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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
After teasing the launch of its debit card in the U.S. earlier this year, Samsung announced that its digital debit card, the Samsung Pay Card, is now available in the U.K.
To make the launch possible, Samsung has teamed up with Curve, a fintech that consolidates all of a user’s existing Mastercard and Visa payment cards. The London-based company makes all of a user’s cards contactless and compatible with Samsung Pay.
Users will receive access to Curve features such as peer-to-peer money transfers, instant notifications about spending, competitive foreign exchange rates, 1% cash back on purchases made with a select group of three merchants, and 5% cash back on purchases made at Samsung.com. Samsung Pay Card users will also be able to use Curve’s Go Back in Time feature that allows them to switch payments from one card to another for up to 14 days after the purchase was made.
The deal is a win-win for both companies; Samsung will benefit from Curve’s e-money license with the U.K. Financial Conduct Authority, and Curve will gain from an increase in users. Interestingly, however, existing Curve users cannot also apply for a Samsung Pay card. As other sources have pointed out, the reason for this exclusion isn’t entirely clear.
“At Samsung we believe in the power of innovation and, through our partnership with Curve, the Samsung Pay Card brings a series of pioneering features that will change the way that our customers manage their spending, with their Samsung smartphone and smartwatch at the heart of it,” said Conor Pierce, Corporate VP of Samsung U.K. and Ireland. “This is the future of banking and we look forward to continuing this journey with our customers.”
Fintech giant FIS has adopted the subscription model that has proven popular in selling everything from wine to digital media to diapers. The Florida-based company launched a subscription core banking solution today called ClearEdge.
ClearEdge is geared specifically to serve community banks and offers a bundle of technologies to help them modernize their operations and provide a better customer experience. The flat-fee, month-to-month subscription model doesn’t require lengthy terms and it eliminates liquidated damages and exclusivity requirements.
“We are committed to making it as easy as possible for our qualifying community bank clients to access the advanced technology they need to offer modern, differentiated products and services to their customers,” said Head of Global Core and Channels, Americas at FIS Rob Lee. “ClearEdge takes that commitment to the next level with a powerful offering that we believe will be a game-changer for many community banks.”
“The ability to bundle solutions relative to our business needs creates the opportunity for us to be more creative and flexible while better controlling our back-office expense,” said John Dickson, chief operations officer at Coastal Community Bank. “Plus, it just makes sense in today’s volatile market.”
As the bank-fintech partnership ecosystem strengthens and the uncertainty of the COVID-19 economic environment persists, we can expect to see more subscription-type models from tech providers. The increased flexibility, combined with the ability to pick-and-choose solutions that are tailored to each individual organization, is a model that is better suited to modern banking requirements.
Account takeover (ATO) prevention specialist SpyCloud locked in $30 million in Series C funding today. The round, led by Centana Growth Partners, featured participation from all of the company’s existing investors, a list that includes Altos Ventures, March Capital Partners, Silverton Partners and M12, Microsoft’s venture capital fund. This week’s funding takes SpyCloud’s total capital to $58.5 million.
“Criminals work together to steal information and find creative ways to monetize it. As a result, even the most careful and sophisticated organizations are vulnerable,” SpyCloud CEO and co-founder Ted Ross said. “SpyCloud will continue to pursue new and innovative ways to stay ahead of criminals and provide solutions that make the internet a safer place for individuals and businesses.”
SpyCloud made its Finovate debut in the fall of 2017, earning a Best of Show award for its exposed credential monitoring and alert service. The company, based in Austin, Texas, finds and recovers stolen and compromised assets that are actively trading on the digital underground, capturing 40 million exposed assets a week using techniques that go beyond web crawlers and other automated solutions.
This spring, SpyCloud partnered with security operations platform ThreatConnect, integrating its database with two of ThreatConnect’s offerings. More recently, the company teamed up with third party risk management platform Privva, and worked with MENA-based information security valued added distributor Spire Solutions,
One of the more interesting partnerships SpyCloud announced this year was a collaboration with Zero Trafficking, a company that provides solutions to combat human trafficking. Taking advantage of the fact that the bad guys are as likely to suffer from the same data breaches and stolen credentials as everyone else, SpyCloud has leveraged its technology to help Zero Trafficking round them up.
