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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
The company is making the auto loans available to a wide range of consumers, even those with FICO scores as low as 580.
The move comes as others are pulling out of auto lending or tightening lending restrictions.
Digital bank Upgrade announced this week it now offers auto loans. The California-based company plans to originate the loans via car dealers and re-sell the debt to its network of banks.
According to Bloomberg, which broke the news, the company will target a range of consumers– even those with sub-prime credit– and plans to extend loans to consumers with FICO scores as low as 580.
This announcement comes at a time when many consumers are underwater on their auto loans, triggering higher delinquencies. According to Edmunds.com, the average U.S. consumer’s monthly payment reached $733 in July, marking a record high.
Because of this, multiple lenders have either exited auto lending in some capacity, or have tightened their lending standards. This has left a “void in the market,” according to Upgrade Co-founder and CEO Renaud Laplanche. “It’s great to be in that position to lower the cost of auto lending at the time it’s really needed,” he said.
Where others are backing out, however, Upgrade is doubling down. The company claims to have a competitive advantage over other lenders because it taps multiple sources of funding– from banks, to credit unions, to asset managers– which purchase the loans after Upgrade has originated them.
While Upgrade already offers auto loan refinancing as part of its banking product suite, this is the company’s first foray into auto loan origination. The company refinances auto loans at 5.24% to 17.94% APR on cars less than 10 years old with mileages under 130,000.
A group of 30 car dealers in California and Oregon are piloting Upgrade’s auto loans, which went live with the loans earlier this week.
As new trends emerge, such as the growth of P2P push payments, businesses need to implement verification processes to better protect their customers. Additionally, cross-border transactions require meticulous compliance with international AML regulations which can be challenging to navigate.
In this webinar, we’ll explore the role of identity in global payments and moving money across borders. Join our experts as they discuss strategies to ensure seamless customer experiences while staying fully compliant, incorporating essential concepts like KYB and KYC.
Key points of discussion will include:
Best trust and safety and compliance practices for moving money cross border and instantly
How account creation fraud spurs push payment fraud and ways to mitigate these joint abuses
This is a sponsored article by Irene Galperin, InterSystems
Innovation is at the forefront of every financial institution’s agenda. The days when a household name was enough for a bank, investment manager or lender to win and retain business are fading in the rear-view mirror. Today’s customers are digitally savvy and are more demanding of their financial service providers.
To compete in a world where digitally-native innovators are proving successful at meeting changed customer expectations, financial service firms are expanding their analytical and automation capabilities.
The sophisticated analytics and processes required to provide customer personalization, accelerate the credit approval process, manage risk, and prevent fraud before it happens, are fueled by vast volumes of data with varying degrees of complexity. Robust, high performance data management infrastructure is crucial to advancing such innovation and remaining competitive.
To meet these many demands, a huge investment in technology is underway. Analysts at Gartner forecast global IT spending in banking and investment services will reach $652 billion in 2023 – a staggering amount. Spending on software is shifting from building in-house to buying solutions that provide quicker time-to-value.
Intelligent data management as non-negotiable
Gaining insight from data has become the new battleground in financial services, as organizations know they must make better use of their data to improve business decision-making.
Predictive and prescriptive analytics offer huge gains in responsiveness and efficiency, but before organizations have access to such insights, they must be capable of managing the vast amount of data they have – not all of it their own.
We can see how firms are tackling this in the real world, using a new approach to data architecture, which is the smart data fabric. A smart data fabric prepares data for analysis by connecting to existing sources without the necessity of moving data or creating new silos. InterSystems, for example, enables businesses to use this approach so they can gain a complete 360-degree view of each customer and their business, enabling one reality powered by unified, trusted data.
A smart data fabric pulls disparate types of data together from many sources in real-time, creating a useable, dependable, and trustworthy single source of the truth. This is no mean feat when data is growing exponentially, flowing into different, highly distinct silos, and in very different formats. A smart data fabric enables financial services firms to transform, validate, and prepare data for use by advanced applications using sophisticated analytics.
