Three Key Lessons We Learned from Plaid

Unless you’ve been living under a rock, you’ve probably heard that Visa is acquiring Plaid for a deal that’s worth $5.3 billion. Finovate’s own David Penn covered the story for us on Monday, and virtually everyone in the fintech space is talking about it.

What you might not know, though, is that Plaid was on stage at one of our events way back in 2014. At that point they were already well on their way – they were close to signing their 1,000th customer, and they had already signed companies from spaces like lending, payments, expenses and accounting, asset management, and PFM. In the years following their time on stage, we’ve seen countless demoing companies come across our stage who relied on Plaid to underpin their offerings from a wide variety of areas.

The fact that they were so widely used at such an early stage is a testament to the quality of their code, but there are also a few key lessons to take away from their success:

  1. A valuable tool can be worth more than what you build with it. The old saying goes something like “in the gold rush, it’s better to sell pickaxes than mine for gold.” That’s precisely what Plaid did, putting together a product that was attractive to a wide variety of fintech companies to capitalize on the massive wave of fintech startups that came through the last decade. Whether those startups survived or not, Plaid became a part of all of them, guaranteeing their own payday and removing the uncertainty that so many fintech startups faced.
  2. Simplicity is an asset. Plaid’s API is simple to understand,  install, and build on, which has made it attractive to developers from across fintech. This simplicity also means that the tech is highly versatile, floating easily from one field to another.
  3. Connections are vital. At the time that Plaid was gaining momentum, the API world was a very competitive one, with a lot of providers fighting to get adopted. The technology itself was very important, obviously, but so was the work they did in coming to events like FinDEVr to make sure that developers knew what their code could do. The ability to evangelize for your product is crucial to success, and building momentum frequently has to be done through face-to-face connections with influencers in the industry.

There are many more lessons to be drawn from Plaid’s example, but for innovators in the space, those three lessons seem the most important to me. Plaid’s connections, simplicity, and business strategy put them in a position to succeed and become the latest fintech royalty. Congratulations to them on their success, and the challenge is laid out for the rest of the industry to follow in their footsteps.

Not Another 2020 Trends Prediction Post (Seriously, It’s Not!)

If you’re like me, you’re already experiencing 2020 fatigue. If you’ve read at least 10 posts depicting the top trends for 2020 in every fintech sub sector, you’re not alone.

Fortunately for you, this isn’t another 2020 predictions post.

Instead, we’re taking a look at the trends you can expect to see on stage next month at FinovateEurope. To keep things simple this year, we assessed the themes at a very high level and broke them down into three categories: the big, the little, and the trends in-between.

The big trends

As you can see in the word cloud above, the big topics for FinovateEurope 2020 are AI, digital identity, and customer experience. The only surprise here is that AI isn’t bigger. Since AI is an enabling technology it often pulses throughout multiple sectors across fintech. Customer experience, for example, is a topic that relies heavily on AI.

Digital identity is another trend developing throughout the fintech industry and has been rising in discussions around identity verification. However, digital identity isn’t quite as sexy as AI, so companies aren’t as quick to boast about their digital identity capabilities.

The little trends

The three smallest trends on this year’s list include blockchain, compliance, and PFM. Though its potential to disrupt traditional banking hasn’t lessened, blockchain has regressed slightly into the shadows of fintech. This may be the result of compliance complications that the blockchain brings. Other challenges to wider blockchain adoption may result from a lack of understanding of the subject or stem from the lack of ability for legacy systems to adapt.

PFM appears as a small topic because while many fintechs help users with their personal finances, they are hesitant to describe their technology as PFM. However, just because PFM is older than Twitter doesn’t make it any less relevant.

Speaking of relevance, compliance is pertinent to every subsector in fintech. However, the topic appears small in the word cloud because it is a bit of a status quo. In other words, every bank and fintech has some level of compliance measures in place.

The trends in between

Data analytics, fraud prevention, wealthtech, chatbots, lending, credit, regtech, and small business tools are all trends caught in the middle this year.

None of the topics is new and the only one I’m surprised to see on this list is fraud prevention since it is thought of more as a requirement than something firms are looking to add to their technology. However, recent evolutions in cybercriminal techniques, high-profile hacks, as well as advancements in enabling technologies adapted to the security space have made fraud prevention an even hotter topic than it once was.

If you want to not only read about the newest fintech trend transformations but also see them demoed live on stage, register for FinovateEurope. This year’s event is taking place in Berlin, Germany on 11 through 13 February.