“Billions of data assets per year are exposed in breaches, including assets belonging to criminals,” SpyCloud Head of Investigations Jason Lancaster explained. “By drawing on the 100+ billion assets SpyCloud has recovered from third-party breaches, Zero Trafficking can piece together criminals’ digital breadcrumbs to uncover the identities of specific adversaries engaging in human trafficking activity.”
A look at the companies demoing at FinovateAsia Digital on June 22, 2021. Register today and save your spot.
Obsecure’s notary-grade technology provides you with a real-time evidence of the true person behind the actions you see. The result is a level of authenticity that exists in an in-person interaction.
Features
Effortless digital experience
Expanded digital services
Reduced fraud
Why it’s great The technology uses AI, biometrics, and unique action capture technologies to “notarize” every digital action and seal it with the identity of the person who performed it, assuring its authenticity.
Presenter
Will Herlands, CTO & Co-Founder Herlands has a Ph.D. in Machine Learning from Carnegie Mellon University and is a MIT Lincoln Lab researcher focused on cybersecurity, AI, and robotics. LinkedIn
A look at the companies demoing at FinovateAsia Digital on June 22, 2021. Register today and save your spot.
Illuma Labs’Illuma Shield provides passive voice authentication for call centers. It elevates the user experience, enhances security against fraudsters, and improves operational efficiency.
Features
Elevates user experience with frictionless authentication
Reduces average handle time, hold times, and abandon rates
Enhances security against fraudsters
Why it’s great A passive voice authentication for call centers.
Presenters
Milind Borkar, CEO & Founder Borkar has over a decade of experience spanning R&D and marketing, and leads the IP and business development activities for the company. LinkedIn
Jeremy Whittington, CTO & Co-Founder Whittington has over 20 years of experience architecting SaaS applications, and leads architecture and product development activities for the company. LinkedIn
A look at the companies demoing at FinovateAsia Digital on June 22, 2021. Register today and save your spot.
With Yext’sYextAnswers, you can take 10 to 15% of your site search traffic and turn it into a lead generation engine to meet retention and revenue goals.
Features
Intent marketing can be used to retain profitable clients
Digital can drive profits to physical banks and financial professionals
NLP and AI will transform site search via the knowledge graph
Why it’s great Google began using NLP and knowledge graphs to serve answers in 2016. It’s time for financial institutions to answer customer questions at their moment of intent with the same proven technology.
Presenters
Shane Closser, Global Head of Industry, Finance Closser is the Head of Industry/General Manager for Financial Services at Yext. He leads all financial services-related activities, including strategy, product, and ISV and GTM partnerships. LinkedIn
The aptly-named stock trading app Robinhood continues to show that it is as good at taking money from the rich as it is in bringing investment opportunity to the masses. The company announced on Monday that it has raised $200 million in new funding in a Series G round featuring D1 Capital Partners. This latest funding comes less than a month after the Robinhood closed a Series F round that was topped off with a $320 million investment, and takes the company’s valuation to $11.2 billion.
“For seven years, the team at Robinhood has been focused on enabling more access to the markets for more people,” the company’s blog read Monday morning. “With this funding, we’ll continue to invest in improving our core product and customer experience.”
Believe it or not, Robinhood has been busy between its last multi-million dollar fundraising less than 30 days ago and this one. Earning certification as a Great Place to Work in the U.S. in July, Robinhood hired Christina Smedley as Chief Marketing Officer early this month and, also in July ,unveiled a new visual identity. Last week, ahead of today’s fundraising announcement, the company revealed plans to “hire hundreds of additional registered financial representatives in both Texas and Arizona this year.
“Supporting and communicating with our customers – both those new to investing and those with more experience – is a critical part of our responsibility to them,” Head of Customer Experience at Robinhood Alex Mesa said. “We’ve more than doubled our support team since January and we’ll continue to grow our teams to provide timely, helpful responses to our customers.”
With its commission-free trading and investing platform, fractional share availability, and Millennial, mobile-first mindset, Robinhood has become a major influence in the retail brokerage business. Founded in 2013 and headquartered in Menlo Park, California, the company has more than 13 million traders and investors on its platform.
