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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
OneID raised $1.3 million (£1 million) in funding.
The funds come from ACF Investors.
OneID has a unique approach on digital identity verification. It uses consumers’ existing banking relationship to authenticate their identity.
U.K.-based OneID announced it raised $1.3 million (£1 million) in funding. The Seed round, which marks the company’s second investment round, comes from ACF Investors. OneID also counts 170 angel investors among its backers.
“The investment from ACF Investors is a coming together of similar interests and visions,” said OneID CEO Paula Sussex. “As the world increasingly becomes digital-first, we aim to minimize fraud, enhance online experiences, and make the world a safer place.”
OneID, which will use today’s investment for product development, was founded in 2020 with a unique take on digital verification. The company leverages consumers’ existing bank accounts to authenticate them. After receiving consent from the consumer, OneID contacts the bank to verify their identity.
By leveraging consumers’ existing bank relationship, OneID eliminates the need for consumers to undergo a registration process, take a selfie, provide paper documents, or travel to a physical location. It also means that OneID does not need to store any sensitive data.
Sussex sees the round as a “vote of confidence” in the company’s efforts to make digital identification accessible and available to more U.K. citizens.
“We’re constantly monitoring businesses that have the potential to enhance the lives of the British people and redefine the future of the U.K., said ACF Managing Partner Tim Mills. “OneID, with its simple, trustworthy, and effective solution to a pressing problem, could touch some 50 million U.K. citizens and make bank-verified digital identification the norm in the UK.”
The company is making the auto loans available to a wide range of consumers, even those with FICO scores as low as 580.
The move comes as others are pulling out of auto lending or tightening lending restrictions.
Digital bank Upgrade announced this week it now offers auto loans. The California-based company plans to originate the loans via car dealers and re-sell the debt to its network of banks.
According to Bloomberg, which broke the news, the company will target a range of consumers– even those with sub-prime credit– and plans to extend loans to consumers with FICO scores as low as 580.
This announcement comes at a time when many consumers are underwater on their auto loans, triggering higher delinquencies. According to Edmunds.com, the average U.S. consumer’s monthly payment reached $733 in July, marking a record high.
Because of this, multiple lenders have either exited auto lending in some capacity, or have tightened their lending standards. This has left a “void in the market,” according to Upgrade Co-founder and CEO Renaud Laplanche. “It’s great to be in that position to lower the cost of auto lending at the time it’s really needed,” he said.
Where others are backing out, however, Upgrade is doubling down. The company claims to have a competitive advantage over other lenders because it taps multiple sources of funding– from banks, to credit unions, to asset managers– which purchase the loans after Upgrade has originated them.
While Upgrade already offers auto loan refinancing as part of its banking product suite, this is the company’s first foray into auto loan origination. The company refinances auto loans at 5.24% to 17.94% APR on cars less than 10 years old with mileages under 130,000.
A group of 30 car dealers in California and Oregon are piloting Upgrade’s auto loans, which went live with the loans earlier this week.
Last month’s launch of FedNow has sparked discussions on the future of real-time payments and their implications on banks and fintechs. In an interview with ConnexPay Founder and CEO Bob Kaufman, we look at the introduction of FedNow and how it stands to impact competition and adoption across the sector.
The interview also sheds light on the shift away from checks and cash, looks at the impact real-time payments will have on banks, and offers insight into strategies to stay ahead of the curve.
How will FedNow’s recent launch impact competition and adoption across the sector?
Bob Kaufman: In my view, FedNow effectively bridges the gap that exists between the traditional ACH infrastructure and the Federal Reserve’s payment rails. While ACH offers a reliable solution for high volumes of payments, its drawback lies in its lack of real-time processing. Even with the introduction of same-day ACH, there remains a risk of funds being reclaimed within a short span. This limitation becomes evident in situations such as property purchases where swift transactions are crucial – a circumstance for which the wire network was established. However, the wire payment system comes with its own set of drawbacks, notably its high cost and the manual intervention required.
What are the current barriers to mass adoption of real-time payments?
