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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Lending and marketing automation platform CuneXusannounced this week it has agreed to an acquisition by CUNA Mutual Group. Terms of the deal were not disclosed.
CUNA began its relationship with CuneXus in 2017 when its venture capital entity, CMFG Ventures, became an early-stage investor in the Santa Rosa, California-based company.
“We are continuing our journey into a more diverse, digital-first world,” said Robert N. Trunzo, president and CEO of CUNA Mutual Group. “Our company is committed to using technology to enhance consumers’ access to financial solutions that work for them and create a more equitable financial system and society. This is a top priority for all of our core businesses.”
CuneXus works with more than 140 financial institutions to help lenders maximize customer relationships by offering turn-key access to its application-free consumer lending tool, cplXpress. The company helps banks offer pre-approved, “click-to-accept” consumer loans to customers that are personalized to appear where and when they need them.
“CuneXus is on a strong growth trajectory, and adding their expertise and product solution to our company portfolio allows us to maximize its growth potential and enhance our long-standing efforts to make a brighter financial future accessible to everyone,” Trunzo added.
Founded in 2008, CuneXus has raised $6.7 million.
“We are genuinely excited to join the CUNA Mutual Group family,” said CuneXus CEO Dave Buerger. “Our capabilities and culture align very well, and we believe we can greatly enhance CUNA Mutual Group’s digital evolution in the lending space.”
This week in Finovate Global we take a deep dive into the fintech ecosystem in Latin America through the lens of Rapyd, one of the companies that has been especially active in helping bring innovative financial services to the consumers of the region. We caught up with Eric Rosenthal, Vice President and Managing Director for the Americas with Rapyd for an extended Q&A via email.
Finovate: Rapyd just launched a new integrated payments solution in Mexico. How big of a deal is this for the company and its ability to serve the Mexican and Latin American markets?
Eric Rosenthal: We have made significant investments in product sales and marketing strategy in Mexico and Latin America as these are critical markets to Rapyd’s growth.
Rapyd has been quietly operating in Mexico since early 2018, building partnerships with local solution providers and developing relationships with businesses. With the launch of our integrated payments solution in Mexico, we formally announced our presence and the strong local partnerships we have developed which have enabled us to provide the full range of payment capabilities that merchants wish to offer to consumers based on how they want to pay.
We intend to target local merchants that are looking into expanding their offerings in Mexico or that are looking into launching in other markets in Latin America or globally, as well as merchants outside of Mexico that have an interest in transacting with Mexico, either by disbursing or collecting funds.
Mexico is a very strategic market for Rapyd. It is one of the five countries in the world where we have local entities and offer our full-stack capabilities – which means we offer all of our payment capabilities including collecting funds via bank transfers, cash and cards, disbursing funds across cash and bank transfers, and card issuing. It was one of the first countries we entered in 2018 – only two years since Rapyd’s founding – and the first country outside of the U.S. I personally opened as Managing Director for the Americas at Rapyd.
Finovate: What can you tell us about this offering? What problem is it designed to solve and who is it designed to solve the problem for?
Rosenthal: Whether we are talking about Mexico or any country in the world, the unfortunate reality of financial services has been and continues to be, that any merchant (marketplace, gig economy platforms, e-Commerce sites, etc.) trying to transact digitally will encounter payments infrastructure that is extremely fragmented. So if I am a Mexican merchant who is trying to solve the issue of collecting, disbursing, and issuing a card, I will need to integrate with three to five services providers – just in Mexico!
Merchants that are expanding in Mexico or looking to enter new markets globally deal with this problem. It becomes exponentially harder to manage as they move into multiple markets.
Rapyd is trying to eliminate the complexity that has come to characterize cross border finance. We look at how you simplify integration, and contracting processes and let companies dedicate their finite resources towards enhancing their core product instead of spending time and energy solving the challenges they face with payment and fintech integrations.
Finovate: The company partnered with a number of major Mexican payment providers for this initiative. How important are these relationships for fintechs in the Mexican payments industry?
Rosenthal: Our partners are what makes us unique – Rapyd is ultimately a network built on shared goals and collaboration. Through our partnerships we facilitate market entry that would otherwise be unattainable for many of these businesses to achieve on their own. Some of the areas we address include attending to merchants that are looking to scale their businesses as well as those looking to diversify their geographical coverage. In many cases, we have merchants that want to continue to work with their existing payment partners but in tandem begin to operate on the Rapyd platform as it offers a technology enhancement on top of what they are already doing, or simply because they are seeking a single point of reconciliation and settlement to minimize their operational overhead.
