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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Mobile payments company Boku has sold its Mobile Identity unit to cloud communications firm Twilio.
Twilio will leverage the technology to create new packages in its Lookup API and Verify API offerings.
Terms of the deal were not disclosed.
Mobile payments company Bokuannounced it has sold its Mobile Identity unit to cloud communication company Twilio. Financial terms of the deal were not disclosed.
Twilio says the purchase is a reflection of its commitment to accelerate its vision for seamless mobile identity and digital intelligence. “Twilio and Boku Mobile Identity share a common goal– building a seamless consumer identity solution that doesn’t sacrifice user experience for security,” said Twilio’s General Manager of Account Security Aaron Goldsmid.
Boku’s Mobile Identity unit verifies customer data in real time using its database of mobile network operator identity connections. Ultimately, the tool helps business customers verify client data in real time, providing a smooth onboarding experience for their end users while mitigating fraud.
San Francisco-based Twilio said it will leverage Boku’s mobile identity technology to create new packages in its Lookup API and Verify API products. The company also plans to build on Boku Mobile Identity’s comprehensive mobile identity network to improve its existing security offerings.
Founded in 2008, Twilio seeks to reinvent how companies engage with their customers by digitizing communication channels via its APIs. The companies tools– which target voice, text, chat, video, and email– do everything from helping companies connect IoT devices to cellular networks to building real-time video applications.
Boku, which offers solutions that help deliver mobile payments, was founded in 2008. Last summer, the company launchedM1ST, also known as Mobile First. The new offering features 330+ mobile payment methods, including mobile wallets, direct carrier billing, and real-time payments schemes. M1ST reaches 5.7 billion mobile payment accounts across 90 countries.
This is a sponsored post by Carol Hamilton, Senior Vice President, Global Solutions at Provenir.
New survey data reveals uncertainty in the accuracy in credit risk modeling, underscoring the need for AI, machine learning, and alternative data.
Consumer credit markets have changed dramatically over the past two years during the Covid-19 pandemic, translating into economic uncertainty for millions across the globe, and it seems for the fintechs and financial services organizations that serve them.
After all the disruption we’ve seen over the past 24 months, how sound are credit risk models? This was the question we sought out to find the answer for with a global research study that surveyed 400 decision makers in the industry. The results were more than a little unsettling — only 18 percent of fintechs and financial services organizations believe their credit risk models are accurate at least 75 percent of the time.
That’s pretty astonishing — especially given the fact that the rest of the respondents indicated they believed their credit risk models were accurate less than 75 percent of the time.
Credit risk modelling is at the heart of every fintech and financial services company and this financial fault line in credit risk decisioning should send chills down the spine of the entire sector.
This “risky business” uncertainty in credit risk modelling accuracy may be why real-time credit risk decisioning was respondents’ No. 1 planned investment area in 2022, as organization’s work to resolve this financial fault line in credit risk decisioning. The survey underscored the growing appetite for AI predictive analytics and machine learning, data integration, and use of alternative data as the means to improve credit risk decisioning.
Aside from improving credit risk modelling accuracy, organizations are also employing credit risk decisioning platforms to help address the key priorities of fraud detection/prevention and financial inclusion. And increasingly these credit risk analysis strategies employ the use of alternative data.
Fraud continues to grow for financial services and lending firms, both before and during the pandemic, with identity fraud being a key factor.
Sixty-five percent of decision makers in our survey indicated they recognize the importance of alternative data in credit risk analysis for improved fraud detection. Additionally, 51 percent recognize its importance in supporting financial inclusion. Alternative data is a more varied way for lenders to evaluate those individuals with a thin (or no) credit file put together a more holistic, comprehensive view of an individual’s risk. This vastly benefits those who can’t be easily scored via traditional methods, while also benefitting financial institutions, by expanding their total addressable market.
To level-up credit risk decisioning, organizations need more data, more automation, more sophisticated processes, and more forward-looking predictions. And to do that, businesses need AI that can provide immediate impact to the decisioning process. AI-enabled risk decisioning is seen as key to usher in improvements in many areas, including fraud prevention (78%), automating decisions across the credit lifecycle (58%), improving cost savings and efficiency (57%), more competitive pricing (51%), and improving accuracy of credit risk profiles (47%).
