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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
PayPal is launching its PayPal Complete Payments platform in China, offering seamless cross-border payment solutions.
The platform, which initially launched in the U.K., Canada, and Europe, helps merchants settle funds quickly and manage international payments.
PayPal estimates the new tool will help Chinese merchants to reach over 400 million PayPal users globally.
PayPal, which just released its stackable in-store and online rewards system PayPal Everywhere earlier this month, has a new take on what it means to be “everywhere.” The California-based company is launchingPayPal Complete Payments in China this week.
Originally debuted in the spring of this year, the PayPal Complete Payments platform integrates customized products and solutions to help merchants sell globally, streamlining payments and receivables. Upon launch, the platform was available to small and mid-sized enterprises in the U.K., Canada, and more than 20 European markets.
“We are excited to bring PayPal’s Complete Payments solution to China, empowering businesses with secure, seamless cross-border transactions and helping them tap into global markets,” said PayPal President, Global Markets Suzan Kereere. “This launch marks a significant milestone in PayPal’s mission to revolutionize commerce globally, bridging Chinese businesses with consumers around the world in a more efficient and transparent way.”
Over time, PayPal plans to add multiple capabilities to PayPal Complete Payments in China. The company will:
Use its network to enable Chinese merchants to reach over 400 million active PayPal users and billions of international consumers who use card and APM payments.
Settle funds quickly to allow merchants to get quick and easy access to their funds.
Offer tailored products– including RMB Transfer and Vendor Payouts– for Chinese merchants to enable fast and secure global fund management and facilitate settlements from PayPal accounts to domestic bank accounts.
Help merchants analyze risk and protect against fraud with AI-powered tools that can reduce time spent managing disputes.
“As one of the first e-commerce platforms to bring PayPal Complete Payments to China’s merchants, we are thrilled to support their expansion into global markets,” WooCommerce Chief Marketing Officer said Tamara Niesen. “This partnership delivers a tailored user experience for WooCommerce merchants, enabling cross-border businesses to confidently scale with PayPal’s advanced solutions.”
PayPal has offered its payments capabilities in China for almost two decades. By partnering with China UnionPay, along with other key players in the region, PayPal is currently engaged with over 700 merchants from across the country. Despite help from partners, PayPal is also able to hold its own in the region. In 2020, the company acquired a 100% stake in Chinese payments firm GoPay, becoming the first foreign company to fully own a Chinese payments platform.
Visa is acquiring fraud prevention company Featurespace to enhance its own fraud detection and risk-scoring solutions.
Terms of the agreement were undisclosed and the deal is expected to close in 2025 pending regulatory approvals.
The acquisition comes as Visa faces legal challenges from the U.S. DOJ over alleged monopolization in debit card markets.
Visasigned an agreement to acquire fraud prevention company Featurespace today. Financial terms of the deal, which is subject to closing conditions and regulatory approvals, were not disclosed. The deal is expected to close in 2025.
Featurespace was founded in 2008 as a project in Cambridge University’s engineering department. The U.K.-based company offers AI-based tools that analyze transaction data to detect fraud. The company’s ARIC Risk Hub assesses behavioral analytics in real-time to identify abnormal user behavior, and leverages machine learning to adapt to changing behaviors and new scams, while improving accuracy over time.
“Providing our clients with solutions that can adapt to and anticipate the changing threat landscape is of the utmost importance,” said Visa Global Head of Value-added Services Antony Cahill. “Featurespace’s strong foundation in AI will enhance our existing product portfolio and enable us to address our clients’ most complex and pressing challenges. We look forward to welcoming the Featurespace team to Visa.”
Visa expects that Featurespace will complement and strengthen its existing portfolio of fraud detection and risk-scoring solutions. By leveraging Featurespace’s expertise, Visa will empower its clients to manage payments fraud in real-time while minimizing false positives and ultimately cutting costs.
“Over the past 12 years we have served the financial services industry, building a company that has gone from strength to strength, and we are thrilled to become a part of Visa,” said Featurespace Founder Dave Excell. “With Visa, we can bring the innovation, integrity and purpose of our platform and our team to more payment service providers and ultimately, stop more people from becoming victims of financial crime.”
