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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
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 PhonePeannounced 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.
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.
Stripeannounced 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.
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.”
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.”
Winds of more than 60 mph tossing 787s around like paper planes. A wave of multi-industry strikes sending parents, patients, and passengers scrambling to reroute plans and rearrange schedules. There is no doubt that the attendees of FinovateEurope 2023 have had more than their fair share of challenges to make it to the Intercontinental O2 this year.
But make it they have – and we are all the better for it. Now, with the votes tallied from those undaunted delegates, we are happy to reveal the names of the companies that have earned Finovate’s most coveted prize: Best of Show.
10x Banking for its technology that enables banks to move from monolithic to next-generation core banking solutions with its cloud native SaaS core banking platform Supercore. Demo.
FinTech Insights by Scientia for its competitive analysis tool for banks and fintechs that offers all the data companies need to outsmart the competition. Demo.
NayaOne for its technology that enables institutions to 10x their digital transformation with single-key access to 200+ fintechs to discover, evaluate, and scale new solutions to production. Demo.
TAZI AI for its technology that empowers experts and data scientists to create, update, and deploy ML models with a no-code platform, making smart decisions in dynamic environments. Demo.
Your Juno for its solution that engages more than 50,000 users around financial education. Demo.
We congratulate this year’s winners – as well as all of our demoing companies – for taking to the Finovate stage to show us their latest fintech innovations. And, of course, a hearty thanks to our sponsors, our partners, and – perhaps most of all – our attendees whose attention, participation, and appreciation make our annual European fintech conference such a joy to host. We look forward to seeing everyone again next year!
Notes on methodology:
1. Only audience members NOT associated with demoing companies were eligible to vote. Finovate employees did not vote.
2. Attendees were encouraged to note their favorites during each day. At the end of the last demo, they chose their three favorites.
3. The exact written instructions given to attendees: “Please rate (the companies) on the basis of demo quality and potential impact of the innovation demoed.”
4. The five companies appearing on the highest percentage of submitted ballots were named “Best of Show.”
5. Go here for a list of previous Best of Show winners through 2014. Best of Show winners from our 2015 through 2022 conferences are below:
Sezzle announced plans to publicly list on the Nasdaq by the end of September.
The company will continue to sell common stock on the Australian Stock Exchange.
The news comes two years after Sezzle’s original announcement of plans to publicly list in the U.S.
Buy now, pay later (BNPL) technology provider Sezzleannounced on Monday it plans to list publicly in the U.S. on the Nasdaq, while continuing to sell common stock on the Australian Stock Exchange (ASX).
The Minneapolis, Minnesota-based company originally listed on the ASX in 2019 using Chess Depositary Interests (CDIs), which are traded on the ASX to allow non-Australian companies to list their shares on the exchange. Prior to listing on the Nasdaq, Sezzle plans to remove the Foreign Ownership Restricted on United States Person Prohibited tag from the CDIs to allow participation from U.S. investors.
“A listing on the Nasdaq is a natural evolution for Sezzle given the company is already filing the necessary reports with the SEC,” said Sezzle Chairman and CEO Charlie Youakim. “Although we are not seeking to raise capital as part of the Nasdaq listing, we are excited to expand the universe of potential investors to the United States.”
Sezzle plans to list in the U.S. no later than the end of September 2023.
Avid fintech nerds may have a sense of déjà vu reading Sezzle’s headline today. In fact, it echoes a news post we published in 2021: Sezzle Plans to File for U.S. IPO. According to that release, “Plans for the public listing are still in early stages. Details, such as the timing, price, and use, have not been revealed.” Sezzle’s release today revisits the plan for a U.S. IPO, but with more concrete details.
Sezzle was founded in 2016 and the company’s growth ballooned alongside the increasing interest in BNPL in 2020. In turning its focus from growth to profitability, Sezzle has made significant cost-saving efforts, including exiting a handful of foreign markets and cutting 20% of its North American workforce. Last February, we reported that fellow BNPL player Zip planned to acquire Sezzle. The deal was terminated in July in light of macroeconomic and market conditions.
