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Global Fintech and the COVID-19 Crisis

By David Penn Posted on March 27, 2020
Categories: Daily news, DriveWealth, Finovate Global, Ripple, TransferWise

The fight against the coronavirus pandemic has captured the attention of people all over the world. From medical professionals on the front lines of caring for the sick to small businesses making hard decisions about how to keep their workforces intact during lockdowns and stay-at-home orders, everyone has been touched by the current crisis.

Earlier this week, we took a look at how fintechs and financial services firms are rising to the challenge of the COVID-19 outbreak. Looking at three different areas – safety, digitalization, and service – we saw how companies in countries ranging from Russia and India to the U.K. and the U.S. are lending their insights, talents, and generosity to the cause.

Companies like London-based Aire, a Finovate alum that is offering lenders three months of free access to its credit insight service, are an example of what is happening across the fintech space. “We’re seeing an unprecedented level of change in the market for consumers right now,” company founder and CEO Aneesh Varma said. “Lenders are understandably stretched and struggling to build accurate pictures of their customers in real-time.”

CoinDCX Cashes In: Two weeks ago we interviewed Neeraj Khandelwal, co-founder of Indian cryptocurrency trading platform CoinDCX, on cryptocurrencies and cashlessness. This week, we learned that the company has raised $3 million in Series A funding. The round was led by Polychain Capital, Bain Capital Ventures, and HDR Group. The capital will help the company launch new products, boost R&D efforts and marketing, and build the CoinDCX team.

“As the country’s largest exchange, we are in a position to drive national crypto adoption forward responsibly,” CEO and co-founder Sumit Gupta said. “This successful investment round will go a long way in funding our vision of accelerating India’s growth into a $5 trillion economy.”

Here is our weekly look at fintech around the world.

Sub-Saharan Africa

Kenya-based telecom Safaricom to waive fees for its M-Pesa mobile money service to help customers avoid cash during the COVID-19 outbreak.
Somalia’s MyBank to deploy Sharia-compliant, core banking technology from Path Solutions.
Ghana goes live with its Universal Quick Response (QR) Code and Proxy Pay system.

Central and Eastern Europe

SME Finance, a factoring services provider for businesses in the Baltics and Poland, picks up 10 million euro investment from new partner, Citadele Bank of Latvia.
Berlin, Germany-based, digital business bank Penta raises 18.5 million euros in new funding.
The COVID crisis has authorities in Russia decontaminating cash and urging citizens to use digital payments.
Erste Bank Hungary deploys mobile security technology from OneSpan.

Middle East and Northern Africa

DriveWealth announces its first MENA region partnership: a collaboration with UAE-based wealth management firm, Wealthface.
Al Ansari Exchange taps Pelican for financial crime compliance.
Emirates’ World Investments commits to investment of $255 million in Australian challenger bank Xinja.

Central and Southern Asia

Mobile payments company HUMBL forges new partnership with Digital India Payments.
Singapore-based anti-fraud solutions provider Advance.AI opens offices in Bengaluru and Delhi.
Indian alt lender Vivriti Capital secures $50 million in Series B funding.

Latin America and the Caribbean

Mexican SME lender Creditjusto raises $100 million in debt financing from Credit Suisse Group.
Brazilian fintech Creditas announces plans to boost staff by 500 by the end of the year.
Wirecard teams up with Mexico’s Banca Afirme as the German digital payments solutions provider extends further into the Mexican market.

Asia-Pacific

TransferWise teams up with Alipay to enable fund transfers to China.
Bank of China launches its AI-based FX trading signal app via Eikon.
Thai remittance company DeeMoney goes live on RippleNet.

Top image designed by Freepik

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KONSULTA’s Roland Woerle on Innovation, Incumbency and Insurtech

By David Penn Posted on March 26, 2020
Categories: FinovateEurope 2020, Speaker series

The impact of technology on the insurance industry continues to be one of the more underrated developments in fintech. And while the level of disruption varies from one region to another, the intersection of insurance and technology is the growing source of innovation.

This year at FinovateEurope, we spoke with Roland Woerle, founder and partner of KONSULTA.eu, a boutique advisory firm, based in Austria, with a focus on the European insurance industry. KONSULTA helps insurers and brokers increase revenues, improve their customer experience, and manage business transformations.

“We are different, refreshing, highly-competent, fun, value-driven, and 100% customer focused,” Woerle described KONSULTA by way of introduction. “We are trying to help insurance players in their transformation, innovation, and customer/employee value propositions.”