Shadowing today’s deal is Visa’s previous failed purchase of Plaid. In 2021, Visa was forced to terminate its planned $5.3 billion acquisition of financial data access company Plaid. At the time, the U.S. Department of Justice (DOJ) filed a civil antitrust lawsuit that ended the merger about a year after discussions were initiated. The lawsuit argued that Visa wanted to acquire Plaid to protect its U.S. debit business against the threat of the fintech. Visa argued that the DOJ did not understand its business and the competitive landscape, saying that Plaid would complement its existing capabilities.
Visa’s planned acquisition of Featurespace is quite different than that of Plaid, however. That’s because the fintech will likely be seen as enhancing Visa’s existing fraud management capabilities and does not pose the same competitive risks as the Plaid deal did.
Even still, the Featurespace deal comes at an interesting time for Visa. The payments giant is re-living some of its 2021 woes with the DOJ. The department sued Visa earlier this week, alleging that it is monopolizing debit card markets. “We allege that Visa has unlawfully amassed the power to extract fees that far exceed what it could charge in a competitive market,” said Attorney General Merrick Garland. “Merchants and banks pass along those costs to consumers, either by raising prices or reducing quality or service. As a result, Visa’s unlawful conduct affects not just the price of one thing – but the price of nearly everything.”
As some experts have pointed out, however, banks and merchants have multiple payment rails to choose from, and that Visa’s global market share is simply a result of capitalism.
Xero and Klarna have partnered to allow small businesses to offer buy now, pay later (BNPL) options at checkout, giving consumers more flexible payment choices.
Under the partnership, Xero’s small business clients will have access to BNPL capabilities that may help boost revenue and enable more large-ticket sales.
This collaboration has the potential to help Xero’s small business clients maintain healthy cash flow by getting paid upfront.
Small business accounting software company Xero and global payments network and shopping platform Klarnaannounced this week that they have teamed up.
The deal is essentially a distribution partnership for Klarna, which will help Xero’s small businesses clients accept buy now, pay later (BNPL) payments from their consumers. Xero small business customers in all regions except Australia can offer Klarna at checkout as a payment option, providing a credit card alternative while still getting paid for the goods or services up front.
“We know that maintaining a healthy cash flow is critical to a successful business, and offering more ways to pay supports increased business growth and getting paid faster,” said Xero SVP Payments & Ecosystem Bharathi Ramavarjula. “In fact, our recent research report shows that if a business doesn’t offer customers their preferred way to pay, they are prepared to take their business elsewhere. By enabling our customers with more ways to pay, including Klarna, we can help them retain customers and increase their revenue.”
Klarna’s BNPL tools include a four-payment, interest-free installment plan, a 24-month financing option, and a pay-in-30 day option. Before a customer makes their purchase, Klarna verifies their eligibility and offers transparent terms of the payment. Once the purchase is made, the company follows up with reminders to help ensure that shoppers stay current on their payments. According to Klarna, 99% of the financing is repaid and 40% of orders placed are repaid early.
The partnership has the potential to provide BNPL capabilities to small businesses that would normally not be able to offer flexible payments or financing. By offering a more flexible payment option, these businesses have the potential to close more larger-ticket deals. It also has the potential to help businesses maintain healthy cashflow, as merchants using Klarna will receive the payment up front.
“This partnership brings Klarna’s flexible payment options to micro businesses of all kinds so business owners can get paid on time and their customers can choose how and when to pay,” said “Klarna Chief Commercial Officer David Sykes. “This includes businesses where gardeners and landscaping services using Xero can now offer a Klarna BNPL payment option, plumbers and heating engineers using Xero can fix their customers’ boilers and let them spread the cost while small businesses involved in the construction industry could spread the cost of smaller projects over three interest-free installments.”
Both Klarna and Xero have been in the fintech news cycle in recent months for different reasons. Last month, Klarna unveiled plans to cut its workforce in half in favor of AI-driven productivity. And earlier this month, Xero announced plans to acquire collaborative reporting tool Syft Analytics.
Revolut is spinning out its wealth management offering into a standalone app called Revolut Invest.
The move will allow Revolut to attract users outside of its existing bank client base.
Revolut counts 45 million users, has 3 million active traders, and 20,000 subscribers to its premium investment account.
U.K.-based fintech Revolut unveiled today that it plans to spin out its wealth management offering into a standalone app.