Interested in demoing your company’s new technology on stage? There’s still room in our demo lineup. Check out more information on what it takes to demo at FinovateEurope or contact heather@finovate.com for details.

Raisin’s New Acquisition Gives Company Access to the U.S. Market

European deposit marketplace Raisin announced today it acquired New York-based Choice Financial Solutions. Terms of the acquisition, which marks Raisin’s fourth purchase in the past year, were undisclosed.

Raisin will license Choice FS’ technology to banks in the U.S., a move that will bring the company one step closer to its U.S. launch. Last year, Raisin teased the geographical expansion with the appointment of Paul Knodel as U.S. CEO.

Raisin U.S. CEO Paul Knodel

“Joining forces with Choice Financial Solutions lets Raisin begin offering cutting-edge services to banks and customers before we even launch our U.S. platform,” said Knodel. “As a leading innovator in the deposits space, Raisin sees Choice FS as a perfect fit for our mission in the U.S. deposits market. The enthusiastic market feedback we have already received affirms how ripe the savings space is for just this type of personalization.”

Choice FS has a decade-long track record of providing banks with technology to help their clients save for long-and-short-term goals. The company’s secret sauce is customization– something modern consumers have become accustomed to in today’s era of BigTech solutions. Choice FS allows banks to customize terms, distributions, amounts, and withdrawals to maximize return on savings accounts, creating a highly-personalized savings experience with an intuitive user interface. Company founder and CEO Daniel Smith refers to this personalization as “the missing piece” for banks and depositors.

Raisin was founded in 2012 and has since brokered $20.6 billion (€18.5 billion) for 200,000 customers in 28+ European countries and 90 partner banks. The company provides a free marketplace where consumers can browse European deposit products, ETF portfolios, and, in Germany, pension products.

French Fintech Lydia Locks in $45 Million

Photo by slon_dot_pics from Pexels

TechCrunch reported this morning that French mobile payment app Lydia has raised $45 million (€40 million) in a round led by Tencent. With existing investors CNP Assurances, XAnge, and New Alpha also participating in the Series B, Lydia adds significantly to the more than $16 million (€13 million) the company raised in 2018. The funding will help propel the firm toward its self-described goal of being the “PayPal of the new mobile generation.”

Lydia is used to make P2P payments, link and share accounts, as well as access a marketplace of additional financial offerings such as lending products and insurance. Available as a free app with other premium services available, Lydia can also set up recurring payments and enable users to pay with their smartphone via Apple Pay, Google Pay, Samsung Pay, or QR code. Company co-founder and CEO Cyril Chiche pointed to the growing numbers of French consumers who are using the app for a variety of money management functions, highlighting the fact that 25% of French consumers between the ages of 18 and 30 have a Lydia account. Chiche added that the technology has three million users across Europe.

Lydia, which was founded in 2013, will use the funding to fuel its continued expansion in Europe. Lydia is particularly keen on opportunities to reach millennial Europeans in markets like the U.K., Ireland, Spain, and Portugal – where its app was deployed in the second half of 2017.

Compared to other countries in Europe, the fintech industry in France is often overlooked. This is not wholly without foundation. According to the recent report on European fintech by Dealroom, the share of fintech related VC spending in France in recent years was 12% compared to 20% in Europe overall, 21% in Germany, and 30% in the U.K. Born2Invest noted in December that French fintech startups had raised $700 million in 2019, and suggested that this year would likely see “a lot of talk about assuretech” also known as insurech, where technologies like digitization and automation are able to make dramatic differences in data management.

Lydia was featured in Silicon Canals last spring in its look at “10 exciting French fintech startups to work for in 2019.” For more on the French fintech industry, check out this infographic from BlackFin Tech which depicts the five main ecosystems in French fintech – regtech, assurtech, financial services, banking/PFM, and payment services – as well as some of the major players.

Backbase-as-a-Service Helps Banks Leverage the Cloud to Innovate and Scale

Photo by Donald Tong from Pexels

Backbase announced today the availability of its new managed cloud platform, Backbase-as-a-Service. The solution makes the company’s broad portfolio of digital banking offerings available to FIs looking to accelerate their ability to develop and offer new technologies to customers.

In their statement, the company depicted banks as challenged by not one, but two types of technologically-driven competitors: digitally-native neobanks and big tech-first companies that are beginning to develop financial products (“TechFin”). The problem of legacy, non-digital infrastructure, according to Backbase, is a key hurdle for most banks when it comes to “keeping pace” with the new digital services these rivals are able to offer. Backbase-as-a-Service enables FIs to develop their digital solutions faster, and to bring them to market without having to overcome their outdated infrastructure – or bear the high cost of replacing it with another on-premise system.