Finovate Research Analyst David Penn talks technology and innovation in insurtech with KONSULTA’s Roland Woerle

Woerle is also senior representative at Vienna-based Match-Maker Ventures, where he helps startups that have already reached the proof-of-concept level scale their businesses. Previously, Woerle spent more than five years as Chief Operations Officer (Nordics/ Austria and CEE) for global financial services firm Aon, and more than ten years as Chief Operating Officer (Austria, CEE, CIS, and Nordics ) for leading insurance broker Marsh.

We talked about the role of technology in accelerating processes in insurance, and which business models benefit the most from the cost savings of technologies ranging from robotics to satellites. We also discussed the key distinction between companies with innovation teams and companies with innovation cultures, and the challenges businesses face in developing the latter from the former.

“Large insurance organizations they are still struggling with (this),” Woerle said. He pointed to issues with the company’s best and brightest often being pre-occupied with other, day-to-day tasks, as well as an incentive structure that does not reward what he called a “try and fail fast” approach to innovation, as major obstacles. Add to that insurance companies’ traditional risk aversion and it’s easy to see why “unconventional ideas,” as Woerle referred to them, face a challenging road to adoption.

Here are some of the top takeaways from our conversation with Roland Woerle this year at FinovateEurope in Berlin.

On platformification and the future of the insurtech

Woerle: (The platform economy) is highly relevant for insurance. We had a good debate in the afternoon, discussing where insurance companies might go into, and how they might become platform providers and solution providers for platforms. The industry as such might evaporate over time and morph into the platforms.

It’s a bit of a scary thought on the one hand. But, on the other hand, it’s a great opportunity for those who actually partner with the right platform providers. They can actually grow and grasp new opportunities in the market.

On the main ways the technology is changing the traditional insurance business

Woerle: I think that there are probably three areas where technology is really changing (insurance). First of all, it primarily speeds up the processes along the insurance value chain. Whether it’s distribution, underwriting, customer service … there’s huge potential for claims … just to make the process faster.

I see also tremendous potential on the B2B side, especially the large B2B speciality insurance lines like marine, where you can actually use satellite tracking, blockchain contracts in much more innovative ways around data analytics to drive down the tremendous costs in that industry.

On the relationship between insurance incumbents and insurtech startups.

Woerle: It’s still a difficult relationship to make work. I guess it’s the same as in the fintech space. It’s one of the things that KONSULTA is actually focusing on. We are working with startups and working with industry leaders to better match them to make sure it’s a win/win case for both of them.

They need to be true partnerships. Incumbents cannot see a startup just as a supplier. This won’t work. They will fail any procurement process. They will not “tick the boxes” which they need to tick. (Incumbents) need to nurture (startups). They need to see them as strategic partners.
So bringing them together, speaking the same language, seeing where value is added on both sides, and how can they make a win/win situation … I think that is the way to succeed.

Watch the full, six-minute interview on Finovate TV.

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ebankIT and Enterprise Engineering Forge North American Partnership

By David Penn Posted on March 26, 2020
Categories: Alumni News, Daily news, ebankIT, Enterprise Engineering

Finovate Best of Show winner ebankIT is working with fellow Finovate alum Enterprise Engineering (EEI) to launch a new omnichannel banking solution geared toward financial institutions in North America in general, and the U.S. in specific.

The collaboration will combine Enterprise Engineering’s experience as an integrator and advisor on digital transformation and open banking with ebankIT’s omnichannel digital banking platform.

“This partnership is an important step on the consolidation of our growth strategy for the North American market, where we already have a significant presence,” ebankIT CEO Renato Oliveira said. “With the change of both operations and customer service models, it is essential for banking organizations to have a flexible and sophisticated solution, capable of bringing a true omnichannel experience, which is exactly the main strength of ebankIT.”

The companies previewed this initiative back in February. The joint venture is geared toward helping banks and credit unions in the U.S. offer full-service banking capabilities, including leading-edge technology solutions, to their customers. EEI and ebankIT are marking this latest development in their relationship with a series of educational, half-day seminars on Open Banking beginning this month in New York City.

“This partnership represents a terrific opportunity for EEI and ebankIT,” EEI founder George Anderson said when the collaboration was announced. “Our product sets are extremely complimentary and are best-in-class in our target markets.” Anderson noted that the partnership will result in “impossibly fast time to market and ROI for our joint customers.”