The new app, Revolut Invest, will feature capabilities from Revolut’s $9.5 billion (€8.5 billion) wealth management business, as well as additional functionality. At present, Revolut offers its users stock trading as well as a roboadvisor tool. The new app will offer much of the same features: access to 5,000 assets, including U.S. and European stocks, ETFs, commodities, and bonds. The app will also come with new products, such as contracts for difference (CFDs). Revolut Invest will offer the option to upgrade to Revolut’s premium subscription tier called Trading Pro that offers reduced commission fees, increased limits, and analytics.
One of the key advantages for Revolut in making its investing services a standalone tool is the ability to attract customers beyond its current user base. New investors using Revolut Invest won’t need to be existing Revolut banking clients, allowing the company to more easily expand its 3 million active traders and its 20,000 Trading Pro subscribers.
New Revolut Invest users will also be given the option to add Revolut’s banking services during the onboarding process. Conversely, Revolut’s banking clients will not need to download the new trading app, as they will still be able to conduct their investing activities within Revolut’s banking app.
Revolut is currently piloting Revolut Invest in Greece, Denmark, and the Czech Republic. The company is aiming to double the number of investments available in the app in the next three months. To fuel this growth, Revolut is scheduled to launch the investment app in other European Economic Area countries by the end of the year and also revealed plans to launch it in the U.K., U.S., Singapore, and Australia, as it already has the licensing in place in these regions.
With more than 45 million retail customers and 500,000 business customers, Revolut supports more than 25 currencies for users in more than 140 regions. The company offers current accounts, savings accounts, and debit cards that feature the ability to pay in multiple currencies. Revolut also has a credit card product in the U.S., Ireland, Lithuania, and Poland.
Last month, Revolut’s valuation was billed at $45 billion, cementing its reputation as Europe’s most valuable fintech. Earlier this summer, the company earned its banking license from the U.K. Prudential Regulation Authority (PRA), adding deposit insurance for its users in the region. These two factors place Revolut in a good position to go public; and it is likely the company will favor a NASDAQ listing over listing on the London Stock Exchange.
You’ve seen the hype around Generative AI (GenAI). And perhaps you even have an AI strategy in place at your organization. But because the development of AI moves faster than any enabling technology we’ve seen in banking in the past, it’s important to think ahead to the next iteration. In this case, the next evolution of GenAI is Agentic AI.
Agentic AI, also known as autonomous AI, refers to AI that can make its own decisions, form a plan, act on its own, and learn from its mistakes to achieve specified goals. Agentic AI can take a complex request and break it down into simple, achievable goals to solve complex problems.
Agentic AI has numerous possibilities for use in financial services, including:
Create a highly personalized customer experience
Agentic AI can automate routine interactions, allowing firms to launch chatbots or virtual assistants that can autonomously handle customer questions, suggest financial products based on specific preferences, and even analyze customer behavior to predict their needs.
Some of this is currently possible with GenAI, but Agentic AI will be able to handle even more complex tasks and make autonomous decisions without human intervention. Agentic AI customer service bots will also be proactive, and will be able to anticipate customer needs based on real-time data and past behaviors.
Offer autonomous roboadvisory with algorithmic trading
Roboadvisors have been popular in fintech since 2015, but Agentic AI will make it possible for firms to autonomously manage investment portfolios by analyzing market trends, risk profiles, and financial goals. The new enabling technology could also become more intelligent, providing financial institutions with scalable advisory services that make investment decisions in real time without human intervention.
Agentic AI will be able to execute algorithmic trades in real time and without human intervention by autonomously making buy or sell decisions based on market conditions, financial models, and pre-set objectives. The technology will also proactively adjust portfolios based on market trends, economic forecasts, and client life changes, continuously aligning investments with a client’s long-term goals.
Power fraud detection and risk management
While GenAI can continuously monitor transactions to detect anomalies and identify fraudulent patterns, Agentic AI can instantly flag suspicious activities, alert relevant parties, and even block transactions. This offers financial institutions an effective way to reduce fraud risks and improve compliance with regulatory requirements.
Credit scoring and underwriting
Agentic AI can autonomously assess creditworthiness by analyzing vast amounts of structured and unstructured data, such as transaction histories, social media activity, and economic conditions. The enabling technology will be able to independently decide whether to approve loans or credit lines in real-time, based on pre-determined parameters such as risk tolerance and regulatory requirements.
