5 Tales from the Crypto: Will Stablecoins Keep Digital Asset Dreams Alive?

5 Tales from the Crypto: Will Stablecoins Keep Digital Asset Dreams Alive?
By David Penn Posted on
Categories: Alumni News, Cryptocurrency, Daily news, Marqeta

As the going gets tough for crypto, will the underlying blockchain technology get going?

That was one of the top takeaways from the conversation on cryptocurrencies, digital assets, and the blockchain at FinovateEurope in London last week. We may be in a crypto winter – if not, as author Steven Van Belleghem quipped during his keynote address, a crypto “ice age.” But while the sun may be setting on the initial promise of cryptocurrencies, a dawn of new use cases and novel user interfaces may arrive sooner than we think.

To that end, it is interesting that much of this week’s crypto news revolves around stablecoins and ways that innovative banks and fintechs are using the technology to better serve customers.

Xapo Bank partners with Circle to leverage USDC as Swift alternative

One example of this trend comes in the news that Xapo Bank has teamed up with Circle to become the first licensed bank to integrate USDC payment rails as an alternative to SWIFT. The partnership will enable the Bitcoin custodian and private bank to offer its members the ability to make deposits and withdrawals via the USDC stablecoin without having to pay any fees to Xapo Bank. The institution is offering a 1:1 conversion rate from USDC to USD, further helping its customers avoid both the time and cost of SWIFT-based payments.

“Xapo Bank’s USDC payment rails mark a watershed moment in financial history, combining the speed and cost efficiency of the digital dollar, with the security guarantees of a licensed private bank,” Xapo Bank CEO Seamus Rocca said. “Enabling auto converted USDC deposits and withdrawals at Xapo Bank gives crypto members a safe haven for their savings.”

USD deposits are guaranteed up to $100,000 courtesy of Xapo Bank’s membership in the Gibraltar Deposit Guarantee Scheme (GDGS). The bank noted that all USDC deposits are automatically converted to USD, giving members a 4.1% annual interest rate return on deposits.

Stables issues USDC-to-fiat Mastercard powered by Marqeta

A new partnership between card issuing platform Marqeta and Stables, a stablecoin-based digital wallet formerly known as Tiiik, will enable Stables customers to convert stablecoins into fiat currency and spend wherever Mastercards are accepted, online or in-store. Stables will leverage Marqeta’s dynamic spend controls and Just-in-Time funding capabilities to give its customers broader ability to transact with their stored stablecoins.

“Stables is committed to expanding what’s possible with stablecoins, giving people more flexibility and choice in their payment habits,” Stables co-founder and CEO Erez Rachamim said. “With increasing demand for digital assets, we’re thrilled to work with Marqeta to develop a card that enables more seamless spending on everyday items.”

Headquartered in Sydney, Australia and founded in 2021, Stables rebranded from tiiik at the beginning of this year. In a statement at the company blog, co-founder Bernardo Bilotta wrote, “This update better encapsulates what we can plan to offer to our loyal community. It highlights our dedication to expanding our focus to solve stablecoin related payment problems and any new use cases/services built around stablecoins.”

Circle supports USDC; sets up European HQ in France

We mentioned Circle earlier with regard to Xapo Bank’s new payments offering. Circle also made crypto headlines for its decision to set up its European headquarters in what it referred to as the “crypto-friendly climate” of France. The company, founded in 2013 and maintaining a U.S.-based headquarters in Boston, Massachusetts, has applied to French regulators to become both a licensed Electronic Money Institution (EMI) and a fully registered Digital Assets Service Provider (DASP). Securing these approvals would make Circle the first company to receive full authorization under the DASP regulatory regime.

“France’s comprehensive efforts towards innovation-forward crypto regulation are commendable and closely align with Circle’s vision for the future of the digital payments sector,” Circle CEO and co-founder Jeremy Allaire said. “The DASP registration provides an initial path to support sensible digital asset innovation.”

Circle is the issuer of the USDC stablecoin. The company has come under pressure in the wake of the Silicon Valley Bank crisis as its relationship with another troubled bank, Signature Bank, limited its ability to process minting and redemption of USDC. A de-pegging of USDC, in which the stablecoin lost its one-to-one relationship to the U.S. dollar resulting in investors cashing out of the digital asset by more than $2.6 billion in 24 hours, only added to the company’s woes of late.

Centi launches Swiss franc stablecoin

Swiss fintech Centi, which was founded in 2020, has announced the launch of its Swiss Franc pegged stablecoin. The stablecoin is backed 1:1 by a Swiss bank, and will serve as the foundation for the company’s Global Payment Network. The new offering will enable merchants to get direct payment settlement in their bank accounts in the fiat currency of their choice. Merchants will not need to make any changes to their current accounting processes nor do they need to have extensive cryptocurrency knowledge. Centi noted that its stablecoin will help bring buying power to both buyers and sellers by eliminating the fees and costs charged by credit card companies.