Kaufman: FedNow targets small-dollar peer-to-peer transactions and operates solely within the United States. In contrast to card-based transactions, there also appears to be a lack of a robust dispute resolution process for FedNow, although there have been discussions about implementing one. When we consider the present use of credit cards, it’s interesting to note the confidence we place in the act of handing our cards to unfamiliar entities. This applies particularly to transactions involving businesses we’ve never engaged with before. We readily input those 16-digit card numbers without dwelling on the potential consequences if the purchased items fail to materialize at our doorstep. This level of assurance stems from the knowledge that, should an issue arise, we can promptly contact our bank, initiate a dispute, and subsequently reclaim our funds. This chargeback process is a fundamental reason why credit cards remain a prevailing payment method.
The dominance of Visa and Mastercard in the market is largely attributed to their establishment of a highly effective chargeback mechanism. This tried-and-true approach provides a reliable means of resolving transactional disputes that isn’t as well-developed within alternative payment avenues.
What impact will real-time payments have on banks?
Kaufman: I believe that the banking sector stands to benefit from addressing the current shortcomings within the ACH and wire transfer systems. While ACH transactions work seamlessly for many B2B payments due to their scalability, they each have limitations when it comes to P2P and certain other transaction types. ACH will undoubtedly continue to serve a purpose for pre-authorized payments, enabling businesses to initiate ACH transfers to designated recipients when there’s an assurance of incoming funds.
However, ACH encounters challenges, especially in terms of data handling. In contrast, credit card transactions provide an array of comprehensive details, including Level 3 data, allowing for precise identification of invoices and the nature of the payment. This wealth of information ensures clarity in understanding the purpose of a transaction. The reconciliation process poses a significant issue with ACH transactions, particularly for the CFOs of large corporations. Their checking accounts could be inundated with hundreds of ACH records on a daily basis, often without clear indications of their corresponding purposes. This discrepancy creates a reconciliation nightmare that doesn’t arise when utilizing credit card transactions, where the associated data provides a more transparent overview of each transaction.
Will the real-time payments boom in the U.S. lead to the end of checks and cash payments?
Kaufman: Throughout my tenure in this industry, the consensus has been that checks are steadily fading into obsolescence. Admittedly, it’s been quite some time since I’ve personally written a check, and even my 20-year-old children are unfamiliar with the concept. In that regard, checks have essentially become a thing of the past.
While checks are dwindling, they persist in B2B payments, constituting nearly half of such transactions. COVID-19 impacted cash usage, yet it remains for businesses lacking stable internet connectivity. The complications of cash management and the IRS’s stance on it provide incentives to phase it out.
At ConnexPay, our objective is to serve as a comprehensive solution for inbound and outbound funds for companies that operate as intermediaries (such as travel agencies, Doordash, Uber Eats, and ecommerce marketplaces), rather than producing their own goods or services. We’re committed to addressing the diverse payment requirements that these businesses demand. This is precisely why we offer options like push-to-card, ACH, and wire transfers.
What is ConnexPay doing to stay ahead of the trends in the industry?
Kaufman: ConnexPay was established with a vision to address the fragmentation in the payments industry. Our goal is to streamline the payment process for companies by offering both incoming and outgoing payment solutions. Unlike our competitors, we provide a unified approach, resolving pain points like cash flow issues. Our real-time access to funds sets us apart.
We are agile in responding to customer needs and rapidly implementing new solutions. For instance, consider companies like AirBnB – although they are not yet our clients, such firms have expressed a need to compensate consumers rather than businesses on the opposite end of a transaction. These companies prefer not to rely on credit cards; instead, they appreciate the benefits of real-time access and the potential data insights associated with such transactions. To address this requirement, we recently introduced Push-to-Card Payouts. A similar scenario could arise with FedNow. However, it’s worth noting that we currently serve 250 clients, and none of them have indicated a desire for ConnexPay to provide this particular offering.
PhonePe has launched a stock broking app, Share.Market.
The app facilitates intraday trades and allows users to purchase stocks, mutual funds, ETFs, and WealthBaskets.
The launch comes as PhonePe is more than three-quarters of the way through its recent $1 billion capital raise target.
