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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Embedded finance player Railsr closed a $46 million Series C round comprised of $26 million in equity and $20 million in debt.
Company CEO and Co-founder Nigel Verdon is calling the investment “a significant step” in the company’s route to profitability.
The new capital brings Railsr’s total funding to $187 million.
Four months after rebranding from Railsbank, embedded finance platform Railsrclosed $46 million in funding today. Company CEO and Co-founder Nigel Verdon is calling the investment “a significant step” in the company’s route to profitability.
The Series C round consists of $26 million of equity, which was led by Anthos Capita and included existing investors Ventura, Outrun Ventures, CreditEase, and Moneta. The rest of the round was comprised of $20 million in debt, which was led by Mars Capital.
Railsr said that the new capital, which brings its total funding to $187 million, will empower the company to continue to invest in its platform and help it enable its customers to offer embedded finance experiences to their end users.
“We set out to challenge old finance and this is what we will continue to do. Our strategy and success to date has come from the way we prioritize customers, invest in technology, empower teams and execute relentlessly to continue our journey,” said Verdon.
With more than 300 customers– including HelloCash, Sodexo, and Payine– Railsr offers a range of embedded finance offerings. The company believes that customers want to focus on frictionless and fun experiences, not finance. Railsr offers banking-as-a-service, along with embedded payment cards, mobile wallets, credit tools, and rewards tools.
Railsr has been keeping busy as of late. Along with its rebrand, the company recently appointed Rick Haythornthwaite as its first Chairman, promoted Chief Product Officer Stuart Gregory to Chief Operating Officer, and promoted Jane Thorburn to serve as Chief of Staff.
Headquartered in the U.K. and founded in 2016, Railsr declined to disclose its current valuation but referred to it as a “fair value.”
Dutch bank ABN AMRO has partnered with bicycle rental company Swapfiets to offer Swapfiet clients access to ID & pay.
With ID & pay, customers can sign up and pay for a service in seconds while securely storing their ID in a single app.
ID & pay works across multiple merchants and service providers. ABN AMRO likens it to “to having a Google login combined with PayPal.”
ABN AMRO is flexing its payment innovation muscle this week in a new partnership. The Dutch bank is teaming up with bicycle-as-a-service company Swapfiets to launch a new functionality that combines payment and identity authentication.
Swapfiets is leveraging ABN AMRO’s ID & pay, a tool that allows customers to sign up and pay for their Swapfiets membership using an electronic ID. When new and existing Swapfiets clients want to pay for their monthly bicycle rental membership, ID & pay allows customers to sign up and pay in seconds and enables users to securely store their e-ID in a single app.
“ID & pay originated from a need we identified among our business clients. A need to offer their customers a much simpler onboarding and payment process,” said ABN AMRO Chief Strategy & Innovation Officer Edwin van Bommel. “This app beats every other onboarding process in the market as an easy-to-use way for customers to provide ID and pay for products and services.”
What’s unique about ID & pay is that, once users sign up initially, they can use their verified identity and payment credentials to pay at other merchants and services that also use ID & pay. ABN AMRO likens the functionality to having a Google login combined with PayPal, but with credentials held within ABN AMRO’s secure, in-app environment.
“We hope this collaboration will make even more people enthusiastic about cycle memberships and our underlying idea of owning less and using more,” said Swapfiets CEO Marc de Vries.
This isn’t ABN AMRO’s first foray into the subscription management space. In 2020, the bank partnered with Subaio to integrate Subaio’s white label subscription management feature into Grip, ABN AMRO’s PFM app that enables users to see all of their recurring payments in one place.
ABN AMRO demoed alongside Fincite at FinovateEurope 2019, where the pair showcased how Fincite’s Automated Advice Engine offers clients and advisors investment recommendations based on ABN AMRO investment strategies.
Today’s global expansion marks Lemonade’s fourth European country. In addition to the U.S. and U.K., Lemonade is also available in France, Germany, and the Netherlands.
Lemonade entered the insurance sector with its flagship renters insurance offering in 2015 and now has a market capitalization of $1.54 billion.
U.S. insurtech Lemonade already has notoriety among mainstream consumers in the U.S., and today, the New York-based company is once again expanding its geographic reach by launching in the U.K.
