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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
The metaverse, decentralized finance (DeFi), and crypto are rising up to become some of the hottest themes in fintech this year, taking the place of AI, digitization, and customer experience.
So how should firms in the traditional finance (TradFi) realm prepare for the road ahead? We spoke with NimbusPlatform CEO Alex Lemberg to get his thoughts on the intersection of DeFi and TradFi.
What changes will we see in crypto and DeFi this year in comparison to years past?
Alex Lemberg: A month ago my answer to this question would have been slightly different than today. We still believe that a great deal of capital inflows will come more and more from financial and institutional organizations. This will cover the gambit from high net worth individuals to hedge funds and family / PE offices alike. We are now also witnessing major use cases related to regions in conflict and faced with sanctions. Also the advent of SWIFT as a new means of restrictions will make sovereign groups look closer to crypto markets as well in the future.
How can traditional financial institutions prepare themselves for these changes?
Lemberg: Financial institutions are extremely well prepared to handle both client activities in the space as well as their own. The main precursor is better understanding of filing and reporting requirements to regulators. I strongly believe that even though most of the innovations we are seeing do come from private markets, the largest impact will come from institutions beginning this year.
The U.S. recently issued a discussion paper on a government-issued CBDC. What do you envision the role of TradFi will be if the U.S. government issues a CBDC?
Lemberg: It is too early to discuss impact, as too many things are still in discussion regarding structure. It could eventually provide some upheavals in the payments space and user data controls which are both quite ripe for it.
Does the recent rise in DeFi indicate an end to paper and coin currency?
Lemberg: Absolutely not in the immediate future, nor do I believe would it be the case for quite some time. That said, let us remind ourselves that 90% of the world’s currency is digital and has been for some time. Yes, this will add to that digital transactional landscape, but certainly as an addition and not a replacement of any meaningful sort.
The digital economy is rapidly growing. With the pandemic accelerating the urgency for agility, adaptability and transformation, traditional business models are being disrupted. It’s estimated that over the next 10 years, 70% of new value created in the economy will be based on digitally-enabled platform business models.
Meanwhile, research regarding global GDP is forecasting that digitally transformed enterprises will reach 53.3 trillion USD by 2023, making them account for more than half of the overall nominal GDP. As the digital economy continues to revolutionize the way we do business, companies are looking to optimize their onboarding workflows for a seamless user experience while continuing to meet Know Your Customer, Anti-Money Laundering and other regulatory and fraud prevention requirements.
With blue ocean opportunities for global growth and prosperity on the horizon, it’s clear that digitally-enabled business models will soon reign supreme in the global economy.
Elevating identity programs with advanced orchestration
By next year, it’s estimated that 75% of organizations will be using a single vendor with strong identity orchestration capabilities for identity proofing and affirmation, which is up from less than 15% in 2021. At a time when securing digital identities is a greater challenge than ever before, this sharp increase in demand for all-in-one vendor solutions is a testament to the pains businesses and their customers are experiencing with current workflows.
Typically, most legacy identity and authentication solutions require companies to cobble together different technologies as their needs and regulations have evolved. As a result of this siloed approach, Frankensteined technology setups put a strain on businesses as they are costly and time-consuming to maintain while also requiring an immense amount of heavy lifting from customers.
Say hello to Trulioo GlobalGateway Orchestration
For the past 10 years, Trulioo, the global leader in identity verification, has been on a mission to build a leading end-to-end identity platform that will enable everyone, in every country, to participate in the digital economy in real-time.
As consumers increasingly interact and transact online, the demand for reliable and robust identity verification services and technology continues to surge.
With this in mind, it only made sense for Trulioo to partner with HelloFlow — an innovative no-code, drag-and-drop builder of client onboarding and monitoring digital workflows.
Through the recent acquisition of HelloFlow, Trulioo is able to bolster its position as a trusted global platform for verifying businesses and individuals while offering advanced orchestration with unmatched capabilities. With a best-in-class, intuitive workflow builder, it will be even easier for customers to customize and deploy its global identity API — Trulioo GlobalGateway.
Backed by advanced orchestration from Trulioo, businesses will be able to seamlessly create multi-product verification workflows and smooth onboarding experiences for their customers, all while keeping their data secure. By bringing together several aspects from the employee and customer journey, businesses can alleviate the pains that are often associated with:
Registrations and logins
Identity verification
Ongoing authentication
With the ability to verify identities, businesses and documents, GlobalGateway Orchestration will combine user onboarding and verification to make it easy to:
Build and launch workflows At the heart of GlobalGateway Orchestration, the flow builder will allow you to build an integrated workflow that connects verification solutions.
Monitor and optimize workflows GlobalGateway Orchestration allows for high-level monitoring and testing of workflows by providing in-depth performance metrics including verification rates, country data and even deeper case-by-case reviews of client data.
Are you ready to future-proof your business?
As your business grows and your needs evolve, it’s important to work with a company that can grow alongside you.
No matter the size of your business, where you’re located or where you’re looking to go, Trulioo has the customizability to get you there. With experience in multiple markets and multiple countries, Trulioo has a team of growth specialists ready to help you future-proof your business, this year and beyond.
To find out how your business can begin leveraging an identity verification platform that’s built for change, visit the Trulioo website or you can see them at FinovateEurope 2022 in booth #37.
The company will leverage the two purchases to fuel global expansion and to deepen its cryptocurrency roots.
Shift4 expects the acquisitions will contribute $15 billion in payment volume in 2023.
Payments processing technology company Shift4 made two key acquisitions this week. The Pennsylvania-based firm snapped up cross-border ecommerce expert Finaro and cryptocurrency fundraising startup The Giving Block. Terms of the deals were not disclosed.