Centi’s Global Payment Network leverages a low-cost transaction model based on a micropayments facilitation foundation. This enables the network to offer the advantages of both cash and electronic payments, as well as seamless integration with online, POS, and cashier payment systems. By leveraging blockchain technology, the network is able to offer fees that are as much as 90% less expensive compared to competing payment services.

“With Centi we have created a new payments universe,” Centi CEO and founder Bernhard Müller said. “Our technology uses the efficiency of the blockchain to lower payment processing fees without requiring users to understand anything about crypto. Our payments solution is a first use case implementation of this technology with many others expected to follow it.”

LiquidStack raises capital to help lower carbon footprint of bitcoin mining

One of the earliest antagonists to the bitcoin and cryptocurrency movement were environmental activists who decried the impact of bitcoin mining on the environment.

This week we learned that LiquidStack, a Massachusetts-based immersion cooling company, has secured Series B funding to build a manufacturing facility in the U.S. Moreover, the firm says that is has a solution, at least in part, to bitcoin mining’s carbon footprint problem. The company boasts the largest install base of liquid cooling for data centers around the world, and has been proven to meet the thermal challenges of cloud, high performance computing, and crypto-mining applications.

The Series B investment came from Trane Technologies, and the amount of the funding was not disclosed. LiquidStack said that it will use the capital to accelerate manufacturing, including the opening of a facility in the United States. LiquidStack CEO Joe Capes noted that the investment from Trane Technologies comes “at a time when demand for sustainable liquid cooling technology has never been greater.”

LiquidStack’s two-phase immersion cooling process reduces data center direct and indirect carbon footprint by more than 1,500 tons per megawatt compared to air cooling. The company’s technology can also be used to reduce the amount of water used to power and cool data centers by more than 300 billion liters per year.

Photo by RODNAE Productions

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J.P. Morgan Acquires Aumni, Investment Analytics Provider

J.P. Morgan Acquires Aumni, Investment Analytics Provider
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, JP Morgan Chase, Mergers & Acquisitions
  • J.P. Morgan is acquiring investment analytics tool Aumni.
  • While terms of the deal are undisclosed, CNBC reports that J.P. Morgan will pay around $232 million for Aumni.
  • J.P. Morgan expects the buy will bolster its private markets platform for companies, their employees, and investors.

J.P. Morgan has agreed to acquire Aumni, an investment analytics tool for private capital markets. Announced today, the deal is expected to close in the first half of this year. While financial terms of the deal are undisclosed, CNBC reports the deal will be valued at $232 million.

Aumni’s investment analytics platform leverages AI to extract and analyze deal data buried in legal agreements. The company serves 300 institutions, including venture capitalists, family offices, and university endowments helps firms compile investment data reports, facilitate limited partner reporting, identify co-investors, generate equity financing summaries for each investment in their portfolio, and more.

Founded in 2018, the company has evaluated more than $600 billion in capital across more than 17,000 private companies. Aumni counts names such as Sapphire Ventures, Khosla Ventures, and Berkeley Law among its clients.

“We’re thrilled to see this collaboration come to fruition as J.P. Morgan first invested in Aumni in 2021 and quickly realized shared synergies of providing more transparency to the private markets,” said J.P. Morgan Head of Digital Investment Banking, Head of Digital Private Markets Michael Elanjian. “Aumni’s market-leading data structuring and portfolio monitoring solutions, combined with the capital raising and cap table management services of Capital Connect and Global Shares, further enhances the ecosystem of digital solutions that J.P. Morgan is building for companies and investors in both growth and later-stage private markets.”

J.P. Morgan expects the buy will bolster its private markets platform for companies, their employees, and investors. Also contributing to the mission of building a private markets platform are the firm’s launch of Capital Connect, a match-making platform that connects entrepreneurs with venture capitalists and limited partners; and its acquisition of share plan management software company Global Shares.

“Together, we can create a best-in-class suite of services for private market participants, enhancing the experience for all current and future clients,” said Aumni CEO Tony Lewis. Aumni will maintain its headquarters location in Utah and will continue to serve its existing client base.

Photo by Yash Savla on Unsplash

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Savana CEO Mike Wolfel: How Active Intelligence and Adaptive Information Help Banks Boost CX

Savana CEO Mike Wolfel: How Active Intelligence and Adaptive Information Help Banks Boost CX
By David Penn Posted on
Categories: CEO Interview, Daily news

How has the challenge of digital transformation impacted banks and credit unions in recent years? Has the momentum for change slowed since the peak of the pandemic? How can banks win the “expectations game” with increasingly digital-first customers?

