for exporters.

Neo has raised $5.4 million since it was founded in 2016. The company’s founders include Emmanuel Anton, Ian Yates, Laurent Descout, and Nuria Molet.

Are U.S. Banks Leaning Toward “Closed Banking?”

Odds are, if you work in fintech, you know what open banking is. It is such a popular concept that in Europe an entire regulatory regime, PSD2, has sprung up around the concept.

So if Europe is progressive enough to create regulations mandating open banking, how is the U.S. doing? It turns out that some banks in the U.S. are taking an opposite approach and preventing third parties from accessing consumer data.

Keeping it secure

The motive behind this move is pure: banks are closing down connections to third party apps to keep customer information secure and limit data breaches. Data retrieval methods such as screen scraping or using the customer’s password to gain access are indeed unsafe. We spoke with Chief Growth Officer and Co-founder of Flybits, Gerti Dervishi, who said this type of data sharing is “risky in so many different ways” since data scraping is not a standard protocol. Regarding recent decisions of U.S.-based banks who are gating off third parties, Dervishi said, “Honestly, this couldn’t go on for much longer.”

First-movers

JP Morgan Chase recently came up with a new access plan for third party fintechs that require access to customer data. The aim of this new plan is to stop third parties from using password-based access to retrieve customer banking data. Starting July 30, fintechs will be barred from pulling customer information until they sign data access agreements and stop using customer passwords to retrieve banking information. Instead, JPM wants third parties to connect to consumers’ accounts via its open API. The bank made it clear that not only is this method more secure, it will also place consumers in control of what data they want other applications to access.

PNC Financial is also cracking down on third party data access, but is leaving third parties with fewer options. Explaining the decision to the Wall Street Journal, PNC Chief Customer Officer Karen Larrimer said, “When aggregators access account numbers, many store them indefinitely, often unbeknownst to customers. This puts customers and their money at risk. We want to make sure we know who is setting up the account.”

As part of the move, Pittsburgh-based PNC is preventing customers from using P2P money transfer app Venmo and has blocked “multiple different aggregators,” including Plaid, which PNC states circumvented its security protocol. Plaid, a popular data transfer network, connects consumer information to other third party apps such as Square’s Cash app, Robinhood, and Digit.

Who owns the data?

But shouldn’t the consumer be able to decide if they want a third party to use their data? This became a major issue when PNC began directing users from PayPal’s P2P payment app Venmo to Zelle, the bank’s in-house P2P money transfer tool. This is because, as Dervishi said, “There is already an agreement in place with Zelle. [PNC] understands data sharing with Zelle, but they don’t have a standardized agreement with Plaid.”

When it comes to the issue of data ownership, Dervishi circled back to the need for standardization. Because PNC does not have a clear agreement in place with third parties, there is nothing to hold them accountable when it comes to how they use or store customer data. “We need a NAFTA for data,” he said.

So though it may seem as if both of these U.S. players are taking a “closed banking” approach, that statement isn’t exactly correct. Both banks offer open APIs. The difference is that PNC has shut out Plaid (and, in turn, the many third party apps that use Plaid) to head off security issues. JPM (and potentially others) may not be far behind. As Ron Shevlin pointed out in his piece The Real Story Behind the PNC Venmo Clash, “[JPM will] be watching what happens with PNC, for sure. If PNC sees limited account attrition, other Zelle banks will be likely to follow.”

At the end of the day, the only thing to prevent banks in the U.S. from taking a “closed banking” approach may be to follow in the footsteps of the European Union and create a PSD2-like, standardized regulation for data sharing. “Because each bank takes a different approach to third party data access,” Dervishi said, “until we have a well-understood framework like open banking and PSD2, we will have a thousand different methods [to access data].”

Wirecard and Xolo Partner to Serve the Gig Economy

Digital financial services company Wirecard is partnering with Xolo (formerly LeapIN) this week to offer a more robust set of banking services for gig economy entrepreneurs.

Under the agreement, Xolo, a platform that helps entrepreneurs launch and run micro-businesses, will bolster the banking and accounting tools on its existing platform. The company will leverage Wirecard’s banking license to allow its 30,000 users to open a business bank account online within 48 hours, receive a debit card, and monitor their banking, tax, and compliance activity.

The move targets gig economy workers, an underserved segment of the population that is growing at 17% per year with an estimated value of $204 billion in 2018.

“This new partnership marks a significant step for Xolo as we strive to establish a new virtual nation for freelancers and solopreneurs,” said Allan Martinson, Xolo CEO. “With the addition of Wirecard’s pioneering digital banking solution, we will continue to build out our vision for enabling millions of micro-businesses to get to market quicker and without the bureaucracy.”

Xolo’s news follows a recent announcement last month from U.K.-based Wollit, which raised funding for its platform that helps gig economy workers smooth out their fluctuating cashflow. There is a significant lack of services for this consumer segment across the globe, but startups and challenger banks have been slowly filling the gaps that banks have left open.

