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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
HighRadius, a company that offers AI-powered order-to-cash and treasury management solutions, announced today that it has raised $125 million in Series B funding. The investment boosts the Houston, Texas-based firm’s valuation to $1 billion, earning it the status as one of the first new fintech unicorns of 2020.
The round was led by Iconiq Capital, and featured participation from Citi Ventures and Susquehanna Growth Equity. Iconiq Capital partner Will Griffith praised the way HighRadius’ platform had improved the efficiency of accounts receivable and treasury teams, and put the company’s accomplishments in the broader context of other innovative firms in its portfolio. “Digital transformation is increasingly a CFO priority,” Griffith said, calling HighRadius’s platform “game-changing.”
HighRadius’ integrated receivables technology optimizes accounts receivables operations by combining all receivable and payment modules into a single, unified business process. The company’s treasury management technology provides treasury departments with greater visibility into cash operations – including cash levels – and automates reconciliation. Founded in 2006, the company, which includes Citi and Bank of America Merrill Lynch among its clients, has processed more than $1.3 trillion in transactions via its AI-enabled platform.
“Today marks an important milestone for HighRadius and we’re thrilled to have ICONIQ join us in our vision to modernize the Order to Cash space,” HighRadius founder and CEO Sashi Narahari said. He pledged to build the company “into a self-sustaining, long-term category leader.”
Earlier this year, HighRadius partnered with London-based, e-payments company PPRO to give merchants a broader range of options to accept payments from buyers. The combined offering will allow for the discovery and support of local payment methods (LPMs) in key locations, and is designed to help merchant clients keep up with the increasing diversity of payment options around the world.
This spring, the company unveiled its Collection Agency Data Exchange solution which enables customers using HighRadius Collections Cloud to electronically send accounts and invoices to a trio of third-party collection agencies directly from the HighRadius platform. HighRadius began the year with the launch of its order-to-cash digital assistant, Freeda, and a partnership with the Media Financial Management Association to provide credit management automation for the organization’s subsidiary credit association, BCCA.
Telecommunications giant Sprint and German financial services provider Wirecard announced they are teaming up to deliver the Internet of Payments.
Under the agreement, Sprint will integrate Wirecard’s commerce solutions into its Curiosity Internet of Things (IoT) platform. Essentially, the two will embed payment capabilities into IoT deployments.
Sprint’s Curiosity IoT combines Curiosity Core, a virtualized IoT network, with Curiosity OS, an IoT operating system. The project will be piloted in the retail sector where the two will work together to “deliver the retail experience of the future” by enabling a connected purchasing experience.
“This opens up many commercial opportunities, and also delivers an unparalleled commerce solution for our global clients and their customers,” said Ivo Rook, Sprint’s senior vice president of IoT and product development. “As IoT becomes even more central to how enterprises run, we look forward to identifying new opportunities and use cases for these technologies. The growing internet of things will lead to new and innovative transactions, like directly between devices, and this collaboration will power such use cases.”
IoT has a wide range of applications in the payments space. With IoT, consumers can move beyond traditional payment devices and instead pay using wearables, their car, and voice-enabled devices such as Alexa. In many settings these types of payment methods are already possible but they are not widespread.
Georg von Waldenfels, executive vice president of group business development at Wirecard said that the collaboration will help Wirecard “meet a growing demand for commerce without barriers.” Waldenfels added that teaming up with Sprint is a “significant step toward developing the shopping experience of the future.”
This isn’t Sprint’s first foray in the IoT space with a fintech. In 2018, the company partnered with Dynamics to launch the Wallet Card, an IoT connected, battery-powered payment card.
Dutch financial services corporation ING announced today it is spinning off Katana into its own entity called Katana Labs.
As a part of its move to independence, Katana has closed $3.9 million in funding, half of which ING contributed “to enable further growth and to pave the way for an independent future for Katana.”
Katana began as one of 25 of ING’s innovation initiatives. The project follows in the footsteps of Yolt and Cobase, former ING innovation initiatives that scaled up outside of ING’s labs.
“Supported by ING Labs, we developed, tested and validated the technology. Now it’s time to move to the next phase as an independent fintech,” said Santiago Braje, CEO of Katana. “We are very excited about the opportunities we see in developing our platform and expanding our client base.”