Mobile payments app PhonePe announced today that its subsidiary, PhonePe Wealth Broking, has launched a stock broking app called Share.Market.
The new tool, which is available as a mobile app or web platform, enables retail investors and traders to purchase stocks, mutual funds, and ETFs. Share.Market will also offer WealthBaskets– curated collections of stocks/investment products that align with specific themes, sectors, or market trends– and will facilitate intraday trades.
PhonePe anticipates that, thanks to PhonePe’s existing reach and distribution, Share.Market will help more Indians build wealth. That’s because PhonePe has around 480 million registered users, accounting for one in four adult Indians.
“We are delighted to launch Share.Marketwhich further enables our vision of driving Financial Inclusion at a population scale,” said Share.Market CEO Ujjwal Jain. “Our goal is to offer the benefits of discount broking while creating lasting value for our customers as they invest and trade.”
The app will embed real-time, value-rich insights into its products and will offer DIY tools that help investors make informed decisions. There is also a Markets section that enables users to track the stock market, indices, individual stocks, and sectors.
“We will continue to invest in advanced technology, data, research, and immersive experiences to offer these benefits at scale and drive this new era of Value led Discount Broking coupling intelligence with Broking,” Jain added.
The launch of Share.Market comes in the midst of PhonePe’s recent capital-raising streak. Since 2021, the company has brought in $850 million from General Atlantic and Walmart, pushing PhonePe close to the $1 billion capital raise target it announced earlier this year.
PhonePe, which launched in 2015, began offering investing tools, mutual fund products, and insurance tools in 2017. In the six years since, the company has launched several mutual funds and insurance products. PhonePe was most recently valued at $12 billion earlier this spring.
Bank of America is launching Global Digital Disbursements for commercial clients in Canada.
The launch in the Canadian market is facilitated via a partnership with Canadian interbank network Interac.
Global Digital Disbursements enables fast mobile B2C payments, helping businesses replace cash or check payments.
Bank of America has teamed up with Canadian interbank network Interac today. The bank announced today it is launching its Global Digital Disbursements product for commercial clients in Canada.
Global Digital Disbursements enables fast mobile B2C payments for users in multiple industries, such as insurance, healthcare, and education. The solution, which uses a person’s email address or mobile phone number as their identifier, works for companies seeking to replace cash or check payments.
“This is a milestone for Bank of America in Canada, as we continue to meet the evolving digital needs of our multinational clients, providing them with enhanced speed, flexibility and transparency to manage their payment and receipt flows,” said Bank of America Head of Product for Global Transaction Services, Canada Leslie Konecny.
The solution, which is available to Bank of America’s commercial clients that hold deposit accounts at the bank’s branch in Canada, uses Interac’s e-Transfer service, a solution that moves money across Canada to more than 300 other banks.
Unique to the Canadian market, Bank of America is making the Request for Pay feature available with Global Digital Disbursements. This feature enables businesses to text or email customers an invoice that contains a link to pay the required amount, which ultimately results in faster payments.
“The launch of Global Digital Disbursements in Canada follows the bank’s 75th anniversary in the country,” said Bank of America head of GTS Canada Maureen Jarvis. “This much anticipated launch speaks to our commitment to local innovations in financial services that help our clients realize cost savings and a competitive edge.”
Bank of America serves 68 million retail and small business clients through operations across the United States, its territories, and more than 35 countries. The bank is listed on the New York Stock Exchange under the ticker BAC and has a current market capitalization of $232 billion.
Lighter Capital raised a $130 million credit facility.
The company will use the facility to continue funding early-stage companies.
Lighter Capital recently surpassed the milestone of distributing $350 million in growth capital via more than 1,000 rounds of financing.
Revenue-based financing fintech Lighter Capital has closed a $130 million credit facility this week. Today’s funds come from ATLAS SP Partners, i80, the Victorian Government, and iPartners.
The credit facility will be used to fund early-stage companies, something Lighter Capital has been doing since its launch in 2010. In fact, the company recently surpassed the milestone of having distributed $350 million in growth capital to more than 500 startups across the U.S., Canada, and Australia through more than 1,000 rounds of financing.
