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Tracking fintech, banking & financial services innovations since 1994
Digital payments company Square announced it will launch its small business bank next year. Square’s application for the bank, Square Financial Services, has been conditionally approved for a bank charter.
Square Financial Services will operate as an independent subsidiary of Square. The new bank’s primary objectives will be to offer small business loans for Square Capital’s commercial lending business, and to offer deposit products.
“We appreciate the FDIC’s thoughtful approach to our application, and their recognition that Square Capital is uniquely positioned to build a bridge between the financial system and the underserved,” said Jacqueline Reses, Square Capital Lead and Executive Chairwoman of the board of directors for Square Financial Services. “We’re now focused on the work ahead to buildout Square Financial Services and open our bank to small business customers.”
In preparation for the launch of the new bank, Square has begun the hiring process to staff its new bank headquarters, which will be located in Salt Lake City, Utah. Square Financial Services CEO Lewis Goodwin and CFO Brandon Soto have been charged to lead the bank’s executive team.
This comes just one month after P2P lending company Lending Club announced plans to purchase Radius Bank. The move offers Lending Club users a full suite of banking tools. Square also follows in the footsteps of Varo Money, which received approval for deposit insurance from the FDIC in February.
When digital banking makes bank branches less necessary, should banks keep their branches simple and cater to those that are less technologically savvy or should they transform their branches into high tech havens with kiosks and robots? As it turns out, a handful of banks are trying something in between.
Six banks across the globe are piloting coffee shop branches. These locations not only serve as a way for folks to buy a coffee and a snack, they are also co-working spaces, meeting rooms for non-profits, a place to gain education about personal financial management and, of course, a location where customers and prospective customers can conduct banking activity and apply for a loan.
Check out each bank’s different approach:
Capital One was the pioneer in the bank-coffee shop branch model, launching its flagship location in 2017. The bank now has 31 Capital One Cafes and has replaced its bank tellers with “ambassadors” to make banking more friendly and approachable. These locations also offer free, one-on-one money coaching sessions (that don’t apply any sales pressure) for members and non-members alike.
Capital One has partnered with Peets Coffee and offers Capital One cardholders 50% off coffee beverages.
Each cafe offers free wifi and power outlets, comfortable seating, and private community rooms that are free for nonprofit, alumni, and student group meetings and events.
Chase opened its first coffee shop branch in December of 2019. The bank teamed up with Joe Coffee for the pilot of a full service coffee shop in downtown Manhattan.
In some respects, calling Chase’s new branch a coffee shop is a bit of a longshot. It looks like the majority of bank branches I’ve walked into. Chase doesn’t even offer any differentiation on the home page of the branch.
That said, the new location has a more modern look, offers a kid’s play area, and is dog friendly. Another differentiating factor is that the branch has only one teller window and it is located in the very back of the branch.
Scotiabank subsidiary Tangerine has built its image around the cafe concept. As the bank’s website states, “People who know Tangerine know we’re not a typical bank. Typical banks have typical bank branches. We don’t. We have Cafés located in some of the busiest Canadian communities.”
Tangerine’s cafes have a laid back, modern atmosphere. Each location has free wifi as well as coffee and treats for sale (all proceeds go to charity).
Unlike other bank cafes, Tangerine does not offer any teller services since it is a fully digital bank. The bank offers ATMs for cash deposits and withdrawals and employs representatives (called cafe associates) for client acquisition, to upsell products, and to answer client questions.
In 2016, CaxiaBank launched imaginBank, a mobile-only bank aimed to serve millennial customers. A year later the bank opened a single physical location, ImaginCafe, to appeal to its user base.
ImaginCafe isn’t quite a bank branch, however. It’s not a place where members can deposit cash or speak with bank representatives. Instead, as CaxiaBank CMO Xavier Mas explained, the cafe is “a place where the ‘imaginBank’ brand is rendered tangible thanks to a blend of innovation, immediacy, the combination of the online and offline environments, interaction with users, and the interests of young people.”
As with many bank-cafes, this location serves as a coworking space and has private meeting rooms and spaces available to rent for meetings and events. It also has an art exhibition space, a fashion showcase room, a modern theatre, a multimedia laboratory, and a gaming area. ImaginCafe hosts multiple events each month including art expos, music discussions, shows, gaming events, and concerts.