Founded in 2014 and maintaining offices in Porto, Portugal and London, U.K., ebankIT demonstrated its Digital Concierge 2.0 solution at FinovateEurope earlier this year. The technology unites financial and third party services via open banking integrations and channel analytics to provide relevant and engaging customer journeys.

Enterprise Engineering participated in our developers conference, FinDEVr Silicon Valley, presenting its Trusted Network Platform, an advanced data aggregation and management solution. A WealthManagement.com 2018 Industry Award winner, New York-based Enterprise Engineering was founded in 1995.

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Fintech Joins the Fight Against the Coronavirus

By David Penn Posted on March 25, 2020
Categories: Daily news, List series

Photo by **Anna Shvets** from **Pexels**

How are fintech companies lending their technology and talent to help the world better manage the COVID-19 pandemic? From insights into the impact on financial services to digital identity solutions to help with remote medical services, fintech companies from across the world are all-in when it comes to coping with the current global health crisis.

One of the key early posts on the impact of the coronavirus on financial services was put together by Jim Marous, co-publisher of The Financial Brand, owner of Digital Banking Report, and host of the Banking Transformed podcast. Looking at both negative and positive impacts of coronavirus on fintech, Marous’ How Will the Coronavirus Impact the Banking Ecosystem, is an excellent first stop.

Another worthwhile read is Ron Shevlin’s Forbes column, which lists fintech companies that are providing technology help during the crisis. The continuously updated list, started on March 23rd, currently has more than 125 companies that are “extending free, discounted, or accelerated deployment offers to financial institutions.”

Here’s a look at three ways that fintechs and financial services companies are doing their part to make a difference.

Safety First

In times of crisis, leadership is paramount. Much of the fear and anxiety that comes with tough times can be alleviated by giving people and institutions clear guidelines on what the best practices are in order to manage the challenge.

In this regard, credit to the American Bankers Association for their guidance to community banks, issued earlier this week, on the importance of communicating “early and often” with customers. As a dinosaur who still visits his bank branch a couple of times a month, I have found it fascinating – and a little disconcerting, at first – to watch my local bank transition from gloved bank tellers (and no more free cookies!) to drive-up service only.

With this in mind, the ABA both encouraged branches to emphasize their digital channels, as well as provided suggestions on how to make in-branch visits safer for those customers who still required that access. Similar recommendations on personal responsibility (“if you feel sick, stay home”) as well as social distancing were made for bank employees whose jobs require them to be physically onsite.

Go Digital

The trend toward cashlessness and digital currencies is one area of fintech that will be positively affected by the social distancing of the COVID-19 crisis. Both the central bank of Russia and the National Payment Corporation of India have urged citizens in their respective countries to use digital payments in lieu of cash to help stem the spread of the coronavirus.

Africa, where mobile payments have helped contribute to financial re-inclusion, is also finding these technologies to be a potential resource for supporting public health. With cash deemed a conduit for the spread of the coronavirus by the World Health Organization, countries where mobile payment technologies are emergent are likely to see an even more accelerated rate of mobile and digital payments adoption.

Note that Safaricom, the telecommunications company behind the region’s leading mobile money service, M-Pesa, announced that it would waive fees on all P2P transactions under $10 for three months. Mobile money services in Ghana also have been encouraged by the country’s central bank to waive fees and lower KYC requirements to ensure access.

Maybe the image of a dystopian future in which books are incinerated will be replaced by one where massive bundles of cash put to the figurative – if not literal – torch. ” ATM Marketplace’s David Jones recently reported a conversation with an analyst who granted that reports of cash being disinfected or burned in Asia are making a pretty good case for the future of contactless payments.

Serve Somebody

Conducting their normal operations is one of many challenges businesses are facing at present. Fortunately, firms like U.K.-based challenger bank NorthOne are providing free banking services to SMEs and restaurants during the crisis.

“Small business owners across the country are having incredibly hard conversations right now around the kitchen table and desperately trying to figure out how they can keep the lights on through this crisis,” NorthOne co-founder and CEO Eytan Bensoussan said. “The last thing they need to worry about is finding a branch or paying bank fees.”

But the loss of revenue due to the various lockdowns and stay-at-home orders issued in many countries is even more of an acute problem. While governments haggle over publicly-sourced solutions for small businesses, a group of U.K. fintechs in the lending business – Trade Ledger, Wisefunding, and NorthRow – have teamed up to offer a turnkey origination and underwriting platform to enable banks and lenders to digitally fund SMEs.