Compliance
With Agentic AI, firms will be able to autonomously monitor, detect, and act on compliance violations in real time. The technology will be able to autonomously make decisions– such as freezing an account or flagging a transaction– and take corrective actions. Also, as regulations change, it can adjust to rules without human intervention.
Back-office automation
Back-office automation is something that banks have been leveraging for a long time now. However, Agentic AI will be able to automate back-office functions like settlement processing, reconciliation, and financial reporting without human intervention and in real-time. Additionally, because Agentic AI can handle, complex, multi-step processes, it will be able to plan, initiate, and execute a task in a proactive manner.
Real-time risk assessment
To reduce operational risks, Agentic AI can autonomously assess the organization and market in real time. Firms with large, organized datasets may experience the most benefit, as the enabling technology will be able to make the most informed decisions based on large, clean sets of data.
These capabilities may sound equal parts idyllic and dystopian. However, it is difficult to prepare for an Agentic AI-powered future without knowing what role regulation will play. It is likely that regulators in the U.S. will mimic Europe in creating some form of AI regulation, especially for its use in financial services.
No matter what the regulatory future looks like, firms can take a handful of steps to prepare for the adoption of Agentic AI. So whether or not your organization even has an AI policy in place yet, you can start working on these things:
Create a robust data infrastructure Because Agentic AI relies on a huge amount of data, banks need to have strong data management systems that collect, store, and process both structured and unstructured data. Simultaneously, it is important that banks adhere to strong security protocols to protect consumers’ sensitive financial data.
Upgrade IT infrastructure and cloud capabilities Banks may need to move more of their operations to the cloud to free up computing power and storage facilities, both of which Agentic AI demands. Edge computing may be a solution to help reduce latency for AI applications, such as algorithmic trading, that require quick responses.
Build AI literacy into your culture Firms should consider investing in their workforce by offering AI training programs. This will help employees work with AI efficiently and creatively. AI education will also help keep employee AI usage compliant by setting boundaries, maintaining transparency, and ensuring ethical use.
Create an ethics and compliance framework Because Agentic AI has the ability to make autonomous decisions, it is essential that those decisions are based on ethical and regulatory compliant standards. Consider creating an AI ethics committee that is able to monitor and oversee AI decision-making. The committee can continuously ensure that the AI usage is not biased and will not harm customers, employees, or the organization.
Foster bank-fintech partnerships If not doing so already, banks should consider partnering with fintechs and AI technology providers to accelerate the adoption of Agentic AI. By collaboarting with third parties, banks can benefit from AI systems that leverage a broader ecosystem of services.
Begin using a different form of AI To prepare for the future of AI, one of the best things firms can do is to begin piloting AI in targeted, high-impact areas such as customer service or portfolio management.
PNC and Plaid have partnered to allow PNC customers to connect to and share their financial data with third party financial applications.
Plaid will help connect PNC customers to apps, while PNC’s API provider Akoya will ensure that PNC’s customer data is securely shared with third party apps powered by Plaid.
Today’s announcement comes five years after PNC blocked multiple data aggregators, including Plaid, claiming they circumvented PNC’s security protocol.
Getting a head start on Section 1033 of the Dodd-Frank Wall Street Reform, PNC Financial Services Group announced recently that it has partnered with financial data access company Plaid. The two have signed a data access agreement to enable PNC customers to connect and share their financial data with third party financial applications through Plaid.
PNC will also leverage its API service provider Akoya. Through this partnership, Plaid will help connect PNC customers to apps, while as the API provider, Akoya will ensure that PNC’s customer data is securely shared with third party apps powered by Plaid, without needing to share login credentials.
The collaboration among the three players will ultimately offer a better user experience. That’s because Plaid will help to increase security by eliminating screen scraping and other fraud-prone data collection techniques. The partnership will also allow consumers to access their financial data without having to share their credentials with the third parties themselves. Additionally, Plaid will offer the customer control of their own data, allowing them to determine which third party apps may have access to their data.
“Through this new partnership with Plaid, PNC customers will be able to achieve greater data security, privacy, and control while using the third-party financial apps and services they enjoy,” said PNC Executive Vice President, Digital and Payments Natalie Talpas. “PNC’s use of its Akoya-provided API allows for all data recipients, including Plaid, to get connected fast, while also enabling customers to reliably control what financial data they are permissioning without having to share their login credentials with third parties.”