Superior customer personalization to alleviate difficulties
This kind of revolutionary approach to data is having major impact on one of the largest credit unions in the US, Financial Center First Credit Union (FCFCU). FCFCU has worked with InterSystems to build a powerful Customer 360 application that uses predictive analytics to indicate signs of financial distress. This enables FCFCU to intervene much earlier and more effectively, fulfilling its mandate to support people while building stronger relationships with members. Frontline employees are able to make more decisions themselves, and are spared the need to move between different applications. Following implementation of the new application, the organization had its best lending year, helping members defer payments and refinance loans.
Asset management transformation
Another InterSystems customer, Harris Associates, is an independent asset management firm in the U.S. with more than $100 billion in assets under management as of March, 2023. It has always looked to improve its ability to better manage risk and gain visibility into performance data on demand, using data to serve multiple consumers and use cases. Speed of access to reliable insights is critical. Harris implemented InterSystems TotalView For Asset Management to build a smart data fabric, aggregating data from third-party providers along with the full gamut of internal sources and applications.
The smart data fabric has met the all-important requirements for timeliness and consistency, serving the entire business and its clients. Business users across the firm are now able to make decisions using timely, trustworthy data, with the ability to drill down and get to the answers that matter to them. The whole project has radically improved enterprise and client reporting.
Leading fintech unlocks the value of data
Broadridge Financial Solutions, a $5 billion global fintech leader handling $7 trillion of fixed income and equities securities trades per day, undertook a significant data management transformation to build a wealth management solution and unlock the value of their data. Broadridge embraced the smart data fabric architecture using InterSystems IRIS.
The architecture seamlessly unifies data sources, creating golden source data that is distributed horizontally with a caching layer, all in one high-performance solution, helping Broadridge to gain real-time insights, agility, and operational efficiency.
The new architecture met Broadridge’s need for speed and enabled them to scale to five times current volume, handle two million transactions daily, and store seven years of data. InterSystems IRIS provided a 900% improvement in performance using only 30% of the infrastructure, compared with an alternative approach.
Broadridge’s success story highlights the importance of innovative data solutions in reshaping business strategies. In the digital era, the smart data fabric emerges as pivotal, unlocking data’s full potential for Broadridge and its clients.
InterSystems’ long record of achievement in financial services data excellence
These real-world use cases are just three examples of how better access to trusted data is revolutionizing the effectiveness of financial service firms at competing and operating in the digital age. InterSystems has a long track record of innovation and achievement in this field, and has gained Gartner Magic Quadrant recognition as a visionary for cloud database management systems. This validates the company’s next-generation data platform and innovative smart data services. Composable services remove the need to build custom applications when organizations want to become more competitive.
The ability to gain a complete, accurate view of the enterprise and of individual customers is critical in today’s highly competitive banking sector where new players often have leaner technology and greater agility. But what they do not have is valuable customer data, acquired over many years. For banks to compete, a smart data fabric provides the ability to leverage predictive and prescriptive analytics to ramp up innovation and efficiency. Organizations can gain a 360-degree view of enterprise data across many silos, enabling them to capitalize on their data assets and deliver innovative services in the face of increasing competition.
Last month’s launch of FedNow has sparked discussions on the future of real-time payments and their implications on banks and fintechs. In an interview with ConnexPay Founder and CEO Bob Kaufman, we look at the introduction of FedNow and how it stands to impact competition and adoption across the sector.
The interview also sheds light on the shift away from checks and cash, looks at the impact real-time payments will have on banks, and offers insight into strategies to stay ahead of the curve.
How will FedNow’s recent launch impact competition and adoption across the sector?