The fintech industry experienced quite a dramatic weekend of fast-breaking news regarding the collapse of Silicon Valley Bank (SVB). By now, you’ve likely heard that the Biden administration stepped in this morning to facilitate a move that will offer SVB’s 40,000 customers full access to all of their deposits.
Banks, startups, and even tangentially related businesses are breathing a collective sigh of relief this morning. However, the move does not bring the industry back to business-as-usual. Below are four potential implications of SVB’s misstep.
FDIC Deposit Insurance to Increase
Regulators are not calling today’s move a “bailout” because the funds being used to make SVB customers whole did not come from consumer taxpayer dollars. “All depositors of the institution will be made whole,” the FDIC said in a statement. “Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.” This means that banks* will bear the responsibility to recoup these funds via increased FDIC insurance rates.
More (closer to) full reserve banks
We likely won’t see banks convert to full, 100% reserve banks (that is, banks that keep all customer reserves in cash). It is possible, however, that SVB’s failure may motivate banks to keep more consumer cash on-hand, operating closer to a full reserve bank than they previously were in order to mitigate risk. If this is the case, banks would have less funds to lend, making it difficult for consumers and businesses to get loans.
Increased opportunities
One of the first lessons taught in business school is that where there are challenges, there are opportunities. This is certainly the case here. HSBC picked up SVB’s U.K. unit for £1, and everyone from Elon Musk to JP Morgan and PNC are considering purchasing SVB’s U.S. arm. Additionally, businesses have cropped up marketing to former SVB clients, offering them working capital loans. Even Mr. Wonderful is in on the action.
Uncertainty reigns supreme
If you’ve read about SVB in the news today, it’s likely you also read about Signature Bank, which was shut down by New York state regulators on March 12, and Silvergate, which closed its doors on March 8. Combined, these events mark three U.S. bank failures in a single week. Though regulators have been quick to step in, the events have shaken investors and consumers alike.
*Interestingly enough, banks are indeed taxpayers– meaning that the responsibility for repayment technically does fall on taxpayers.
This is a sponsored blog post by Delaware Prosperity Partnership
Delaware’s status as a hub for financial services dates back to the early 1980s, when state leaders enacted the Financial Center Development Act to welcome out-of-state banks and attract new investments. Today, financial services is the state’s largest traded sector. In Wilmington alone, nearly 170,000 financial services professionals work for venerable institutions like Bank of America, Barclays and Capital One and newer firms like College Ave Student Loans, Marlette Funding and PayPal, among many others. Another 100,000 technology experts are employed in the city’s metropolitan labor market.
With that amount of fintech expertise, it made sense for Rob Habgood and his team – all veterans of the Delaware credit card industry themselves – to launch Fair Square Financial (now part of Ally Financial Inc.) in Wilmington in 2016.
“There’s a very deep talent pool here in Delaware,” said Habgood, head of Ally Credit Card and former CEO of Fair Square. “There is more credit card talent here in Wilmington, Delaware, than any other place on the planet.”
Fair Square was created as a customer-centric, digital-first credit card company and quickly became known for its competitive brand of transparent and low-fee Ollo products.
What sets the Ollo (now Ally) card apart in a state known for credit cards is its digital-first strategy. Customers do everything from applying for a card to making payments and servicing their accounts online and via the mobile app. On the back end, machine learning models and advanced analytics drive decisions from targeted underwriting to customer management and collections, with teams all working hand-in-hand to execute a strategic plan in an open-plan fintech space.
By the time it was acquired by leading full-service digital bank Ally in 2021, the entrepreneurial, stand-alone business was operating in a lean, effective and successful manner with fewer than 100 Wilmington employees serving 693,000 customers around the world. The new Ally Credit Card headquarters remain in Wilmington, and operations there are growing.