This partnership is notable not just for PNC and its customers, but also for bank customers across the U.S. That’s because PNC’s partnership with Plaid indicates a positive change in attitude toward open banking in the U.S. In the past, PNC has notoriously held a stance against open banking. The bank not only prevented its customers from accessing Venmo in 2019, it also blocked multiple data aggregators, including Plaid, claiming they circumvented PNC’s security protocol.
With today’s partnership, however, the two now appear to be on good terms. “We are pleased to have reached a data access agreement with PNC that further supports their customers securely connecting to applications and services powered by Plaid,” said Plaid Head of Open Finance Partnerships Christy Sunquist. “Moving the industry away from credential-based access is a top priority for Plaid, and our alignment on key principles around security, access and control played a definitive role in establishing this partnership. We look forward to future collaboration for many years to come.”
Walmart is partnering with Fiserv to enable pay-by-bank payments for online purchases starting in 2025.
Benefits to Walmart include lower transaction costs, faster settlement, reduced fraud, and fewer payment declines, while customers can avoid stacked pending transactions.
Consumers may face challenges like added friction and lost credit card rewards, but early pilot results have exceeded Walmart’s expectations for pay-by-bank adoption.
Walmart made its latest move in the fintech space this week after announcing it has partnered with Fiserv to offer pay-by-bank for online purchases.
Bloomberg unveiled this week that, while the retailer has offered pay-by-bank via Walmart Pay for a few months now, the payments were routed through ACH payment rails and still took days to clear. Beginning in 2025, however, Walmart will leverage Fiserv’s NOW Network, which will route the payments through The Clearing House’s Real Time Payments network and the Federal Reserve’s FedNow. Launched in 2014, Fiserv’s NOW Network aims to reach as many banks as possible to provide consumers and businesses the ability to send, receive, and access funds immediately while supporting credit push payments.
Starting next year, customers will be able to make online purchases using pay-by-bank by connecting their bank account through Fiserv’s AllData platform. The platform will facilitate authentication and securely link bank accounts. This will be done through integrations with Plaid, MX, Akoya, and Finicity, ensuring a seamless and secure connection to customer accounts.
Leveraging Fiserv to power real time payments is an important move for Walmart as it enters the pay-by-bank game. As Fiserv Head of Digital Payments Matt Wilcox told Bloomberg, “As an industry we believe we need to create this connectivity. FedNow and RTP, they don’t necessarily talk to one another. The NOW Network can play that role in the industry of bringing all these networks together to enable applications like pay-by-bank.”
Walmart stands to receive multiple benefits when consumers choose to pay-by-bank. The retailer will face lower transaction costs by bypassing credit card networks; increased cash flow, since bank transfers settle faster than card transactions; reduced fraud and fewer declines, since the pay-by-bank payments offers direct access to and will authenticate a customer’s bank account; and the potential to reach more consumers who may not have a credit or debit card.
From a consumer perspective, the benefits of pay-by-bank are more difficult to find. Unlike the merchant, they don’t experience any cost savings for opting for pay-by-bank, there is added friction involved in connecting their bank account to Walmart’s platform, they lose out on credit card rewards, and in the event their account is hacked, fraudsters will have the option to make purchases directly from their account, instead of on a credit card that would offer an extra layer of protection while the customer disputes the transaction.
That said, Walmart is touting the ability for pay-by-bank to help consumers avoid stacked pending transactions. “When the transaction processes as a real time payment, customers get immediate access to see that payment come through, I see it hit my account and I can properly budget,” said Walmart Vice President of Emerging Payments Jamie Henry. “It’s not as if I’ve got this phantom payment out there that’s going to take place a couple days down the road.”
And while I remain skeptical on the mass consumer adoption of pay-by-bank, perhaps Walmart’s customer base is more well suited for these types of transactions. Henry said that the initial pilot of pay-by-bank was surprising. “It’s certainly surpassed our expectations of the amount of customers that have registered and actually use the payment type,” he said.
CSI announced plans to acquire deposit growth firm Velocity Solutions.
CSI will integrate Velocity’s solutions that drive revenue, service, and compliance for community banks and credit unions into its existing offerings.
Financial terms of the deal were undisclosed.
Community bank technology provider CSI announced plans to acquire deposit growth firm Velocity Solutions. Financial terms of the deal were undisclosed.