Bob Kaufman: In my view, FedNow effectively bridges the gap that exists between the traditional ACH infrastructure and the Federal Reserve’s payment rails. While ACH offers a reliable solution for high volumes of payments, its drawback lies in its lack of real-time processing. Even with the introduction of same-day ACH, there remains a risk of funds being reclaimed within a short span. This limitation becomes evident in situations such as property purchases where swift transactions are crucial – a circumstance for which the wire network was established. However, the wire payment system comes with its own set of drawbacks, notably its high cost and the manual intervention required.
What are the current barriers to mass adoption of real-time payments?
Kaufman: FedNow targets small-dollar peer-to-peer transactions and operates solely within the United States. In contrast to card-based transactions, there also appears to be a lack of a robust dispute resolution process for FedNow, although there have been discussions about implementing one. When we consider the present use of credit cards, it’s interesting to note the confidence we place in the act of handing our cards to unfamiliar entities. This applies particularly to transactions involving businesses we’ve never engaged with before. We readily input those 16-digit card numbers without dwelling on the potential consequences if the purchased items fail to materialize at our doorstep. This level of assurance stems from the knowledge that, should an issue arise, we can promptly contact our bank, initiate a dispute, and subsequently reclaim our funds. This chargeback process is a fundamental reason why credit cards remain a prevailing payment method.
The dominance of Visa and Mastercard in the market is largely attributed to their establishment of a highly effective chargeback mechanism. This tried-and-true approach provides a reliable means of resolving transactional disputes that isn’t as well-developed within alternative payment avenues.
What impact will real-time payments have on banks?
Kaufman: I believe that the banking sector stands to benefit from addressing the current shortcomings within the ACH and wire transfer systems. While ACH transactions work seamlessly for many B2B payments due to their scalability, they each have limitations when it comes to P2P and certain other transaction types. ACH will undoubtedly continue to serve a purpose for pre-authorized payments, enabling businesses to initiate ACH transfers to designated recipients when there’s an assurance of incoming funds.
However, ACH encounters challenges, especially in terms of data handling. In contrast, credit card transactions provide an array of comprehensive details, including Level 3 data, allowing for precise identification of invoices and the nature of the payment. This wealth of information ensures clarity in understanding the purpose of a transaction. The reconciliation process poses a significant issue with ACH transactions, particularly for the CFOs of large corporations. Their checking accounts could be inundated with hundreds of ACH records on a daily basis, often without clear indications of their corresponding purposes. This discrepancy creates a reconciliation nightmare that doesn’t arise when utilizing credit card transactions, where the associated data provides a more transparent overview of each transaction.
Will the real-time payments boom in the U.S. lead to the end of checks and cash payments?
Kaufman: Throughout my tenure in this industry, the consensus has been that checks are steadily fading into obsolescence. Admittedly, it’s been quite some time since I’ve personally written a check, and even my 20-year-old children are unfamiliar with the concept. In that regard, checks have essentially become a thing of the past.
While checks are dwindling, they persist in B2B payments, constituting nearly half of such transactions. COVID-19 impacted cash usage, yet it remains for businesses lacking stable internet connectivity. The complications of cash management and the IRS’s stance on it provide incentives to phase it out.
At ConnexPay, our objective is to serve as a comprehensive solution for inbound and outbound funds for companies that operate as intermediaries (such as travel agencies, Doordash, Uber Eats, and ecommerce marketplaces), rather than producing their own goods or services. We’re committed to addressing the diverse payment requirements that these businesses demand. This is precisely why we offer options like push-to-card, ACH, and wire transfers.
What is ConnexPay doing to stay ahead of the trends in the industry?
Kaufman: ConnexPay was established with a vision to address the fragmentation in the payments industry. Our goal is to streamline the payment process for companies by offering both incoming and outgoing payment solutions. Unlike our competitors, we provide a unified approach, resolving pain points like cash flow issues. Our real-time access to funds sets us apart.
