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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Starting this week, NatWest is making it easier for clients to get the help they need to make their banking experience easier. The initiative is called Banking My Way and provides a single place for customers of the U.K.-based bank to input their preferences so that they are addressed across all channels.
The preferences are divided into two sections, About me, which addresses vulnerabilities or disabilities such as being visually or hearing impaired, and Support me, which focuses on how the bank can support the user, such as speaking slowly and clearly or not assuming a gender when addressing them.
“Banking My Way will allow you to tell us more about your current circumstances and the difficulties that you are facing with your banking,” NatWest explained on its website. “This will allow you to also tell us about the support you require, and we will ensure that this information is shared with our teams to support any further interactions that you have with us.”
Clients can input or change preferences online, in a branch, or via phone. In order to ensure information is up-to-date, users will be asked to review their preferences on an annual basis.
This is an amazingly simple idea, but because it is a pull, rather than a push approach, it may be lost on some consumers. That said, NatWest will have the best response rates with this system if it is implemented as part of the onboarding process, instead of being structured as a separate item customers need to register for.
The West won the Cold War, says conventional thinking, not via open confrontation, but by making the cost of competition prohibitively high for its adversary. Some of the brightest minds in the digital identity business believe that a similar approach is key to undermining the ability of criminals to profit from cyberfraud.
“Eliminating all fraudulent accounts is an admirable goal, but perhaps unattainable,” wrote Cameron D’Ambrosi, Principal, One World Identity, and an upcoming participant in our FinovateFall DigitalFuture Financial Crime roundtable. “Making it more expensive to create a fraudulent account than the profit generated by a fraudulent account is … achievable. It will go the farthest towards meeting the goals of trust and growth teams alike.”
In a blog post earlier this year, D’Ambrosi put the case for digital identity in the context of the current global health crisis, seeing COVID-19 – and the social and economic response to it – as an accelerant of trends that had been in place before the onset of the coronavirus.
As D’Amborsi explains, in a world in which individuals are increasingly accessing an ever-growing array of digital platforms – on their own or under the influence of algorithms – distinguishing authentic users from digital-created fakes and imposters – is critical to a 21st century online experience that can be trusted. This challenge will be all the more intense because of the incentive brands and businesses will have to “go viral” and spread their content as widely as possible. Ensuring that customers are not conned by brands that are scams and that merchants are not fooled by customer-impersonating bots is a key task for digital identity companies today.
On the issue of digital identity and financial crime, Jas Randhawa, Chief Compliance Officer for Stripe has underscored the rise and challenge of “newer fraud typologies” and opportunities for fraud in the current, COVID-19 environment. He has also observed that the renewed volatility of the stock market during the global pandemic unfortunately has also provided fertile ground for fraudsters. Add to this the powerful incentive for merchants and other businesses to “go digital” in response to lockdowns and work-from-home, and the result is additional pressure on the ability of the identity management infrastructure – for institutions and individuals alike- to determine real, legitimate actors from fake or malevolent ones.
Randhawa will also join our FinovateFall Digital conversation on Future Financial Crime this September. A 14-year veteran of financial crimes and compliance management – including six years with PwC – and a certified anti-money laundering specialist, Randhawa has emphasized three general themes from his experience in compliance: de-siloing decision-making, embracing technology, and understanding the cyclic nature of identifying problems, developing solutions, innovating as new challenges arise – and then starting the whole process over again.
Randhawa’s example of Stripe is interesting, given that the company is a digital-first entity. While that shielded the firm from having to digitize in the middle of a pandemic, the company was faced with the task of securely onboarding a surge of businesses who had suddenly made the decision to pursue digitalization. Moreover, the company needed to thread the needle of keeping bad actors off the platform while not being so restrictive as to undermine its own goal of “growing the GDP of the Internet.”
For Randhawa the current circumstance likely represents a New Normal as far as the innovation cycle in compliance is concerned. “We’ll have to keep whacking away at this problem,” he said during an online panel earlier this year, Real Identity Validation in a Digital World, sponsored by One World Identity. He emphasized that creativity will be required in order to achieve an experience that is simultaneously the most seamless and the most secure.
Among the companies helping businesses and individuals cope with the new requirements of the New Normal are firms like Jumio and SheerID. Both companies are innovators in the digital identity management space, both Finovate alums, and both portfolio companies of venture capital firm Centana Growth Partners. Founded in 2015, Centana considers authentication and identity technology companies among its core competencies and the firm’s co-founder Eric Byunn will also join our conversation on Future Financial Crime next month.