“The government’s capital injection is a massive boost to an underserved market at an extreme time of need,” Trade Ledger CEO Martin McCann said, “but it’s impact will be lost if lenders aren’t able go get these loans to their customers quickly.”

The technology community in general, and to some degrees fintech, as well, has come under various strains of criticism of late. From overvaluation to questions of work culture to concerns that the innovations of Silicon Valley increasingly cater to the young and affluent, many of these critiques have merit. But all that said, as many of these companies are showing, there may be in the current crisis an opportunity for technology – and fintech – to remind the world of its enduring value to us all.

We would be remiss not to highlight our Finovate alums that are offering their services and solutions to help during the COVID-19 pandemic. These alums include Alpharank, Banno, Cunexus, Datanomers, Digital Onboarding, Finovera, Finscend, Horizn, Hydrogen, Inspirave, Invest Sou Sou, Kasasa, Moxtra, Pinkaloo Technologies, Plinqit, Q2, StreetShares, Temenos, and Teslar Software.

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Arkose Labs Locks in $22 Million for its Fraud Fighting Technology

By David Penn Posted on March 25, 2020
Categories: Alumni News, Arkose Labs, Daily news, Funding

In a round led by Microsoft’s venture capital arm, M12, anti-fraud solutions provider – and FinovateSpring Best of Show winner –Arkose Labs has raised $22 million in Series B funding. The round, which takes the company’s total capital to more than $36 million, also featured participation from existing investors PayPal and USVP.

“Our platform takes a zero-tolerance approach to cyber-attacks and our team is committed to putting a stop to the global fraud epidemic,” Arkose Labs CEO and founder Kevin Gosschalk said. He praised both Microsoft and M12 for their recognition that the challenge of cybersecurity is to “eliminate fraud, rather than contain it.”

Global Head of M12 Nagraj Kashyap noted that Microsoft was no stranger to Arkose Labs’ work in fraud-fighting. “Multiple Microsoft businesses are already benefiting from this innovative technology,” he said. “With Arkose’s end-to-end anti-fraud platform, enterprises across the globe can better protect against fraud and abuse long-term.”

San Francisco, California-based Arkose Labs offers an authentication system that identifies the context, behavior, and reputation of requests, recognizing them as either authentic or inauthentic. Authentic requests are passed through, while inauthentic requests are remediated with a set of dynamic defenses. Requests that cannot be recognized are processed via a challenge-response mechanism until there is evidence of the request’s authenticity. This process also helps improve the platform’s real-time decisioning, reducing the number of false positives over time.

The platform helps defend against a variety of threats including ATO (account takeover), scraping, spam, gift card abuse, and other fraud. Microsoft Director of Identity Security Alex Weinert credited Arkose Labs for offering a cybersecurity solution that is as efficient as it is effective. “Arkose Labs’ technology is an important component of our multi-pronged approach to minimize fraud without negatively impacting legitimate customers,” he said.

Arkose Labs said that the funding will help drive platform development and fuel global expansion, as well as enable the firm to add talent. The investment comes in the wake of the firm’s near doubling of its customer base and the introduction of a number of platform enhancements. These additions include new functionality for Arkose Detect, the platform’s dynamic risk engine, and for Arkose Enforce, the platform’s adaptive step-up mechanism.

“2019 was a banner year, with our platform detecting and preventing $500 million fraud attacks over the last twelve months,” Gosschalk said in January, “saving our customers hundreds of millions in fraud losses and operational costs.”

Founded in 2015, Arkose Labs was recognized by CNBC in its 2019 Upstart 100 roster. The company’s VP of Marketing and Strategy, Vanita Pandey, and Senior Producer, Hedda Peters, won Women in Cybersecurity awards at Cyber Defense Magazine’s Cyber Defense Global Awards last fall.

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TheWaay, Neo Digital Banking and Serving the Mass Affluent Market

By David Penn Posted on March 24, 2020
Categories: Alumni profile, FinovateAsia 2019, The WAAY

Making banking more compatible with the everyday lives of consumers is one of the top goals of fintechs everywhere. London-based fintech startup, TheWaay, which made its Finovate debut last year in Dubai and followed that appearance with a Best of Show winning return to the Finovate stage a few months later in Singapore, has built a solution designed to do just that.