These are some of the questions we posed to Savana CEO Mike Wolfel. Headquartered in Malvern, Pennsylvania, Savana offers banks and other financial institutions a digital delivery platform that provides single location, real-time orchestration for all processes and transaction requests across the enterprise.

In recent months, Savana has announced partnerships with Primis Bank, Capco, and Battle Financial. Founded in 2009, the company has raised more than $53 million in funding from investors including Georgian and LiveOak Venture Partners.

What is the primary challenge for banks and credit unions that are trying to undergo digital transformation today in 2023?

Mike Wolfel: Most of the challenges banks and credit unions face center on technical innovation constraints based on their existing technical and operating architectures. Banks and credit unions are often limited either by their complex and rigid solutions already in place to support multiple channels or products, or by the inflexible multi-system architecture that allows them to be more agile. In addition, the lack of complete API exposure of underlying core systems leaves little opportunity to drive digital self-service or product innovation.

The inconsistency of processes implemented in different channels or across products is both a technical constraint and an operational efficiency challenge. These inconsistencies of processes and dependencies on manual work can also create regulatory issues or, at a minimum, lead to customer dissatisfaction.

There was a great deal of momentum behind digital transformation during COVID.  Has that momentum waned?  If so, why?

Wolfel: The momentum has not changed, but the focus seems to have shifted to different areas and more broadly expanded across various layers of the banking technology. The drive for transformation during COVID, especially during the first year, was a general improvement in digital consumer experiences due to the branch banking challenges. However, the banks we are working with seem to be taking a broader and more systemic internal view to recognize that they need more agility in terms of next-gen cores and more operationally efficient operations systems.

How can banks win the expectations game?  How can the customer experience at banks keep up with the kind of CX/UX people experience in other digital interactions?

Wolfel: Bank experiences need to deliver more active intelligence, using AI, to consumer experiences. An adaptive information approach to tailor content and action needs to be more dynamic based on customer intelligence and behavior analytics. Just as Amazon or social media applications recommend the content of interest, consumers can be enlightened with relevant information on their banking behavior that will enable them to see opportunities better.

In addition, the capabilities of the experience, not just a pretty design, need to provide an effective and comprehensive set of services to the consumer to take action without requiring the need to engage the bank in the direct channels (branch, call center). Clearly, consumers prefer self-service and being able to act at a time and place of their choosing. Additionally, having the same processes and awareness of customer engagement actions need to be available to the banker if the consumer reaches out for direct support. Often, in today’s environment, the bank is unaware of why the customer might be calling when making a transition for support between digital to direct engagement.

What are the first key steps a financial institution needs to take in order to be ready for digital transformation – to say nothing of executing the transformation itself?

Wolfel: That depends on the goals and the transformation journey desired by the bank. But, in general, several things are consistent for the banks we work with on their journeys. First, they are taking a much broader view than trying to solve for a specific channel improvement. For those that are considering new next-gen core technology, they need to decide on a big bang or progressive renovation approach.  The progressive renovation (gradual cutover to a new core) takes significant planning because it will create significant operational issues with customer and account data spread across multiple cores. 

Comparatively, a big bang cutover to a next-gen core will require significant ecosystem rework and presents a potentially higher risk. Fortunately, Savana’s approach and architecture support our bank partners regardless of their desired approach. In the end, having a clear vision of the full end-state vs. a siloed or segmented view is the critical consideration.

What role does Savana play in helping facilitate digital transformations for financial institutions?

 Wolfel: Savana’s Digital Delivery Platform is driving ‘Core-to-Customer’ innovation. Savana’s platform is designed to operationalize the bank across all cores, all products, and all channels. The system provides a consistent customer engagement experience and standardized bank operations processes from OAO & OLB across any engagement channel, including self-service, branch, and assisted call center operations.

Savana recently raised a significant amount of equity capital. What did that investment say about Savana’s accomplishments and potential. What will the investment enable the company to do in 2023 and beyond?

Wolfel: Savana has been working with early adopter customers over the last few years to get the platform into production and be able to continue the buildout of the solution architecture to meet the original strategy and the diverse needs of our bank partners. The investment by fintech investors and about six strategic bank partners is a validation of our strategy and confirmation of the capabilities and value that Savana’s platform brings to the market. The investment allows us to continue our growth strategy more broadly in the market across banks and credit unions. Savana has delivered a unique and differentiated solution for our bank partners to execute complex transformation journeys, as recognized by the investment. Savana will continue accelerating our offerings in all areas of digital, branch, call Center, and bank operations and for a broader market segment.