Lighter Capital’s revenue-based financing model helps startups that offer SaaS, technology services, subscription services, and digital media to access up to $4 million in growth capital without selling equity.
“Lighter Capital’s model is so innovative — a debt provider that’s essentially a VC partner,” said Qnary Founder and Chairman Bant Breen. “We get the financial rigor, network, and strategic guidance that a VC would give us, and that’s been incredibly helpful.”
Recently, the Seattle-based company has opened new offices in Australia, unveiled more non-dilutive funding options, and launched an online networking community for startup CEOs.
“After more than a decade in business, 2022 was our best year in the company’s history,” said company CEO Melissa Widner. “It’s a great privilege to help founders achieve their dreams on their terms by providing funding that doesn’t require selling equity or giving up control.”
Lighter Capital and other alternative financing startups are experiencing a moment in the fintech spotlight. That can be attributed to two factors. First, because VC funding is in decline, it is difficult to obtain equity financing. Additionally, banks have started to tighten their lending standards because of economic uncertainty and decreased collateral values.
An early Finovate alum, Lighter Capital’s most recent Finovate demo was at FinovateFall 2013, where then-CEO BJ Lackland demonstrated how the company’s small business lending platform leveraged CRM data to predict a borrower’s future performance.
FICO and LigaData have partnered on a decision-as-a-service tool.
The two will make the new capabilities available to telecommunications firms in Africa, the Middle East, and Asia.
The decision-as-a-service solutions suite includes mobile lending, price optimization, collections optimization, subscriber segmentation, and fraud detection for communications service providers.
Data and analytics firm FICO and big data analytics company LigaData have come together in a move to bring decision-as-a-service capabilities to telecommunications firms in Africa, the Middle East, and Asia.
The two California-based companies will offer solutions that leverage data to help telcos increase revenues, decrease costs, and expand their offerings. Tools included in the decision-as-a-service solutions suite are mobile lending, price optimization, collections optimization, subscriber segmentation, and fraud detection for communications service providers.
“Together we plan to also help communications service providers grant loans in emerging markets, making it easier for consumers while increasing the digitization of the economy,” said FICO Vice President of Global Partners & Alliances Alexandre Graff.
FICO and LigaData envision that the tool will help telcos add new revenue streams and ultimately expand financial inclusion in emerging markets. “Our partnership with FICO will give communications service providers new tools to expand and compete in a data-driven marketplace,” explained LigaData CEO Bassel Ojjeh. “In addition, we will be bringing to market new solutions that can help communications service providers serve the large number of unbanked and underbanked communities in Africa, the Middle East, and Asia.”
LigaData’s name follows the naming convention of major soccer teams such as Bundesliga, La Liga, and Liga MX and is a reference to the company’s league of data experts. LigaData offers two main products, Data Fabric, which helps telcos leverage data better understand their customers by breaking down silos, and Flare, which serves as a decisioning engine that breaks down the data to provide operational and subscriber insights. These solutions are used by over 30 mobile network operators, supporting over 350 million subscribers around the world.
Founded in 1956 and headquartered in California, FICO offers decisioning tools used by more than 650 clients, including nine of the top 10 U.S. banks and eight of the top 10 EMEA banks. The company was recently named Best Technology Provider for Data Analytics at the 2022 Credit Awards, and was identified as a leader in The Forrester Wave: AI Decisioning Platforms, Q2 2023 report.
Fall is coming, and with the changing of the season comes an increase in activity in the fintech world as organizations work to launch their latest initiatives before the end of the year.
Fortunately, our friends at FintechFutures have asked all the right questions in their latest video interview series. The clips below cover the current economic climate, fintech trends, and future industry technologies. These are all worth watching as you prepare your fourth quarter initiatives.
Fiserv and Akoya announced a partnership this week.
Fiserv will have API access to consumer data from Akoya’s network of financial organizations.
Akoya will utilize Fiserv’s AllData Connect to access consumer data held at financial institutions.
Digital banking and payments solutions company Fiserv has partnered with consumer-permissioned data company Akoya this week. Under the agreement, the two will facilitate financial data sharing among banks, their end customers, and the third party apps the customers engage with.