Founded in 2016, TheWaay offers a Lifestyle Banking platform that helps banks and other financial institutions better understand and meet the needs of their customers. The platform’s Lifestyle Assistant leverages deep behavioral profiling to give users personalized lifestyle advice and suggestions on financial services and banking products, as well as travel and e-commerce opportunities that might interest them. The technology helps financial services firms increase customer engagement and transaction volume, as well as grow revenue through increased up-sell activity.

“This product organically grew from inside our company for one reason,” company CEO Ivan Kochetov said during a demonstration of the company’s Digital Family Office solution at FinovateAsia. “We were sad because everybody was doing neo and digital banking for the mass market, and nobody was doing neo and digital banking for people like you and I, for the affluent market, for the premium market. Is it fair? No.”

TheWaay CEO Ivan Kochetov

For TheWaay, this neo digital banking solution for the affluent market should be about more than changing designs, Kochetov said. Instead, it should be about “new value (and) new promise.” The goal is to provide what Kochetov called “the first digital family office” for the affluent market that works within an institution’s banking app to provide a private banking level of service.

We caught up with Kirill Lisitsyn, Head of Business Development with TheWaay, who facilitated our email conversation with company CEO Ivan Kochetov earlier this year. The transcript of our exchange follows.

Finovate: Congratulations on winning Best of Show at your first Finovate event! What was your experience at FinovateAsia like?

Ivan Kochetov: Thanks a lot! Oh, that was incredible! It was our first step to test the ground in Asia and we surprisingly got the award!

Finovate: For those who are just getting to know your company, what problem does TheWaay solve?

Kochetov: We are a fintech startup aiming to shift current “old school” communications between bank and its customers to a new way of personalized non-banking communications based on customers’ lifestyle and needs. And we believe that this is the right way to support banking industry transformation in the era of the engagement economy.

Finovate: How does TheWaay solve the problem better?

Kochetov: We develop a software that is called Lifestyle Banking Platform. We help banks to understand people and become a Lifestyle Assistant for their customers to boost daily engagement, card transactions and up-sell metrics in their mobile banking app. We use over 500 attributes for each customer and a model trained with over 1 billion in transactions.

Finovate: Who are your primary customers?

Kochetov: We are a B2B2C business. Historically we have been building our expertise within banking industry, but now also see the growing interest from telco and retail industries as well. Especially accounting the trend for virtual banking, you do not need huge branches network to become a bank and serve customers. But once you are a digital-only bank you need to engage your customers in your digital channels. And here we could definitely help.

Finovate: What in your background gave you the confidence to tackle this challenge?

Kochetov: The core of our team has a well-balanced mix of background in behavioral psychology, machine learning, product development and in implementing innovative tech and consulting projects for large financial institutions.

CEO Kochetov and Head of Business Development Kirill Lisitsyn at FinovateAsia 2019 in Singapore.

Finovate: Tell us about a favorite feature of your platform.

Kochetov: Ha! You know, based on our user surveys and the metrics we track, we figured out that one of the favorite features of our Lifestyle Assistant product is the advice on how to spend one day of a weekend. Users do not have to worry about what to do on their free day; our system will suggest a set of recommendation and ideas coupled with geo-routes, all based on user’s lifestyle, interests, and preferences.

Finovate: What are some upcoming initiatives from TheWaay that we can look forward to over the next few months?

Kochetov: We plan to launch several pilot projects of our Digital Family Office product that we presented on Finovate Asia. We successfully delivered PoC projects, and now very much look forward to scaling that success. Also we have prioritized our international expansion and plan to get few international contracts within next 3-6 months.

Finovate: Where do you see TheWaay a year or two from now?

Kochetov: We plan continue our rapid growth which will be supported by our presence in 3-4 large international markets and focus on 2-3 industries. Also we aim to sign one or two global mutually-beneficial partnerships which could even speed-up our expansion.

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Revolut Arrives in the U.S.A.

By David Penn Posted on March 24, 2020
Categories: Revolut

Revolut, the London-based fintech and alternative bank that reached unicorn status in 2018, has finally made its move to America.

The financial services company has racked up more than 10 million customers in the U.K. and Europe since its launch in 2015. Now an option for banking customers in the United States, Revolut enables users to send free, real-time payments, and make fund transfers and exchanges at the interbank rate in 28 currencies. Customers can also use the app to manage their financial lives more efficiently with instant spending alerts, budget categorization tools, bill-splitting, round-up savings on transactions, and card controls. Those who select direct deposit can get their wages up to 48 hours in advance of their regular pay date.