The big card companies continue to make the kind of deals that underscore the importance of fintech to the future of financial services. This week we get confirmation that international payments giant American Express has agreed to acquire SME lender Kabbage.
Terms of the deal were not disclosed. Speculation on the deal in recent days has put the purchase price between $850 million and $1 billion.
The acquisition will include Kabbage’s team, its suite of financial technology solutions, as well as the company’s data platform and IP built for small businesses. American Express also plans to leverage Kabbage’s technology and talent to offer additional cash flow management and working capital solutions to its small business customers. In the acquisition announcement, American Express highlighted Kabbage’s recently introduced business checking account, which centralizes funds for easier cash flow management.
“This acquisition accelerates our plans to offer U.S. small businesses an easy and efficient way to manage their payments and cash flow digitally in one place, which is more critical than ever in today’s environment,” President of Global Commercial Services at American Express Anna Marrs said.
A Finovate alum for more than a decade, Kabbage has raised $2.5 billion in funding, with the company’s last equity round closing in 2017 after raising $250 million. This year, in addition to the launch of its business checking account, Kabbage distinguished itself as a major conduit for small businesses seeking COVID-19 related relief funding. The company said it has facilitated 300,000 Paycheck Protection Program (PPP) loans valued at more than $7 billion. Kabbage’s participation in the program was a dramatic return to its role as a resource for small business financing after the company suspended SME lending in April in response to the global health crisis.
“At Kabbage, we have always made the success of America’s small businesses our primary objective,” Kabbage CEO and co-founder Rob Frohwein said in a statement. “We have built a technology and a data platform that provides them with the kind of capabilities and insights often reserved for larger businesses. By joining American Express, we can help more small businesses succeed with a fully digital suite of financial products to help them run and grow their companies.”
As part of the agreement, both Kabbage’s securitized SME loans and its PPP laons will be serviced by an separate entity to be established by Kabbage and American Express, the Financial Times reported.
American Express’ purchase of Kabbage comes less than a month after another big acquisition in the online SME lending space: Enova International’s $90 million deal for OnDeck. For both companies, the acquisitions provide the opportunity to expand meaningfully beyond their core competencies: Enova adding to its consumer lending operations, and AMEX bringing working capital and SME financing to its commercial card business.
The acquisition is expected to close later in 2020.
The Finovate Awards recognize the best and brightest of the fintech industry, and while we aren’t able to hold an in-person gala dinner this year, it’s more important than ever that we recognize the strong work being done by those across the fintech spectrum who are pushing the industry forward.
We had a record number of nominations this year, and our judges had some very difficult decisions to make as they whittled the nominees down to the short lists for each category. Their initial task is complete, though, and we’re delighted to be able to announce the short lists for each category below. Congrats to all the finalists on making it this far!
Best Fintech Partnership
Finalists:
Radius Bank and Treasury Prime
American Express and Nova Credit
PPP.bank (Citizens Bank of Edmond and Teslar Software)
The following is a guest post by Borys Pikalov Head of Analytics and Cofounder at Stobox.
One of the greatest challenges in fintech is reaching the unbanked. Accessing poor communities is operationally complicated and their use of financial services is very limited.
Microfinancing institutions are only a partial solution and traditional loans do not work as an investment vehicle because they are risky for both parties: banks don’t want to give, and poor don’t want to take. To solve this puzzle we may use two creative concepts from financial engineering.
Individual investment contract
Instead of taking a loan, people promise part of their future income in exchange for money. This reduces the risk for farmers in case they cannot pay off the debt. This is already being practiced when corporations provide education grants to poor students in exchange for future employment.
Loan securitization
Instead of taking a single loan from banks, real estate developers issue debt securities and sell them to many institutions. Thus, the loan is divided into many small parts that may be traded on a secondary market, which spreads the risk for parties giving the credit. For conventional real estate loans, the maximum debt-to-value ratio is ~60%, while for securitized loans it is ~90%, which means that 50% higher risk is acceptable.
Personal securities
Combining these two concepts we arrive at personal securities – individual investment contracts issued in the form of securities that can be divided into small parts and traded on a secondary market. There is already an example of a personal securities offering in use: a software developer offered a part of his future income in order to move to Silicon Valley.