Backbase CEO Jouk Pleiter called the cloud “an exceptional tool” to help financial institutions transition to becoming digital first. “We believe the move to cloud is an unstoppable one, and one which every financial institution needs to embrace,” he said. “Our clients want the freedom to innovate and maintain their competitive edge, so launching Backbase-as-a-Service is the logical step or us.”

The technology will enable banks to take advantage of innovations in account aggregation, security and identity verification, personalization, and smart banking. Developers benefit from the option to use shared or dedicated Backbase environments, as well as multiple sandbox environments to support the development and testing of new integrations and products. BaaS provides 99.9% uptime, database backups and multi-zone redundancy, as well as end-to-end encryption for all communications. The solution meets regulatory requirements, including the ability to audit across environments.

A multiple-time Finovate Best of Show winner, Backbase most recently demonstrated its digital banking platform at FinovateEurope 2018. Headquartered in Amsterdam, the Netherlands, and founded in 2003, the company inked a deal with Payveris late last year to provide FIs with an integrated digital payments and money movement solution. With more than 100 FIs using its technology, Backbase includes Barclays, Citi, KeyBank, Navy Federal Credit Union, and Societe Generale among its customers.

Tradeshift Lands $240 Million as it Inches Toward Profitability

Supply chain payments company Tradeshift just unveiled details about a $240 million funding round today. The investment– a combination of debt and equity– comes from new and existing investors. Tradeshift’s total funding is now $672 million.

The San Francisco-based company will use the investment to boost expansion efforts and gear toward a “direct path to profitability in the near future.” The funding will also be used to grow Tradeshift’s network finance program that provides liquidity to companies in 100+ countries.

And it appears that Tradeshift is already on the right track. Last year the company tallied record expansion; growing its revenue more than 60% and closing more than 300 enterprise deals. What’s more, 40% of the total transaction volume across its platform occurred in the last 12 months.

“It’s clear that the investor community has a strong focus on growth combined with profitability and they like our plan,” said Tradeshift CEO Christian Lanng. “As a network business, growth is always going to be a key part of our story. But it’s also important that we manage that growth responsibly.”

Tradeshift’s business commerce platform connects more than 1.5 million companies across 190 countries. To date, the company has processed more than half a trillion dollars in transaction value. After Tradeshift’s most recent funding round of $250 million last spring, the company’s valuation was boosted to $1.1 billion.

As for 2020 plans, Lanng said that the company’s focus “will be about doubling down in areas where we’re seeing the greatest momentum while continuing to ensure we have the necessary balance in place to fully capitalize on the enormous opportunities in front of us.”

FinovateEurope Sneak Peek: Horizn

A look at the companies demoing live at FinovateEurope on February 11-13, 2020 in Berlin. Register today and save your spot.

Horizn’s award-winning platform equips frontline employees & customers directly with the knowledge needed to improve customer experience and dramatically increase digital adoption across all channels.

Features

  • Get employees & customers fluent on latest digital innovation
  • Improve customer experience & drive digital adoption
  • Combine simulation microlearning methodology with gamification/analytics

Why It’s Great
Using Horizn, banks increased digital adoption by 25% and brought call center times down by 45 seconds. Using the in-branch demo with non-digital customers, up to 20% converted to digital banking.

Presenter

Steve Frook, VP Sales
Frook works closely with financial institutions to significantly increase adoption and awareness of new and existing innovations.
LinkedIn

FinovateEurope Sneak Peek: Glia

A look at the companies demoing live at FinovateEurope on February 11-13, 2020 in Berlin. Register today and save your spot.

Glia is a digital customer service platform that connects financial institutions to their customers using Chat, Voice, Video, CoBrowsing and AI.

  • Seamlessly move between modes of communication
  • Receive improved sales results and customer satisfaction via richer customer interactions
  • Deliver the best experience for customers and agents

Features

Why it’s great
By employing a digital-first approach to customer conversations, financial institutions improve customer satisfaction, reduce customer effort, and gain operational efficiencies.

Presenter

Dan Michaeli, CEO & Co-Founder
Michaeli is the driving force behind Glia’s vision to combine the human touch with technology to create the best customer experiences.
LinkedIn

Credit, Data, and Cryptocurrencies: Graychain Rebrands as Credmark

The company that is bringing credit data clarity to the cryptocurrency industry is entering 2020 with a new name. Credmark, which made its Finovate debut as Graychain at FinovateAsia earlier this year, is reintroducing itself with a new Southeast Asia headquarters and partners who are helping develop the cryptocurrency lending market.