“America, we come bearing good news in these uncertain times,” the company’s Head of Marketing and Communications Chad West announced on the Revolut blog this morning. “Imagine, one app to manage your entire financial life.”

The Revolut app is available for both iOS and Android. Once the user downloads the app and enters their information, the verification and approval process takes only a few minutes after which the new customer can begin making deposits and sending money.

Deposits in the U.S. are FDIC-insured up to $250,000 (thanks to a partnership with Metropolitan Commercial Bank). Revolut customers have access to more than 55,000+ ATMs in the U.S. and around the world.

“When spending or transferring money overseas, most people are unaware of the hidden fees that banks are charging them,” Revolut founder and CEO Nik Storonsky said. “The world is becoming more connected, and financial services should be supporting this notion, not hindering it.”

Last month Revolut announced a $500 million fundraising that boosted the company’s total capital to $836 million and gave the firm a valuation of $5.5 billion. Revolut recently unveiled its digital money management accounts for children (and their parents), Revolut Junior. The company, which was an early pioneer in cryptocurrency holdings, also introduced a new service this month that will enable its customers on its Premium and Metal plans to make in-app purchases of gold.

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Ripple Explains What’s Holding Back Blockchain Adoption

By Julie Muhn (@julieschicktanz) Posted on March 23, 2020
Categories: Report series, Ripple

Last fall, blockchain payments company Ripple, in conjunction with Celent, conducted a survey to better understand payment services providers’ adoption of blockchain-based payments. The findings of that study are published in a report issued by Ripple, and illustrates how far the payments industry has come with regards to blockchain adoption, and what’s needed to keep the momentum going.

The study surveyed 1,050+ payment services industry representatives across 21 countries. Overall, it found that:

35% of respondents are in production of a blockchain payments solution
27% are nearing implementation of a blockchain-based payments solution
31% say that the blockchain offers the opportunity to expand existing services into new regions
71% are “very to extremely” interested in digital assets

Ripple indicated that leveraging the blockchain for payments has gained a significant amount of momentum thanks to its fair pricing for end consumers, attractive revenue for payments providers, and the overall level of trust placed in the technology.

Now all that’s needed is to pick up the pace of adoption– but what is holding back mass adoption of the technology? Ripple’s study identifies three drivers responsible for faster blockchain adoption:

Faster implementation

Payments companies are concerned about implementing a blockchain-based payments solution because they are worried it will be expensive and difficult to integrate into their existing platform. In fact, a third of respondents to the study cited implementation as a concern of using the blockchain for payments.

Regulation

When integrating new technology into existing platforms, regulatory hurdles are almost always a concern. With blockchain technology, however, this seems to be even more true, especially with legacy financial institutions. As one would expect, regulatory concerns of digital banking providers are less acute, since they are accustomed to operating using non-traditional models.

Digital assets

One of the top perceived benefits of using the blockchain for payments is the time savings. In fact, three quarters of the survey respondents were interested in leveraging the blockchain for digital assets in cross-border money transfers. Fueling this interest is the speed at which these transactions can occur when compared to traditional payments. The study found that early adopters of blockchain technology are most interested in using digital assets.

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Lighter Capital Takes Debt Financing to Canada

By Julie Muhn (@julieschicktanz) Posted on March 23, 2020
Categories: Daily news, Lighter Capital

The physical border between the U.S. and Canada may be closed, but that’s not stopping tech startup financing provider Lighter Capital. The Seattle-based company announced today it has launched its services in Canada.

Canadian businesses can now take advantage of Lighter Capital’s debt financing offerings, including term loans and lines of credit, as an alternative funding source from bank loans and VC funding. Both debt financing options offer companies up to $1 million in capital.

The company’s flagship offering, Revenue Financing, will not yet be available to Canadian businesses. Lighter Capital’s Revenue Loans help borrowers access up to $3 million in loans that they repay based on their monthly cash inflow.

“With the Canadian tech industry’s continued growth, we’re seeing a correspondingly greater need among startups for access to venture capital as well as to various forms of debt financing,” said Meredith Powell, Vancouver-based venture partner at Voyager Capital, an investor in Lighter Capital. “Lighter Capital is a trailblazer in the area of debt-based financing and I have little doubt that, given the increasing demand for their services, they’re positioned for success across the nation.”

Fueling its Canadian expansion, Lighter Capital will open an office in Vancouver, British Columbia. The company is also partnering with the Canadian branch of the Founder Institute, a startup accelerator.