Photo by Croberin Photography

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eToro Lands $250 Million at $3.5 Billion Valuation

eToro Lands $250 Million at $3.5 Billion Valuation
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, eToro, Funding
  • eToro landed $250 million in funding at a $3.5 billion valuation
  • The investment boosts the company’s total funding to $573 million.
  • Today’s funding comes from an agreement made during eToro’s cancelled SPAC transaction.

eToro announced today it received $250 million in funding in a round that values the social trading and investment network at $3.5 billion. Investors in the round, which boosts eToro’s total funding to $573 million, include ION Group, SoftBank Vision Fund 2, Velvet Sea Ventures, and existing investors.

In 2021, eToro planned to go public via a merger with FinTech Acquisition Corp. V, a publicly-traded special purpose acquisition company (SPAC), in a deal worth $10 billion. That deal was cancelled in 2022 and, according to eToro’s update, today’s funding “stems from an Advance Investment Agreement which eToro entered into in February 2021 as part of its proposed SPAC transaction.”

Today’s investment will help eToro with its plans for growth over the next few years. “Our 2023 to 2025 strategy focuses on scaling our brokerage business in our key markets and increasing profitability via revenue growth and cost management,” said eToro Founder and CEO Yoni Assia.

Along with today’s funding announcement, eToro released highlights of its fiscal year 2022 performance. The company has 2.8 million funded accounts, up 17% from 2021. The company’s accountholders paid commissions totaling $631 million– a figure that is down from the company’s 2021 performance, but up 5% from 2020.

Adding to its busy 2022, eToro made two acquisitions, picking up options trading app Gatsby for $50 million and acquiring portfolio management tools provider Bullsheet for an undisclosed amount. The company increased its footprint for digital asset operations, receiving a Digital Asset Service Provider (DASP) registration in France, joining the registry of cryptoasset providers in Italy, and securing a New York BitLicense and Money Transmitter License.

As for long-term plans, “eToro will continue to focus on profitable growth while helping to drive progress towards a world where everyone can invest in a simple and transparent way,” said Assia.

Photo by Jared Schwitzke on Unsplash

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Zeta and Featurespace Partner to Combine Card Processing with Fraud Detection

Zeta and Featurespace Partner to Combine Card Processing with Fraud Detection
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Alumni profile, Featurespace, Zeta
  • Zeta and Featurespace are partnering to create a solution that combines credit card processing and fraud detection.
  • The new offering will be made available to U.S. credit card issuers.
  • The solution will be available out-of-the-box and will enable issuers to test and launch features in days, rather than weeks or months.

Modern core banking technology provider Zeta and fraud prevention company Featurespace are joining forces today. Under the partnership, the two are offering U.S. credit card issuers a solution that combines credit card processing and fraud detection.

Zeta was founded in 2015 to offer modern card processing for banks and embeddable banking for fintechs. The company’s Tachyon Credit offers banks modern credit card programs and spending tools to help boost engagement, increase scale, and decrease fraud. Additionally, Zeta enables fintechs to offer their own credit cards with spending controls and multi-factor authentication.

Zeta CEO and Co-founder Bhavin Turakhia described the company’s issuer clients as “demanding,” and said the company is enabling issuers to iterate on their credit card products faster to test and launch features in a matter of days. “With this solution available out-of-the-box to our clients,” said Turakhia, “their credit card holders will be protected against existing and future fraud attempts seamlessly while reducing the number of genuine transactions declined.”

U.K.-based Featurespace will offer its fraud detection engine that combines AI, behavioral networks, and rules-based decisioning to help organizations identify fraud without negatively impacting the customer experience. Featurespace’s flagship solution, the ARIC Risk Hub, secures more than 50 billion transactions per year across 500 million consumers located in 180 countries.

Combined, the two companies will unlock a range of capabilities for credit card issuers, including out-of-the-box availability, pre-built workflows, real-time transaction authorization, custom decision rules based on risk scores, real-time access to all transaction fraud events, and more.

Zeta was voted Best of Show at FinovateWest Digital 2020 and has more than 1700 employees and contractors located across the U.S., U.K., Middle East, and Asia. The company’s 35+ customers have issued more than 15 million cards on its platform. The California-based company has raised $280 million and last year was valued at around $1.5 million.

Featurespace has more than 70 clients, including HSBC, TSYS, Worldpay, RBS NatWest Group, Danske Bank, ClearBank, and more. Founded in 2005 by a university professor and his PhD student, Featurespace has raised $108 million, including its most recent investment of $37 million received in 2020.

“The partnership between Zeta and Featurespace brings together two of the most capable solutions across the industry in each’s segments,” said Carolyn Homberger, President of Americas at Featurespace. “We are very impressed with the way Zeta is rethinking the issuer processing stack from the ground up, utilizing modern and flexible architecture to provide outstanding new capabilities to Issuers. We’re extremely excited to bring our joint solution to market in the U.S.”