Fiserv will have API access to consumer data from Akoya’s network of financial institutions and brokerage firms, while Akoya will utilize Fiserv’s AllData Connect to access consumer data from more than 2,800 financial institutions.
“Fiserv and Akoya are empowering consumers to share their data by creating a broader and more secure data access network,” said Fiserv President of Digital Payments Matt Wilcox. “Direct access to data facilitates more integrated digital experiences for consumers and improves the security of the financial ecosystem.”
Akoya’s APIs can create secure, permissioned access to consumers’ account data across Fiserv’s client base of banks, fintechs, and merchants. This free flow of information across the network can help reduce risk related to account opening, funding, and account-to-account transfers. On the merchant side, consumers can opt to transact using a Pay by Bank option in which consumers link their bank account to the merchant’s wallet or app to make direct payments to the merchant.
Ultimately, the partnership will help consumers choose what financial data from their bank they want to share with third party providers.
“This will help consumers manage exactly who they give their data to and understand how their data will be accessed and used,” said Akoya CEO Paul LaRusso. “100% of Akoya’s traffic to financial institutions goes through APIs. Akoya doesn’t ask for consumers’ passwords, and it doesn’t screen-scrape. All consumers deserve this protection and control.”
In the U.S., where open banking regulations do not exist, partnerships like these are key to empowering consumers with control over their financial data. In addition to helping end customers, this open structure also creates efficiencies by empowering organizations with more data, reduces fraud by eliminating screen scraping, and reduces errors that come with manual data entry.
Founded in 1984, Fiserv’s solutions are used in nearly six million merchant locations and almost 10,000 financial insitution clients. The company powers 12,000 financial transactions each second. Fiserv is listed on the NASDAQ under the ticker FI and has a market capitalization of $73.6 billion.
Earlier this month, the Federal Reserve (Fed) rather quietly released a letter that addresses what it is calling the “creation of novel activities.” Signed by Michael S. Gibson, the Board’s Director of the Division of Supervision and Regulation, the letter is titled, Creation of Novel Activities Supervision Program.
If you’re a fintech or a bank, the contents of the letter will likely apply to you. Here are 7 highlights of the newly created program.
Who is impacted
The letter applies to all banking organizations supervised by the Fed, including those with $10 billion or less in consolidated assets. Organizations will receive a written notice from the Fed if their activities will be subject to examination. Those who are still in the exploration phase will be “routinely monitored” for active engagement.
What is it for
The program will focus on activities related to crypto-assets, distributed ledger technology (DLT), and what the Fed is calling “complex, technology-driven partnerships with nonbanks” that deliver financial services to end customers.
The target
The letter explains that the Fed will “enhance supervision” over the following categories:
Partnerships where a non-bank provides banking products and services to end customers via APIs that provide automated access to the bank’s infrastructure.
Activities such as crypto-asset custody, crypto-collateralized lending, facilitating crypto-asset trading, and stablecoin issuance and distribution.
The exploration or use of DLT for issuing tokens or tokenizing securities or other assets.
Organizations that provide traditional banking services to crypto-related companies.
How will it supervise?
The program will leverage existing supervisory processes and will use the Fed’s existing supervisory teams instead of creating a new portfolio to monitor activity. The supervision will be risk-based, meaning that the intensity of the scrutiny will vary based on each firm’s engagement in novel activities mentioned above.
Why
The Fed is seeking to strengthen its existing oversight of banks’ third party fintech partnerships. In the letter, Gibson reasons that innovation can lead to rapid change in banks and in the financial system in general, and that it has the potential to generate risks that can impact banks’ safety and soundness. “Given the novelty of these activities,” he states, “they may create unique questions around their permissibility, may not be sufficiently addressed by existing supervisory approaches, and may raise concerns for the broader financial system.”
Future plans
The Fed explained that it will continue to “build upon and enhance” its technical expertise to stay abreast of fintech trends, the risk associated with the trends, and appropriate controls to manage risk. In addition to increased supervision, the letter explains that the program will help shape supervisory approaches and create guidance for banking organizations engaging in the use of these “novel” technologies.
