BBVA and Anthemis Back the Gig Economy with Seed Round for Wollit

Banking giant BBVA and VC firm Anthemis have backed U.K.-based Wollit in a $1.3 million (£1 million) Seed round.

Founded last year, Wollit aims to support the 43% of U.K. residents who lack a stable income by helping gig economy workers and independent contractors smooth out their cashflow.

Wollit will use the funds to fuel its flagship product, the Wollit Income Promise. According to Wollit CEO Liad Shababo, the new tool “offers a financial safety net for the 14 million U.K. workers whose income fluctuates from month to month.”

The Wollit Income Promise is different from credit cards and loans because it personalizes financing to each user’s individual financial situation. When workers earn less than usual, Wollit provides interest-free top-ups that the user repays once they start earning more.

“With this, we set to end [gig workers’] monthly gamble of feast or famine and provide a safer, more sustainable option than the short-term, risky alternatives,” said Shababo. “Wollit is here to establish a new status quo in financial services. We want to make sure everyone has access to financial wellbeing.”

The investment is one of the first from the BBVA & Anthemis Venture Creation Partnership, which was formed in 2018. “The BBVA & Anthemis Venture Creation Partnership identifies early-stage fintech companies who are looking for both financial and strategic support to accelerate the growth of their business,” said Farhan Lalji, Principal at Anthemis. “This means Wollit now has access to mentors and resources inside the Anthemis and BBVA ecosystems beyond pure capital – including product development, data science, business development, and talent resources – as they grow their business.”

Startups such as Wollit underscore society’s need for financial services geared toward the gig economy. Banks have historically failed to serve consumers with unpredictable income. As Ron Shevlin points out in his piece Gig Economy Banking Is Booming (And Banks Are Missing The Boat), fintechs and challenger banks have been the first to take a chance on this growing consumer segment by serving them with unique products and services that cater to their fluctuating income.

Morgan Stanley Acquires eTrade in $13 Billion Deal

E*TRADE, the digital brokerage behind the stock trading baby commercials in the early 2000s (remember those?) has agreed to be acquired by investment banking giant Morgan Stanley. The all-stock transaction is valued at $13 billion.

The deal is expected to close in the fourth quarter of this year.

Since it was founded in 1982, E*TRADE has built up 5.2 million client accounts and $3.6 billion in assets under management. This will bolster Morgan Stanley’s 3 million client relationships and $2.7 trillion in assets under management. Adding E*TRADE’s digital capabilities to Morgan Stanley’s more traditional offerings will grant Morgan Stanley a more well-rounded approach that ranges from high tech to high touch.

“E*TRADE represents an extraordinary growth opportunity for our Wealth Management business and a leap forward in our Wealth Management strategy. The combination adds an iconic brand in the direct-to-consumer channel to our leading advisor-driven model, while also creating a premier Workplace Wealth provider for corporations and their employees,” said Morgan Stanley CEO James Gorman. “In addition, this continues the decade-long transition of our firm to a more balance sheet light business mix, emphasizing more durable sources of revenue.”

Logistically, E*TRADE CEO Mike Pizzi will lead Morgan Stanley’s E*TRADE business and be charged with overseeing the integration. “By joining Morgan Stanley, we will be able to take our combined offering to the next level and deliver an even more comprehensive suite of wealth management capabilities,” said Pizzi. “Bringing E*TRADE’s brand and offerings under the Morgan Stanley umbrella creates a truly exciting wealth management value proposition and enables our collective team to serve a far wider spectrum of clients.”

Today’s deal comes at a time when brokerages across the U.S. are in a race to zero, lowering trading fees as much as possible to compete with consumer attention. Last year Charles Schwab eliminated fees for stock trades and a month later bought TD Ameritrade for $26 billion.

eToro’s Evolution

Social trading and investment platform eToro has never been one to stand still for very long. The company’s development cycle is fast enough to make even the most sprightly fintech jealous.

Roots

eToro was founded by David Ring, Ronen Assia, and Yoni Assia in 2007 with a mission to make trading accessible to anyone, anywhere, and reduce dependency on traditional financial institutions. The company has come a long way since its first iteration, which was, by today’s standards, simple.