“Insurance as we know it hails from the U.K., as do I. So both professionally and personally bringing Lemonade to the U.K. is a homecoming of sorts,” said Lemonade Co-CEO and Co-founder Daniel Schreiber. “We believe the millions of local renters will appreciate what Lemonade has to offer. After all, who doesn’t want instant, transparent, personalized, and mission-driven insurance?”
Starting today, U.K. residents can sign up for Lemonade’s personal property coverage, Lemonade Contents insurance. Coverage plans start at $4.52 (£4) a month. The Contents insurance covers individual personal items of up to $2,260 (£2,000) each, and offers total coverage up to $113,000 (£100,000). Lemonade also offers add-on coverage for theft and loss-related incidents, accidental damage to mobile devices, and expert help through legal protection.
This isn’t Lemonade’s first international expansion. The company has also launched in France, Germany, and the Netherlands. For this move, however, Lemonade is relying on the U.K.’s largest insurance carrier, Aviva, which counts 18.5 million customers across the globe.
“By joining forces we can ensure compelling propositions reach a broader range of customers, including renters, an under-served yet growing segment of the U.K. insurance market,” said CEO of Aviva U.K. & Ireland General Insurance Adam Winslow. “In our 325 year history we have adapted and thrived in a changing world and our partnership with Lemonade is a marker of our intent to continue just this.”
Lemonade entered the insurance sector with its flagship renters insurance offering in 2015, when AI-driven, digital first insurance offerings were hardly commonplace. Today, the company has expanded to offer homeowners, auto, pet, and life insurance products. Lemonade went public in 2020 and now trades on the New York Stock Exchange under the ticker LMND with a market capitalization of $1.54 billion.
Societe Generale will become a majority stakeholder in U.K.-based payment processor PayXpert.
The acquisition will help Societe Generale adapt to new consumer behavior stemming from the use of new technologies such as Buy Now, Pay Later.
In turn, PayXpert’s merchant clients will benefit from additional payments, financing, and insurance solutions.
France-based investment bank Societe Generaleannounced today it will become a majority stakeholder in U.K.-based payment processor PayXpert.
The acquisition aims to help Societe Generale adapt to new consumer behaviors stemming from new technologies and tools such as Buy Now, Pay Later and integrated insurance services. “Societe Generale constantly adapts its offering and innovates to address new customer journeys,” the company said in a blog post announcement.
Specifically, PayXpert’s technologies will help Societe Generale broaden its offering for retail and online merchants and continue in its quest to be a leading player in payment acceptance in Europe. As a result of the acquisition, PayXpert’s merchant clients will benefit from additional payments, financing, and insurance solutions.
“The acquisition of PayXpert would enhance our payment solutions offering by providing increasingly comprehensive and innovative services to our retail and online merchants,” said Aurore Gaspar Colson, Deputy Head of Societe Generale Retail Banking in France. “It reflects our determination to maintain an integrated approach to payments and is consistent with Societe Generale’s long-standing and innovative policy of cooperation with fintechs.”
Founded in 2008, PayXpert offers point-of-sale technologies for both online and in-person transactions, as well as solutions for subscription and recurring payments, data management, business intelligence, and more. Among the company’s clients are Uber, Santander, and Gucci. PayXpert was a finalist in the for the Best Mobile Payments Solution category in the 2020 Finovate Awards.
Private Equity Firm EQT has agreed to acquire B2B accounts receivable and payments company Billtrust.
The deal is expected to close in the first quarter of next year for $1.7 billion.
This move will take Billtrust back to a privately-held company, following its public debut on the NASDAQ in 2020 after closing a SPAC merger.
B2B accounts receivable and payments company Billtrustannounced today it has agreed to be acquired by EQT Private Equity for $1.7 billion. The transaction is expected to close in the first quarter of 2023.
Once finalized, the deal will take Billtrust from the public markets. The company went public in 2020 in a SPAC merger valued at approximately $1.3 billion. Billtrust is currently listed on the NASDAQ and has a market capitalization of $1.52 billion.