Velocity Solutions was founded in 1995 to offer tools that help drive revenue, service, and compliance for community banks and credit unions. The company’s Velocity Intelligent Platform powers its solutions, among which are a Retail Performance Engine, Consumer Liquidity Engine, and Digital Business Lending. These tools leverage machine-led intelligence to help firms manage risk, drive revenue, increase engagement, and boost non-interest income.
Velocity Solutions, which demoed its Akouba cloud-based lending platform at FinovateFall 2021, services more than 30 million consumers and business owners.
“Our customers rely on us to provide the advanced tools and software that drive revenue, efficiency and cost savings,” said CSI CEO and president David Culbertson. “Velocity’s data-driven approach to deposit management and its intelligent overdraft decisioning engine are each designed to deepen relationships with account holders while minimizing risk exposure for financial institutions.”
CSI plans to integrate Velocity’s solutions into its existing financial services suite, which includes everything from core banking to lending to managed IT and cybersecurity, advisory services, and more. “We’re eager to identify more opportunities to evolve the differentiated financial software and technology solutions that make CSI the first choice for community and regional financial institutions nationwide,” added Culbertson.
“The CSI and Velocity teams are united by the same mission to empower community and regional financial institutions to compete and win against the largest banks in the country,” said Velocity Solutions CEO Christopher Leonard. “Our customers are facing increasing pressure to grow in a challenging rate and deposit environment and require innovative ways to acquire and serve their account holders. We are eager to tap into CSI’s deep expertise and development prowess to expand our banking management platform and support customers in meeting their goals.”
CSI expects that today’s purchase will complement the acquisition of community bank loan servicing platform, Hawthorn River, the company made in December of last year.
CSI, which recently launched an expanded developer portal, was founded in 1965. The company received an investment of an undisclosed amount from private equity firm TA Associates in January 2024.
You’ve likely been following the fallout from Synapse’s bankruptcy earlier this year. BaaS provider Synapse filed for Chapter 11 bankruptcy in April, leaving its clients, including Evolve Bank & Trust and multiple others, unable to verify and manage funds. In all, around $85 million in consumer funds are missing due to discrepancies in Synapse’s records.
Adding to the confusion, the dispute is ongoing in court, and because Synapse is a fintech and is thus unregulated, regulatory bodies are unable to protect consumers, many of whom are still missing their funds.
As a result of this nightmare, the FDIC has advanced a notice of proposed rulemaking for what it is calling Requirements for Custodial Deposit Accounts with Transactional Features and Prompt Payment of Deposit Insurance to Depositors. The regulatory body is currently taking public comment on the rule.
As it currently stands, the rule applies to bank accounts that fit into three categories:
The account is established for the benefit of beneficial owners
The account holds commingled deposits of multiple beneficial owners
A beneficial owner may authorize or direct a transfer through the account holder from the account to a party other than the account holder or beneficial owner
Here are five things banks with accounts that fit these categories should know about potential implications the rule may have on them.
Strengthened recordkeeping requirements
Advanced recordkeeping should already be part of a bank’s routine. However, the proposed rule is specific in its requirements, stipulating that banks working with non-bank entities (as in a BaaS partnership) must maintain accurate records that identify the beneficial owners of custodial deposit accounts that are held on behalf of consumers, which is typical in a BaaS agreement. Maintaining records of custodial accounts will help regulators ensure that deposit insurance can be quickly and accurately provided in the event of a bank failure.
Continuous third-party records access
The proposed rule states that if banks rely on non-bank companies to manage custodial deposits and their records, the bank must have continuous, direct access to records held at the third party organization. This requirement aims to prevent disruptions to operations, as what we saw in the Synapse bankruptcy case earlier this year. Ultimately, if banks have transparent access to third party records, they can help customers maintain access to their funds.
Annual compliance and validation
Under the new rule, FDIC-insured, BaaS-enabled banks will be required to conduct an annual, independent validation to verify that their third party partners are maintaining accurate deposit records. Banks will send the records, which must be accurate and compliant with the FDIC’s standards, to the FDIC and to the bank’s primary federal regulator. The purpose of this stipulation is to ensure consumers are able to access their funds without delays and to increase the reliability of custodial funds arrangements.
Consumer protection and transparency
Consumer protection is the underlying reason behind the new proposed rule. A large piece of this provides clarity about FDIC insurance. As such, BaaS-enabled banks will be expected to ensure that their consumers fully understand the coverage and protections of their deposited funds, particularly when dealing with non-bank custodians.