Photo by Joshua Woroniecki

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Omnichannel Payments Provider Qolo Inks Partnership with PayQuicker

Omnichannel Payments Provider Qolo Inks Partnership with PayQuicker
By David Penn Posted on
Categories: Alumni News, Daily news, Qolo
  • Qolo announced a partnership with payouts company PayQuicker.
  • The partnership will combine PayQuicker’s Payouts OS platform with Qolo’s card issuing and payments technology.
  • Headquartered in Fort Lauderdale, Florida, Qolo made its Finovate debut at FinovateFalll 2022.

Omnichannel payments and card issuing processor Qolo has teamed up with global payouts company PayQuicker. The partnership will combine PayQuicker’s Payouts OS platform with Qolo’s card issuing and payments technology. This will enable PayQuicker to issue a more advanced suite of card products, as well as make multi-channel payouts to help its corporate customers meet a wide range of payout needs.

“We chose Qolo as an issuing-processing partner because they offer the most modern, scalable, and flexible platform that will enable us to bring unique and differentiated payment solutions to our customers,” PayQuicker President Charles Rosenblatt said.

Headquartered in Fort Lauderdale, Florida, Qolo made its Finovate debut at FinovateFall 2022 in New York. At the conference, Qolo demoed its Companion Core, which offers banks low-cost, fintech functionality that runs in tandem with their existing system. Via a single API set, Qolo provides direct access to all payment rails and account types and offers program management, processing, and platform licensing, as well as acquiring, card and non-card payments, and account solutions.

“Qolo and PayQuicker are aligned in our vision to bring the best payments offerings to market,” Qolo CEO Patricia Montesi said. “We are thrilled to work with them and help power their innovative consumer and commercial programs.”

Founded in 2018, Qolo began the year with news that the company had processed more than $1 billion in total payouts in Q4 of 2022. Qolo has raised $19 million in funding, most recently securing $15 million in a Series A round led by The Raptor Group. The investment, in August 2021, came in the wake of a tripling of Qolo’s staff, as well as a pair of C-suite hires, and the launch of a beta version of its Qolo Accelerator program.

“We experienced strong investor interest fueled by our unique value proposition and rapid pace of customer acquisition,” Montesi said when the funding was announced. “The current fintech climate is driving massive growth, and Qolo’s 100% cloud-native omnichannel offering is perfectly positioned to meet the demand. And we have yet to see a payments model we can’t power.”

Photo by Kelly

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Three Takeaways from FinovateEurope 2023

Three Takeaways from FinovateEurope 2023
By David Penn Posted on
Categories: David's column, FinovateEurope 2023

There is a challenge when it comes to writing about an event like FinovateEurope when you’re busy covering live demos, hosting on-stage fireside chats, and conducting off-stage video interviews. On the one hand, there’s a lot you’re going to hear and see. On the other hand, however, there’s a lot you’re going to miss, as well.

With that in mind, my apologies if I overlooked your favorite demo or keynote presentation in this “day-after” review of what I found most memorable at FinovateEurope. Better still, drop us a line and let us know just what kind of magic moment you had at our annual European fintech conference in London last week. We’d love to hear what you think!

Bringing the “E” the “S” and the “G” to the ESG Party

The maturation of the ESG (Environmental, Social, Governance) movement in fintech and financial services was on display as early as rehearsal day (the day before FinovateEurope officially opens when demoing companies practice their presentations on stage). It was impressive to see the number of companies that were offering solutions to make it easier for banks and FIs to leverage technology to better track their – and their customers’ – carbon footprint. Innovators like Connect Earth were among the most prominent. But companies like Storied Data, Topicus/Fyndoo, and OpenFinance also made it a point to show how their technologies gave institutions often granular insights into not just their environmental impact, but also into ways to minimize it.

From the main stage, ESG was also a theme that speakers returned to – often emphasizing the importance of connecting the “S” or “social” component of ESG with the “E” or “environmental” component. Sanghamitra Karra, who runs the Inclusive Ventures Lab at Morgan Stanley, reminded attendees during her Wednesday morning Fireside Chat that those who live in the most economically and socially underserved conditions in society are often those who are the most vulnerable to the challenges of climate change.

And in the wake of the Silicon Valley Bank (SVB) crisis, it is easy to see how “G” or “governance” has become an increasingly important issue for those who work for and rely on fintechs and financial services organizations. While some critics were busy trying to blame SVB’s woes on “wokeness”, or an inappropriately intense focus on diversity, equity, and inclusion, other more astute observers noted that Silicon Valley Bank, for example, did not have a Chief Risk Officer for much of 2022.