For unbanked and underbanked consumers, AI gives organizations the opportunity to support those consumers’ financial journeys. Financial services organizations typically struggle to support these consumers because they don’t come with a history of data that is understandable by traditional decisioning methods. However, because AI can identify patterns in a wide variety of alternative, traditional, linear, and non-linear data, it can power highly accurate decisioning, even for no-file or thin-file consumers.
While AI and machine learning, and alternative data may have been on the credit risk decisioning “nice to have” list a few years ago, fintechs and financial services organizations are quickly realizing legacy technology and methods simply are not up to today’s task of credit-risk decisioning. By deploying new technology such as AI and machine learning, and embracing alternative data, organizations are on their way to improved confidence in the accuracy of their credit risk models – moving to remediate their credit risk “risky business.” In doing so, they will be more prepared to react to changes moving forward, while supporting inclusive finance.
Carol Hamilton is Senior Vice President, Global Solutions at Provenir, which helps fintechs and financial services providers make smarter decisions faster with its AI-Powered Risk Decisioning Platform. Provenir works with disruptive financial services organizations in more than 50 countries and processes more than 3 billion transactions annually.
Bulgaria-based Payhawk extended its Series B funding round by $100 million to $215 million.
The investment values Payhawk at over $1 billion and brings its total funding to $239 million.
The company currently serves businesses in 30 countries and will use the recent funding to pursue further global expansion.
Bulgaria may be known more for its beaches and opera singers than it is for its fintech. Business spend management platform Payhawk may soon change that, however. The Bulgarian-based fintech just extended its recent Series B round by $100 million and is now valued at over $1 billion. This new valuation makes Payhawk Bulgaria’s first unicorn.
The fresh funding brings its Series B round to $215 million and boosts its total funding to $239 million. Today’s round was led by Lightspeed Venture Partners and saw participation from Sprints Capital, Endeavor Catalyst, HubSpot Ventures, and Jigsaw VC.
Payhawk’s $1 billion valuation is a huge leap forward for the fintech. Just three months ago when the company first announced its Series B round, Payhawk was valued at $570 million. It now sits 75% higher.
Payhawk, which currently serves businesses in 30 countries, will use the investment to expand its presence in the mid-size enterprise market and pursue global expansion. The company will open offices in Paris and Amsterdam this month and will add one in New York in September.
To support this growth, Payhawk plans to ramp up its workforce by 3x. The company plans to grow from 100 to 300 employees by the end of this year. As part of this expansion, Payhawk will increase the size of its product team by adding 60 additional senior software engineers to meet customer demand for new features.
Payhawk was founded in 2018 to offer businesses a way to control company spending. In addition to payment cards, the startup offers invoicing, employee reimbursement, and billpay tools along with accounting software integration, built-in spending policies, and analytics.
“Every employee that deals with company payments feels that there should be a better way to do it, but this huge problem was never tackled by a strong product team with a hardcore engineering background,” said Payhawk Founder and CEO Hristo Borisov. “This is what Payhawk brings to the market.”
Open banking platform Tink partnered with Irish postal services provider An Post.
Tink will provide data and analytics that fuel An Post’s Money Manager app.
The new partnership serves as an inroad for Tink into the Irish market.
Visa-owned open banking platform Tink formed a new partnership this week that will bring its open banking capabilities to users of Irish postal services provider An Post.
An Post, which offers not only parcel and mail logistics but also financial services, operates a network of 920 post offices for its 1.5 million weekly customers. An Post offers many of the major services typical of high street banks, including current accounts, savings accounts, credit cards, loans, and a currency card that allows users to purchase and top up 16 currencies.
Leveraging Tink for data and analytics, An Post now delivers a Money Manager app that helps users track their income and spending, set budgets, and receive insights about how they can better manage their funds.
“The partnership with Tink is the next step in our transformation journey, to firmly position ourselves as a challenger to the banks in Ireland, and to give customers access to simple money management tools that will enable them to build their financial confidence,” said An Post Financial Services Director John Rice. “As the leading open banking platform in Europe, Tink was a clear choice of partner for us to provide the data and analytics that sit at the core of our Money Manager app.”