So, for us, our partners are absolutely critical. What does it mean for the Mexican ecosystem? It ultimately means a better level of service for our end clients. We went out and found partners that are best in class, a handful of which we have announced publicly, and then others that we have not announced, but all of them are the best at what they do. So if you are a potential merchant looking for top of the line providers, you can trust that Rapyd has done the footwork, from the necessary technical integrations, ensured the network is compliant, performed the business due diligence, and also established attractive commercial terms with our partners. On behalf of the client, we minimize the effort and time of what would otherwise have been an enormous effort to set up what we set up on their behalf. Rapyd allows them to focus on their core business and not worry about the challenge of building and maintaining mission-critical payments infrastructure.
Finovate: Many people in fintech here in the U.S. are aware of the fintech ecosystem in Europe and Asia, and even the Middle East, to a degree. We hear much less about fintech in Latin America. What are some important things for people to understand about that ecosystem?
Rosenthal: I personally have spent a lot of time living in Latin America. I lived in Peru for about 3 years and in Mexico for 3 years, so I have always felt a strong connection to the ecosystem. My perspective, shaped by having also lived in Southeast Asia, is that the Latin American ecosystem to a certain degree is a few years “behind” (in time, not in quality) and therefore the attention that has been given previously to APAC and Europe has to do with the fact that the ecosystem in Latin America is perceived to be a few years behind.
The amount of time it takes for new initiatives to take hold or knowledge to transfer across the globe is significantly compressed. For example, most of what Rappi is doing is modeled after what Grab was doing in Southeast Asia three years prior. But yet you are now seeing that Rappi itself has significantly compressed its innovation cycle to launch new solutions and products.
While the Latin American market may be less known for the time being globally, it is very well known by, and relevant to, those that have been operating in the region for some time.
Finovate: What are some of the more unique aspects of fintech in Central and South America?
Rosenthal: What is unique about Latin America is that it has a significant advantage over other markets, in my opinion when we talk about scalability and ease of adoption. While there are differences across cultures and of course dialect and language- don’t forget that Brazil has close to 250 million people speaking Portuguese, in the grand scheme of things Latin America is well suited for scale because of the commonality of language and ease of talent mobility- making the replicability of business models seamless.
All that being said, we do continue to confront one challenge in Latin America, that is of course the sheer size of the market. Operating across 18 countries means 18 different regulatory regimes and few regional banking partners that are truly regional and that can offer the full set of capabilities.
But where there is fragmentation there is opportunity for Rapyd. Our ability to weave together multiple partners has positioned us as the single largest cash payment provider in the region. We have over 400,000 cash payment locations across Latin America, a large bank transfer network spanning each country we operate in, the ability to offer card acquiring in most of the countries we operate in, and the ability to hold the vast majority of Latin America currencies. That is something that even some of the world’s largest financial institutions are not able to provide. All of this together puts us in a prime position to serve clients that are looking for multi-country regional solutions. We believe that other companies such as Rapyd are playing a major role in removing these artificial technology barriers and borders between countries and are laying the foundation for more and more companies to scale with ease across the region and ultimately build more globally recognized fintechs.
For workers in the gig economy, getting paid as quickly as possible is a critical way to manage – to say nothing of survive on – an often-irregular source of income. And with the onset of the COVID-19 crisis, even those working in the traditional, 9-to-5 economy are feeling new levels of financial anxiety.
Responding to this challenge is Clair, a New York-based startup founded last year by Nico Simko (CEO), Erich Nussbaumer (CPO), and Alex Kostecki (COO). The social-impact fintech believes that workers should have access to their wages, without any additional fee or charge, at the end of the work session rather than at some arbitrary point in the future. This week, the company announced a $4.5 million seed fundraising that will help it fulfill its mission of enabling workers to “freely access money they’ve already earned,” said Simko in a statement.
“There are more payday lenders than McDonald’s in the U.S. that charge on average more than 300% annual interest on loans,” he said. “So we have one simple vision: it’s time for change.”
The round was led by Upfront Ventures and featured participation from Founder Collective and Walkabout Ventures. Also involved in the investment were Michael Vaughan, former COO of Venmo, and Paul Appelbaum, founder of Seamless. Combined with $55,000 in pre-seed funding the company picked up in the fall of last year, Clair’s total capital adds up to over $5 million.