Heightened money laundering
The document also emphasizes that banks must exercise strengthened internal controls and anti-money laundering (AML) compliance requirements. Notably, the ruling also emphasizes that banks must ensure that their third-party partners do not facilitate financial crimes.
This week’s proposed rulemaking highlights two truths in financial services. First, the additional requirements can potentially add burdens on banks that are already weighed down by multiple reporting responsibilities. Yesterday, Vice Chairman Travis Hill voiced his concern, saying, “I recognize that certain types of pass-through arrangements have become much more complex in recent years, exacerbating the potential risks…” Hill said, however, that he is voting in favor of the proposal, explaining that, “improving recordkeeping and reconciliation practices (1) can reduce the likelihood of another Synapse-like disaster in the event of a third-party failure, and (2) may result in a more orderly resolution in the event the bank fails.”
The second truth today’s proposed rulemaking underscores is that the financial services industry needs a national fintech charter that can monitor, regulate, and enforce third parties that manage and handle consumer funds. Banks have long been subject to strict regulations and reporting requirements. But should banks that have conducted the proper due diligence be held responsible for the actions (or inaction) of their third party partners? It is time for fintechs to step up and share the responsibility.
Xero announced plans to acquire Syft Analytics, a collaborative reporting tool.
Financial terms of the agreement were not disclosed, but the deal is expected to close between October and December of this year.
Xero plans to integrate Syft’s technology into its existing accounting offering, and it will also continue to maintain Syft as a standalone company.
Small business accounting software company Xero has announced plans this week to acquire collaborative reporting tool Syft Analytics. Financial terms of the deal were not disclosed.
South Africa-based Syft was founded in 2017 to help small businesses leverage their financial data. In addition to automated, customizable reports, businesses can also create financial reports and disclosures. The tool can also consolidate financial information from any accounting software, trial balance, transaction list, or ERP.
“We’ve worked closely with Xero’s teams and customers over the past seven years,” said Syft CEO Vangelis Kyriazis. “Having met Xero’s senior leadership team over the past few months, we knew that joining Xero was a natural fit and would advance our shared goal of helping small businesses succeed.”
Xero has worked with Syft since February of 2018. The two first partnered when the New Zealand-based company added Syft to its App Store, which allowed Xero customers to leverage Syft’s custom reporting features.
Once the acquisition is finalized, Syft will continue to operate as a standalone offering for small businesses, accountants, and bookkeepers – regardless of whether they are Xero clients or not. Xero also plans to embed Syft’s functionality into its existing platform, aiming to enhance its own analytics and reporting capabilities.
“We look forward to bringing this exciting vision to life by strengthening our insights, advanced reporting and analytics offerings through capabilities such as benchmarking, long term cash flow forecasting and multi-entity reporting,” the company said in a blog post. “Our goal is to bring the power of premium insights and advanced reporting functionality to our customers so they can reap the value for their business.”
The acquisition is expected to close between October and December 2024.
Founded in 2006, Xero listed on the New Zealand Stock Exchange (NZX) in 2007 and the Australian Securities Exchange (ASX) in 2012. In January 2018, the company consolidated to list solely on the ASX and now boasts a market capitalization of $22.58 billion. The company counts 4.2 million subscribers.
Earlier this year, Xero launched new inventory management software called Xero Inventory Plus, which it anticipates will help goods-based small business owners track and manage their inventory across different channels.
MoneyLion will integrate TransUnion’s data and credit solutions into its hosted enterprise credit-decisioning platform and direct-to-consumer finance tools.
Leveraging TransUnion’s data will help MoneyLion deliver more personalized and relevant financial offers, and ultimately improve the user experience.
TransUnion also offers marketing, fraud, risk, and advanced analytics tools. The company showcased its Enchanced BreachIQ tool at FinovateSpring earlier this year.
Mobile banking platform MoneyLion will be adding personalized touches to its consumer-focused products and services thanks to a partnership with TransUnion.
Under the agreement, MoneyLion will integrate TransUnion’s data and credit solutions into its hosted enterprise credit-decisioning platform and direct-to-consumer finance tools. By using the data from TransUnion, MoneyLion will be able to deliver more personalized and relevant financial offers to its clients, which it expects will improve the user experience. For its part, TransUnion will see its credit solutions expand their reach into not only the MoneyLion platform, but also to its partner network.