“This transaction marks the beginning of an exciting new chapter for Billtrust, our customers and employees while providing shareholders an immediate and substantial cash value with a compelling premium,” said Billtrust Founder and CEO Flint Lane. “We believe B2B payments and accounts receivable continue to be ripe for massive disruption and innovation, and our partnership with EQT will provide us with greater resources and flexibility to build on our leadership position.”
Billtrust was founded in 2001 to offer a suite of solutions that simplify and automate B2B commerce through cloud-based software and payment processing solutions. In 2018, the company launched its Business Payments Network (BPN) that connects buyers, suppliers, and financial institutions to simplify and streamline electronic payment acceptance. The company also offers tools for credit risk managers, ecommerce solutions for wholesale distributors and manufacturing businesses, payments acceptance tools, and more.
For EQT, a Sweden-based private equity firm with $100 billion in assets under management, this marks its third fintech deal. Others in the firm’s fintech portfolio include SaaS cloud banking provider Mambu and payment acceptance company Mollie.
“The Billtrust platform features modern solutions, a compelling value proposition, and, like EQT, a commitment to innovation and transformation in the digital era,” said Arvindh Kumar, Partner and Co-Head of EQT’s Global Technology Sector Team. “Additionally, the Company operates at the intersection of software, fintech, and payments—sectors in which EQT has deep familiarity and a track record of success. With proprietary end-to-end solutions that generate value for all stakeholders and across economic cycles, Billtrust is poised to advance its leading offering in the underpenetrated accounts receivable automation space.”
Traditionally, we’ve talked about Amazon, Google, Apple, and Meta (formerly known as Facebook) as big tech companies with the potential to rise up as competitors in the banking and fintech space. However, there is one giant that is worth adding to this list– Walmart.
Walmart is not a fintech company, or even a tech company, it’s a retail firm. Or at least that’s what it was when Sam Walton founded it in 1962. But what does Walmart’s future look like? The company has made it clear that it will not only begin offering financial services, but will also evolve into a super app. On examining the company’s ambitions, it appears that Walmart may have what it takes to ascend as a competitor in the fintech space.
Below are five aspects of Walmart to consider when evaluating it as a potential competitor.
User base
As one of the most recognizable brands across the globe, Walmart comes with a large, built-in user base. The company sees 265 million customers worldwide each week, and many of those shoppers seek out Walmart as their primary retailer. Walmart+, the company’s $99 annual subscription service, counts 32 million members.
Once Walmart begins its formal foray into financial services in earnest, it will certainly not count all 32 million members as users right away. However, having a built-in, captive audience will help jump-start its user base and will lower customer acquisition costs.
In-app rewards
In both retail and financial services sectors, rewards create stickiness. As one of the oldest retail companies, Walmart has figured this out. Leveraging a partnership with Ibotta Performance Network, Walmart recently launched Walmart Rewards, a way for Walmart+ members to earn additional savings toward their future purchases at Walmart.
Checking account
Earlier this month, Bloomberg unveiled that Walmart plans to launch a digital bank account to serve its shoppers and 1.6 million employees. While no specific details have been released, it is clear that the digital bank will stem from One, which Walmart acquired in early 2022. One is a neobank that offers a debit card and boasts non-traditional products and services such as earned wage access, fee-free overdraft protection, and digital wallet integration.
Currently, One relies on Coastal Community Bank to provide banking services. It is not clear whether Walmart will continue to use that model, or if it will seek its own banking license. Walmart initially pursued a banking license in 2005. After two years, the company withdrew its application after receiving opposition from bankers and other credit institutions. Given hurdles involved in earning a banking license, my guess is that Walmart will rely on its relationship with a traditional bank like Coastal Community Bank.
For more clues into Walmart’s banking ambitions, I checked out job advertisements on LinkedIn. Walmart is currently hiring for a range of positions within its financial services arm. “We are starting some exciting ventures as we expand our financial services in various ways to engage and provide capabilities to our customers,” one of the job descriptions states.
Physical presence
Walmart has 11,501 physical retail stores across the globe. The largest U.S. bank, JP Morgan Chase, has fewer than half that number at around 5,080 physical bank branches. And for customers who are not into doing business IRL, Walmart has them covered, as well. The company just launched Walmart Land, a new immersive experience in Roblox.
If Walmart truly wants to become a large competitor in the financial services world, it already has more than enough physical infrastructure to do so.