Crypto Still Out in the Cold

As the crypto winter slowly metastasizes into what FinovateEurope 2023 keynote speaker Steven Van Belleghem referred to as a “crypto ice age,” it was probably no surprise that the number of demoing companies boasting their cryptocurrency bonafides at FinovateEurope this year was low.

That doesn’t mean that there was zero discussion of cryptocurrencies at FinovateEurope this year. But what it does mean is that there has been a reckoning during which it looks as if digital assets like Bitcoin and ethereum will have to take a backseat while those innovating with the underlying blockchain technology search for better use cases.

Fortunately, there is a precedent for the path cryptocurrencies and blockchain technology may be forced to pursue over the next 5-10 years. In the same way that it took almost a decade for the promises of the dot.com era to be realized, so too may a few dark years for crypto be just what the industry needs in order to figure out how its technology can be best used in order to solve real world challenges. Beware of solutions in search of a problem, Van Belleghem warned from the FinovateEurope stage last week. And while he was talking about enabling technologies writ large – from embedded finance to the metaverse – those innovating in the cryptocurrency/blockchain space would do well to heed his advice.

CX as the Killer App

Whether the task was right-sizing the responsibilities that financial institutions have to ESG concerns, or understanding that building new products alone is not enough to help people solve problems, the solution offered was both consistent and clear: focus on the customer.

Want to improve your carbon footprint – or help your customers do so? Make it easier for customers to access the data and insights they need in order to make the changes they are often eager to make? Want to see more innovative technologies in the hands of more consumers? Make interfaces more intuitive, more seamless, and with greater interconnectivity and interoperability. Think more fintechs should be using your tools and platforms? Leverage low- and no-code building blocks to enable innovators with more modest technical resources to be as creative as larger, better resourced firms.

It has been a cliche in fintech and financial services that “every year is the year of the customer.” But at this moment of retrenchment – with fintech funding down, crypto crashing, and new enabling technologies still en route to proving their true utility – keeping the customer’s needs top of mind might be the best strategy for weathering the current storm and emerging unscathed when the clouds finally do part.

Fintech 2023: Don’t Call it a Comeback

From the crypto crash and subsequent crypto ice age to the Silicon Valley Bank crisis, there has been a headline sense that fintech may be entering a slowdown period. Very little of this was in evidence at FinovateEurope this year. Chris Skinner reminded us that great things often emerge from the rubble of dashed dreams. Hundreds of fintech and financial services professionals braved the turbulent winds at Heathrow airport (as well as a tube strike) to mix, mingle, and talk shop as our return to live events continues.

The desire to innovate in our industry remains strong. And with a focus on improving the lives of everyday customers – from individuals and families to businesses small and large – we are optimistic that fintech’s best, most productive days, are still to come.

Photo by Drew Powell

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FinGoal Secures New Funding in Round Led by Naples Technology Ventures

FinGoal Secures New Funding in Round Led by Naples Technology Ventures
By David Penn Posted on
Categories: Alumni News, Daily news, FinGoal, Funding
  • Banking and insights platform FinGoal announced a new investment this week. The amount of the investment was not disclosed.
  • The funding round was led by existing investor Naples Technology Ventures (NTV).
  • FinGoal won Best of Show at FinovateSpring 2022 for its Aggregator Switch Kit, developed in partnership with fellow Finovate alum Envestnet | Yodlee.

Digital banking and personal finance insights platform FinGoal secured new funding this week. The Boulder, Colorado-based fintech announced that it has closed an investment round led by existing investor Naples Technology Ventures (NTV). The amount of the funding was not immediately disclosed.

“We believe FinGoal’s offering is a game changer in the banking and finance space,” NTV Managing Partner Mike Abbaei said. “Their platform will be a thriving success in the new digital world.”

This week’s funding marks the second time NTV has backed FinGoal. The company first invested in FinGoal in early 2022.

A specialist in enabling greater personalization in banking, FinGoal helps financial institutions understand where their customers are spending their money. These insights not only help FIs learn which banking products and services to offer their customers. This analysis also informs banks and other financial institutions on how best to market new offerings to their customers, as well.

“A business owner isn’t shopping for a business payments product – they want a way to better serve their customers and reduce costs,” FinGoal CEO David Nohe said. “Knowing what is really happening in the lives of customers allows FIs to do more with the account holders they already have.”

Making its Finovate debut in 2021, FinGoal returned to the Finovate stage less than a year later, securing a Best of Show award for its Aggregator Switch Kit that makes it easier for developers to quickly and easily transition away from their current data aggregator. The solution was developed in partnership with fellow Finovate alum Envestnet | Yodlee and provides a translation layer API that enables engineering teams to switch to Envestnet | Yodlee’s enrichment and make their first API call soon afterwards.