Starting up

eToro started as an easy-to-understand online trading platform that made investing more digestible with the use of graphics. Three years after its initial launch in July of 2010, the company unveiled CopyTrader, its social trading platform that enables users to copy the trades of successful investors. The model proved popular among investors and gave eToro notoriety within the fintech industry. After CopyTrader the company launched a mobile app, introduced stocks, unveiled a new interface, and launched CopyPortfolio.

This screenshot from eToro’s FinovateEurope 2011 demo gives off major retro fintech vibes.

Move into cryptocurrencies

In 2013, eToro took a chance on cryptocurrencies, adding Bitcoin trading via CFDs. From there, the company continued to advance its cryptocurrency offerings. Here’s what the past seven years of innovation have looked like for eToro:

  • 2017: enabled users to trade and invest in Ethereum, XRP, Litecoin, and others
  • 2018: launched its cryptocurrency investment offering to users in the U.S.
  • 2019: partnered with TIE to deliver sentiment-driven investment strategies
  • 2019: launched the eToro Club, a personalized trading experience

Best of Show accolades

eToro’s most recent Finovate appearance was FinovateEurope 2017, where CEO and Founder Yoni Assia, along with VP of Product Tal Ben-Simon, took the stage to demo CopyFunds for Partners. The duo won Best of Show bragging rights for the presentation, marking eToro’s fourth Best of Show award since its first Finovate demo in 2011.

To see eToro’s evolution yourself, watch the company’s most recent 2017 demo in contrast with its 2011 demo.

FinovateEurope 2017

FinovateEurope 2011

Lending Club Snaps Up Radius Bank for $185 Million

When Lending Club was founded in 2007, the startup aimed to serve as a place to help borrowers avoid dealing with banks. In a somewhat ironic move today, that same startup is becoming a bank itself.

The move is made possible through Lending Club’s acquisition of Radius Bank, an online-only community bank founded in 1987 with more than $1.4 billion in assets.

It’s a logical purchase. Both Lending Club and its U.S. competitor Prosper have struggled with the classic chicken and egg conundrum– they can’t lend money to borrowers without investors ready and willing to lend, and they can’t find people willing to lend without enough qualifying borrowers. By becoming a bank, Lending Club has now adopted a pool of borrowers while having access to customer deposits to lend to those borrowers.

The deal is subject to regulatory approval and is expected to close in 12 to 15 months.

Radius President and CEO Mike Butler called the acquisition “a perfect marriage.” He added that, “with LendingClub bringing the leading digital asset generation platform, and Radius contributing a leading online deposit gathering platform,” they are set up for “long-term success.”

“This is a transformational transaction that allows us to reimagine banking in a way that is free from legacy practices and systems and where the success of LendingClub is aligned with the success of our customers,” said Scott Sanborn, CEO of LendingClub.

Lending Club isn’t the only alternative lender with aspirations to become a bank. U.K.-based P2P lender Zopa is currently working on launching a bank of its own and small business lender On Deck Capital plans to seek out a bank charter this year.

Breach Clarity’s New Offering Provides Consumers Personalized Protection

Fraud detection and prevention company Breach Clarity announced this week it has developed a new platform to help financial service providers offer personalized protection for their customers.

The machine learning-powered platform, dubbed Breach Clarity Premium for Financial Services, offers two sets of tools, one for the financial services company and one for the end consumer.

“Financial institutions are in a bad spot when it comes to data breach fallout,” said Breach Clarity founder Jim Van Dyke. “These breaches, most of which they have zero control over, are coming fast and furious, yet the actual damage can take years to occur. We first developed Breach Clarity to help the consumer fight back against the routine theft of their personal information. Now, we’re equipping their financial providers with much greater intelligence to help them strengthen everyone’s financial health.”

Founded in 2019, Breach Clarity analyzes data breaches, scores them in real-time based on 1,000 factors, and offers ideas for protective measures. The database behind the consumer-facing tool includes more than 4,000 data breach incidents, a number that grows by 50 each week.