ING launched Katana to help traders leverage predictive analytics to determine bond pricing based on historic and real time data. In 2018, ING enhanced the tool with the launch of Katana Lens, a tool for bond market investors that identifies the most promising trades based on historical data. Last year, Global Finance Magazine highlighted Katana as Innovator 2019.
“In the past few years, Katana has managed to grow from an internal innovation project to a serious value proposition for bond investors. We attracted major clients who see the added value of this super smart AI-tool. I’m proud that with our support Katana grew out to a fully-grown fintech that is ready for an independent future,” said Annerie Vreugdenhil, head of Innovation at ING Wholesale Banking.
Katana Labs has incorporated in the U.K. and is now headquartered in London.
Bankjoy and Zogo Finance are betting that helping credit unions and community banks educate their members rather than “sell” to them is the key to better engagement for CUs and better financial health for consumers.
In a strategy especially geared toward attracting Gen Z customers, Bankjoy and Zogo will offer credit unions a combined financial literacy program and online account opening solution. The combined technology enables new members to join in 90 seconds or less while improving their financial wellness. The partnership will enable credit unions to refashion their offers into educational opportunities rather than just sales pitches, and help the next generation as they grow from learning financial responsibility to taking financially responsible actions, like opening a savings account.
Zogo founder and CEO Bolun Li said that the partnership will enable users of his company’s platform to “take the next step and join a credit union.” Zogo Finance, which won Best of Show at its Finovate debut last fall, leverages behavioral finance – and real world rewards – to guide users of its technology through a series of 300+ educational micro-modules. These lessons, providing information on topics like using credit and successful savings, help users meet the national standards for financial literacy. Successful completion of a module grants the user points that can be redeemed as gift cards from leading brands.
For many fintechs, Gen Z represents an opportunity to market financial solutions based more on financial literacy and the balance between credit, consumption and savings, as opposed to debt-fighting strategies and longer-term family planning. As the median Millennial is moving into their thirties, the oldest Gen Zs are negotiating their teenage years and starting to develop the kind of financial habits that could stick with them well into adulthood.
GoMedici recently cited a RaveReviews study that indicated that the average Gen Z youth begins learning about financial planning at the age of 13. The study indicated that of its polled respondents, 60% of Gen Z had a savings account and 89% said that “planning for their financial future made them feel empowered.” The study added that it expects Gen Z to comprise as much as 40% of the consumer market as early as this year.
“Zogo is exactly the kind of value we have been looking for to add to our digital banking platform,” Bankjoy CEO Mike Duncan said. “Providing financial education to younger generations builds value on top of our digital banking ecosystem and delivers it through all our different channels to create a better member experience – especially for Gen Z.”
Zogo Finance finished 2019 with news that it had partnered with 11 community banks and credit unions in 12 different states. Founded in 2018, the company is headquartered in Durham, North Carolina.
Bankjoy also ended last year with new partners in the credit union community. An alum of FinovateFall from 2016, where the company demonstrated its API, Bankjoy announced in December that it was collaborating with three credit unions in Indiana and Texas that have a combined $500+ million in assets and 50,000+ members. Based in Royal Oak, Michigan, Bankjoy was founded in 2015.
With Finovate making its debut on the European continent just over a month from now, we thought it was a good time to catch up with one of the major fintech innovators in the region, banqUP.
The company, headquartered in Belgium and “proudly developed in Poland,” demonstrated its small business banking platform at FinovateEurope 2017. We reached out to company CEO and founder Krzysztof Pulkiewicz to talk about banqUP’s latest accomplishments in open banking, as well as what the landscape for fintech innovation is like inside and outside the CEE region.
Finovate: The most recent news from banqUP is the news of your AIS license from the Polish Financial Supervision Authority. What does this license enable and how important was this development to your company?
Krzysztof Pulkiewicz: It allows us to broaden our reach and gain new clients. We have been working with a number of banks but now, with our newly gained license, we have the possibility to work both with banks and other entities that can gain access to the opportunities provided by open banking thanks to our solutions.