“We’ve been wanting to rebrand for awhile,” Credmark CEO Paul Murphy said. “When we decided to move the company from Hong Kong to Singapore, we realized it was the right time to rebrand.”

Murphy believes the rebrand will make it easier for people to understand what the company is about – especially in a field like cryptocurrencies, which can be intimidatingly complex to both businesses and consumers. “We are the only company giving credit ratings to blockchain addresses, not individuals or corporations,” Murphy explained. “This allows us to address a much wider range of use-cases including anonymous and pseudonymous borrowing, and smart contract credit, as well as more traditional uses of credit.”

Murphy agrees with those who see cryptocurrencies as the foundation of a new financial system. Like any other financial system, he said, cryptocurrencies will need credit (what he called “a proxy for trust”) in order to function efficiently. And in order to extend credit, you need data. And that’s where Credmark comes in.

“Credmark is developing a product to remove friction in the crypto space caused by lack of trust,” Murphy said. “This product will help minimize systemic credit risk whilst simultaneously speeding up business transactions.”

One example he shared was his company’s collaboration with a firm that is tokenizing sneakers in order to use them as collateral for crypto loans. “Crypto finance is proving endlessly creative. Building on top of centuries of technology in a global, decentralized environment is a rare opportunity. This work will have a profound impact on everyone, from the world’s richest to its poorest,” Murphy said.

In addition to Murphy’s 12 years of building software for financial firms on Wall Street, Credmark benefits from the talents of co-founder Neil Zumwalde, the company’s Chief Technology Officer. Zumwalde is a veteran software developer and engineer whose experience includes building complex distributed systems in the IOT/energy space.

About the company’s technology, Murphy said Credmark is a big user of blockchain technology (“we currently work with nine different chains!”), Credmark also leverages AI to build its cutting-edge prediction models. The company currently offers three products – Credmark Wealth, Credmark Clear, and Credmark Clear for Business – which help crypto businesses, lenders, and investors evaluate the value of digital asset holdings on a company’s or address’ overall net worth and creditworthiness.

Credmark’s decision to relocate from Hong Kong – where the company has been headquartered since its founding in 2018 – to Singapore is also a key part of the company’s evolution. In addition to putting some distance between itself and Hong Kong’s civil unrest of recent months, the move will enable Credmark to remain in a major fintech hub while building its position in the rapidly growing Southeast Asia cryptocurrency industry.

“Singapore is a fantastic jurisdiction in which to do business,” Murphy said. “Rules are very clear, bureaucrats are efficient, and legal and financial services are of very high quality. I personally ran several businesses in the U.K., so Singapore’s legal system is very familiar.”

The rebrand also comes as the company issues its second Crypto Credit Industry report (CCR). Credmark’s CCRs are a compilation of industry data with analysis and commentary to help readers learn about the crypto credit industry, the vendors that participate in it, and the different products they offer. The company’s first report was released in late August, and covers industry developments through Q2 2019.

“Our latest industry report reveals growth of 23% in the third quarter,” Murphy said of the Q3 report. “And institutional lending products are starting to mature.” He added that one way the CCR will benefit readers will be in bringing greater clarity and transparency to the world of crypto financing.

“The industry uses some vanity metrics that are confusing and sometimes misleading,” Murphy explained. “We’re calling those out and planning to de-emphasize them.”

Asked where he thinks Credmark will be a year or two from now, Murphy responds, “If we’d been asked that question two years ago our predictions would have been completely wrong. The industry is moving fast. We are careful to take this rapid, uncertain evolution into account as we design our products. We have taken a big bet on crypto, but have remained blockchain-independent.”

“No matter how things evolve, we expect to play a central role in this emerging financial system,” he said.

FinovateEurope Sneak Peek: BLECKWEN

A look at the companies demoing live at FinovateEurope on February 11-13, 2020 in Berlin. Register today and save your spot.

Bleckwen: Real-time Machine Learning solution for financial crime detection. In partnership with banks, we combine Behavioral Analytics with AI to provide an effective response against fraud.

Features

  • Reduce false positives, customer friction and costs of financial crime detection
  • Reduce time to manage alerts with our white box approach
  • Comply with increasing regulatory requirements

Why It’s Great
Bleckwen’s real-time, dynamic Behavioural Analytics & Explainable AI-engine is well placed to detect the surging fraud threats in payments in today’s open banking world.