Clair combines digital banking functionality – complete with savings account and debit card – with an Instant Pay Access feature that mitigates the temptation workers may feel to resort to high-interest payday lenders. Workers at participating businesses sign up for the service as they would for direct deposit. Once onboarded, they can request free advances on a portion of their earned income via the Clair app (or a partnering app). The advance is loaded onto a Clair debit card and the amount is deducted from the worker’s account on the subsequent payday.
According to Clair, Instant Pay Access provides a reduced reliance on payday loans and more income security in the event of emergency for workers, and turnover reduction and lower check printing costs for businesses. Upfront Ventures partner Aditi Maliwal, who sits on the Clair board of directors, praised the company’s business strategy of avoiding high customer acquisition costs by “creating a product embedded in other services that workers already use.” Simko echoed this point, highlighting not just Clair’s value to SME payroll operations, but also the value that fintechs bring to small businesses more generally.
“With small business employees making up nearly 50% of the country’s workforce, employers often don’t have enough scale to offer better benefits on their own, so they look towards their software providers,” Simko said. “By enabling these providers, we are bridging a gap and empowering them with functionalities their users want.”
When we saw Ninth Wave Founder and CEO George Anderson’s keynote presentation at FinovateFall titled, “Open Banking: Ignore at Your Own Peril,” we wondered what else the tech industry is missing about the topic.
After the event, we tracked him down to ask him a few questions about what we’re missing about open banking and where the U.S. stands on the path to an open banking paradise.
When it comes to open banking, there’s a lot of terminology out there: open banking vs open finance, for example. What’s the difference?
Open banking is often viewed as a set of regulations and government-mandated standards (e.g., U.K. Open Banking, PSD2 in the E.U.) and usually describes the consumer-permissioned exchange of financial account and transaction data. I see open banking as a basic “check-the-box” feature for financial institutions.
Open finance represents a broader paradigm shift. Anything we can do by walking into a bank branch, calling our financial advisor, or logging into the bank app, we should be able to do from any app, software, or online service. Open finance is the natural extension of open banking and as such can be a strong differentiating factor for financial institutions.
What is one thing most fintechs don’t know about open banking?
One thing many fintech firms don’t realize is that, when using an aggregator or other API service, they will pay fees to get data they can get for free by integrating directly with the banks. While it’s currently not practical for smaller fintechs to do that, the move towards a standardized API – such as the FDX API standard – will make this more and more feasible. Why pay fees for data you can get for free?
A close second would be for fintechs to try and step into the shoes of the bank. This could make their business model more successful in the long run and also face less resistance from data providers. Questions entrepreneurs should ask themselves include: How does the bank perceive what I am offering? Can we find a win-win situation for the bank by adding value for them in some way?
What is one thing most banks don’t know about open banking?
Many financial institutions (FIs) still see open banking as a threat to their traditional business model. I think that’s a shortsighted view. I believe that banks that embrace open finance will be able to reinforce the “trusted advisor” relationship with their customers and also leverage third-party integrations as a true differentiator from other financial institutions.
Open finance API platforms, such as the Ninth Wave Platform, allow customers to securely share their data, integrate their bank accounts with third-party software, and most importantly, act on this data. This means that customers can initiate payments from non-bank-owned applications. Banks can regain control by having the necessary tools to securely and transparently manage data exchange with fintech applications, aggregators, and other third parties.
Without specific governmental regulation, do you think it’s possible for all banks, fintechs, and consumers to be on the same page when it comes to open banking?
On the surface, it would appear that banks, fintechs, and consumers have different viewpoints and interests. While I agree it’s really a tall order, I think it is possible to get all market participants aligned on open banking since they all realize that customer security and privacy must come first and foremost. Without these, the ecosystem completely breaks down.
The Financial Data Exchange (FDX), of which we are a member and contributor, is a group of ~150 companies, consumer, and industry groups which are developing and promoting a common, interoperable, and royalty-free data sharing standard. This includes banks, aggregators, fintechs, as well as other companies that provide or request financial data. The FDX working groups contributing to the standard have balanced representation of interests from members.
Having said all that, regulation may not be that far off, as indicated by the recent CFPB “pre” ANPR (Advance Notice of Proposed Rulemaking) on Section 1033 of the Dodd Frank Act.