“Before today, switching aggregator was a pain in the butt,” FinGoal’s VP of Product Ariam Sium said from the FinovateSpring stage last May. “It took a lot of time and put a lot of product road maps at risk. At FinGoal, we believe that the best data made available through reliable and safe infrastructure is key to the future of financial services. That’s why we’re going to show you how to switch aggregators in minutes.”

Learn more about FinGoal in our podcast interview with Finovate VP Greg Palmer and FinGoal’s Sium.

Photo by Pixabay

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India’s PhonePe Receives $200 Investment from Walmart

India’s PhonePe Receives $200 Investment from Walmart
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding
  • PhonePe raised $200 million from Walmart.
  • With this latest tranche, the India-based company maintains its $12 billion valuation.
  • The new investment brings PhonePe’s total funding to $650 million.

Just one month after raising $100 million, India-based PhonePe announced it closed a $200 million investment. With the new round, PhonePe’s pre-money valuation remains flat at $12 billion.

Today’s investment boosts the payments application expert’s total funding to $650 million, placing it more than halfway to reaching its $1 billion capital raise target. In its announcement today, PhonePe noted that it is expecting further progress toward the $1 billion goal, saying it is expecting more funding “in due course.”

PhonePe will use today’s funds to build and scale new businesses including insurance, wealth management, lending, stockbroking, Open Network for Digital Commerce-based shopping, and account aggregators. The investment will also help PhonePe grow UPI payments in India, including UPI lite and Credit on UPI. “We are excited about the next phase of our growth as we build new offerings for Indian consumers and merchants, along with enabling financial inclusion across the nation,” said PhonePe Founder and CEO Sameer Nigam.

“We are excited about PhonePe’s future and have confidence in how it continues to expand its offerings and provide access to financial services for Indians at scale,” said Walmart International President and CEO Judith McKenna. “India is one of the world’s most digital, dynamic and fastest growing economies, and we are pleased to have the opportunity to continue to support PhonePe.”

PhonePe was founded in 2015 and was acquired by Walmart-owned Flipkart in 2016. The company counts around 450 million registered users, a total that accounts for nearly one in three adult Indians. In 2017, PhonePe began offering investing tools, mutual fund products, and insurance tools.

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Stripe Lands $6.5 Billion in Funding at $50 Billion Valuation

Stripe Lands $6.5 Billion in Funding at $50 Billion Valuation
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding
  • Stripe received $6.5 billion in Series I funding, along with an updated valuation of $50 billion.
  • The $50 billion valuation is almost half of the company’s peak valuation of $95 billion received in 2021.
  • Today’s investment will not be used to fuel company growth, but will instead be used to provide liquidity to employees and address employee equity awards withholding tax obligations.

Stripe announced a $6.5 billion Series I funding round today. Alongside the financing round, the payments processing company also unveiled an updated valuation.

The investment comes from existing Stripe shareholders– including Andreessen Horowitz, Baillie Gifford, Founders Fund, General Catalyst, MSD Partners, and Thrive Capital. New investors GIC, Goldman Sachs Asset and Wealth Management, and Temasek also contributed to the round, which boosts Stripe’s total funding to $8.7 billion.

Stripe also unveiled that it is now valued at $50 billion. This number is notably lower than the company’s peak. Stripe’s valuation rose to $95 billion in March of 2021, making it the most valuable U.S. startup. In July of 2022, the company’s valuation began tipping downward to $74 billion, and earlier this year, TechCrunch reported that Stripe was valued at $63 billion.

Unlike most venture funding rounds, however, today’s investment will not be used to fuel company growth. Instead, as Stripe notes in its announcement, “The funds raised will be used to provide liquidity to current and former employees and address employee withholding tax obligations related to equity awards.” This liquidity will offset the issuance of today’s round’s new shares, and therefore will not result in a reduction of the percentage of ownership that current investors hold in the company.

Founded in 2010, Stripe processes hundreds of billions of dollars each year and offers a range of products– including a suite of global payments solutions, banking-as-a-service offerings, and revenue and financial management tools.

Photo by Jonathan Borba

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GPT-4 Has Arrived. Here Are 6 Things You Should Know about the New Iteration.

GPT-4 Has Arrived. Here Are 6 Things You Should Know about the New Iteration.
By Julie Muhn (@julieschicktanz) Posted on
Categories: List series, Thought Leadership

If you need a break from bank failure news, here’s something refreshing. OpenAI’s GPT-4 was released yesterday. The new model is the successor to GPT-3.5-turbo and promises to produce “safer” and “more useful” responses. But what does that mean exactly? And how do the two models compare?

We’ve broken down six things to know about GPT-4.