“Authentication is of critical importance to a broad range of online and mobile applications across industries such as financial services, e-commerce, travel, and the entire sharing economy,” Byunn said four years ago when Centana acquired Jumio, making a statement that is all the more true today. He called identity “top-of-mind for companies” last fall when SheerID was named to the Deloitte Technology Fast 500.
Centana also has a more direct commitment to financial crime fighting than just its investments in digital identity innovators. The VC firm is also a backer of SpyCloud, a Finovate Best of Show winning startup that specializes combating account takeover (ATO) fraud and recovering stolen credentials from the online criminal underworld or “dark web.” SpyCloud raised $30 million in funding earlier this week in a round led by Centana and featuring the participation of Microsoft’s venture capital fund, M12, as well as Altos Ventures, Silverton Partners, and March Capital Partners.
“SpyCloud’s approach to fraud prevention is helping businesses protect themselves and their customers at a time when threats are more pervasive than we’ve ever seen,” Byunn said when the funding was announced. “We heard from major financial institutions and a wide range of enterprises that SpyCloud’s solutions are critically important to their anti-fraud efforts.”
The fact that VC firms continue to plow money into companies that fight cybercrime – either directly like SpyCloud or indirectly by enhancing the identity management infrastructures we rely on – is a positive sign in and of itself. But in the context of winning the arms race against technology-savvy criminal adversaries, it’s a welcome indication that the money is flowing in an area where the challenge appears never-ending.
A look at the companies demoing at FinovateAsia Digital on June 22, 2021. Register today and save your spot.
Scientia’sFinTech Insights is a research tool that analyzes behind login screens the digital banking offerings from high-street banks, challengers and fintechs around the world.
Features
Understand your competitors’ digital banking offerings, in depth
Perform real gap analysis, in detail
Simplify compliance by understanding how others tackle the same challenges
Why it’s great FinTech Insights provides you the data you need to understand your local and international digital banking competition. In-depth, it analyzes every single function and transaction.
Presenters
Alexandros C. Argyriou, CEO Argyriou is Scientia’s CEO and has been involved with some of the largest Digital Banking Transformation projects worldwide. LinkedIn
Erenia Kontolatou, Head of Business Development Kontolatou is Head of Scientia’s Business Development, bringing vast experience from the fintech ecosystem. LinkedIn
A look at the companies demoing at FinovateAsia Digital on June 22, 2021. Register today and save your spot.
Finzly’sFinzlyBankOS enables financial institutions to subscribe, try, and launch Finzly and third party apps that modernize the digital experience for consumers and businesses.
Features
Open banking API enables third party service providers
Specialty banking options to support new market opportunities
Freedom from legacy technology limitations
Why it’s great Finzly BankOS helps FIs create and choose best-in-class products and services for their customers while quickly and seamlessly adding new solutions through Finzly’s plugin app-based architecture.
Presenters
David Hunkele, Chief Strategy Officer Hunkele is Chief Strategy Officer and advisor with expertise in SaaS software, cloud-banking, go-to-market strategy, and digital transformation within fintech and financial services. LinkedIn
Terry Howell, CTO Terry Howell is co-CTO and VP of Technology for Finzly with responsibility for R&D of the BankOS platform, treasury and digital banking products, and quality assurance, test and engineering automation. LinkedIn
A look at the companies demoing at FinovateAsia Digital on June 22, 2021. Register today and save your spot.
Remitter is a white labelled digital communications platform powered by artificial intelligence that helps lenders maximize revenue by optimizing customer engagement.
Features
SMS and email intelligent engagement
Reaching customers on their preferred channel, at the right time and language
No downloading apps, remembering logins, or speaking to an agent
Why it’s great Remitter’s secure white-labelled platform engages customers with personalized mobile communications to increase collections and maximize revenue for our customers.
Presenters
David Nathanson, EVP & Head of Sales Nathanson joins Remitter after spending the past ten years in a variety of senior leadership roles. He is responsible for leading all sales and business develpoment. LinkedIn
Roxanne Bartley, EVP Strategic Partnerships Bartley is EVP of Strategic Partnerships. In this role she is responsible for cultivating strategic relationships and driving business development across Remitter with key partners. LinkedIn
A look at the companies demoing at FinovateAsia Digital on June 22, 2021. Register today and save your spot.