For Sweden-based Tink, the partnership with An Post serves as an important inroad into the Irish market. “An Post is in the perfect position to help simplify money management for its customers through the power of open banking technology,” said Tink UK & IE Banking Lead Tasha Chouhan.
More than 10,000 developers use Tink’s tools to help financial services firms leverage the power of open banking via a suite of open banking tools including income verification, payment tools, risk insights, and more. Tink currently serves 18 markets from its 13 offices and integrates with more than 3,400 banks and financial institutions reaching over 250 million end customers across Europe.
Founded in 2012, Tink is a two-time Finovate Best of Show Award winner, and most recently demoed at FinovateEurope 2019. The company acquired FinTecSystems earlier this year, a move that expanded Tink’s reach into the DACH region with a range of new customers including N26, DKB, Santander, Solarisbank, and Check24.
A look at the companies demoing at FinovateEurope on March 15 digitally and on March 22 and 23, 2022, in London. Register today and save your spot.
Dynamic Planner is one system for all your financial planning needs, matching people with suitable portfolios through engaging financial planning.
Features
Review a client’s risk and sustainability profile and portfolio
Receive powerful cash flow planning aligned to a client’s risk profile
Access independent fund research and suitable recommendations
Why it’s great
Dynamic Planner is a complete and yet flexible system, using a single definition of risk to avoid miscalibration and ensure nothing is lost in translation in the planning and advice process.
Presenters
Ben Goss, CEO & Co-Founder Goss is an award-winning entrepreneur with more than 20 years’ experience at the forefront of financial services. LinkedIn
Yasmina Siadatan, Sales & Marketing Director Siadatan heads Dynamic Planner’s sales and marketing-led growth strategy. She previously worked for Lord Sugar, winning BBC One’s The Apprentice in 2009. LinkedIn
A look at the companies demoing at FinovateEurope on March 15 digitally and on March 22 and 23, 2022, in London. Register today and save your spot.
Crassula is a fintech software platform providing solutions for businesses to create financial products. Crassula’s white label solutions allow businesses to build PSP, banking, and FX products the way they want them to be in days, not months.
Why it’s great
Crassula allows businesses to build products the way you want them. Products are fully customizable to personal preferences, with individualized logos and colors, and can easily link into existing ecosystems via an API connection.
Presenters
Daria Dubinina, CEO and Co-founder Dubinina is a leading strategist and entrepreneur. She has dedicated more than ten years to mastering payments, e-commerce, and business development. LinkedIn
Alex Zhukov, Business Development Manager LinkedIn
A look at the companies demoing at FinovateEurope on March 15 digitally and on March 22 and 23, 2022, in London. Register today and save your spot.
Harmoney is a modular, next-generation, digital platform of solutions for complex onboarding and client lifecycle management compliance processes.
Features
Getting rid of compliance processes frustrations
Increasing data quality
Substantially saving costs
Why it’s great
Get rid of compliance process frustrations via a digital, customer-friendly onboarding and client lifecycle management platform which is built with a truly end-to-end perspective.
Presenters
Thomas Van Maele, CEO & Co-founder Van Maele holds masters’ degrees in Business Engineering and Technology Management. Previously, he worked as a Senior Corporate Finance Advisor at KPMG and as a partner at the Econopolis wealth manager. LinkedIn
Thierry van Alphen, Head of Business Development Van Alphen holds a Solvay Business School MBA and has 22 years of experience in financial services at ING in several senior roles in Belgium and the Netherlands. LinkedIn
A look at the companies demoing at FinovateEurope on March 22 and 23, 2022 in London. Register today and save your spot.
ForwardAI’sPredict-as-a-Service is a premium cash flow forecasting and planning tool for companies that want to offer predictive cash flow solutions to small business clients.
Features
Offers simple access to historical, real-time, and predictive cash flow data
Creates cash flow projections and comparisons
Provides custom and template business pivot scenario-building
Why it’s great
Predict-as-a-Service provides a premium cash flow experience for a company’s small business clients while also offering opportunities to offer proactive financial support and custom financing.
Presenter
Nick Chandi, CEO and Co-Founder A repeat entrepreneur with multiple successful companies, Chandi is using his prior experience to help bridge the gap between financial institutions and small businesses. LinkedIn
Consolidation in the Buy now, pay later (BNPL) industry continues as Zip agrees to acquire competitor Sezzle.