Founded in 2012, Lighter Capital has offered more than $200 million to 350+ U.S. startups. Of those, 20% have had successful exits.

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Cybersecurity: The Hidden Risks of Fintech Services

By Julie Muhn (@julieschicktanz) Posted on March 20, 2020
Categories: Guest Post

The following is a guest post written by Apoorv Gehlot, founder of Matellio LLC, a software engineering studio based in California.

Fintech has drastically improved the products and the services of the traditional financial services in the past few years. However, even after many financial institutions have readily adopted fintech services, there are still some hidden risks in the aforementioned industry. For instance, the integration of the fintech services in the existing banking solutions raised a severe concern for data security. Also, the rapid growth of digital platforms made the fintech industry and its customers uniquely vulnerable to various breaches in IT security networks.

Hence, it is vital to know about various hidden risks involved in the fintech services. Let’s discuss some of them here.

Trending challenges in fintech

Third-party security risks

Internal security is not always enough, especially when it comes to banks. Hence, much of the time, when banks or other financial institutions leverage a fintech service from a not-so-trusted service provider, they end up losing their data, experiencing service failures, and may even suffer a loss of reputation because of inefficient data. These types of damages occur due to third-party security risks. To eliminate third-party risks involved with fintech services, banks and financial institutions should consider the fintech relationship-related risks in their risk management assessment.

Malware Attacks

Malware attacks and hacking are the most prominent types of security issues that are prevalent in the global market. The hackers are now targeting the Society for Worldwide Interbank Financial Telecommunication (SWIFT) more easily. SWIFT systems are used by almost all the banks and top financial institutions to exchange vital financial information.

However, the recent cyberattack on the SWIFT infrastructure indicated the level sophistication of the hackers and malware attackers. The banks and financial institutions have vulnerabilities in their processes, and the hackers take advantage of these vulnerabilities to launch malware attacks.

Data Breaches

We all know that data plays a crucial role in every industry irrespective of their domain. And when it comes to banks and other financial institutions, data automatically becomes a matter of utmost importance. However, with the introduction of inefficient fintech systems in the finance industry, the problems of data breaches rose to a great extent.

Payment card details and user information are readily available to hackers making online transactions prone to cyber thefts. The financial institution partners with third parties, and then data losses may occur due to their inefficient fintech services.

Application Security Risk

Fintech applications are used by many banks to access the real-time financial information of their customers. They leverage this real-time information to carry out transactions and for performing other banking operations.

However, if a software application does not have foolproof security modules and efficient codes, then it automatically becomes more prone to cyber thefts. The attackers leverage the weak security of the applications to steal the customer data and other vital information. So if a person is planning to develop a fintech software solution they need to be very sure that the application has all the vital security features included in it.

Money Laundering Risk

Fintech-driven banks often use cryptocurrency for carrying out financial transactions. These cryptocurrencies are an integral part of the fintech ecosystem, and they are not formally regulated by any set of standards and global regulations.

Hence, the frequent use of non-regulated currencies results in illegal money laundering and even in terrorist funding. Since identifying the beneficiary in any fintech-enabled transactions is not possible due to fintech’s pseudonymous nature, the money laundering operations get enough support from the fintech services.

Digital Identity Risks

With the introduction of digital tools in the banking and finance industry, the use of mobile-based services that used one-time passwords and security codes increased drastically. These security codes and passwords are not as safe and can be easily accessed by a hacker.

The vital data of the banking customers could be easily accessed due to the faulty fintech system provided by some of the fintech service providers. Hence, financial institutions need to revisit their online security architecture to address these risk factors before planning for fintech implementation.

Legacy Banking Systems

Banks are struggling hard to develop and introduce advanced fintech services in their non-patched core banking systems. These traditional banking systems are very much vulnerable to all sorts of cyber thefts. And the main concern is way more than that.

When the tech-friendly fintech services integrate with the existing non-secured banking systems, there are chances that they will be at the target of attackers too. So, the first duty for any financial institution before implementing fintech in their organization is to refresh their core banking systems. That will help the company eliminate losses due to cyber thefts.

Cloud-based Security Risks

Cloud-based solutions are one of the significant aspects of the fintech industry. From payment gateways and digital wallets to secure online payments, cloud computing services offer everything in the fintech ecosystem. Maintaining the confidentiality and security of financial data is critical to banks and financial institutions.