The Open Banking Implementation Entity recently unveiled that over two million U.K. residents now use open banking. What will it take for the U.S. to reach that point?
While the U.S. may not have a government agency tracking users of “Open Banking”, I believe the U.S. is already at or beyond that level of utilization. Earlier this year, the Financial Data Exchange said that nearly 12 million end consumers have been transitioned away from screen scraping since 2018. This has been achieved mainly by large organizations embracing stronger security and data access methods, such as APIs, to reduce or eliminate screen scraping. I also believe the U.S. is leading with open finance initiatives – which go well beyond the definition of open banking – and have seen immense adoption during the COVID-19 pandemic. Embracing open finance will allow the U.S. and U.S. institutions to lead global adoption.
Sometimes the open banking conversation can feel like a battle between banks and fintechs! Where does the end customer fit in and how can firms consider their needs?
This is a great question and one I very much enjoy speaking about. I’ve watched this ecosystem evolve for longer than I care to admit. While Ninth Wave officially launched in 2018, the experience of our team is unmatched in this space.
The one constant I’ve been seeing is the perceived tug-of-war between banks and fintechs. Predominantly, I see three groups of players. First is the consumer or account owner, next comes the financial institutions, and third are the apps a consumer wishes to use and the aggregators/API players that connect fintech apps to financial institution account data.
Everyone needs to understand that the data belongs to the account holder. Period. Once you acknowledge and embrace that, it becomes much easier to understand the customer, meet their needs, and protect them.
Stripe has been partnered with Nigeria-based Paystack for quite some time, even leading Paystack’s Series A financing round in 2018. Today Stipe unveiled it is taking things a step further.
The San Francisco-based company has agreed to acquire Paystack for an undisclosed amount. Additional terms of the deal were not disclosed but Stripe made it clear that Paystack will operate independently, growing its operations in Africa and adding more international payment methods.
“This acquisition will give Paystack resources to develop new products, support more businesses and consolidate the hyper-fragmented African payments market,” said Matt Henderson, Stripe’s business lead in EMEA. “We can’t wait to see what they will build next and how their growth can turbocharge the African tech ecosystem.”
In the video below (which is well-worth watching) Paystack Co-founder and CEO Shola Akinlade describes how the company got its start and why it chose to align with Stripe.
Stripe will eventually embed Paystack’s capabilities into its Global Payments and Treasury Network (GPTN), a platform that moves money across 42 countries.
Paystack, which counts 60,000 business clients and processes more than half of all online transactions in Nigeria, plans to expand across Africa. The company recently launched a pilot with businesses in South Africa.
As for Stripe, today’s move furthers its geographic expansion efforts that have been on the rise as of late. In the past year-and-a-half the company has added 17 countries to its platform. Stripe Co-founder and CEO Patrick Collison told TechCrunch that there is “enormous opportunity” in Africa. “In absolute numbers, Africa may be smaller right now than other regions, but online commerce will grow about 30% every year. And even with wider global declines, online shoppers are growing twice as fast. Stripe thinks on a longer time horizon than others because we are an infrastructure company. We are thinking of what the world will look like in 2040 to 2050.”
Stripe recently closed a $600 million round of funding and is valued at $36 billion.
When it comes to foreseeing the future, nobody gets things 100% right. However, Strategic Futurist at TEDx Curator Nancy Giordano is poised to come pretty close with her predictions.
Giordano is a keynote speaker at FinovateWest Digital, a online event hosted November 23 through 25. At her presentation, Just One Percent In – Learning to Navigate the Next Economy, Giordano will discuss how we are only 1% into this new technological era and what that may mean for your five-year, 10-year, and 50-year outlook. She will detail four massive shifts in human awareness and behavior that are reshaping the understanding of business, society, technology, and ourselves, and will offer hope for the days ahead.
Giordano is a 10-year TEDx curator in Austin. Described as endlessly optimistic, she is a strategic futurist with a drive to help enterprise organizations and visionary leaders transform to meet the escalating expectations ahead. With growing conviction of what will (and needs to) shift, executives value Giordano’s unique abilities to sense and synthesize the terrain ahead, and guide those ready to build more relevant and sustainable solutions.
Don’t miss Nancy Giordano’s presentation at FinovateWest Digital on Monday, November 23, 2020 at 1:20 pm. If you still haven’t registered for FinovateWest Digital, book now to get the best discounts.