Umpqua bank calls its branch locations “stores” and incorporates retail and hotel-like amenities into the locations to make them more welcoming.
EVP of Umpqua Bank Brian Read explained that factors contributing to the uniqueness of the stores include free Umpqua-branded coffee, a dog-friendly environment, and community spaces that host yoga classes and non-profit meetings.
Santander has eight Work Cafes across the globe. These locations look like traditional coffee houses and aim to make visiting a bank something that consumers want to do, not an obligation.
As with many other banks’ concept branches, Santander’s locations offer spaces where events, conferences, and classes are hosted. These cafes are also geared toward offering entrepreneurs a co-working space and offers advertising opportunities for small businesses.
These concept branches have been successful for the Spain-based bank, which reports that anywhere from 2x to 4x more accounts are opened at Work Cafes than at its traditional branches. Additionally, at the bank’s Spain location the number of customers is increasing by 11% per year and new loan production has been boosted by 73%.
Financial services firm Fiserv made its 32nd acquisition today. The Wisconsin-based company purchased Bypass Mobile, a company that specializes in software and POS systems. Terms of the deal were not disclosed.
The acquisition is expected to help Fiserv support its clients in creating a seamless customer experience across physical and digital channels. By integrating with Fiserv’s universal commerce platform, Bypass will offer businesses a single point of contact. As a result, businesses will benefit from increased operational efficiency, enhanced security, and a more complete picture of customer interaction.
“Adding Bypass to our portfolio will make it easier for our clients to realize their digital transformation strategy, delivering interactions their customers are demanding,” said Fiserv Senior Group President of Global Business Solutions Devin McGranahan. “With this combination, we will improve the omni-commerce experience for businesses and their customers, making it easier and more efficient to pay for goods and services.”
Specifically, Bypass will enable secure Fiserv clients to accept payments in a secure environment across multiple devices. “In combination with Fiserv, we will help businesses accept payments efficiently while continuing to meet customer expectations by providing a variety of payment options,” explained Bypass CEO Brandon Lloyd.
Fiserv was founded in 1984. While the company’s most recent purchase was Merchant Pro Express earlier this month, its most notorious one in recent memory was the acquisition of First Data in January of last year. That deal closed for $22 billion.
Status is something we’ve become accustomed to in the social media era. On Facebook, we update our status to let our friends know how fun our vacation was. On Instagram we brag about our financial status, on Twitter we show off our social status, and on LinkedIn we boast about our professional status.
There’s one fintech in particular that understands this. Aptly named Status, the New York-based company helps users compare themselves with others– though not via pictures, memes, or self-aggrandizing updates. Status takes a user’s financial snapshot by aggregating all of their accounts and anonymously compares a range of metrics with the national average and different groups, including others with similar demographics, people in the user’s geographical location, those that are in the user’s income range, and of the same age.
What exactly are they comparing? Users can analyze their spending, income, debt, assets, net worth, and credit score and compare each figure against those of different groups. Specifically, users can see how much others in their geographical area spend on groceries, how their credit score compares to the national average, how their net worth compares with others in their same age group, how much folks in their same income range spend on housing, etc.
Because users are motivated to share as much financial data as they can to see how they compare with their peers, Status has excellent insight into which products and services will be most enticing. If Status sees a consumer has a lot of liquid cash, they might show them an ad for a high-interest savings account. Or maybe the user’s vehicle is 15 years old– in that case Status may show them new vehicle financing offers.
Some of Status’ partners include Airbnb, AllState, Liberty Mutual, Betterment, VSP, and Haven Life. Status makes money when it makes a successful referral. This is a common model with B2C fintechs who want to offer their services for free to end consumers.
I have to admit, I’ve enjoyed the comparison capabilities more than I thought I would. My competitive side loves comparing every aspect of my financial standing with others. However, I found it more difficult than I expected to aggregate my entire financial life to gain an accurate comparison. I linked my everyday accounts but there are multiple investment accounts and crypto holdings still outstanding. Additionally, I never found a good way to account for my investment property.
As for the referrals, I was impressed. The offers listed were much more relevant than the offers my bank (which keeps trying to get me to refinance a vehicle loan that I don’t have) usually presents.
Overall, I think I’ll be back. As with all PFM platforms, it is difficult to get a clear picture since transaction categories are often muddled. However, it is still a nice way to not only view my own financial standing, but also compare it with my neighbors.