Finovate: You also recently announced that the company will focus fully on its B2B2C open banking platform. Can you tell us a little bit about the thinking behind this decision?
Pulkiewicz: For banqUP, the main reasons of moving from an idea of a fintech bank to a platform integrating banking APIs were challenges related to the acquisition of customers, especially on mature digital banking markets like Poland. There were also several limitations like opening accounts in polish zloty. On the other hand, we were already closely working with banks interested in our technology. We have seen that a number of our partners were interested in our open banking solutions. We have been working in a sort of a schizophrenic environment – both working with banks and building our own bank as well.
Multibanking was a core element of banqUP fintech bank from day one, and we have decided to focus on this aspect of the platform. We knew that sticking to what we are really good at – technology and data analytics – will be working for us. And it proved true.
banqUp’s platform adds new functionality such as analytics and data enrichment in addition to data aggregation.
Finovate: In line with this, the company has decided to launch a TPP-as-a-Service business line. Why do this and how large are the opportunities there?
Pulkiewicz: This is something we have been thinking about since we have started considering open banking. Multibanking solutions are the beginning of the open banking ecosystem, but we are sure that what the future brings, are the new ideas and products that will come from PSD2. There are many companies that do not consider getting their TPP licenses, as it is not a core of their business. However, they are willing to use the information provided by the banking system, and our solution is created for such partners.
The number of inquiries we are getting from prospective partners is really astonishing – and these are both new companies and major players from different industries.
Finovate: You mentioned in an email that you plan to open the next generation of your platform to the public early next year. Can you give us a preview of what’s new and what to expect – as well as any update on the timeline?
Pulkiewicz: Our main focus is on what we call “open banking building blocks.” We are extending our platform with best-in-class API and SDK that will offer effective integration capabilities for developers. On the functional level, we are adding new functionalities on top of data aggregation (analytics, data quality management, and data enrichment) as well as provide and expand on all the components that can support different businesses in connecting to the open-banking world (consent lifecycle management, data streaming, combining PSD2 APIs with other data sources). We know that data aggregation and payment initiation is just a starting point and we are positioning our platform as a one-stop shop for open banking.
The team from banqUP during their live demonstration at FinovateEurope 2017.
Finovate: BanqUp operates in both CEE and non-CEE Europe – Poland, Slovakia, Hungary, and Bulgaria on the one hand, Belgium and Ireland on the other. Are there categorical differences between working with financial institutions in Central Europe compared to Western Europe? Are attitudes toward open banking the same or different?
Pulkiewicz: The ecosystems differ, but the main distinction we see is not between Central and Western Europe, but between individual countries. Ireland’s ecosystem, for example, is very open. It is not only a reaction to the British banking regulations that have been the basis for PSD2 and had an effect on Ireland, but also the number of fintech companies from the U.K. and Ireland that had quickly started working with banks as they have opened. Poland’s banks have been working on many innovative banking tech projects, and banks have implemented many solutions of their own, making their ecosystems quite closed. When you look at Hungary, it was very fast with opening its own data – with eight out of 10 of the biggest banks in the country providing their API access in March of 2019, well before the final implementation of PSD2 in June. The central bank of the country has also created a fintech cooperation strategy. The differences here do not come from geographical divisions, but from the local ecosystems.
Finovate: In addition to the platform enhancements expected in 2020, are there any other announcements you can preview? New partners, new investors, new markets?
Pulkiewicz: We are definitely planning to expand to new markets – mostly focusing on the CEE region. We have a number of really promising talks with new, large partners, but we cannot really disclose any names at this moment. When it comes to investors – we have been very proud we have managed to come to this moment without any external support, but we are now also looking for strategic partnerships and alliances.
The last decade brought about a lot of discussion around digital identity. Dozens of security companies created new solutions to help banks authenticate their user’s identity and verify their personal information. Throughout the years, those authentication methods have evolved from comparing a simple selfie with a picture of a driver’s license, to tracking how a user navigates a web page, to assessing their online footprint.
Lately, however, the topic of conversation has shifted from authenticating digital identities to creating a digital identity infrastructure. But what exactly is a digital identity infrastructure and why is it important in fintech?
What is digital identity infrastructure?