SoFi has spent the past few years broadening its focus. What launched as an alternative lending company has emerged as a platform that provides a deeper breadth of banking services including insurance, checking accounts, credit score monitoring, investing, estate planning, and small business financing.
After building all of these tools, SoFi began focusing on building something different– community. The fintech offers a membership program with a range of perks including career coaching and financial planning.
Today, the company is leveraging its community in the launch of social trading and investing features. The new capabilities allow users to share their investment portfolios and discover and follow the holdings, watchlists, and activity of fellow members who opt in to the feature.
“According to SoFi’s research, about 70% of SoFi Invest member respondents indicated that they regularly (at least weekly) discuss their investments with family members, peers, or colleagues,” said SoFi CEO Anthony Noto. “Our new social investing features not only help us live up to our name of Social Finance, but provide ways for investors to see specifically what members on the platform are doing with their investment decisions, discover new investment ideas, and see how they stack up in their investing performance. Given the importance of investing early and consistently, we are thrilled to be able to provide a more informative, engaging, interactive mobile investing experience rooted in building better investing habits.”
To encourage social interaction, SoFi’s new tools allows users to comment on and react to the others’ trades and compare their performance on dynamic leaderboard.
For privacy purposes, participation is optional and members are not automatically enrolled. Additionally, the amounts of investment portfolios are hidden from other users.
If you’ve studied fintech for any length of time this should sound familiar. U.K.-based eToro launched its CopyTrading platform in 2011. This social investing platform is different from SoFi’s in that it pays top investors when others copy their trades.
In a round led by Left Lane Capital and featuring participation from Jump Capital and Clocktower Technology – as well as other investors – M1 Finance has scored $45 million in funding. The Series C round takes the finance super app company’s total to more than $95 million, adding to the $33 million M1 Finance raised in June.
CEO and self-described “personal finance nerd” Brian Barnes highlighted ways the new investment would help power the company forward. In an extended blog post, Barnes listed investment in the client experience, more products and features, and more talent as initiatives customers can look forward to over the balance of the year and into 2021. “We’re not just stepping on the gas,” he wrote, “we’re now on a rocket ship.”
M1 Finance’s Finance Super App combines investing, borrowing, and spending functionality in one automated platform. Clients can use the platform to build their investment portfolios for free, take advantage of fractional share investing and schedule automatic, one-click rebalancing. A flexible portfolio line of credit is available to users once their portfolio value reaches $10,000; and the platform’s M1 Spend feature enables users to schedule and pay back loans, as well as set up direct deposits, automatic investments, and transfers.
Founded in 2015 and headquartered in Chicago, Illinois, M1 made its Finovate debut at our New York conference in 2016. In September, the company partnered with Rackspace Technology in order to bring expanded Amazon Web Services functionality to its platform. That same month, M1 reported that it had reached $2 billion in assets under management, and added more than 229,000 new accounts since February. More recently, the company launchedSmart Transfers, a new feature for its Plus members that provides greater control and flexibility in setting automatic transfers and investments.
“We’re here to empower a new world of personal financial well-being through a simpler, smarter, stronger platform,” Barnes wrote this week. “With more funds and the opportunity to continue working with people we know and trust, we can expand what we do for you and your money.”
The following is a guest post by Lisa Bigelow who writes for Bold.org.
Robo advisors. Touchless payments. Zelle. These are just a few ways that digitalization has transformed how people manage their money. Although consumers have experienced a few hiccups along the way — lame chatbots, we’re looking at you — fintech is making an enormous impact on how banks will serve their customers now and in the future.
Here are five futuristic fintech trends that reveal where banking is headed.
In five years, AI will dominate customer service
You’ve probably used your bank’s chatbot to accomplish a simple task like disputing a transaction, but have you considered asking it how much you spent at the grocery store last month? Some digital transformation experts estimate that 95% of customer service interactions will be powered by artificial intelligence by 2025.
Consumers expect AI-driven interactions to satisfy bigger customer service expectations, according to a Drift survey. Businesses that delay improvements in natural language processing or that rely on human responders will be at a disadvantage, with one IBM study showing a 99% improvement in response times when using AI. With 38% of baby boomers expecting a 24-hour response, that’s significant.
Yet chatbots are more than basic analytics delivered quickly. They can also offer suggestions on the best mortgage or investments for your finances. Even high net worth investors may be surprised to learn their financial managers rely on roboadvisors for complex algorithms that recommend investment strategies.