“Ally’s strong nationwide brand allows us to go after more aggressive growth and compete effectively across the full spectrum of customers. We’re going to be growing pretty rapidly here and welcoming high-quality people to continue to build our team,” Habgood said.
In 2022, Ally announced it was investing $520,000 to renovate 22,000 square feet of the Wilmington site and adding up to 150 positions – which will increase employment there by up to 200% – through 2025. Supporting the company’s investment in this expansion are a $20,000 Capital Expenditure Grant and a $2.64 million Jobs Performance Grant from the Delaware Strategic Fund.
Hiring is across the board, from marketing and product personnel to data scientists with credit card experience in analytics, risk, compliance, operations and project management. Many of those whom Ally hopes to welcome already live in Delaware or the surrounding area, but more and more talent looking for a great place to live, work and play are discovering Delaware’s advantages.
Habgood, himself, moved to Delaware in 2011. “We enjoy a high quality of life here in Delaware,” he said. “We not only have access to major metro areas, but to beaches and beautiful countryside — and to great schools.”
“Delaware is a great place to live — a great place geographically — I couldn’t speak more highly of it,” he said.
APEXX Global has raised $25 million in a Series B round.
The funds come from existing investors Forward Partners, Alliance, and MMC Ventures.
APEXX Global will use the new investment to expand further into North America and to boost product development.
Global payment solutions company APEXX Global has raised $25 million in Series B funding. The investment, which comes from Forward Partners, Alliance, and MMC Ventures, brings APEXX’s total amount raised to $37.1 million.
“I’m delighted to announce that we have successfully closed our Series B funding round,” said APEXX Global Co-founder and CEO Peter Keenan. “Since day one we’ve been laser-focused on our mission to build the world’s leading payment orchestration platform and deliver clear benefits to merchants. We‘ve seen strong growth across international markets, delivering significant cost savings and transaction conversion benefits. We look forward to using these funds to further consolidate our position in driving the future of global payments.”
APEXX Global, which currently holds offices in New York, London, and India, plans to use the funds to expand further into North America via its New York office. The company will also leverage the investment to boost product development.
APEXX offers a payment orchestration layer to help merchants optimize their payment stack. The company’s payment gateway enhances the global payment processing experience by processing payments locally to help circumvent foreign exchange fees on cross-border transactions.
In addition to traditional payment methods, APEXX enables businesses to offer alternative payment methods to their end customers. The company currently partners with more than 120 alternative payment methods, including Apple Pay, Klarna, Alipay, and PayPal. Allowing users to pay using their preferred method not only enhances the user experience, but it also has the potential to increase sales.
“We’ve seen good momentum in terms of customer growth, and we are delighted to continue to back Peter and his talented team as they work with merchants to rethink payments and save money,” said MMC Ventures Chairman and Co-founder Alan Morgan. With today’s agreement, Morgan will also take a seat on APEXX’s board of directors.
Paysera is partnering with Ria to add cash-pickup capabilities to its suite of financial services offerings.
Paysera clients can select from Ria’s network of 522,000 cash pickup locations in 152 countries.
The new service is currently available to Paysera clients using electronic banking and will be made available on the mobile app in the first half of this year.
E-money app Paysera is adding a cash-pickup service to its suite of financial services offerings. The new capability is made possible thanks to a partnership with international money transfer company Ria.
Owned by Euronet Worldwide, Ria enables clients to send money to a physical Ria cash pickup location instead of a bank. Customers can choose from Ria’s network of 522,000 cash pickup locations in 152 countries. Under today’s partnership, Paysera clients can now tap into this network when sending and receiving funds.
“Sometimes it’s not possible to transfer money to a bank account because the recipient doesn’t have a local bank account,” said Paysera CEO Gintautas Mezetis. “Even if the recipient has an account, it may not be linked to a debit card, the card may have been lost, or there may be no ATMs around to withdraw the money. An international transfer from Europe to Asia is sometimes more expensive than an alternative cash pickup transfer. Therefore, there are many situations where cash pickup transfers are useful and necessary.”