We are agile in responding to customer needs and rapidly implementing new solutions. For instance, consider companies like AirBnB – although they are not yet our clients, such firms have expressed a need to compensate consumers rather than businesses on the opposite end of a transaction. These companies prefer not to rely on credit cards; instead, they appreciate the benefits of real-time access and the potential data insights associated with such transactions. To address this requirement, we recently introduced Push-to-Card Payouts. A similar scenario could arise with FedNow. However, it’s worth noting that we currently serve 250 clients, and none of them have indicated a desire for ConnexPay to provide this particular offering.
A look at the companies demoing at FinovateFall in New York on September 11 and 12. Register today and save your spot.
Purpose built for homeowners, Chimney Home provides data, tools, and portfolio insights needed to build lifelong relationships and generate more deposits and loans.
Features
Data to identify opportunities, monitor portfolios and speed up approvals
Proven digital engagement for mobile apps
Automated campaigns to cross-sell homeowners
Why it’s great
Homeowners can track home value, see available equity, and receive personalized offers within online and mobile banking, regardless of who holds their mortgage.
Presenter
Chase Neinken, Co-Founder Neinken is a new dad. He’s also an award winning tech founder and passionate about saving the planet. LinkedIn
A look at the companies demoing at FinovateFall in New York on September 11 and 12. Register today and save your spot.
The True Digital Platform helps banks and credit unions discover, qualify, implement, monitor, and troubleshoot vendors and their products.
Features
Discover, vet, and monitor vendors via FI-verified vendor data
Connect with peers for candid references
Compare tech stacks for integration compatibility
Why it’s great
The Platform is a conduit to collaboration in strengthening the relationships financial institutions have with technology, vendors, and each other.
Presenter
Patrick Sells, Co-Founder & CEO Sells is an award-winning entrepreneur, Digital Banker of the Year winner from American Banker, and thought leader in the financial services industry. He is a catalyst for change in how FIs innovate. LinkedIn
A look at the companies demoing at FinovateFall in New York on September 11 and 12. Register today and save your spot.
AI Squaredis a platform for product owners, data scientists, and enterprise leaders. It empowers them to accelerate predictive and generative AI projects, measure their benefits, then iterate and improve them to drive significant revenue growth and cost reduction.
Features
Speed to Market: Faster model LLM integration into business applications driving increased adoption of foundational models and LLMs across the organization
Increased Efficiency: Increased foundation model & LLM accuracy using feedback from end users to auto-tune
Built-In Privacy and Security: Designed with financial services organizations in mind, protecting the data for their organization and customers
Why it’s great
Data is a competitive moat and AI Squared helps users harness it with both predictive and generative AI.
Presenters
Michelle Bonat, CTO Bonat boasts two decades in finserv. Formerly an AI CTO and Head of AI Innovation at JPMC, she’s now shaping the next wave of financial AI innovation. LinkedIn
Andre Llewellyn, Advisory Board Member Llewellyn is an award-winning experienced marketing exec at AI Squared with previous roles at Instagram and P&G. He’s an expert in AI-driven marketing innovation. LinkedIn
A look at the companies demoing at FinovateFall in New York on September 11 and 12. Register today and save your spot.
Autobooks’Tap to Pay on iPhone enables businesses and non-profits to accept contactless payments, directly from the financial institutions’ existing mobile banking apps.
Features
Contactless payment acceptance
Available directly from financial institutions’ mobile banking apps
Payments deposited directly into customers’ existing accounts at FIs
Why it’s great
To lock in customer deposits and relationships, financial institutions need to offer easy ways for businesses and non-profits to accept online and in-app payments.
Presenters
Steve Robert, CEO & Co-Founder Robert helped found Billhighway, a financial platform for organizations, in 2003. After Billhighway was acquired in 2016, Steve founded Autobooks. LinkedIn
Derik Sutton, CMO Sutton is a product and marketing executive with a track record of helping to build, market, and sell products in the financial industry. Sutton joined Autobooks in 2018. LinkedIn
A look at the companies demoing at FinovateFall in New York on September 11 and 12. Register today and save your spot.