Shift4 said the move will position it to pursue growth in eCommerce, gaming, stadiums, restaurants, hospitality, specialty retail, charitable giving, and a new frontier– cryptocurrency enablement. The company expects the acquisitions will contribute $15 billion in payment volume in 2023.
“These two acquisitions… underscore our aggressive efforts to deliver a unified commerce experience across the world,” said Shift4 CEO Jared Isaacman. He also noted that the move gives the company “a real right-to-win additional customers across the nonprofit vertical. It also represents an exciting and responsible step towards further embracing cryptocurrencies and blockchain technology.”
Malta-based Finaro was founded in 2007 as Credorax. The company is a global cross-border payments provider with four offices across the world. Finaro serves more than 5,000 merchant clients, 98% of which leverage Finaro for ecommerce capabilities. The company has a diverse team; its 370 employees represent 24 nationalities and speak 12 different languages. Shift4 will leverage Finaro to expand its existing services, notably its next-generation SkyTab POS solution, Shift4Shop eCommerce platform, and VenueNext stadium offering.
The Giving Block was founded in 2018 with a mission to make Bitcoin and other cryptocurrency fundraising easy for nonprofits. The company, which is part of a recent rise in charitable giving-enablement, serves as a donation platform more than 1,300 non-profits ranging from mission-driven organizations, charities, universities, and faith-based organizations. The Giving Block is not just a transaction platform; the company also helps non-profits build community, raise awareness, and create campaigns to support their cause.
Shift4 will invest in The Giving Block’s existing business while combining crypto donation capabilities with traditional card acceptance and pursuing the non-profit market. Notably, Shift4 will tap The Giving Block’s crypto talent to establish a Crypto Innovation Center and integrate crypto acceptance and settlement capabilities across its own existing verticals.
Shift4 was founded in 1994 and is publicly listed on the New York Stock Exchange under the ticker FOUR. The company’s market capitalization is $3.69 billion.
Digital marketing solutions provider Segmint is partnering with marketing communications expert Constant Contact.
The partnership will enable Segmint to bring a turnkey email delivery solution to its Marketing Automation platform.
The offering leverages Segmint’s Key Lifestyle Indicators, which offer insight into customer life events and interests.
Digital marketing solutions provider Segmint is partnering with marketing communications expert Constant Contact. The two are working together to bring a turnkey email delivery solution to Segmint’s Marketing Automation platform, a tool that helps financial services companies create personalized, timely engagement campaigns.
By integrating Constant Contact’s capabilities into its Marketing Automation platform, Segmint will help financial institutions leverage customer insights and personalize individualized, targeted messages to their account holders. Constant Contact will offer banks a turnkey email automation tool that unlocks siloed customer data to deliver highly personalized messages.
Segmint’s Marketing Automation solution leverages the company’s KeyLifestyle Indicators (KLIs). Segmint’s KLIs analyze customer data to gain insights into their life events and interests, as well as to identify cross-sell opportunities, product utilization, and more. The company processes the data in real time to keep the insights relevant and up-to-date.
“The email integration into Segmint’s platform enables FIs to align digital marketing efforts with the full suite of media channels, while most importantly utilizing their own account holder data which allows them to produce insights that deliver the highest level of targeting efficiency and relevant messaging,” said Segmint Chief Product Officer Nate Shahan.
Founded in 2007 and headquartered in Ohio, Segmint offers financial services companies a range of solutions, including AI-driven predictive models, data cleansing and quality management tools, customer insights, and customer retention tools. Among the company’s recent partnerships are Access Softek, Corelation, and Nymbus.
You’ve no doubt heard of the three largest buy now, pay later (BNPL) players, Klarna, Afterpay, and Affirm. The oldest of these, Klarna, has been around since 2005. But after the BNPL boom exploded in 2020, dozens of new players (and even some consolidation) emerged in the BNPL arena.
With so much competition– especially competition from large incumbents such as Chase–it can be difficult for BNPL companies to stand out and attract frequent customer spend. That is why some firms have found it advantageous to tailor their offering to a more specific audience. By targeting niche consumer groups, companies can provide a better user experience by tailoring each aspect of their offering to the specific group.
We’ve identified four niche players, each of which uses specificity to its advantage.
Study now, pay later
Australia-based ZeeFi recently launched its platform that helps education providers maintain cashflow and offers students a flexible, interest-free payment solution. The education provider receives payment upfront, while students can spread out the cost of their course for up to 36 months. ZeeFi was founded in 2016 under the name Study Loans. The company has raised $88.5 million.
Travel now, pay later
Uplift was founded in 2014 to allow users to pay for their travel experiences over time. The San Francisco-based company partners with travel brands, including hotel, airline, cruise, travel agencies, and more, and offers a point-of-sale financing option that lets customers spread their purchase out over time. Depending on factors such as purchase details and the traveler’s credit history, Uplift offers no-interest and simple interest loans that users can pay back over time, even after their trip.
Healthcare now, pay later
medZero‘s tool allows businesses to offer their employees a way to spread out the cost of their out-of-pocket healthcare expenses. The company provides users on-demand access to funds to pay up-front for the fraction of their healthcare bill that their insurance doesn’t cover, and pay the balance back over time. medZero doesn’t run credit checks, is fee-free, and charges no interest. The Missouri-based company has raised $5.7 million since it was founded in 2015.
Housing now, pay later
New York-based Flex helps renters pay their landlord on a schedule that works with their cashflow. Flex automatically connects to major rent payment companies and sends rent money on the user’s behalf to their landlord on the first of the month. As an added bonus, the company can help users build their credit scores, too. Flex, not to be confused with challenger bank Chime’s in-house BNPL tool with the same name, was founded in 2019 and has raised $5.8 million.
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