The deal values Sezzle at $355 million.
After the acquisition is finalized, Sezzle will rebrand to Zip and the company’s CEO Charlie Youakim will lead Zip’s U.S. business.
Buy now, pay later (BNPL) player Zip (formerly known as Quadpay) is acquiringSezzle in a deal that values Sezzle at $355 million.
Zip CEO and co-founder Larry Diamond expects the deal will help Zip scale up its operations. “Combining with Sezzle positions us as a leading global BNPL provider and prioritizes our ability to win in the important U.S. market.”
Following the deal, Zip’s customer base will increase from 9.9 million to 13.3 million and the number of merchant partners will grow from 82,000 to 129,000. Additionally, The Financial Review estimates that Zip’s total transaction volume will rise from $8 billion to $10.4 billion, and that almost $6.5 billion of this will be from U.S. users.
After the deal closes, Sezzle will rebrand as Zip and the company’s CEO Charlie Youakim will lead Zip’s U.S. business. “I believe the transaction will position us to win in the U.S. and globally,” Youakim said.
Today’s announcement is yet another indication of consolidation in the increasingly-crowded BNPL space. Industry giant Afterpay sold to Block (formerly Square) on February 2nd. And on February 17th, digital payments firm Latitude agreed to acquire Humm’s BNPL operations.
Australia-based Zip was founded in 2013, seven years before BNPL took off as an alternative payment method. Zip is publicly traded on the Australian Stock Exchange (ASK) under the ticker ZIP. The company allows users to split their purchase into four installments over the course of six weeks. With Zip’s app, shoppers use their Zip Virtual Card to pay for their purchase in installments anywhere that Visa is accepted, both online and in-store.
Similarly, Sezzle allows shoppers to use their Sezzle Virtual Card to pay for purchases in four installments over the course of six weeks. The company also offers a long-term financing tool in partnership with Ally and Sezzle Up, an alternative credit solution that helps shoppers build their credit.
Minnesota-based Sezzle was founded in 2016 and went public on the ASK in 2019 under the ticker SZL. At the time, Sezzle said it opted to list on the ASX instead of in U.S. markets because, prior to 2020, the BNPL model was more commonplace in Australia, given that Afterpay, a major player in the BNPL arena, is headquartered in Melbourne.
TransUnion launched Point-of-Sale Suite of Capabilities to provide lenders insight into consumer borrowing habits with point of sale lending and buy now, pay later products.
The new data reporting helps lenders underwrite credit risk.
The reporting methods also benefit the consumer by not penalizing them for using these alternative credit products on a regular basis.
Financial insights firm TransUnionlaunched a new set of tools today that will help shoppers using point-of-sale (POS) loans, including buy now, pay later (BNPL), improve their credit scores while offering lenders a more holistic view of prospective borrowers’ risk.
TransUnion’s Point-of-Sale Suite of Capabilities offers lenders insight into the payment behaviors of consumers using alternative credit tools such as POS lending and BNPL products.
This increased data reporting and visibility helps lenders underwrite credit risk, but also benefits the consumer by not penalizing them for using these alternative credit products on a regular basis. That’s because POS and BNPL loans are underwritten as unsecured installment loans. When these installment products are used frequently, typical credit models could view the borrowing behavior as risky.
“The inclusion of point-of-sale loans including BNPL into credit reports and other risk management tools can help tens of millions of consumers gain access to more credit opportunities and potentially secure better loan terms,” said Liz Pagel, senior vice president and consumer lending business leader at TransUnion. “TransUnion has taken a measured approach in developing our solution suite, working with the top BNPL lenders over the past three years to craft solutions that benefit consumers and do not penalize them for using these products frequently.”
TransUnion’s new toolset aims to offer lenders a single standard to report this alternative borrowing data. In order to minimize unnecessarily negative impact on the consumer credit score while still communicating valuable borrowing and repayment data, POS and BNPL borrowing information will be tagged and filtered into a new section in TransUnion’s core credit file.
“Maximizing the financial inclusion impact requires broad usage of this valuable data in more credit decisions. Ultimately, given the prominence of FICO and VantageScore in the market, the biggest impact from the data will not be realized until the data migrates to the core file and these scores take into account consumers’ good behavior,” added Pagel.