Breach Clarity Premium for Financial Services has multiple benefits for financial services and their customers. The new tool details the most effective actions both parties can take, based on the information that was compromised, to mitigate loss in the event of a breach. The offering also enables consumers to search for data breaches that impact them without leaving their bank’s website or mobile app.

Breach Clarity is headquartered in Walnut Creek, California. Van Dyke recently demoed Breach Clarity at FinovateFall 2019 in New York.

5 Ways Edge Computing Can Benefit Banks

One of my favorite sayings is, “If you’re not living on the edge, you’re taking up too much space.” Can the same be said of banks who don’t use edge computing? Not exactly.

First, let’s take a look of what edge computing is as it relates to the financial services sector. Edge computing refers to when data processing and storage occurs closer to the person or item creating the data. It is an alternative to cloud processing, in which data is processed at a data center that could be located thousands of miles from the source.

The classic edge computing illustration is an autonomous vehicle. The AI that the driverless car uses has to process a lot of data very quickly in order to be a successful (and safe) driver. Taking too long to decipher between a tree and a person could mean life or death, so being able to process that data as close to the vehicle as possible is key.

Edge computing sounds fancy and has obvious benefits across the technology landscape, but what can it do for banks?

Increase security

Because edge computing eliminates the need to send consumers’ personal information into the public cloud, the security risks inherent to the process of moving data are eliminated. The closer the data stays to its source, the fewer the places cyberattackers can penetrate.

Lower latency

With edge computing, data is able to be processed much faster since it does not have to travel to and from a data center. This increased speed can be beneficial when businesses must make decisions in near-real time.

Boost the use of the Internet of Things (IoT)

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Banks are increasingly relying on IoT to interface with their customers. Bank apps, ATMs, kiosks, and technologies such as HSBC’s Pepper all require increased data processing capability. Edge computing opens up possibilities for more IoT options with fewer data limits.

Increased innovation

When security is less of a concern, speed is no longer an issue, and a bank has more options for IoT implementation, innovation is able to flow more freely. This, combined with edge computing’s potential cost benefits, can help banks implement new solutions that otherwise may have been on the back burner.

Lower cost

When there is no need for a data center, costs associated with the data center itself, as well as the costs of sending data back-and-forth to data centers or the cloud are diminished.

Flywire Closes $120 Million Investment, Acquires Healthcare Payments Platform

It’s a big week for Flywire. The global payments platform made a dual announcement yesterday that it closed a round of funding and sealed the deal on an acquisition.

The $120 million in funding brings Flywire’s total raised to $260 million. Goldman Sachs led the Series E round. The Massachusetts-based company will use the funding to digitize payments across education, healthcare, and travel.

“We are thrilled to lead the Series E round for Flywire”, said Ashwin Gupta, Managing Director at Goldman Sachs’ Merchant Banking Division. “They bring together a unique blend of a payments network, platform and vertical-specific solutions to completely digitize the payments experience for their clients across industries. We look forward to continuing to help accelerate Flywire’s growth.”

Along with the investment news, Flywire unveiled that it has acquired healthcare billing and payment solutions company Simplee for an undisclosed amount. The acquisition blends Flywire’s tech platform with Simplee’s solution that focuses on patients and providers. The combined companies power four of the top ten U.S. healthcare systems and together process $10 billion+ in payments per year.

“Flywire is uniquely built on a global payments network, which is the cornerstone of how we move billions of dollars across 200+ countries and 150 currencies, and an industry-leading payments platform” said Flywire CEO Mike Massaro. “This digital foundation enables us to develop vertical-specific applications that make payments more efficient and cost-effective for our global clients. The Simplee acquisition improves patient engagement and healthcare affordability and extends these capabilities to a broader customer base.”

Flywire, which originally launched has peerTransfer in 2009, has processed $12 billion+ in payments for 2,000 clients. The company has office locations at its headquarters in Boston, as well as Chicago, London, Manchester, Valencia, Shanghai, Singapore, Tokyo, Cluj, and Sydney. 

Three Challenges Banks Face with Digital Transformation

For banks, digital transformation is a moving target. Perhaps that’s because it’s all-encompassing, or maybe it’s because it seems like an ambiguous buzzword with no real meaning. There is one overarching truth about digital transformation, however, and that is that it is a multi-faceted process, not a single solution.