Your fintech product. Millions of users. One integration. Q2’sQ2 Partner Marketplace lets you offer your fintech products to more than 400 bank and credit union customers.
Features
Rapid partnership
Streamlined integration to over 450 financial institutions
Target end users through a trusted channel
Why it’s great The path to partnering with financial institutions is hard. The Q2 Partner Marketplace makes it simple.
Presenters
Greg Varnell, VP Engineering Varnell has worked in the technology arena for over 20 years. With more than ten years of experience at Q2, he is responsible for creating and growing the Q2 Caliper SDK team. LinkedIn
Derik Sutton, VP Product & Experience, Autobooks Sutton joined Autobooks in 2018 as Vice President of Product and Experience. As part of the executive team, Derik leads Autobooks’ product, design, and marketing execution. LinkedIn
Crypto asset-backed lender BlockFI just landed $50 million in funding, marking the company’s third investment in just 12 months.
The round was led by Morgan Creek Digital with participation from Valar Ventures, CMT Digital, Castle Island Ventures, Winklevoss Capital, SCB 10X, Avon Ventures, Purple Arch Ventures, Kenetic Capital, HashKey, and others.
BlockFI will use the cash to hire more employees and boost its business offerings. Specifically, BlockFI plans to add support for additional assets and currencies and is working on the launch of a bitcoin rewards-based credit card.
Flori Marquez, SVP of Operations and Co-Founder of BlockFi, described the company as “a driving force in bringing cryptocurrencies mainstream.” And that summarizes BlockFI’s goal with this new growth round. Not only does the company hope to improve the customer experience, it also wants to broaden the appeal of crypto-based investment.
Founded in 2017, BlockFI offers some of the same services customers are used to seeing at their traditional bank, only for cryptocurrencies. In addition to providing trading and institutional services, the company allows users to earn compound interest in a range of different cryptocurrencies. BlockFI also helps clients leverage their cryptocurrency as collateral towards a loan, paid in U.S. dollars, and receive their cryptocurrency back after the loan is paid off.
“With the support from our partners, we’re creating a platform for investors where they aren’t investing in just digital assets anymore—they’re investing in the future, greater financial empowerment and accessibility,” said Zac Prince, CEO and Founder of BlockFi.
BlockFi, which currently has $1.5 billion in assets on its platform, has seen impressive growth in recent months. The company ballooned its revenue 10x over the past year, with plans to reach $100 million in revenue over the next 12 months.
Alternative credit scoring innovator CredoLab announced a new $7 million investment today. The Series A round was led by identity data specialist GBG, a company that entered a technology partnership with CredoLab back in June and is now taking a minority stake in the Singapore-based firm. CredoLab plans to use the additional capital to fuel expansion in markets in Asia, Latin America, Europe, and Africa.
Founded in 2016, CredoLab made its Finovate debut at our Asian conference in 2018. At the event, the company demonstrated its proprietary CredoScore which converts digital footprints into highly predictive scores that can be used by banks and lenders to guide credit decisioning. The company’s technology examines mobile device data – collected after securing the user’s permission – and leverages AI-based algorithms to analyze 50,000+ data points to, as the company puts it, “connect the dots that traditional credit scoring methods can’t.”
GBG Group uses Credo’s technology to bolster its own antifraud platform’s ability to determine creditworthiness during the onboarding process. GBG Chief Executive Chris Clark praised the way Credo’s risk scoring will help it better serve “good customers who are financially excluded” – especially by lowering false positives.
In addition to its partnership with GBG, CredoLab teamed up with GoBear and fellow Finovate alum Mambu in June to help the financial platform expand to the Philippines. The previous month, CredoLab was highlighted by Fintechnews Singapore in its look at fintechs in SE Asia that are making a difference when it comes to financial inclusion. The company this year has also worked with LenDenClub, among the fastest-growing P2P lending platforms in India, and collaborated with Salary Dost – also based in India – to help the lending platform enhance its underwriting process.
A winner in the ASEAN Open category of the SFF x SWITCH Fintech Awards last year, CredoLab was recognized in January as Indonesia’s first credit scoring company. Since inception, CredoLab has powered more than $2 billion in loans issued, analyzing more than one trillion data points across 21 countries. Peter Barcak is co-founder and CEO.