Part of why this matters isn’t the sheer number of physical locations or square footage. Having these physical stores will impact who Walmart is able to serve, just as much as it will impact how many people it is able to serve. That’s because Walmart stores are typically located in rural and suburban areas– in other words, Walmart stores are close to non-urban customers who may not rely on their mobile devices as much as city dwellers, and therefore may not be comfortable maintaining an account at a digital-only bank. No smartphone? No problem, just drive down to Walmart and open up an account.
Super app
The term “super app” is used quite lightly in the fintech sector these days. However, Walmart is one of the few firms in the U.S. with the potential to evolve into a true super app. In a piece published earlier this year, Chief Research Officer at Cornerstone Advisors Ron Shevlin summarized Walmart’s potential as a super app. “Walmart’s DNA is efficiency and cost control—and that’s the ultimate promise of a super app for the supercenter,” said Shevlin.
Currently, the company’s app offers Walmart+ subscribers online grocery and retail shopping with free shipping; access to Scan & Go, a tool that enables shoppers to scan barcodes as they shop, pay with their phone using their card on file, and scan a QR code at the cash register before they exit the store. Subscribers also benefit from discounts of up to 10 cents off per gallon of fuel at 14,000 gas stations; and free access to stream movies and shows at Paramount+.
As it stands, Walmart’s app with the above services does not constitute a super app. In a blog post last year, I detailed a list of ten elements required for a super app. Here is what Walmart has and where it needs improvement:
Ecommerce: currently offers
Health services: currently offers vaccination services and provides medical care at locations in four U.S. states.
Food delivery: currently offers grocery delivery, but not prepared food delivery
Transportation services: currently offers fuel discounts and in-app fuel payments
Personal finance: does not offer, but is actively working on plans to do so
Travel services: does not offer
Billpay: does not offer
Insurance: does not offer
Government and public services: does not offer
Social: does not offer
Using that summary, Walmart receives a score of 4.5 out of ten on the super app scale, and it will likely progress in the next few years. Walmart has made it clear that it plans to create a super app. As Omer Ismail, CEO of Walmart’s One, told the Wall Street Journal, the company’s strategy “is to build a financial services super app, a single place for consumers to manage their money.”
HSBC has tapped Nova Credit to integrate the company’s Credit Passport, a cross-border credit data product.
As part of the partnership, Nova Credit received a $10 million investment, bringing its total funding to more than $79 million.
HSBC deployed Nova Credit’s Credit Passport at HSBC Singapore in May and plans to expand its use of the solution later this year to cover more country bureaus.
Consumer-permissioned credit bureau Nova Creditreceived $10 million in funding this week. The investment, which boosts the California-based company’s total funds to over $79 million, came from HSBC Ventures.
Under the strategic partnership, Nova Credit will provide HSBC with access to Credit Passport, its cross-border credit data product. Credit Passport essentially translates consumer credit across geographical borders, providing residents who are new to a country with access to financial products that require credit, such as loans or mortgages.
By leveraging Credit Passport, HSBC will have access to a customer’s translated credit history, after receiving permission from the customer. This not only increases HSBC’s potential client base, but it also increases the speed of the bank’s decisions.
“Accessing credit in a new market can be a challenge and is something we’ve been helping customers with for years,” said HSBC Group Head of Retail Banking and Strategy, Wealth and Personal Banking Taylan Turan. “We’re excited to be partnering with Nova Credit, to improve our ability to do this even more, with its innovative digital Credit Passport. We’re proud to be the first organization to offer this to customers in Singapore.”
HSBC Singapore integrated Credit Passport in May, enabling its applicants to offer the bank permission to access their global credit record and credit score. HSBC Singapore’s implementation of the tool also marked the first use of Credit Passport outside of the U.S.
HSBC elected to launch the use of the product in Singapore because thousands of its Singapore-based clients have recently moved to the country from India, where they have credit history. The bank plans to expand its use of the solution later this year to include customers with a credit history in Australia, the U.K., and the Philippines, and plans to cover more country bureaus in 2023.