SheerID Expands Identity Marketing Platform

Customer segmentation identification company SheerID launched its Employment Verification tool today in 191 countries. The move enables brands to identify and acquire new customers across the globe.

SheerID’s segmentation tool enables companies to identify consumer subsets such as military members, students, and teachers to help personalize communications and increase customer acquisition via gated, personalized offers for different employee groups. Today’s geographical expansion of SheerID’s technology will help brands build their acquisition efforts on a global scale.

Along with employment verification, SheerID has updated its age range verification tool, which is available in 23 countries. With this offering, brands can more efficiently target consumer groups such as seniors and young adults.

“With this latest expansion of verification types, we’re making it easy for brands to extend their identity marketing campaigns beyond the U.S. and personalize offers in new ways, to new potential customers,” said Jake Weatherly, SheerID CEO. “The opportunity to use personalized offers to acquire consumer tribes is endless, and this latest expansion is yet another step forward in meeting customer demand.”

SheerID leverages 9,000 data sources and 1.3 billion identity attributes. Among the company’s clients are Amazon, Lowe’s, Spotify, and T-Mobile. SheerID, which recently showcased at FinovateSpring 2019, has raised $96 million since it was founded in 2011.

Lendio Lands $55 Million to Match Small Businesses with Lenders

Online marketplace for small business loans Lendio landed $55 million in combined debt and equity funding today. The investment more than doubles the company’s previous funding, bringing its total to $108.5 million.

The equity portion of the Series E round was led by Mercato Partners’ Traverse Fund, which contributed $31 million, and included contributions from existing investors Napier Park Financial Partners, Comcast Ventures, Blumberg Capital, Stereo Capital, and Runa Capital. Signature Bank led the debt facility with $24 million.

Founded in 2011, Lendio serves as a matchmaker that connects small businesses seeking funding with its network of over 75 lenders. Since Lendio launched at FinovateSpring in 2011, the Utah-based company has funded more than 100,000 loans totaling $2 billion. Over the past two years, Lendio has seen an average year-over-year growth rate of 75%.

CEO Brock Blake called today’s investment a “significant milestone” for the company. “With these funds, we are strongly positioned to grow our existing platform as a trusted loan facilitator that supports both lenders and borrowers, while building out a range of new integrated lending services that get the right loans into the right hands at the right time.”

Lendio will use today’s investment to increase the scope and precision of its flagship loan marketplace; expand lender services functions, which provide lenders access to a white-labeled online loan application; and enhance its small business bookkeeping platform, Sunrise by Lendio. The company launched Sunrise last year after acquiring online bookkeeping startup Billy. The new service aims to help Lendio’s small business clients manage their cash flow and monitor their overall financial health.

“Lendio’s ability to combine data analytics with the human touch to connect small businesses quickly and precisely with ideal lending partners has made all the difference in its success,” said Ryan Sanders, senior investor at Mercato Partners Traverse Fund. “Lendio uniquely solves the problem of inefficient capital for small businesses by bridging lenders and borrowers. They are able to connect both sides and facilitate loans faster and more effectively between small business owners and lending institutions. Lendio’s impressive growth is a result of its technology-backed personalized service which has created a loyal and growing following in the industry.”

Azimo Taps Ripple for Cross-Border Payments to the Philippines

Digital money transfer service Azimo announced today that it has partnered with fellow Finovate alum and blockchain payment solutions company Ripple to power cross-border payments to the Philippines.

Fueling these payment transfers is Ripple’s On-Demand Liquidity (ODL) solution that uses XRP to source liquidity and complete money transfers within three seconds. This time reduction results in a 40% to 60% cost savings over the traditional method that requires businesses to hold cash in pre-funded accounts. ODL has proven especially useful for international payments in emerging markets. The technology is currently available in the U.S., Mexico, Australia, Europe, and the Philippines, with plans to expand across APAC, EMEA, and LATAM.

Azimo, which plans to expand its use of ODL to more markets in 2020, opted to start with the Philippines because it is one of the top remittance destinations. In 2018, the region received $34 billion in remittance payments.

Ripple’s ODL

“We’ve been interested for a long time in the potential of digital assets like XRP to make cross-border payments better for customers,” said Azimo CEO Richard Ambrose. ”Ripple’s ODL solution has significantly reduced the cost and delivery time for cross-border transfers, and our customers are seeing the benefits. As more banks and financial institutions use ODL, we believe it has the potential to replace current methods of foreign exchange trading and to reduce settlement time to close to zero.”

Founded in 2012, Azimo has amassed one million customers. The company facilitates money transfers from 25 countries to more than 200 regions across the globe.

Ripple has 300+ customers in more than 45 countries and six continents. The company’s flagship global blockchain network, RippleNet, facilitates faster and cheaper payments in 40+ currencies.