UAE-based foreign exchange platform Al Ansari has partnered with financial crime compliance company Pelican. Under the deal, Al Ansari will leverage Pelican’s PelicanSecure, a set of AI-based sanctions screening, anti-money laundering tools, and transaction monitoring solution.
Al Ansari selected PelicanSecure for its compliance accuracy, auditability, processing capacity, and AI-based risk classification approach. Company CEO Mohammad Bitar also noted that, because AI is a core part of Al Ansari’s strategy, Pelican’s use of the enabling technology was a factor in the partnership.
“We selected Pelican as we are convinced they can support us enhancing our anti-money laundering and sanctions compliance frameworks to make them more robust through the use of innovative technology, said Bitar. “This is the start of a long-term partnership with Pelican and we look forward to working closely to streamline our operations around sanction screening, transaction monitoring and AML, both now and in the future.”
Pelican is headquartered in the U.K. and was founded in 1993. Among the company’s clients are ADCB, Standard Chartered Bank, Al Mulla Exchange, Wells Fargo, State Bank of India, and Bank of Barbado.
Al Ansari opened its first branch in 1966 and has since expanded to 190 branches. The company has 2,500 employees that help facilitate 80,000 transfers each day for 2.5 million customers every month. Last year, Al Ansari transferred $11.3 billion (AED 40.5 billion) via its network.
Digital alternative banking company Revolutannounced this week it is helping users diversify their portfolios even further by enabling in-app purchases of gold.
The U.K.-based company, which first started with cryptocurrency holdings, then began offering investment in stocks, will enable customers on its Premium and Metal plans to purchase and transfer gold. Users cannot, however, make purchases with their gold holdings using their Revolut card. If a user attempts to make a purchase when they only have funds in gold, Revolut will convert a portion of their gold into fiat currency and use that.
Revolut makes it clear that since gold is not regulated by the U.K. Financial Conduct Authority, funds used to purchase gold – and the gold itself – will not be safeguarded under the U.K. Electronic Money Regulations 2011, the Payment Service Regulations 2017, or the Financial Services Compensation Scheme.
This is good timing on behalf of Revolut. Since the stock market and crypto assets are extremely volatile at the moment, many people are purchasing to gold to grasp onto some stability. And now they don’t even need to leave Revolut’s app to do so.
There is no word on if or when the company will allow trading of other precious metals such as silver or platinum.
What does it take to create an event with true gender diversity? In this piece, Finovate Content and Strategy Director Adela Knox, who was recently named the Goodwill ambassador for the European Women Payments Network (EWPN), explains how she gets the balance right.
Finance leaders have predicted this year could mark a turning point for gender diversity in the banking and finance sector as pressure is mounting and gender pay gap reporting galvanizes efforts to promote more women.
The financial services industry is making progress on gender balance in the workforce. Mindsets are changing and, as a result of hard work and commitment, progress is starting to be reflected in the numbers. Finovate has always advocated for gender diversity at our events globally to support the overall industry change and market shift happening within the fintech sector. There is still a long way to go to create an environment in which women have equal access to opportunity and positive outcomes but we at Finovate are eager to support the industry change every step of a way.
Our team made a commitment to pledge to only run events with mixed-gender panels. As a result a considerable amount is being done to challenge the prevalent all-male conference panels. We provide women in fintech with an opportunity to bolster their profile and to be taken seriously. The gained visibility and platform become fundamental to getting women into the boardrooms and ultimately build their network and advance their careers.
We focus on an equal female-to-male ratio during our speaker acquisition phase and we also proactively support gender equality at our events while running Women in Fintech forums with the goal to empower women in financial services and technology.
The Women in Fintech forums are compiled of networking evenings, workshops, panel discussions, keynote presentations, and debates offering dialogue-driven sessions and initiatives to promote diversity and gender equality at the workplace and educate on why encouraging it matters. Topics include: What is diversity in the workplace? What are the benefits and challenges of diversity in the workplace? How can we manage diversity in the workplace? What should hiring, policies, & practices look like? How can we promote gender equality at workplace? etc.