Digital identity infrastructure is the set of processes a company has in place to verify users’ digital identities and manage their access. This infrastructure is especially important for banks and fintechs who host their information in the cloud, are frequently increasing the amount and types of information gathered, and are often times moving fast.
Why is digital identity infrastructure important in fintech?
This is where identity infrastructure comes into play– it helps companies scale faster and more simply. Creating a methodology around identity verification helps organizations leave behind a siloed approach in favor of a more holistic methodology that is consistent with the framework of the rest of the company.
What does the industry have to say?
David Birch, a well-known thought leader in the fintech industry, talked to us about digital identity last year at FinovateEurope. He laid out a handful of ideas on the subject, including his thoughts on creating identities for non-human objects such as robots. Some of the topics Birch discussed include:
The need to develop a framework around digital identity, including its definition
How banks should be responsible for developing the infrastructure around identity
There will be a future where robots will need passports
You can catch the full interview below.
Birch takes the stage at FinovateEurope next month to discuss how digital identities will be a game changer in the war against financial crime. He will also speak on a panel discussing which new technologies will transform financial crime and what an enterprise-wide financial crime risk assessment should look like.
Still need your ticket to FinovateEurope? Book now and we’ll see you in Berlin on February 11 through 13. If you register before this Friday, you can save up to £1,000.
The $175 million in Series C funding raised by Latin American digital real estate platform Loft this week offers an insight into how proptech is providing new investment opportunities within the emerging markets of countries like Brazil and Mexico.
“We’re aiming to reinvent the way people move homes by building the most consumer-focused real estate marketplace,” Loft founder and co-CEO Mate Pencz said. Loft’s digital platform leverages transaction data and machine learning to price apartments at the unit level. This brings both liquidity and transparency to a market the company says suffers from a lack of data transparency, excessively-high selling prices, and long transaction times.
The company plans to also use the funding to fuel its continued growth in Brazil and throughout Latin America. Expansion to Rio de Janeiro is anticipated for early 2020, with Mexico City to follow soon afterward. Loft also plans to grow its product portfolio in the new year to include mortgages and insurance.
“Loft is creating a consolidated source of truth on inventory and transaction prices that has, until now, been fundamentally missing from the Latin American real estate market,” Vulcan Capital general partner Rafael Costa explained. “This, together with Loft’s highly accurate and intelligent pricing tools, is transforming real estate transactions and providing a truly unmatched customer experience for sellers, agents, and buyers,” Costa said. Vulcan’s investment in Loft is the first and only Latin American investment in the company’s portfolio.
TechCrunch’s Anna Escher compared Loft to U.S.-based home-selling marketplace platform Opendoor in her reporting on the funding announcement. And while the San Francisco-based property management technology company has quite the head start, including a $3.8 billion valuation, Loft has made strong strides in its initial year of operation. The company announced more than $150 million in annualized revenues last year and transacted more than 1,000 properties. Beginning with 100 employees, Loft finished 2019 with more than 450 on its team, with plans to add more talent early this year.
Loft competes with firms like QuintoAndar, a SoftBank-funded unicorn based in Brazil, and Mexico’s Flat, which includes investors such as ALLVP and Next Billion Ventures. Proptech represents a modest amount of the overall capital VCs have invested in Latin America, rising to 4% of all VC funding in 2018. Nevertheless, this constituted a sizable increase in both the amount invested (503x) and number of deals (5x) over the previous year, as reported by the LAVCA in its Annual Review of Tech Investment in Latin America. The figure also rivaled investment in other areas such as security & infrastructure, digital security, and e-commerce. Overall, the report indicated that fintech represented 25% of all VC spending in Latin America in 2018.
The investment in proptech Loft also reflects the breadth of funding Latin American fintechs are receiving. Last week, Latin American SME lenders Cora and Rebel made headlines with million dollar fundraisings that will help bring credit to underserved businesses. Challenger banks in Mexico have attracted VC interest, as well, with neobanks Albo and Flink both announcing year-end funding last week.
Lending solutions provider Open Lending has agreed to merge with Nebula Acquisition Corporation, an acquisition company sponsored by True Wind Capital.