TransUnion Executive Vice President and Head of Financial Services Jason Laky said that the partnership will drive efficiency and innovation in the industry. “By integrating our comprehensive credit data with MoneyLion’s innovative digital acquisition platform,” he added, “we can offer a more robust experience to consumers and our partners alike, ensuring informed decision-making and greater consumer satisfaction.”
TransUnion was founded in 1968 and entered into the consumer credit reporting industry in 1969. Since then, the Illinois-based company has expanded its services to offer marketing, fraud, risk, and advanced analytics. As part of its risk portfolio, TransUnion offers Enhanced BreachIQ, which it demoed earlier this year at FinovateSpring. The technology behind BreachIQ originated from Breach Clarity, a fintech founded by Jim Van Dyke that won Best of Show honors at FinovateSpring 2020.
New York-based MoneyLion, which was founded in 2013, offers both direct-to-consumer banking tools as well as a marketplace of embedded banking tools, called Engine, for businesses. This enterprise technology suite serves as a marketplace for financial products, enabling financial services and non-financial services companies alike to add embedded finance to their business leveraging MoneyLion’s API.
“This partnership with TransUnion exemplifies MoneyLion’s commitment to creating a dynamic digital consumer finance ecosystem where consumers can seamlessly access the financial tools and insights they need, while also enabling financial institutions to engage with customers more effectively,” said MoneyLion Co-Founder and CEO Dee Choubey. “By integrating our leading platform with TransUnion’s credit data solutions, we can offer consumers more personalized and relevant financial products that meet their unique needs at every stage of their financial journey.”
If you skipped FinovateFall last week, you missed out! Fortunately, I’ve compiled a written highlight reel to bring you up to speed.
Demos
With 66 demos on stage, the audience took in a variety of fintech solutions. There was one underlying, enabling technology that fueled the majority of the products and services. That enabling technology, AI, pulsed throughout not just the demos, but the entire event.
There were a wide variety of thought leaders on the Finovate stage last week. Among my favorites were Akeem Shannon, Founder and CEO of Flipstik, who not only brought a massive amount of energy to the stage, but also brought the story of how he launched his product. Perhaps not surprisingly, Akeem’s message centered around the importance of your brand or company’s story. During his presentation, Akeem shared both why crafting a story around your brand is so important, as well as how to build your own compelling story.
As always, I also loved the coverage from the Analyst All Star session, which featured seven-minute presentations from Tiffani Montez, Principal Analyst at EMARKETER; Philip Benton, Senior Analyst- Financial Services at Omdia; and Suraya Randawa, Head of Omnichannel Experience at Curinos.
Tiffani covered the growth of retail media networks in financial services. In addition to Chase Media Services and PayPal’s media arm, Tiffani covered others in the space and explained that financial media networks such as these are superior to retail media networks in that they have cross-merchant data. For his presentation, Philip highlighted the increase in SaaS adoption for banks and explained the implications of leveraging third party technologies. Suraya offered her presentation on how banks can deliver a better customer experience. Notably, she explained that there is no singular, happy path for customers. This variability is perhaps the factor that makes achieving a perfect user experience so difficult.
The conversations
My favorite part of every conference is the networking. This event was no different. I saw plenty of familiar faces and met multiple new ones. Many of my conversations centered around AI–specifically the regulation of AI in financial services.
I spoke with Katie Quilligan, Investor at BankTech Ventures, who sat on a panel discussion I led on creating value in leveraging AI. During our conversation, Katie remarked that all banks need to have a strategy around AI, even if they are not planning on using it directly. She added that banks don’t have the option to ignore the AI revolution, because not only are they falling behind by not leveraging the new technology, but also because their employees are using the technology, regardless of whether or not there is a formal policy around using it.
In a separate conversation with Jim Perry, Senior Strategist at Market Insights, Jim commented that he spoke with a bank recently that said that even though they put up a firewall blocking ChatGPT, one of their bank marketing employees felt they needed to leverage GenAI and was able to get around the firewall by walking across the street to Starbucks on their lunch break so that they could use Starbuck’s wifi to access ChatGPT and generate marketing copy.
The point of both of these conversations makes one thing clear– GenAI has arrived, and at this point ignoring it is not an option.