Processes both image and text input

GPT-4 accepts images as inputs and can analyze the contents of an image alongside text. As an example, users can upload a picture of a group of ingredients and ask the model what recipe they can make using the ingredients in the picture. Additionally, visually impaired users can screenshot a cluttered website and ask GPT-4 to decipher and summarize the text. Unlike DALL-E 2, however GPT-4 cannot generate images.

For banks and fintechs, GPT-4’s image processing could prove useful for helping customers who get stuck during the onboarding process. The bot could help decipher screenshots of the user experience and provide a walk-through for confused customers.

Less likely to respond to inappropriate requests

According to OpenAI, GPT-4 is 82% less likely than GPT-3.5 to respond to disallowed content. It is also 40% more likely to produce factual responses than GPT-3.5.

For the financial services industry, it means using GPT-4 to power a chatbot is less risky than before. The new model is less susceptible to ethical and security risks.

Handles around 25,000 words per query

OpenAI doesn’t measure its inputs and outputs in word count or character count. Rather, it measures text based on units called tokens. While the word-to-token ratio is not straightforward, OpenAI estimates that GPT-4 can handle around 25,000 words per query, compared to GPT-3.5-turbo’s capacity of 3,000 words per query.

This increase enables users to carry on extended conversations, create long form content, search text, and analyze documents. For banks and fintechs, the increased character limit could prove useful when searching and analyzing documents for underwriting purposes. It could also be used to flag compliance errors and fraud.

Performs higher on academic tests

While ChatGPT scored in the 10th percentile on the Uniform BAR Exam, GPT-4 scored in the 90th percentile. Additionally, GPT-4 did well on other standardized tests, including the LSAT, GRE, and some of the AP tests.

While this specific capability won’t come in handy for banks, it signifies something important. It highlights the AI’s ability to retain and reproduce structured knowledge.

Already in-use

While GPT-4 was just released yesterday, it is already being employed by a handful of organizations. Be My Eyes, a technology platform that helps users who are blind or have low vision, is using the new model to analyze images.

The model is also being used in the financial services sector. Stripe is currently using GPT-4 to streamline its user experience and combat fraud. And J.P. Morgan is leveraging GPT-4 to organize its knowledge base. “You essentially have the knowledge of the most knowledgeable person in Wealth Management—instantly. We believe that is a transformative capability for our company,” said Morgan Stanley Wealth Management Head of Analytics, Data & Innovation Jeff McMillan.

Still messes up

One very human-like aspect of OpenAI’s GPT-4 is that it makes mistakes. In fact, OpenAI’s technical report about GPT-4 says that the model is sometimes “confidently wrong in its predictions.”

The New York Times provides a good example of this in its recent piece, 10 Ways GPT-4 Is Impressive but Still Flawed. The article describes a user who asked GPT-4 to help him learn the basics of the Spanish language. In its response, GPT-4 offered a handful of inaccuracies, including telling the user that “gracias” was pronounced like “grassy ass.”

Photo by BoliviaInteligente on Unsplash

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Tilia, a Payments Platform for Digital Economies, Raises $22 Million

Tilia, a Payments Platform for Digital Economies, Raises $22 Million
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding
  • Payments platform for digital worlds, Tilia, has raised $22 million.
  • The funds come from South Korea-based Dunamu and J.P. Morgan Payments.
  • Tilia offers a compliant way for digital content creators to receive micropayments and mints fiat-pegged currency that can be used in virtual economies.

Tilia, a digital payments platform for games and virtual worlds, announced this week it received $22 million in funding.

Today’s funds come from South Korea-based Dunamu. Combined with the funds that existing investor J.P. Morgan Payments invested in Tilia in October of 2022, the venture round boosts the company’s total raised to $22 million. Tilia will use today’s round to scale its platform and address the demand for payments in digital economies.

Originally founded in 2019, Tilia was spun out of Second Life creator Linden Lab in 2022. The California-based company’s payments platform is the backbone for online economies such as those found in online games, creator platforms, social commerce, and other digital worlds. Tilia enables creators to receive direct payouts by processing user-generated content transactions and microtransactions, allowing them to monetize their operations. For games and virtual worlds, the company mints branded tokens that are compliant in the U.S. and have a fixed conversion rate to fiat currency.

Along with today’s news, Tilia also announced two new appointments. The company brought on Brad Oberwager as CEO and Catherine Porter as Chief Business Officer. Oberwager has served as Executive Chair at Tilia for the past two years.

“Today’s payments infrastructure was built for traditional commerce – it hasn’t caught up with the new way of living and working in a digital, creator-driven economy,” said Oberwager. “At Tilia, we have a massive opportunity to unlock new revenue streams for both online creators and the platforms they build in, whether they are gaming worlds, social platforms, or next generation marketplaces. As I take the helm at Tilia, my focus will be on providing a payments system that enables these expanding digital economies.”

Photo by RODNAE Productions

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