This is a guest post written by Philippa Ushio and Hal Bienstock of Prosek Partners.
In an extremely uncertain business environment, there are two things that almost every expert agrees to be true:
The most innovative companies are likely to come out ahead when the COVID-19 crisis comes to an end
Diverse leadership teams are more innovative and generate better business results
So, why is it that venture capitalists – the very people tasked with funding innovation – are so monolithic? According to a report from Richard Kerby of Equal Ventures, just three percent of VC employees in 2018 were Black and only one percent were Hispanic. Eighteen percent are women.
The numbers for fintechs tell a similar story. According to research from Oliver Wyman, women represent just 14% of fintech boards, compared with 23% in the banking sector. The consulting firm found that 39% of fintechs it studied had no women on their board at all.
Now consider that McKinsey’s Delivering Through Diversity Report found that companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability. And research from Boston Consulting Group found that companies with more diverse management teams have 19% higher revenues due to innovation. Clearly, there’s a disconnect.
That said, we can agree that not all talk about diversity and serving underserved populations is just lip service; many fintechs are in fact delivering on their missions. Facilitating access to PPP is a good example, with loan marketplaces like Lendio, Fundera and Nav having all been credited with reacting quickly to help small businesses during the first round of government support. And many neo-banks and earned wage access providers are helping low-income workers achieve financial wellness during a period of great economic uncertainty. Pandemic aside, there is no doubt that it is easier today than it was 10 years ago for businesses and individuals to get reasonably priced short-term credit, specialized financial advice, and avoid high percentage loans, among other things. Yet, for all the good fintechs are doing, it’s impossible not to think about the problems that founders haven’t begun to even consider – let alone solve – because they don’t have people on their teams who are actually living with these issues.
In addition to the disturbing lack of ethnic and gender diversity at VC firms, Richard Kerby found that 40% of VC employees went to one of just two schools – Stanford or Harvard. How many of them grew up unable to afford an unexpected $400 expense, like 40% of Americans? Or with parents running small businesses that lived or died based on what was in the cash register at the end of the day?
Over the past decade, fintechs have done a lot to help small and medium businesses. But there’s an opportunity to do so much more and there has never been a more important time than now as so many face the reality of shutting their doors in the wake of the pandemic.
If founders and VC firms continue to ignore the benefits that diversity in leadership bring, it won’t be long before the disruptors find themselves disrupted by those who are more innovative, more thoughtful about the problems they are trying to solve, and more able to reach a customer base that consists of far more than just Harvard and Stanford grads.
The good news is that things are changing. Many fintechs and VC firms put out strong statements of support following recent racial justice protests and committed themselves to taking measurable action to diversify. Only by living up to these ideals can the current fintech wave continue to build. Let’s watch this space.
Philippa Ushio is SVP at Prosek Partners where she leads teams in developing communications strategies and mounting multi-disciplinary campaigns to protect and enhance business value. Throughout her career, she has provided strategic counsel to clients facing a wide variety of complex issues, focusing particularly on their communications challenges.
Hal Bienstock is a Managing Director at Prosek Partners. A fintech specialist, he has spent more than 20 years working as a brand strategist and corporate communications executive. He has extensive experience counseling C-suite leaders and developing integrated campaigns that change perceptions internally and externally.
A couple weeks back I had a conversation with Andrew Besheer, Head of North America for Appway, about the rise of challenger banks. Our discussion centered around some of the data points in Ron Shevlin’s piece, The Online Banking Insurgency of 2020, published in Forbes last month.
One of the questions that came up was if this surge in new challenger bank accounts is an accident of digital transformation? In other words, are Millennials and Gen Z consumers gravitating towards challenger banks because their websites appear more digitally savvy?
At its core, this is a chicken-and-egg question. Are challenger banks successful because their tech-first approach satisfies consumers? Or are underserved consumers driving challenger banks to create new products and services that banks are unable (or unwilling) to offer?
First, its important to recognize that both challenger banks and incumbents know their target market. That is, the challenger banks are catering to an audience looking for a different bank experience than the one that appeals to their parents.
To answer this question, first, take a look at the outward appearance. Traditional banks’ websites are text-heavy, with long-winded fine print, and are intimidating enough to drive away less experienced consumers. Conversely, challenger banks use colloquial language and present websites that look simple and transparent. As an example, take a look at Charles Schwab’s website:
And now look at Dave’s:
Both are relatively technologically and digitally advanced banks, but they are appealing to two entirely different demographics.