The use of personal securities can solve the risk puzzle of investing in poor communities. However, there are a number of practical problems to be solved in order for personal securities to be an efficient solution.
First of all, personal securities should be powered by proper technology. Offering many securities to many investors in dozens of different countries requires robust and scalable infrastructure. Blockchain technology is widely considered suitable for these purposes. In the last few years, providers of securities tokenization made serious progress and now enable convenient mass operations with securities. For example, the blockchain was used to reduce the entry threshold in a $22 million venture fund by 2,0000 times– from $1,000,000 to $500.
Another problem is the operational complexity. Using personal securities would require reaching poor communities, doing the legal groundwork of signing investment contracts, choosing investment opportunities, and gathering and distributing income. This requires wide collaboration between existing banking providers, governments, nonprofits, and startups.
A solution may be to organize everything as an investment fund that would issue securities to investors worldwide and use the proceeds to organize the investment process and do the investment itself. Pooling investment into funds can further reduce the risk for investors. It is better to do pilot projects to test the best structures.
The next big investment opportunity
Giving money to poor communities is the next big investment opportunity. It would not only directly benefit investors but also all businesses that can sell to poor communities. It can vastly improve the financial outcomes of developing countries. Most importantly, it can assist in finally ending extreme poverty and providing people with a dignified life.
Borys Pikalov is Cofounder and Head of Business Analytics at Stobox, an award-winning advisory and technology company in the field of securities tokenization. Pikalov has done 2500+ hours of research in the digital securities industry. Co-author of the book “How to Attract Investments with STO: A Practical Guide”. He is currently advising the government of Ukraine about developing an ecosystem for virtual assets.
Earned wage access startup PayActivclosed $100 million today for its technology that helps companies offer their employees their pay on a daily basis rather than wait for their bi-weekly paycheck.
The Series C round was led by Eldridge and includes existing investors Generation Partners and the Ziegler Link•Age Fund II. The investment brings PayActiv’s total funding to $134 million.
The company will use the funds to expand its client base, which currently consists of 1,400+ businesses and organizations representing more than four million employees. Walmart, Wayfair, and Ibex Global are some of the major employers in PayActiv’s portfolio.
“American families are facing more financial stress than they have in generations,” said PayActiv CEO and Co-Founder Safwan Shah. “The timing gap between work and wages is the main reason workers get hit with punitive late fees, overdraft fees and other penalties. Cumulatively, these fees reduce wages by seven percent every month. The PayActiv platform is the only system where everyone wins: employers lift worker morale with little to no cost and huge dividends; employees get wages when they actually need them most; and cash re-enters the economy faster, making communities financially healthier.”
PayActiv was founded in 2011 and has emerged as a major financial wellness tool for employers. In addition to offering flexibility around how frequently employees receive payment, PayActiv also gives employees multiple options of how they receive payment. Workers can opt for direct cash pickup, a PayActiv prepaid card, an instant Visa or Mastercard debit card load, an ACH payment, or use their wages to pay bills, make purchases on Amazon, or purchase rides on Uber.
The company also offers financial wellness and planning tools that help employees to save, budget, and manage their money. Additionally, PayActiv announced today that it will offer employers a retirement benefit in partnership with Security Benefit, a retirement services provider based in Kansas.
Demand for earned wage access tools are on the rise, especially in today’s post-COVID economy. Sending employees their paychecks on a daily basis can help them avoid overdraft fees and high interest financing options such as payday loans and credit card debt.
“The future of pay is not a two-week cycle,” said Eldridge Co-founder, Chairman, and CEO Todd Boehly. “By simply giving people access to their wages as they earn them, PayActiv increases the velocity of money, stimulating the economy and serving employers and employees by driving costs down and efficiencies up.”
Mario Aquino, Founder and Managing Partner of FutureLabs Ventures, looks back at FinovateAsia Digital, and the panel on Financial Wellness: How the Digital Shift In Asia Has Created Opportunities to Better Serve The Underserved, to share his key takeaways and thoughts for the future of financial wellness.
Last month I joined a distinguished panel of speakers, including Ryan Jonghoon Kim (Group Chief Digital Officer, FWD Insurance), Lotte Schou Zibell (Regional Director, Asian Development Bank (ADB), Ankit Shrivastava (Director Digital Product, Aegon Asia), Yinglan Tan (Founding Managing Partner, Insignia Ventures Partners), and Amran Hassan (Chief Executive Officer, Etiqa Insurance and Takaful). We explored 4 questions:
What does financial wellness and serving the underserved mean to each organisation?