The merger will take place via an acquisition in which, once finalized, Nebula will purchase Open Lending and form a new Delaware holding company called Open Lending Corporation. The new entity will be publicly-traded on NASDAQ with an estimated value of $1.3 billion.
Members of Open Lending’s executive team– John Flynn, cofounder, president, and CEO; and Ross Jessup, cofounder, CFO, and COO– will lead the new company. Flynn commented that there is “significant runway” for new growth, considering Open Lending’s existing banking relationships and “untapped opportunities” with new partnerships.
Open Lending was founded in 2000 and offers automated lending solutions to banks, specializing in automotive lending. Ultimately, Open Lending helps banks offer near-prime borrowers more attractive borrowing rates without changing the risk profile for the bank. In 2019, Open Lending facilitated more than $1.7 billion in automotive loans for 275+ financial institutions.
“Open Lending’s ability to demonstrate consistent organic growth and high levels of profitability represents an exciting investment opportunity within the risk-based analytics ecosystem,” said Adam Clammer, Nebula co-CEO and founding partner of True Wind. “John and his team have developed a highly-scalable technology platform that helps hard working consumers get into a new or used car at the best rate possible. We look forward to partnering with Open Lending’s management team and Bregal at this exciting inflection point in the company’s growth.”
Join us for this #FinovateWebinar, as Ondot gives an overview of what the Google Checking product is, how it compares to payment products from Apple, Facebook, and other tech giants, and what Google stands to gain.
We will be joined by Richard Crone from Crone Consulting, whose Apple Card insights have been featured in Bloomberg, Marketwatch, PaymentsSource, and The Financial Brand, to discuss what’s driving the opportunity from these tech giants and what is the opportunity or threat for banks and credit unions, as well as how financial institutions can respond.
Covered in the session:
How is this different or the same from other tech company launches such as Apple Card?
Why does Google see an opportunity and what’s in it for Google?
Along with Apple Card and other tech giants, what are industry trends and consumer demands driving this change?
What’s in it for banks and credit unions? Should financial institutions see this as an opportunity or a threat?
Featuring:
Richard K. Crone, CEO and Founder, Crone Consulting, LLC
Heidi Liebenguth, Managing Partner and Research Director, Crone Consulting, LLC
According to reporting in the Financial Times, JPMorgan Chase is the latest financial institution to pledge a pivot toward tokenization to make it easier and safer for customers to access third party financial solutions. Tokenization enables FIs to securely send only the limited amount of data necessary to complete transactions, and limits the exposure of customer passwords and other sensitive information. The article, by Laura Noonan, highlights a pair of companies – Envestnet |Yodlee and Plaid – and their agreements to use tokenization in their interactions with Chase and other major FIs.
“Our partnership with Chase will allow further consumer choice, reliability, and insight into how and where their data is being used, along with improved overall financial well-being,” Envestnet | Yodlee CEO Stuart DePina said when his company’s deal was announced last December. “As we move toward API-based connectivity in the United States, relationships like the one we have with Chase are laying the groundwork for this reality by giving consumers greater connectivity across their financial accounts, all accomplished through these types of secure and protected channels.”
The move also represents Chase’s most recent strike against screen scraping, with the FI has long opposed out of concerns that the practice was exploitative of customer data. Noonan’s article notes JPMorgan CEO Jamie Dimon who decried the way “many third parties sell or trade information in a way customers may not understand, and the third parties, quite often, are doing it for their own economic benefit – not for the customer’s” in a shareholder letter in 2016.
On Finovate.com
The CA Consumer Privacy Act Went into Effect While You Were on Vacation – If you’re unfamiliar with the California Consumer Privacy Act (CCPA), you might want to stop catching up on email you missed over the holiday and focus on this new regulation. Here are a few highlights of California’s new law, which went into effect yesterday.
Wall Street to Exiting Fintechs: Show Us the Profits – What does the fintech landscape look like for startups in 2020? Among all the forecasts and predictions we’ve been reading and re-reading, is reporting from the Wall Street Journal that suggests that fintech startups seeking successful exits may face tougher challenges in 2020 than in 2019.