The use of BNPL is becoming more commonplace as more retailers and payment companies adopt varying versions of the technology to encourage higher consumer spending. In fact, according to a recent TransUnion study, up to 100 million U.S. adults have used BNPL loans at least once in the past 12 months. As this growth continues, lenders will need to adjust their underwriting models to account for use of alternative lending technologies.
The environmental, social, and governance (ESG) initiative is no longer just for niche investment portfolios. Instead, the entire banking and fintech industry is going green, and we’re here for it. With that in mind, we have something exciting to announce.
Sustainability Scholarship Program
New this year, we’re promoting ESG within the industry with our Sustainability Scholarship Program for demoing companies. We launched the program to highlight and help the individuals and companies driving fintech forward through sustainable and equitable practices.
How it works
Starting with FinovateSpring, taking place May 18 through 20 in San Francisco, we’ll be looking for applications from prospective demo companies led by underrepresented founders and startups tackling climate change, diversity, and financial inclusion, and granting them complimentary demo participation. Select companies from that applicant pool will be granted complimentary demo slots in our demo line-up for the show.
We’ve always had an application process for the demos we showcase on stage at Finovate events, but the new Sustainability Scholarship Program will help expand our demo lineup. By offering a scholarship to ESG focused startups, we’ll be able to include more voices, more perspectives, and more cutting-edge thinking within fintech, which is an incredibly important initiative.
How to apply
Each event, starting with FinovateSpring 2022, will have scholarship opportunities for eligible* startups working in the following categories:
Environmental: Available to companies pursuing climate-related, environmental, or green fintech
Social: Available to companies with socially conscious fintech solutions
Governance: Available to companies that emphasize responsible governance and leadership
Person of Color Founded/Owned: Available to companies with person-of-color founders or owners
Female Founded/Owned: Available to companies with female founders or owners
Our team will review submissions in each sustainability area and award complimentary demo packages to each of the winners. As part of the demo package, each winner will also receive special sustainability branding.
Companies working in these areas who are interested in demoing at an upcoming event should apply through Finovate’s traditional application process and note their scholarship interest on the application form.
*To be eligible for the program, startups must have less than $7 million in funding.
Challenger bank Nerve is launching banking-as-a-service APIs.
The APIs will enable creator platforms to offer their clients in the creator economy an embedded digital banking experience.
Nerve’s flagship digital bank for musicians helps artists treat their music like a business by providing digital banking and tracking tools.
Nerve, a challenger bank originally designed for musicians, is getting a bit more creative this month. The startup launched a set of public APIs that will help companies serve their clients in the creator economy.
According to Nerve Co-founder John Waupsh, content creators–whether they are individuals or small businesses– have long been underbanked and overcharged. “Every creator deserves financial dignity, and we believe that this begins with a business checking account, and collaboration tools that meet their everyday needs. They are businesses and should be afforded those same benefits,” said Waupsh.
Nerve’s new APIs will offer firms a way to send payouts and royalties at a lower cost to artists such as musicians, authors, entertainers, filmmakers, makers, podcasters, social media content creators, songwriters, and more. The APIs will also enable companies to provide their creator clients with free digital banking tools to help manage their business.
“Companies that pay creators deserve the best, fastest, and least expensive way to pay those they serve, and our APIs open up win-win options for all in the ecosystem,” said Waupsh. “Companies providing distribution, licensing, advances, credit, marketplace, or other services are now able to use Nerve’s APIs to deliver instant, lower-cost payouts to creators.”
Nerve’s flagship product, launched last September, is a niche bank account that helps musicians treat their music like a business. Artists can use the free FDIC-insured debit and savings accounts, powered by Piermont Bank, to manage their business expenses and track and receive royalties and payouts. In addition to digital banking, Nerve also offers tools to help artists collaborate with fellow artists in the music industry, as well as view and track their own stats for Spotify, YouTube, and a range of social media platforms.
Creator platforms that use Nerve’s banking-as-a-service tool will have the opportunity to have access to creators’ transaction and balance information. This data, in turn will benefit the platform by helping them create specialized banking products, such as loans and invoicing tools, to up-sell and better serve their customers.