Nova Credit launched in 2016 and has since built relationships with credit bureaus in more than 20 countries. Partnering with the credit bureaus has given the company consumer-permissioned access to over one billion credit profiles. Nova Credit also has partnerships with lenders including American Express, SoFi, Yardi, and Verizon.
Payroll data company Pinwheel launched a tool called the Pinwheel Earnings Stream.
The new product offers data on past, current, and projected income.
According to Pinwheel, the data is most useful for earned wage access (EWA) offerings, but can also be used for financial wellness tools, underwriting, and more.
Income and employment data innovator Pinwheelannounced its newest launch today. The company unveiled the Pinwheel Earnings Stream, a tool that offers up-to-date historical, current, and projected income data.
Pinwheel leverages machine learning and pay stub data to determine net earned wages for any work completed to create an accurate view of accrued and projected earnings. Earnings Stream uses analytics and intelligence to help make sense of this data.
Earnings Stream offers organizations three main benefits: accrued earnings, which shows wages a customer has earned so far in the current pay period; projected earnings, which estimates the earnings a customer will have by the end of the current pay period; and pay dates, a list of a customer’s projected pay dates.
By leveraging the projected earnings information from Earnings Stream, organizations can efficiently deploy an earned wage access (EWA) strategy. According to Pinwheel, Earnings Stream has other use cases, as well, including “financial wellness tools, educational services, cash flow underwriting, and so much more.”
“We developed Earnings Stream to support our customers’ strategies to answer the consumer demand for EWA services, while they have long wanted to offer these products, it’s been nearly impossible to execute at scale throughout the fintech industry at large,” said Pinwheel Co-Founder and CEO Kurtis Lin. “EWA is a unique product because it benefits all parties. Consumers are excited about meaningful liquidity, financial institutions are happy to acquire customers, and employers are pleased to see their workers have less financial stress. I’m proud of our team for developing what we believe will be one of the fintech industry’s keys to building truly impactful EWA products.
Founded in 2018, Pinwheel aims to create a fairer financial system with its API that connects to more than 1,600 payroll platforms and more than 40 time and attendance platforms. In all, the system covers 80% of U.S. workers and more than 1.5 million employers.
The New York-based company aims to offer fintechs the data needed to create financial tools for underserved populations, without taking on additional risk. “Many of our customers are working on exciting use cases that we’re excited to see hit the market soon,” said Lin.
Visa is expanding its integration with Square’s instant transfer feature into Canada.
Square’s Canadian merchant clients can access their funds in real time, instead of waiting for the next business day.
Instant transfers are enabled by Visa Direct, a VisaNet processing capability that facilitates real-time delivery of funds.
One of the themes at FinovateFall earlier this month was how organizations can leverage real time data. When it comes to the movement of money, timing is everything. So it’s no surprise to see Visa’s announcement this week that it will expand its integration with Square’s instant transfer feature into Canada.
Under the new integration, Square’s Canadian merchant clients can now access their funds faster than the next business day. When they link an eligible debit card, Square’s Canada-based merchant clients can transfer funds instantly to an external bank account.
Used for rapid merchant settlement, Square’s instant transfers are enabled by Visa Direct, a VisaNet processing capability that facilitates real-time funds delivery directly to bank accounts. As a result, businesses experience increased cash flow, which can be a major pain point, especially for small businesses.
“Cash flow management and more immediate access to funds is critical for small businesses to survive and thrive in a rapidly evolving payments ecosystem,” said Visa Canada’s VP and Head of New Payments Jim Filice. “Together with Square, we’re committed to supporting Canadian small businesses and helping to identify solutions that can benefit them by delivering fast, reliable and secure access to funds.”
Fintech is a broad industry, and with the breadth of its sub-sectors comes a large range of trends that change year after year. But with all of the new, hot trends to follow, it’s impossible for banks and fintechs to focus on everything at once.