In a conversation with Grant Spradlin, Nuxeo’s VP of Customer Success, Spradlin outlined three key challenges businesses have in achieving digital transformation.

1. Competition
Making digital transformation more complex are players in the bigtech arena such as Google, Facebook, Apple, and Amazon. When it comes to customer experience, banks are not only competing against other banks or even other fintechs. Instead, they are pitted against the tech sector at large.

2. Gap in customer expectations
Customers are expecting more from banks than just acting as a safeguard of funds. This is because bigtech megaliths have redefined the user experience for their customers to such an extent that it has raised customer expectations.

3. Regulations
New and updated regulations are always a challenge, but are especially so with digital transformation. Fortunately, digital transformation also serves as an aid to comply with new regulations. Banks will have an easier time complying with GDPR, for example, when they update their data management practices.

As with most digital objectives, digital transformation all comes down to data. Spradlin noted that his successful customers have one thing in common– they are all using data management as a service. Nuxeo’s data management as a service offering is a single API that offers access to all of the content across an enterprise. “It’s all kind of the same use case at the end of the day,” he said. “That is, providing the right content to the right person at the right time.”

Check, Please! Clover’s Scan to Pay is a Faster Way for Diners to Pay

Payment processing company Clover announced a new capability for dine-in restaurants to offer their guests. The Fiserv-owned company launched Scan to Pay, a tool that enables diners to pay for their meal at their table without the help of their server.

Available on Clover Dining, Scan to Pay prints a QR code on the customer’s itemized bill. Once guests scan the code with their iPhone they can pay via Apple Pay without opening a separate payment app. After the transaction is complete, the server sees a notification on their Clover terminal that their customer has paid. This allows the customer to leave the restaurant without further interaction.

“As restaurants look for new ways to adapt to consumer trends and offer quality dining experiences, Scan to Pay puts the power of when to pay and leave into the hands of the restaurant guest, creating a better dining experience and reducing extra tasks for servers,” said John Beatty, co-founder of Clover. “Scan to Pay represents another step forward for Clover as we continue to build out our core technology capabilities and provide additional solutions that can help merchants grow their businesses and delight their guests.”

Restaurants using Clover Dining can access Scan to Pay without additional cost, though they are charged card not present (CNP) rates for Scan to Pay transactions.

While the potential user base is limited to iPhone users and further limited to those that have set up ApplePay, the user base for payment services such as Scan to Pay is growing. 9to5Mac recently reported that Apple Pay is used for 5% of card transactions across the globe. And by 2025, that number could reach 10%.

Clover was founded in 2010 and was acquired by First Data in 2013. First Data, in turn, was acquired by Fiserv in July of last year. Clover, which demoed at FinovateSpring 2012, offers a range of card present and CNP technologies and processes more than $100 billion in payment volume each year.

6 Banks Making Saving as Easy as Spending

Automatic saving tools have been around since the dawn of the new millennium. You’re probably familiar with how they work; the tools allow users to contribute to savings goals on a regular basis using microtransfers. Some take a randomized approach to the contributions, transfering under $10 a few times a week from a user’s checking account to their savings account. Other tools round up the amount of everyday purchases and contribute the “spare change” to a savings account.

Though Bank of America’s autosave tool has been available since 2005, it wasn’t until the launch of investing app Acorns in 2012 that the industry picked up on the possibility of success for autosave and payment round-up tools.

Banks were quick to notice not only the positive consumer response to such tools but also the potential for more consumer deposits and increased debit card usage. While many banks offer a straightforward version of autosave, a handful offer more robust features, such as purchase round-ups, to entice users to keep a few more bucks in the bank. Below are autosave programs from six banks.

USAA’s Tracker

Tracker from USAA tries to make saving a bit more approachable with the use of a German Shepherd. The tool does not implement purchase round-ups, however. Instead Tracker randomly withdraws small amounts ranging from $2 to $9 from a user’s checking account one to four times per week. To keep the user involved, Tracker texts the user every day to inform them of their checking account balance.