Presenters

David Christie, CEO
Christie has a global view of the challenges of managing Fraud from multi-jurisdictional, technology and business process perspectives with 20 years in financial services.
LinkedIn

David McLaren, VP Sales EMEA
McLaren is an Enterprise Sales and Financial Crime specialist with experience in new business sales, SaaS and managed services with extensive engagements working with Financial Institutions and Corporates.
LinkedIn

Visa to Acquire Plaid in $5.3 Billion Deal

Updated 1/14/2020: The first big fintech acquisition of the year just crossed the headlines: Visa has agreed to acquire innovative fintech Plaid for a reported $5.3 billion in “total purchase consideration.”

“Today marks an important milestone for our company and for fintech,” company co-founder and CEO Zach Perret wrote on the Plaid blog earlier today. “What started with two founders building in a cramped conference room has become an incredible network that enables millions of consumers to interact with over 2,500 digital finance products.”

Plaid’s technology connects digital consumers with thousands of apps and services ranging from Transferwise and Betterment to Chime, Acorns, and popular payment app, Venmo. The company estimates that one in four individuals with a U.S. bank account have used Plaid to connect with thousands of developers across 11,000+ financial institutions.

Visa said the acquisition will bolster the company’s capacity to serve and reputation with fintech developers – especially when it comes to providing them with enhanced payment functionality and related value-added services. Visa also believes the acquisition will help open new business opportunities both in the U.S. and around the world.

“We are extremely excited about our acquisition of Plaid and how it enhances the growth trajectory of our business,” Visa CEO and chairman Al Kelly said. “Plaid is a leader in the fast growing fintech world with best-in-class capabilities and talent. The acquisition, combined with our many fintech efforts already underway, will position Visa to deliver even more value for developers, financial institutions, and consumers.”

Visa participated in Plaid’s Series C round in 2018, which was led by Index Ventures and Kleiner Perkins. The company raised $250 million in that funding raising effort. Plaid began the year with an acquisition of its own, purchasing account aggregation and data analytics technology provider Quovo in January of 2019. The value of that deal was not disclosed; Bloomberg reported that the sticker price for Quovo could have been as high as $200 million. Quovo, incidentally, is also a FinDEVr alum, participating in our New York developers conference in 2017.

Plaid demonstrated its technology at FinDEVrSiliconValley in 2014, demonstrating how its API for Financial Infrastructure enabled developers to leverage data quickly, efficiently, and securely power fintech applications. Headquartered in San Francisco, California and founded in 2012, Plaid had raised $310 million in funding previous to today’s announcement.

The ripples from the acquisition news are reverberating throughout the fintech community. And while some are worried about the ability of the innovative startup from San Francisco continue to drive change in the industry, others are busy heralding the news as a victory for fintech and incumbent financial services firms, alike.

Indeed, the acquisition of Plaid by Visa has put other fintechs involved in financial data on notice that they too may hear an inquiring knock on their proverbial doors. One observer on Twitter asked “Will $MA pick up Finicity now?” As of this writing, neither company has deigned to comment.

INTL FCStone Acquires International Bank Transfer Firm

Risk management and advisory services firm INTL FCStone announced today that its London-based subsidiary has agreed to acquire GIROXX for an undisclosed amount.

Headquartered in Germany, GIROXX offers international bank transfers and currency hedging. INTL FCStone plans to leverage this technology to expand its current client base to small-and-medium-sized enterprises (SMEs).

As part of the agreement, INTL FCStone’s advisory services will be made available to GIROXX’s clients. GIROXX founders Klaus Hoffmann and Jörg Sonnenschein said that the deal will help the company “gain the resources to offer hedging services on a multi assets basis.” As a result, the founders anticipate that GIROXX will solidify its client base and boost company expansion.

The purchase marks INTL FCStone’s sixth acquisition and its fourth in less than 10 months. The company said that these purchases, combined with internal restructuring, are part of an effort to protect clients from negative effects of Brexit.

“Our objective is to offer SME’s the ability to hedge all parts of their production processes, and to allow these corporates to have access to a digital payments and hedging platform,” said Carsten Hils, Global Head of INTL FCStone’s Global Payments Division.

Following the deal, INTL FCStone plans to open its client base to companies with less than 1,000 employees in Europe, a market with 350+ correspondent banks. The acquisition is pending approval from BaFin, Germany’s financial regulatory authority.

Founded in 1981, INTL FCStone is publicly listed on the NASDAQ under the ticker INTL. The company has a market capitalization of $947 million.