That’s why our team set out at FinovateFall earlier this month to ask people from across the industry what trend we should be paying attention to. We received a large range of answers, but here were the top picks:
Fraud mitigation and security
Business intelligence
Money movement and payments
Consumer-permissioned data
Processing data using AI
Financial inclusion
Embedded payments and embedded banking
Detailed transparency in machine learning solutions
Customer obsession and customer experience
Check out the full video below, which includes explanations and reasonings behind each of these trends:
We have several people to thank for answering this very broad question, including Gregory Wright, Executive Vice President and Chief Product Officer at Experian; Derek Corcoran, SVP Financial Services Strategy at Woodridge Software; Estela Nagahashi, EVP and Chief Operating Officer at University Credit Union; Bill Harris, CEO of Nirvana Money; Craig McLaughlin, CEO of Finalytics; Rikard Bandebo, Executive Vice President and Chief Product Officer at VantageScore; Kathleen Pierce-Gilmore, Head of Global Payments at Silicon Valley Bank; Lora Kornhauser, Co-founder and CEO at Stratyfy; Vivek Bedi, Author of You, the Product; Steven Ramirez, CEO of Beyond the Arc; and Chad Rodgers, Executive Vice President and Chief Operating Officer of Connexus Credit Union.
At FinovateFall earlier this month, I sat down with author Vivek Bedi who delivered a keynote presentation later that week, to gain some insights on the customer experience. Specifically, Bedi discussed how organizations can shift from a product focus to a customer focus.
See his answer below and watch the video in its entirety for more on how business leaders can make smart decisions and how the financial services industry can keep up with a continuously changing world.
We always talk about it, right? How do we actually do it? Being in product for 20 years, I’ve realized, “geez, the customer is so important.” And there are a few things I’m going to talk about tomorrow.
The first is how do we become customer obsessed? I know we say that term a lot, but how do we actually make that happen in practicality…. Nine out of ten times, we’re not even using our own product day in and day out. Somebody else is. So how do we become in their shoes? So it’s really important– when I say customer obsession– is how do we really become the customer; feel their challenges, feel their pains, and feel their struggle.
The second area [I’m going to focus on] is that all customers’ feedback matters. It is so easy for us to gravitate towards “the good.” The customers that are our cheerleaders saying that we’re doing a great job. What about the naysayers? I actually found myself obsessing over time on folks that don’t like my product. Why don’t they like it? Are they just grumpy, or is there something there that I’m missing? The point is really obsessing about all different parts of the product lifecycle.
To watch more video interviews from FinovateFall, check out FinovateTV on YouTube. And whether you were at the event in person or not, check out the highlights below:
Taulia and Standard Chartered signed a Memorandum of Understanding to collaborate on working capital finance solutions.
The partnership will initially focus on supply chain finance and dynamic discounting.
The agreement will offer Taulia access to Standard Chartered’s global client base.
Supply chain finance company Taulia has inked an agreement with Standard Chartered this week. The agreement comes in the form of a Memorandum of Understanding (MoU) to collaborate across a range of working capital finance solutions.
The two will begin by focusing on supply chain finance and dynamic discounting, two solutions that Taulia offers to buyers. Taulia will use its expertise in this area, combined with Standard Chartered’s global client base, to help clients build a more resilient and sustainable supply chain.
Ultimately, the partnership aims to enable suppliers to access working capital in a more efficient and cost effective manner.
“We are excited to work with Taulia to explore new and innovative ways to support our clients’ working capital needs, as well as extending the Bank’s leading sustainable trade expertise into their business network,” said Standard Chartered Global Head of Trade & Working Capital Kai Fehr. “Taulia’s footprint also complements that of the Bank, offering greater opportunities for us to support companies in the West with their supply chain flows into Asia, Africa and the Middle East.”
Taulia was founded in 2009 to help businesses improve their supply chains by providing financing options with flexible payment terms. Used by a network of two million organizations, the company’s tools help businesses accelerate payments and free up working capital. Taulia processes over $500 billion every year. Among Taulia’s clients are Airbus, AstraZeneca, Nissan and Vodafone.
Taulia was acquired by SAP earlier this year and today’s agreement marks the first MoU that Taulia has signed with a banking institution post-acquisition. Taulia anticipates that having the backing of SAP will help it access further opportunities across SAP’s ecosystem and deliver a differentiated experience for both buyers and suppliers.
“We believe that all CFOs should focus on their cash strategy to ensure growth during these turbulent times and our partnership with Standard Chartered will deliver cash when and where it is needed, especially in emerging markets,” said SAP Head of Working Capital Management CoE and member of the Taulia Leadership Team Thomas Mehlkopf.