Synthetic ID fraud is the fastest growing financial crime category. This demo will show how Nuance’sGatekeeper detects artificial voices in real-time.
Features
By combining synthetic speech detection with voice and conversational biometrics, Gatekeeper provides a layered defensive countermeasure against AI-powered fraud attacks.
Why it’s great
Nuance has worked with the Microsoft Cognitive AI research team to detect the tiny differences that distinguish a computer-generated voice from a live human voice.
Presenter
Rachel Muench, Security & Biometrics Lead Muench’s expertise lies in helping FIs leverage biometrics for authentication and fraud prevention while delivering better customer experiences. LinkedIn
A look at the companies demoing at FinovateFall in New York on September 11 and 12. Register today and save your spot.
SRM Key Moments are customized experiences that load into existing apps to drive desired outcomes for card portfolios.
Features
Customized moments
Integratabtle into existing mobile apps
Configurable tech stack rules at every level
Why it’s great
SRM Key Moments is paying dividends for bank and CU issuers with 25%+ overall increase in transactions, $20-$40 per card per year in increased payment volume, and increased customer engagement.
Presenters
Chris Boncimino, Global Innovation Partner CEO, Key Moments Boncimino has 20 years leadership in global payments, financial services and product development. He’s an executive member of the Visa Asia Pacific Leadership Team, responsible for global development and solution delivery. LinkedIn
Bob Koehler, Chief Innovation Officer Koehler has 20+ years of experience in card portfolio strategy. He’s successfully led multiple high-value projects for clients negotiating with signature networks and is steeped in revenue growth programs for FIs. LinkedIn
A look at the companies demoing at FinovateFall in New York on September 11 and 12. Register today and save your spot.
FinTech Insights is the premier competitive analysis tool for banks and fintechs that provides all the data they need to outsmart their competition in one powerful, user-friendly platform.
Features
See exactly what competitors are doing right now
Identify unmet market needs in a matter of seconds
Find out how product enhancements would change bank market positioning
Why it’s great
Most digital banking teams develop with a limited view of the market, and FinTech Insights allows them to quickly identify unmet customer needs and market opportunities.
Presenters
Nickolas Belesis, VP of Growth Belesis is a fintech growth and digital banking specialist, assisting C-Suite executives in utilizing FinTech Insights to skyrocket their digital banking and maximize their NPS scores. LinkedIn
Konstantine Pappas, Account Executive Pappas is an experienced fintech executive who is empowering digital banking teams to improve their UX and product offerings. LinkedIn
Is the tide turning in favor of crypto? Today’s unanimous, three-judge ruling in favor of Grayscale over the SEC is yet another sign that crypto winter could be transitioning into crypto spring.
What happened? As we’ve been reporting in Tales from the Crypto, there has been a growing movement in favor of an exchange-traded fund based on the price of Bitcoin. A number of major financial institutions – including crypto asset manager Grayscale Investments – have applied to the SEC in order to make this happen. To date, firms pursuing ETFs based on Bitcoin futures have fared better than those companies opting to offer ETFs based on the spot price of the cryptocurrency.
One of the ways that the SEC has pushed back against these latter efforts has been to say that, essentially, spot Bitcoin ETFs are not safe. Specifically, the SEC told Grayscale – which was looking to convert its Grayscale Bitcoin Trust into a listed Bitcoin ETF – that the planned product was not “designed to prevent fraudulent and manipulative acts and practices.”
In June, Grayscale sued the SEC. And this week, a three-judge panel of the District of Columbia Court of Appeals overturned the ruling. The court directed the SEC to grant Grayscale’s petition for review and to vacate its order to deny the company’s listing application. The succinct, two-sentence judgment does not determine the ultimate fate of Grayscale’s spot Bitcoin ETF. But the successful appeal is a major boon for the effort to make spot Bitcoin ETFs available to traders and investors.