B-North Lands $2.6 Million Ahead of Launch – E.U.-based alternative lending company B-North announced this week it landed $2.6 million (£2 million) in new funding. The investment comes as part of crowdfunding efforts via Crowdcube and Growthfunders.
Finovate Global: Solaris Bank to Secure CryptoCurrencies; Brazilian Fintechs Announce New Funding
Lendiorecognized as one of the best places to work by Glassdoor.
iProov CEO Andrew Bud earns Commander of the Most Excellent Order of the British Empire (CBE) status from Queen Elizabeth as part of his work in driving technology innovation in the U.K.
Standard Charteredappoints Rene Keller as CIO of CCIB.
If you are a Finovate alum, please send us your news and announcements by Friday noon, Pacific Time, in order to be featured in our weekly Alumni in the News roundup.
Join us next month in Berlin, Germany for FinovateEurope 2020. Our three-day fintech conference will begin on February 11 and run through February 13.
The event features both our signature, seven-minute, live technology demonstrations, as well as keynote addresses, roundtables, and case studies on many of the most critical issues in fintech. Check out our conference agenda and stay tuned for more about our speakers and demoing companies.
Here’s our weekly look at fintech around the world.
Central and Eastern Europe
Austrian mobile payments firm Bluecode raises $13.4 million (€12 million) from European Private Venture Capitalists.
German fintech Solaris Bank announces plans to offer custodial services to cryptocurrency investors.
Ukraine’s mobile-only bank Monobank to expand to the U.K. in 2020.
Middle East and Northern Africa
IBMbrings its fraud prevention technology to Qatar International Islamic Bank.
PYMNTS looks at the opportunities PSD2 may offer Turkish banks.
Egypt-based fintech Dayra wins $15,000 grant from Y Combinator’s Startup School, the first MENA-based startup to do so.
Central and Southern Asia
Business Recorder interviews Syed Mohsin Ahmed, CEO of Pakistan Microfinance Network.
Fintech Singapore lists India’s top fintech influencers for 2020.
Makers India highlights five women who are driving fintech innovation in India.
Latin America and the Caribbean
Born2Invest examines the impact of mobile money on Argentina’s banking industry.
Brazilian fintech Cora raises $10 million in funding to help provide financial services to SMEs.
Rebel, a startup that helps provide credit to middle-class Brazilians, rakes in $10 million in equity funding.
Asia-Pacific
With closing of a 70% stake in China’s GoPay, PayPal is the first non-Chinese firm licensed to offer payment services in the country.
FIS’ global ecommerce platform, Worldpay, partners with Japanese issuer and acquirer JCB.
Who are the top contenders in Singapore’s digital banking race? Fintech Singapore reviews the field.
Sub-Saharan Africa
Micro-investing startup Trove picks up an investment from Nigerian asset management company, ARM.
Kontomatik’s Konstantin Rabin looks at South Africa’s position as an “unlikely fintech leader.”
Julaya, a startup based in Ivory Coast that specializes in digitizing financial services for small businesses, raises $550,000 in funding..
As Finovate goes increasingly global, so does our coverage of financial technology. Finovate Global is our weekly look at fintech innovation in developing economies in Asia, Africa, the Middle East, Latin America, and Central and Eastern Europe.
E.U.-based alternative lending company B-North announced this week it landed $2.6 million (£2 million) in new funding. The investment comes as part of crowdfunding efforts via Crowdcube and Growthfunders.
Combined with the $5.5 million (£4.2 million) the company has already raised, today’s round brings B-North’s total funding to just over $8 million, according to FSTech. The company will use the new capital to increase its workforce and boost its infrastructure.
While B-North has yet to launch, the company plans to do so in “mid-2020.” Taking a step in that direction, last month B-North partnered with Newcastle Strategic Solutions, which will provide a deposit-taking solution for the new lender.
While there are multiple alternative lending companies in the fintech sector, B-North aims to differentiate itself by lending up to 10x faster than incumbent players, placing core banking functions closer to the customer, and tapping its commercial finance broker channels for distribution. Much of this will be accomplished through “lending pods,” as the company calls them, which will launch across Manchester in the second half of this year.
B-North was founded in 2015. Jonathan Thompson is co-founder and CEO.