In China, digital payments — not cash — is king
Digital payments went mainstream in Asia long before COVID-weary consumers turned away from cash for health reasons. In China — where a mobile payments market worth $17 trillion flourishes — vendors often prefer cashless transactions, even for small purchases. And with 91% of Chinese tourists saying they would shop more overseas if mobile payments were an option, all economies — and their banking systems — will benefit by adopting fintech.
In addition, cash payments don’t always offer consumers more convenience or better pricing, especially with browser add-ons making finding deals easier. Peer-to-peer shopping platforms like eBay and Alibaba have given consumers more choices than ever before. And with players like Venmo and Zelle allowing instant cash transfers, it’s never been more convenient to shop.
Fintech is changing cross-border education
American colleges prize international students for reasons related to finances and diversity. International students value American college educations for their quality and name recognition. Before fintech, financing an international education and recording international tuition payments was time-consuming and difficult.
Fintech helps lower the barrier to entry to the U.S. education market. Take the University of Virginia, which adopted Flywire as a means of helping foreign students establish payment plans and transfer funds. And in China, Superyou and myMoney allow students to complete cross-border transactions with the touch of a mobile button.
What about those who can’t afford the sometimes $70-thousand-and-up annual price tag of American education? Enter Prodigy Finance, a U.K. lender that finances students based on their future earning potential. Think that can’t possibly work? Think again — Prodigy says its repayment rate is 99%.
Students, for their part, are eager to learn about fintech. At Georgetown, MIT, NYU and other top-tier institutions, courses related to financial innovation are filled, with fewer expressing career aspirations in once-hot areas like trading.
Tech startups are also playing a role in increasing accessibility to education with platforms like Bold.org creating and hosting exclusive scholarship opportunities for students.
India is adopting fintech quickly
You already know that China, the U.S., and the U.K. are fintech hotspots. But what about emerging markets with large, tech-savvy populations and unmet banking needs?
Enter India, widely regarded as the “next frontier” in fintech. According to a 2019 report on emerging technologies in banking, PWC ranked India second worldwide in fintech adoption, with a rate of 57.9%, driven by favorable government policies and funding from foreign venture capitalists.
If you can’t beat ‘em, join ‘em
Traditional banks are eager to jump aboard the innovation train. Collaboration is at an all-time high, with staid players such as Lloyds, American Express and PNC partnering with hot innovators like Swave, GreenSky and OnDeck, respectively.
A 2017 PWC study found that 82% of banks, insurers and wealth managers surveyed plan to invest or collaborate with fintech firms over the next three-to-five years, with 88% fearing lost revenue should they not make the move to fintech. PWC says, “Businesses need to understand how this new world affects all of their touchpoints with the customer if they are to actively reinvent their own future and not be at the mercy of external events.”
In addition to improving operational efficiency and lowering costs, traditional banks believe that fintech will ultimately improve the customer experience for less money. And that means fintech will drive your financial decisions sooner than you ever thought possible.
Lisa Bigelow writes for Bold.org and is an award-winning freelance content creator who helps people learn more about personal finance, real estate and information security. Bigelow has contributed to Finance Buzz, Life and Money by Citi, MagnifyMoney, Well + Good, Smarter With Gartner, Popular Science and Cadre Insights.
In today’s era of embedded finance, everything is available as a service. Digital banking services company Q2 is at the leading edge of this trend, offering a range of solutions for banks’ retail clients, their commercial customers, and fintechs.
Many fintechs sell an “as-a-service” offering that focuses on a single aspect of banking. Q2, however, takes a more holistic approach. Here’s a look at some of the company’s embeddable offerings.
Q2’s consumer solutions include remote onboarding, PFM tools, remote deposit check capture, lending tools, marketing offers, behavioral biometrics, and authentication. The company helps banks leverage client data using machine learning technology that brings the necessary intelligence to effectively market new products to customers.
On the commercial side of things, Q2 can aid with account opening, loan origination, ERP integration, and scalable tools to suit a range of business sizes.
Q2 offers fintechs both lending-as-a-service and banking-as-a-service tools to integrate into their existing offerings. The former focuses on the application, approval process, and loan funding, while the latter offers bank accounts, debit cards and payment solutions without the need to partner directly with a traditional bank.