Crypto continues to have an easier path outside the United States than within it. Today’s news about Grayscale and the SEC comes at the same time that Coinbaseannounced a new PayPal integration for its users in the U.K. and Germany. The integration will enable Coinbase users in those countries to easily buy and withdraw cryptocurrencies via debit cards and bank accounts linked to PayPal.
“Coinbase’s mission of increasing economic freedom in the world means making it easier and faster for customers to interact and engage with the cryptoeconomy, reducing the frictions of the legacy banking system,” Coinbase VP and Regional MD, EMEA, Daniel Seifert said.
The process is simple for U.K. and Germany-based customers who already have a PayPal account. They can begin making crypto transactions on Coinbase immediately, the company said in a blog post. Customers also do not have to input their bank account or card number directly to Coinbase; users can continue using PayPal to securely manage their financial data. The company said that it plans to extend the functionality to other EU countries in the months to come.
Speaking of Coinbase, the company recently announced an investment in stablecoin company Circle. Circle is the issuer of the USDC stablecoin. The investment announcement was accompanied by a statement that the two companies will shut down the Centre Consortium, a private governance organization for USDC established by Circle in 2018.
“We believe that stablecoins can advance the real-world utility of crypto and help make the global financial system more open and inclusive,” Circle CEO Jeremy Allaire and Coinbase CEO Brian Armstrong said in a joint statement. “Together, we look forward to unlocking additional value by growing the USDC ecosystem, circulation and global adoption.”
Founded in 2018 to help financial consumers in the U.K. access digital assets, cryptocurrency firm Coinpass has agreed to be acquired by OANDA Global Corporation. OANDA acquired a majority interest in Coinpass last week.
OANDA CEO Gavin Bambury said the acquisition would add to the company’s multi-asset offering and its appeal to a broader range of retail investors. He added: “A crypto native, Coinpass will provide OANDA with the technology backbone and trusted experience in the regulated crypto markets we need in order to offer clients globally a fast and secure route to the digital economy.”
Coinpass offers fast, secure, and compliant trading in more than 50 fiat currencies, stablecoins, and cryptocurrencies. The firm won Best Cryptocurrency Exchange Platform at CityAM’s 2020 CryptoAM Awards. Coinpass launched its crypto trading platform in 2021 – the same year it secured approval from the Financial Conduct Authority – and initiated stablecoin trading in USDC and USDT in 2022.
“We are delighted at Fluency to be part of this exciting and forward-thinking partnership with Mastercard helping CBDC networks seamlessly bridge transactions between different types of CBDC: account and token-based, retail and wholesale, multi-CBDC with tokenized assets and regulated stablecoins,” Fluency CEO Inga Mullins said.
Fluency offers a technology to enable organizations and institutions to deploy, configure, and manage custom CBDC networks. The company has joined CBDC boards around the world in order to assist central banks and governments on CBDC design, implementation strategy, and policy.
“We believe in payment choice and that interoperability across the different ways of making payments is an essential component of a flourishing economy,” Mastercard Head of Digital Assets and Blockchain Raj Dhamodharan said. “As we look ahead toward a digitally driven future, it will be essential that the value held as a CBDC is as easy to use as other forms of money.”
Crypto exchange Bybitintroduced a revamped launchpad this week. The enhanced offering, Bybit Launchpad 3.0, gives early investors the opportunity to invest in new and pre-listed tokens directly from the Bybit platform. The technology connects project developers with potential investors, and provides a token launch process that is more streamlined and features greater transparency.
“Bybit Launchpad 3.0 is bringing innovative blockchain projects to the forefront,” Bybit co-founder and CEO Ben Shou said. “We are providing direct access to pre-listing rounds and facilitating the acquisition of new tokens. These tokens then seamlessly transition to trading on Bybit’s trading platform.”
Headquartered in the UAE, Bybit was founded in 2018. With more than 270 assets available via its platform, the company has more than 15 million users around the world.
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