Bank of America’s Keep the Change

Bank of America was well ahead of its time when it launched Keep the Change in 2005. The savings program rounds up consumers’ purchases to the nearest dollar and deposits the extra change into a separate savings account.

The tool is still available and is relatively unchanged today.

KeyBank’s EasyUp

KeyBank’s savings tool, EasyUp, is tied to a user’s debit card and works by automatically transfering $1 to a specified savings account every time a user makes a purchase. While customers can use the savings balance any way they choose, KeyBank specifically highlights using EasyUp to pay down debt faster.

Chime’s Automatic Savings

Chime, a U.S. challenger bank that was founded in 2013, uses the round-up concept to help users save money every time they make a purchase. In conjunction with this way to save, the bank also allows users to automatically transfer a percentage of each paycheck into their savings account. While this isn’t a new concept, Chime has built a user experience around the transfer capability and sends push notifications regarding savings progress to make it more accessible for users.

Qapital’s Rules

Qapital uses the concept of If This, Then That (IFTTT) to help users set up a structure around their savings transfers. The tool leverages behavioral economics to get users to save when certain actions are triggered. For example, accountholders can have Qapital set a small amount of money aside each time they visit the gym, every time it rains, or each time Donald Trump tweets.

Simple’s Round-Up Rules

Simple’s saving program, Round-up Rules, works similarly to Bank of America’s Keep the Change tool by depositing the “spare change” from each of a customer’s purchases into a separate savings account. The one difference with Simple’s savings tool, however, is that it waits until the spare change adds up to or exceeds $5 before transfering the cash into the savings account.

Fenergo Raises $80 Million from ABN AMRO Ventures and DXC Technology

Digital banking and client lifecycle management solutions provider Fenergo brought in $80 million in funding today, bringing its total raised to $155 million and boosting its valuation to $800 million.

The funds come from new investor ABN AMRO Ventures and existing investor DXC Technology, which have taken a 10% stake in Fenergo. “We are very happy to add Fenergo to our investment portfolio,” said Hugo Bongers, Director at ABN AMRO Ventures. “This investment will contribute to ABN AMRO’s strategic priority to build a future proof bank and fight financial crime. We are impressed with the management team and solution Fenergo offers. In addition, this gives us additional exposure to a group of tier one investors.”

Fenergo will use the funds to bolster its products and hinted that the money will also fuel future company and product acquisitions.

Founded in 2009, Fenergo aims to help financial institutions revamp their client onboarding process by creating a seamless user experience while maintaining regulatory compliance. Demand for the company’s modern onboarding tools can be seen in the growth of its bottom line; last year, Fenergo grew its revenue by 21%.

The Dublin-based company boasts 70 clients, including two of its investors, ABN AMRO and BNP Paribas. Also on the list are ANZ, PNC, Banc of California, National Australia Bank, Canadian Imperial Bank of Commerce, UBS Asset Management, Anglo Gulf Trading Bank, Royal Bank of Canada, First Abu Dhabi Bank, Tricor, Exos Financial and Mizuho.

China Opens its Doors to Mastercard

Mastercard announced today it has received approval from the People’s Bank of China (PBOC) to set up a domestic bankcard clearing institution in China. PBOC has given Mastercard, along with its partner NetsUnion Clearing Corp (NUCC), one year to begin clearing activity in China.

This move comes after a long period of restricted payment card operations in China. For the past ten years, foreign payment card companies could only tap into China’s credit card market via partnership with state-run UnionPay.

“China is a vital market for us and we have reiterated our unwavering commitment to helping drive a safer, more inclusive and seamless payments ecosystem for Chinese consumers and businesses,” said Mastercard President and CEO Ajay Banga. “We remain focused on working with the Chinese government and local partners to grow the overall payments infrastructure.”

According to Bloomberg, which estimates the payments market in China to be $27 trillion, the country has 8.2 billion bank cards in circulation 90% of which are debit cards.

Thanks to a recent trade deal with the U.S., China has ended the monopoly of state-run payments and so far has already opened its doors to American Express and PayPal after the payments company took a 70% stake in China-based GoPay.