Even though the cloud-based services are considered a secure means of storing the data, lack of adequate security measures can result in the corruption of your sensitive financial information. There are instances when the company partners with an inefficient, cloud-based solution provider and then deals with significant data losses. Therefore, stay updated and be wise while selecting your cloud-based service partner.

To conclude, we can say that, if hackers are unbeaten in their efforts to access the fintech platform with ease and efficiency, the faith of banking customers in the technology-driven fintech platform will be significantly reduced. All this will result in the slow growth of the fintech industry. Hence, balanced innovation is needed to promote the growth of the fintech industry and mitigate the hidden risks of fintech services.

Apoorv Gehlot takes a keen interest in exploring various aspects of the digital realm, and ideate solutions with his team of innovators. He believes in sharing his experience and knowledge with readers across the world to enlighten the audience through concise and meaningful write-ups.

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Why a Focus on CX is More Important Now than Ever

By Julie Muhn (@julieschicktanz) Posted on March 19, 2020
Categories: Speaker series

The past couple of years in financial services have brought a lot of discussions about the client experience. In fact, that was the topic of my interview last fall with Martin Lange, Director of Client Experience Strategy at BNY Mellon. Is the sudden focus on customer experience all hype?

“Any of us who have been in client experience for a long time would say it’s been around for awhile,” Lange said, adding, “But the industry is looking for new ways of differentiation. And new ways of differentiation– as we’ve learned from other industries– is the client experience.”

Differentiation

So why is a focus on customer experience more important now than last year, last month (or even last week)? It comes down to differentiation.

Last year we wrote about fintechs vying for customer deposits and mindshare by boosting interest rates on savings accounts up around the 3% mark. With the Federal Reserve cutting rates to near-zero, that strategy will be increasingly difficult to follow through with.

Recognizing that this is a difficult time for everyone, banks can offer consumers two simple things that may be hard to come by to improve the customer experience (and no, it’s not toilet paper).

The first is kindness. When customer service representatives have a kind and friendly disposition over the phone it can bring customers a bright spot, especially if they are in isolation from other human beings. Kind words in email and social media correspondence are also easy ways to retain consumer attention.

Financial services companies can also differentiate themselves with compassion. Waiving certain fees, especially when they are small, can be an easy way to only maintain a customer when they are struggling. Even better, banks can follow in the footsteps of Goldman Sachs, GMC, Ford, and other financial institutions by waiving payments for a month without charging interest. When the economy improves clients will remember which firms stood by them during hard times.

Challenges

When it comes to challenges in creating a stand-out client experience, Lange noted two hurdles. The first is attribution. Firms need to know that a spike in sales or client acquisition is attributed to certain actions or events, such as an improved user interface, and was not driven by other changes such as pricing or an altered service structure.

“The other challenge is a culture challenge,” said Lange. He explained that instead of structuring operations around process improvements, where employees fall into the habit of looking for the next thing to fix, firms need to be proactive and design an experience first and allow the design to follow that experience.

Leading with a design idea, Lange said, “can be emotional, and it’s based on empathy. It’s not based on Excel spreadsheets, which the industry is very used to… there are human beings that are interacting and we want to design for human beings.”

Check out the full interview with Lange below:

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Square to Launch Bank for Small Businesses

By Julie Muhn (@julieschicktanz) Posted on March 19, 2020
Categories: Daily news

Digital payments company Square announced it will launch its small business bank next year. Square’s application for the bank, Square Financial Services, has been conditionally approved for a bank charter.

Square Financial Services will operate as an independent subsidiary of Square. The new bank’s primary objectives will be to offer small business loans for Square Capital’s commercial lending business, and to offer deposit products.

“We appreciate the FDIC’s thoughtful approach to our application, and their recognition that Square Capital is uniquely positioned to build a bridge between the financial system and the underserved,” said Jacqueline Reses, Square Capital Lead and Executive Chairwoman of the board of directors for Square Financial Services. “We’re now focused on the work ahead to buildout Square Financial Services and open our bank to small business customers.”

In preparation for the launch of the new bank, Square has begun the hiring process to staff its new bank headquarters, which will be located in Salt Lake City, Utah. Square Financial Services CEO Lewis Goodwin and CFO Brandon Soto have been charged to lead the bank’s executive team.

This comes just one month after P2P lending company Lending Club announced plans to purchase Radius Bank. The move offers Lending Club users a full suite of banking tools. Square also follows in the footsteps of Varo Money, which received approval for deposit insurance from the FDIC in February.

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