In addition to these embedded finance offerings, Q2 is venturing into the bank-fintech collaboration space. In a Best of Show winning demo at FinovateFall last month, Q2 launched its Partner Marketplace, an app store integrated within the company’s digital banking platform. Fintechs can upload their tools on the platform’s app store and banks can browse the offerings they’d like to integrate.
By relying on fintechs to bring the tech, the Partner Marketplace broadens Q2’s reach as a provider of embedded finance. The company offers banks access to a variety of fintech solutions that range beyond what Q2 itself is able to create or provide.
For fintechs, the marketplace lowers customer acquisition costs by making the startups’ solutions visible to Q2’s network of bank partners on the platform. It also helps with integration and deployment– after integrating with Q2’s digital banking platform, fintechs can offer their product to 400+ banks and credit unions, one million businesses, and 16+ million end users.
CU Solutions Group, a CUSO (credit union services organization) that provides technology, marketing, and advisory products and services to more than 3,400 credit unions across the U.S., has announced a new partnership with digital card services platform Ondot Systems. Via the agreement, CU Solutions Group is now a Card App reseller partner with Ondot and will offer its digital card management program to credit unions in its network.
“We are excited to be able to offer our credit unions a way to level the playing field with the digital-first card experiences being offered by tech giants like Apple, Google, and Samsung,” CU Solutions Group President and CEO Dave Adams explained. “Consumers have long said they want to bank with digitally-savvy credit unions, and this helps ensure those desires are met.”
Ondot’s Card App enables financial institutions to offer their customers a mobile app for managing, tracking, and controlling both credit and debit card usage. The solution makes it easy to monitor transactions and improve financial planning and decision-making for users, while enabling card issuers to benefit from fewer service calls and more customer engagement. Last month, Ondot announced that eleven card issuers – from American State Bank to Utah Community Credit Union – had selected Ondot’s Card App to provide “digital-first card experiences, similar to cards launched or announced by Apple, Google, and Samsung.”
Ondot VP Jim Cahill referenced the challenge that financial institutions face from platform players that are determined to have a role in the card space. “Cards are the most critical touchpoint between consumers and a financial institution, and currently non-banks are promising a better user experience than banks and credit unions,” Cahill said. “The 11 financial institutions that have selected Ondot’s Card App are examples of regional and community issuers that can compete on digital experiences and win.”
A Finovate alum since 2014, Ondot’s digital card services platform is used by more than 4,500 banks and credit unions to power cardholder engagement. The San Jose, California-based company won “Best Overall FinTech Mobile App” at the 2020 FinTech Breakthrough Award for its Card App this spring, and was also named to the Financial Times’ inaugural The Americas’ Fastest Growing Companies 2020 roster. Founded in 2011, Ondot counts Citi Ventures among its investors.
When it comes to payment and savings account services designed for minors, most large banks have stayed on the sidelines. In fact, much of the development has come from fintechs that layer kid-friendly tech on top of existing bank accounts.
This bank-fintech partnership is exactly what Chase is relying on for its new bank account for kids that it is launching this week in collaboration with Greenlight, a company that provides financial tools for children. The new offering, Chase First Banking, aims to help parents manage allowances, complete and check off chores, monitor spending, and help kids save towards a goal.
“Families are juggling so many more responsibilities today than ever before,” said JPMorgan Chase Head of Digital for Consumer and Community Banking Allison Beer. “To help, we’ve made it easy for parents to manage kids’ allowances, keep track of chores and teach important financial skills from within the Chase Mobile app.”
The accounts have three features that encourage kids to earn, spend, and save. The Earn function allows parents to set allowances and assign chores and allows the child to check off when each chore has been completed. The Spend tool provides kids with their own prepaid debit card that they can use to shop at stores that their parents have approved. Parents have ultimate control of the card and can lock or freeze it at any time. The Save function helps the child set aside money toward a goal and allows parents to move funds, as well.
Chase First Banking accounts, which are aimed at grade school children, are available for free to Chase retail deposit account customers. The bank already offers checking and savings accounts tailored to high school and college-aged users.
Founded in 2014, Greenlight competes with startups such as Oink and FamZoo. In addition to the Earn, Spend, and Save features offered with Chase, Greenlight’s B2C offering, which costs $5 per month, also offers a Give tool and will soon launch an Invest feature. The company rebranded earlier this year which helped it double its growth and set it on track to double again by the end of the year. Late last year Greenlight raised $215 million. The company is valued at $1.2 billion.