Taking a look under the surface, the products and services each bank offers are also different. Schwab’s are heavily geared toward investing and trading, while what Dave offers– paycheck advances and credit building tools– seems to center around keeping its users afloat.
In the end, the two approaches are perfectly suited for users on opposite sides of the generational spectrum. My father and grandfather would never bank somewhere that had a cartoon as a mascot. And younger, Generation Z users don’t trust incumbent banks’ language and apparent lack of transparency.
Now, to answer the question, “are Millennials and Gen Z consumers gravitating towards challenger banks because their websites appear more digitally savvy?” The answer is no. Challenger banks are built from the ground up to entice this generation of users. And while the banks’ advanced digital capabilities help to draw users in, they are not the sole reason younger, tech-savvy users choose them.
You can check out the full interview, where Besheer and I delve further into the challenger banking conversation, on Appway’s website.
Urban FT’s newly-launched X-35 FinTech Core will enable financial institutions to centralize their fintech infrastructure into a singular hub that sits beside and is connected to the bank’s existing core or payment processor. The API-based, developer-friendly technology helps FIs create and deploy new, innovative solutions to their customers faster and at significantly less expense.
Urban FT sees the new offering as a tool to help smaller and mid-sized FIs maximize their engagement with their customers via more personalized products and services. Company CEO Richard Steggall said in a statement that providing these resources to banks was not just a matter of helping them keep up with the larger competition, but also was designed to empower them to “leap frog the competition entirely.”
“We founded Urban FT with the vision of giving our clients the means to dream big and deliver exceptional, and that’s exactly what X-35 does,” Steggall explained. He compared his company’s approach to providing “an Amazon Web Services for FIs” enabling them to leverage Urban FT’s R&D team on a continuous basis. “FIs can digitize nearly every interaction they have with their customers while significantly compressing the number of implementations, systems, and platforms they need to outpace the competition.”
Urban FT’s new solution is geared toward bridging the gap between the dreams of open banking and the reality of a fintech infrastructure that is not yet capable of maximizing this opportunity. By contrast, Urban FT’s offering relies on a cloud-based, serverless, microservice architecture that supports continuous innovation, seamless updates, and greater operational efficiencies in a scalable environment. “It makes the ‘impossible’ possible by providing both the foundation and the plumbing that realize the vision that many have tried but few have been able to deliver on,” said Urban FT board member and former Citibank Managing Director Aditya Menon.
Founded in 2013 and headquartered in New York City, Urban FT made its Finovate debut in 2015. A member of the Inc. 5,000, Urban FT has more than 500 financial institution clients, and processes more than $18 billion in transactions a year. The company has raised more than $15 million in funding.
You’ve likely heard the phrase, “every company will become a fintech company.” That’s because the banking-as-a-service model has officially taken off and is helping companies across all industries offer their customers a variety of banking options.
Perhaps that’s what Alviere was thinking in creating its new flagship offering, TheHivePlatform, which it distinguishes as a Financial-Services-as-a-Platform (FsaP) tool. Hive allows businesses to choose from a range of seven financial services offerings– including banking and treasury application services; payment processing and cross border transactions; debit, prepaid, and credit issuing services; identity, risk, and fraud management services, business intelligence and analytics, customer communication tools, and mobile technology– and enables them to easily integrate their own branded tools into their existing business via an API.
“We know from our own experience the pain it takes to get a financial service to market, so we launched Alviere and The HIVE to help companies like us to alleviate the pain,” said Yuval Brisker, co-founder and CEO of Alviere. “We’re excited to announce the launch of The HIVE, which is the most advanced and complete Financial Services as a Platform (FsaP) on the market today. It’s much more than Banking-as-a-Service, incorporating many more capabilities than similar offerings.”
The Hive Platform also solves one of the biggest hurdles for companies delivering financial services– regulations. That is because it is already designed to be deployed in any geography with any regulatory framework.
Offering businesses financial services is a good move because it allows companies to focus on their core competency while providing access to valuable financial services. In addition to keeping customers happy, delivering financial services helps businesses by creating a stickiness that will drive customers back to their business, website, or app more frequently.
Founded by Yuval Brisker and Pedro Silva, Alviere is now available to businesses in Canada and the U.S. The company plans to be available in more geographic regions by year-end.