We collaborate with various industry bodies and associations who strive to create more opportunities for women and minorities, as well as being a champion for a more diverse and inclusive industry for all. Some of the groups that we collaborate with include the European Women in Payments Network (EWPN), Women in Fintech NY, and Women in Fintech SF. This is an ongoing effort and we at Finovate are passionate to constantly grow and elevate our initiatives globally. Recently, i had an opportunity to interview Isil Ugurlu, the German Ambassador of EWPN, while running yet another Women in Fintech forum at the annual FinovateEurope 2020 in Berlin, about what it means for the organisation to collaborate with event organisaers like Finovate. You can watch the interview here:
To promote the gender goal of 50/50 diversity in financial services, women who register by this Friday, March 13, can purchase a ticket to any 2020 Finovate event at a 50% discount. Just enter the code EQUALITY on the booking form.
Mastercardannounced a partnership with Samsung’s security platform, Samsung Knox today in a move that will serve to foster digital inclusion across emerging markets.
“This partnership with Mastercard is our way of making that future available to everyone by helping to close the digital divide, especially in emerging economies and countries,” explained KC Choi, executive vice president of Global Mobile B2B at Samsung.
The two will use Mastercard’s Pay on Demand platform which offers consumers device financing via a pay-as-you-go model. Built by Mastercard Labs, Pay on Demand brings together banks, equipment manufacturers, and telcos to solve issues limiting device financing in underserved markets. The program consists of four components:
A lending marketplace that aggregates lenders who offer affordable device financing
Samsung’s Knox security platform that ensure the safety of consumer data and transactions
Tools that help consumers analyze and build their credit history from usage data
Virtual card numbers that can be used for everyday transactions and to make payments on a device
“At Mastercard, we see a connected world where opportunity and prosperity are possible for everyone, everywhere,” said Jorn Lambert, executive vice president of Digital Solutions at Mastercard. “The Pay on Demand platform enables us to deliver on that vision and foster financial inclusion, giving consumers an opportunity to participate in digital commerce. By combining Samsung’s device management and security expertise with Mastercard’s innovative technology, we are creating an ecosystem that can deliver measurable, positive impact to the communities we serve.”
Pay On Demand will be launched in the Middle East and Africa in early 2020 and will extend to other geographical locations later this year.
Financial commerce technology provider Wirecard announced today it has partnered with Grab, a super app based in Southeast Asia that provides users with everyday services including on-demand transportation and food delivery.
Under the partnership Wirecard will process transactions made using Grab’s ewallet GrabPay in Malaysia, the Philippines, and Singapore.
Grabpay, which is accepted by 600,000+ merchants, works for both online and brick and mortar transactions. Along with payment processing, Wirecard will help introduce Grabpay to more merchants, expanding acceptance across Southeast Asia.
While mobile payment functionality may not be impressive to U.S. users, keep in mind that mobile wallets are much more popular in Asia. In fact, mobile wallets are almost 2x more popular in Southeast Asia than they are worldwide. Among consumers in the region, 44% regularly choose their mobile wallet as a payment method. In comparison, the global average mobile wallet usage is 25%.
Senior Managing Director of Grab Financial Group Reuben Lai explained that Wirecard will help the company build a cashless economy for millions of businesses across Southeast Asia. “Wirecard’s innovative mobile payments solutions will not only complement our GrabPay e-wallet platform, but also offer businesses and consumers the opportunity to transact with greater security, convenience and flexibility,” he said.
Today’s announcement comes just days after Wirecard partnered with another player in the gig economy. Earlier this month the Germany-based company partnered with Xolo to offer more robust financial tools to entrepreneurs and micro-businesses.
As any woman working in fintech can tell you, we have a long road to equality. The good news is that equality starts with us.
And because we are responsible for exemplifying the change we want to see in the workforce, we are in control of how we inspire others and create solutions.
Today we bring you perspectives from two women working in the fintech field to get their take on what they are doing to be the change they want to see.
First up is Sophie Theen, Chief People Officer at Oakam, a U.K.-based fintech that helps underserved individuals build credit. Theen is passionate about recruitment, culture, diversity, and inclusion and has helped a number of tech startups with talent recruitment and HR strategy. She has received multiple industry awards, including being named a WeAreTheCity Rising Star Finalist in 2019.
In your professional life you help startups recruit talent. What is your strategy in promoting diversity?