Paysera anticipates the new cash pickup offering will benefit migrants working in developed countries in Europe. Specifically, Paysera is seeking to help Ukrainian citizens temporarily living in European countries due to the war who need to transfer money back home.
The new Ria cash pickup service is currently available to Paysera customers using electronic banking. The company plans to make cash pickup available on the mobile app in the first half of 2023.
Paysera offers an online merchant payment gateway, money transfers, currency conversions, payment cards with a tandem financial management app, event ticketing, and a parcel locker network. The Lithuania-based company has had more than one million app downloads since it was founded in 2004.
As a legacy player in the money transfer space, Norway-based Ria also offers bill payment, mobile top-ups, prepaid debit cards, check cashing, and money orders. The company is partnered with many major retailers to serve as cash pick-up locations, including Walmart, 7-Eleven, Privatbank, and Post Finance.
This highly acclaimed awards program, now in its sixth year, has been supporting, celebrating and recognizing excellence in the use of IT in the finance and payments industry worldwide.
PayTech Awards are open to banks and financial institutions, paytech software and services providers, and individuals and teams working in the payments industry across the globe.
Israel-based payroll and payments technology company Papaya Globalunveiled its latest solution this week. The new offering, Papaya Global Payroll Payments, is a fully automated, embedded payments platform that facilitates global payroll processing and mass payments. The solution is designed to assist payroll vendors who typically outsource these payments to third party vendors who often are not best suited to handling payroll payments.
“Papaya Payroll Payments is a game changer, full stop.” Papaya CEO and co-founder Eynat Guez said. “No other company is offering fully automated, embedded payments designed for payroll. We are the first payroll payments company in the industry to help its clients navigate the needs of the local employee and the global employer.”
Papaya’s solution will also enable its customers to process payments faster given the fact that Papaya owns money transfer licenses globally and its technology is built specifically to facilitate payroll payments. The company said that payroll payments typically arrive within 72 hours, which it calls “an industry first.”
“We’re giving organizers with global workforces a true borderless solution for getting team members their payments quickly and accurately,” Guez said. “No more manual processes, no more late or inaccurate payments, no fees reaching the employees.”
Founded in 2016, Papaya Global maintains offices in Tel Aviv, New York, Austin, London, Kiev, Singapore, and Melbourne, Australia. Named to the Forbes Cloud 100 and CNBC’s Top Startups for the Enterprise, Papaya Global has raised more than $444 million in funding from investors such as Scale Venture Partners and Insight Partners.
E-commerce risk management platform Riskified announced late this week that it was pulling $500 million in cash and equivalents out of Israel. The move comes as concerns grow about a controversial judicial reform plan championed by the current government led by Prime Minister Benjamin Netanyahu. The proposal would give the executive branch greater control over judge selection and limit the ability of the country’s Supreme Court to strike down legislation.
Riskified CEO Eido Gal was quoted by Reuters as fearing that the Israeli government might limit transfers and withdrawals of large sums should the financial situation in the country “continue to deteriorate.”
In addition to transferring funds out of the country, Riskified reported that it will expand hiring in its research and development site in Lisbon, Portugal.
Riskified was founded in 2012 and is based in New York. The company is publicly traded on the NASDAQ under the ticker RSKD and has a market capitalization of more than $940 million.
Learn more about the challenges currently faced by startups in Israel in this explainer from Crunchbase News. Note that Papaya Global, mentioned above, also moved funds out of Israel earlier this year, citing similar concerns about the country’s business climate and political uncertainty. Shuly Galili, founding partner at UpWest, a Silicon Valley-based seed investor that specializes in funding Israeli startups, was quoted as saying that passage of the judicial reform legislation would result impact “investments coming into the country, founders staying or not staying in the country.” Galili added that the new law could result in between $7 billion to $10 billion in funds leaving Israel.
Here is our look at fintech innovation around the world.