So what?
The Fed is making it clear that the lack of regulation for fintechs and the Wild West environment of the crypto realm is a thing of the past. This means that fintechs– especially those engaged in crypto– will need to be ready to answer not only to banks, but also to the Federal Reserve. On the flip side, banks will need to be ready to ask a lot more questions before engaging with fintechs, formalize partnership processes, and document all that they can regarding potential risk.
Questions about the letter can be sent via the Federal Reserve’s website..
Koverly is launching KoverlyPay, a new B2B BNPL tool.
KoverlyPay offers businesses a 30-day extension on FX payments.
Clients can use KoverlyPay to extend payments over four, eight, or 12 fixed weekly installments.
B2B payment tool Koverly is jumping on the buy now, pay later (BNPL) trend this week with the launch of its newest tool. The Massachusetts-based company unveiledKoverlyPay, a new B2B BNPL tool that offers a free, 30-day extension on FX payments.
Koverly clients can use KoverlyPay to extend payments over four, eight, or 12 fixed weekly installments. Businesses can apply for the financing using KoverlyPay, which is integrated into the point-of-sale, at checkout and receive a decision within 24 hours. Once a business is approved, they do not have to repay their purchase for the first 30 days. After the initial 30 days, for both FX and local payments, businesses pay as low as 1.5% interest per month.
“Inventory is the lifeblood for importing businesses, and it is directly impacted by cash flow,” said Koverly CEO Igor Ostrovsky. “Our KoverlyPay offering for FX transactions is designed to give businesses enough extra working capital to unlock at least one additional inventory turn per year. For a typical importing business, this can boost annual profitability by 50% to 100%. This is a game changer for global trade.”
As growth in the B2C BNPL space begins to slow, interest in B2B BNPL has seen growth. Melio, Allianz Trade, Yapily, and others have recently launched B2B BNPL tools. Banks have started implementing stricter small business lending practices, and we can expect to see small businesses pursue working capital via alternatives channels such as BNPL expand.
Koverly combines foreign exchange and credit into its invoicing, billpay, and accounting tools. The company, which currently processes $200 million a year in both domestic and international payments, launched global payment capabilities last summer. Today, global payments account for 50% of the company’s volume.
Since it was founded in 2021, Koverly has received $7.6 million in Seed funding from Vinyl Capital, One Way Ventures, and Accomplice.
Ramp landed $300 million in Series D funding today, bringing its total funding to $1.7 billion.
Today’s funds come from new investor Sands Capital, along with existing investors Thrive Capital, General Catalyst, and Founders Fund.
At $5.8 billion, the company’s current valuation is 28% lower than its 2022 valuation of $8.1 billion.
Late-stage VC funding has been down in 2023, but business finance automation platform Ramp is bucking that trend today. The New York-based company has announced the closure of a $300 million round of Series D funding.
The investment boosts the company’s total funding to $1.7 billion. With the increase in capital, however, comes a decrease in valuation. The company’s current valuation now sits at $5.8 billion, 28% lower than the company’s $8.1 billion valuation reported last year.
Today’s Series D round comes from new investor Sands Capital, along with existing investors Thrive Capital, General Catalyst, and Founders Fund. Ramp will use the funds to fuel product development and accelerate its expansion into adjacent categories.
“In the last year alone, we’ve expanded Ramp’s offerings to become the only platform in the market that’s designed to save businesses time and money,” said Ramp CEO Eric Glyman. “Our mission is to help our customers build healthier businesses and this funding will help us execute against our goal to continue expanding the Ramp platform to better serve customers. At Ramp, we succeed when our customers can run their business more efficiently.”
Ramp offers its 15,000 clients access to its suite of payment cards, expense management tools, accounts payable offerings, procurement solutions, working capital, and more. Among Ramp’s recent client wins are Anduril, Poshmark, and Virgin Voyages.
Next month, Ramp plans to debutRamp Plus, a new set of procurement tools to help finance teams with procurement-related tasks. To support this growth, the company also plans to boost its hiring efforts “significantly” and “across all functions.”