Sophie Theen: Hiring for diversity to me is very simple. We don’t want to deliberately hire for diversity i.e., rejecting male candidates or promoting or writing an advert that only speaks to a woman. It’s about making it fair and equal to all candidates who are in the process and ensuring that the hiring managers and panel of interviewers are diverse, too (so no all male or female panel).
It’s also got a lot to do with the way we present ourselves as a company. If we want to be recognized as an inclusive employer, then we need to always remember to put effort in taking those baby steps.
Tell us how someone in the industry has helped empower you.
Theen: So I haven’t been in fintech for so long yet, and my first experience wasn’t all that amazing. I was new to the industry and had to learn to navigate through adversity in a heavily male-dominated environment, most of the time feeling quite lost and insecure.
This was the case until I joined 11:FS in 2017. The leadership there really changed my impression about the industry. My CEO then, David Brear, empowered me in every way you could imagine; that made me realize this is the industry I’m passionate about and this is where I want to make a change for the better.
How do you empower other women to achieve success of their own?
Theen: Simple, I give as much of my time as I can back to the women that I meet, cross paths with, and to those who reach out to me asking for support. Because if it wasn’t for my community and mentors around me, I wouldn’t have gotten the strength– let alone the confidence– to enjoy doing what I’m doing everyday.
The one most important thing I’ve learned from them was that I needed to believe in myself. So to anyone of you thinking you can’t– stop. We’re the only ones limiting ourselves!
Our next interview was with SVP of Product and Marketing at biometric authentication company iProov, Aarti Samani. After working for more than 10 years in the investment banking space, Samani transitioned to the tech sector and has since gained experience in banking, consumer technology, and healthcare.
Talk to us about efforts at iProov to promote diversity within the organization and in the tech community at large.
Aarti Samani: iProov is an inclusive and diverse organisation. We always look to hire the right person for a role based on their experience and skill set. Everyone gets a fair chance regardless of labels like race and gender. We actively promote a culture of inclusivity in the organization in a number of ways. Our flexible working policy encourages an inclusive workplace, as well as women centric comms channels to provide support. The diversity in demographics across the organization enables iProov to propel as a startup.
We celebrate the uniqueness of our people, and endeavour to inspire young people from all walks of life. For example, as part of International Day of Women and Girls in Science, iProov published a blog post showcasing the career trajectories and accomplishments of my colleagues and I. By demonstrating some of the exciting work that STEM skills can lead to, we hope to inspire young women to pursue STEM.
Despite a lot of progress, women are still highly underrepresented in technology – both as employees and as leaders. I take conscious responsibility to empower women and other minority groups around me.
Tell us about a way someone in the industry has helped empower you.
Samani: I have been incredibly fortunate to have had great mentors and sponsors who have both supported and guided me in my career.
According to research from the Center for Talent Innovation (CTI), 85% of women and 81% of multicultural professionals need navigational support to figure out how best to succeed in the workplace, but often don’t receive it with nearly the same regularity as men.
I would like to take this opportunity to call out Eric Collins, a former colleague, and now a dear friend. Eric not only helped me navigate a career transition from finance to technology, he was also a strong role model and an influential sponsor. His endorsement and guidance helped me to grow as a leader and helped advance my career in an otherwise male dominated environment.
Working with Eric was a very positive experience and has greatly shaped my approach to leadership, team-building and the impact I aspire to have on people I work with.
How do you empower other women to achieve success of their own?
Samani: As a leader, I mentor and coach members of my team and in the wider industry to help them develop their professional and people skills to help them succeed in their careers.
I am invested in the growth and well-being of my team so that they are able to be their best selves at work and in their personal lives. I am a big believer in celebrating each individual’s accomplishments and ensure that their work is recognized across the organization. This instills a sense of pride in their work and fuels a virtuous circle of increased confidence in their ability to deliver, which encourages people to aim higher and in turn accomplish more. To foster mental well-being and create space for the team to reconnect with themselves as well as each other, I make available weekly team meditation sessions. This, coupled with an emphasis on open, collaborative team culture means everyone leans in and acts as sponsors for their colleagues. This leads to lower stress levels overall, and promotes greater happiness in and out of work.
To promote the gender goal of 50/50 diversity in financial services, women who register by this Friday, March 13, can purchase a ticket to any 2020 Finovate event at a 50% discount. Just enter the code EQUALITY on the booking form.
Financial health platform Credit Sesameannounced 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 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.