What are the latest exciting innovations across the payments/remittance, lending and insurance landscapes?
What are the key challenges to increase adoption of new solutions (including having a financial identity, financial literacy) and what is the impact of Covid on this?
Where are the next big opportunities and areas of impact? — as the focus moves from remittances to lending & insurance solutions and, even more broadly, goes beyond financial services to include HealthTech, EduTech & ESG solutions that benefit the underserved.
It is not my intent of this article to reiterate the full content of our session, instead I would like to focus on sharing my 3 key takeaways about Asia, the diversity and nuances it presents.
1. A quarter of a trillion in new GDP value can be created through the scale of the unbanked opportunity available in Asia
The scale of opportunity to better serve the underserved is enormous. There are 1.7B (30%) unbanked adults globally, out of which 2/3 of them own a mobile phone that could access financial services. 658M of the unbanked population live in Asia. 200M of them are expected to join an exponentially growing middle class by 2030. To provide a sense of scale of the opportunity that lies ahead, it can be estimated that if a portion of this population is converted to a banked population, a quarter of a trillion in new GDP value can be created. At FutureLabs Ventures, serving the underserved is one of our three megatrends we focus on — we call this “serving the next 1 Billion” – which is a tremendous opportunity to do well by doing good.
“Serving the next 1 Billion” – can be a great way to do well by doing good.
While the opportunity is incredibly big, there are no doubt various challenges to unlock it. These range from reaching the unbanked (especially where there is no electricity), financial identity and literacy, to fraudulent activities. One of the areas that is being widely studied by Aegon Asia, a financial services company, as shared by Ankit, is the right ecosystem to reach the unbanked, and a question being asked is ‘would digital or physical solutions be more effective for this group?’. That being said, the increase in smartphones is making access easier — and it is a trend that is only going to improve.
2. Covid-19 is a great catalyst to change consumer behaviours and leverage on the help of a broader ecosystem to create effective solution for the underserved
A significant shift in consumer behavior has been seen as a result of Covid-19, primarily in the adoption of digital non-cash payments. During the initial outbreak period, the World Health Organisation (WHO) came up with guidelines encouraging contactless payments as a measure to curb the spread of the virus. The psychological fear set in created more willingness in merchants to accept non-cash payments and use channels such as Instagram, QR Pay, E-wallets while absorbing any transaction cost for the transfer.
In our panel discussion, Amran confirmed that in markets like Malaysia, he believes this consumer behavior will stick as merchants realize the benefits from digital payments. But, in order for these consumer behaviors to continue to be adopted by the unbanked/underserved, a concerted collaboration among all ecosystem players is needed — central banks, governments, fintechs and large corporates — in order to bring to market targeted solutions that address real pain points and are interoperable. As Lotte well emphasised during our conversation, there are two critical aspects to be addressed in the process. Firstly, the basic rails for financial access – from digital identity to financial literacy; and secondly, interoperability and data protection need to be integrated right from the outset to encourage broader adoption and impact vs. the proliferation of an sub-scale set of individual solutions that don’t work with each other. If we are able to achieve this broader ecosystem collaboration, we would have put the setting for real impact at scale — where individual creativity and entrepreneurship is encouraged, but within an ecosystem that allows scale, competition as well as collaboration.
3. Financial Inclusion is not a means to an end, but rather a means to create access to Healthcare, Education and other Services
Financial access has a key role to play in day-to-day living and facilitating individuals in everything from long-term goals to unexpected emergencies. Overtime, individuals with financial access are more likely to use the access to invest in education, health, weather financial shocks and improve their overall quality of life.
As Ying Lan also shared, I truly believe there is an ever greater realization and awareness of the consequent positive effects that financial inclusion in Asia can create. These are new and sizeable customer segments that can generate new business opportunities for corporates and start-ups.
It would be wonderful to continue to see a high and close collaboration among all ecosystem participants — entrepreneurs, investors, banks, corporates and large tech firms — to unlock these opportunities and to do well while doing good!
