Finovate Alumni News

By David Penn Posted on
Categories: ACI Worldwide, AlphaClone, Bright Funds, Fastacash, itBit, Kreditech, Lending Club, Motif Investing, Prosper, Silanis Technology, Toshl, Zopa

On Finovate.com

Around the web

  • Forbes column on a “$30 trillion customer service experience” features insights from Motif Investing CEO Hardeep Walia.
  • Wells Fargo funding authorizes ApproveIt Web Server from Silanis Technology as part of their approved e-signature solutions program.
  • Sun Sentinel article highlights Toshl Finance in a discussion on the eight things you should know before going to college.
  • Column on RIAs and the active ETF market quotes AlphaClone CEO Mazin Jadallah.
  • Bright Funds establishes six disaster-response funds to support Nepal disaster relief.
  • The Economist features Lending Club, Prosper, Zopa, and Kreditech in its look at P2P lending and “financial democracy.”
  • Axis Bank launches Ping Pay, a multisocial payment app, in partnership with Fastcash.
  • PYMNTS.com considers what itBit’s New York banking license and $25M funding means for the broader bitcoin community. See itBit at FinovateSpring 2015 in San Jose this week.
  • ACI Worldwide signs Letter of Commitment to support U.K. Faster Payments Scheme’s New Access Model.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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FinovateSpring 2015: We’re On the Way to San Jose

FinovateSpring 2015: We’re On the Way to San Jose
By David Penn Posted on
Categories: FinovateSpring 2015

FS2015_banner_logo

Spring has sprung! And with it, the return of FinovateSpring to the Bay Area for our second event in San Jose!

This year we will miss the throngs of San Jose Sharks fans marching down the street, packing the pubs, and enjoying the performance of their beloved NHL playoff contender. But we are looking forward to the throngs of financial technology fans who have already saved their spots at what is shaping up to be the biggest FinovateSpring to date.

So, whether you will be joining us here in San Jose, or following us online via Twitter feed (@Finovate) or our Live Blog here at Finovate.com, here’s everything you need to know to be ready when the lights go up on the Finovate stage Tuesday morning.

Schedule
Registration begins at 8:00 a.m. on Tuesday, 12 May. The first demo begins at 8:55 a.m. The final demo of Day One begins at 4:02 p.m.

On Wednesday, registration begins at 8:00 a.m. The first demo will start at 8:55 a.m. The final demo of Day Two begins at 2:28 p.m., with the Best of Show award ceremony at 4:15 p.m.

There’s still time to be a part of our record-breaking audience. Visit our registration page and pick up your ticket today.

CityNationalCivic_small

Venue
FinovateSpring returns to the City National Civic, near the campus of San Jose State University. Here’s the address for those of you joining us in person:

135 West San Carlos Street
San Jose, California 95113

Presenters
Over the course of two days, FinovateSpring 2015 will feature 72 companies demonstrating the latest in fintech innovation live on stage. Take a peek at our presenters below, and learn more about them at our presenters page, as well as in our Sneak Peek preview series.

FS2015_Logo_Box

We hope to see you in San Jose! For more information, visit our FAQ page or email us at [email protected].

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itBit Raises $25 Million, Earns New York State Trust Charter Ahead of Finovate Debut

itBit Raises $25 Million, Earns New York State Trust Charter Ahead of Finovate Debut
By David Penn Posted on
Categories: Funding, itBit

itBit_homepage

Days away from its debut at FinovateSpring in San Jose, itBit has earned an investment of $25 million from new and existing investors. Participating in the round were Liberty City Venture, RRE Ventures, and individual investor, Jay W. Jordan II, as well as James Pallotta, chairman of Raptor Capital Management.

The round takes itBit’s total funding to more than $30 million. The company said in a statement that the capital will be used for both increasing investment in future products and services, as well as hiring talent in a wide variety of areas from engineering and operations to marketing and customer service.

The investment comes as itBit announces that it has won approval as a New York State trust company. This makes itBit the only federal and New York state compliant, U.S.-chartered and managed bitcoin exchange.

Charles Cascarilla, itBit co-founder and CEO, explained that the approval from the New York State Department of Financial Services (NYDFS) will allow itBit to “serve as a custodian for our clients’ assets” and take advantage of the large pool of bitcoin traders in the U.S. Accounts will be dollar-denominated and FDIC-insured.

“Our mission at itBit has always been to create a trusted, institutional-grade exchange. Regulatory compliance is an important pillar of that mission,” Cascarilla said.

Founded in 2012 and headquartered in New York, itBit provides a platform for both institutional and retail traders and investors to buy and sell bitcoin. The company recently announced major additions to its board of directors: former FDIC chair Sheila Bair, former U.S. Senator Bill Bradley, and former FASB Chair Robert H.Herz.

Join itBit in San Jose for FinovateSpring 2015 next week. Seats are going quickly as we head for another record-breaking attendance at our annual spring event. Visit our registration page and save your spot today.

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FinTech Unicorn List: 36 Companies + 34 More Closing In

FinTech Unicorn List: 36 Companies + 34 More Closing In
By Jim Bruene Posted on
Categories: Funding, Metrics & Market Research, Unicorns

unicorn_StampedeUpdate: An update of this post was published in July 2015.

———

It’s been a year since we published the first fintech unicorn list. It includes companies (and exits) in the financial sector (either direct services or software) founded since 2000 and worth at least $1 billion (actually we are using $900 million as the floor).

This year, the list has more than tripled to 36 companies, up 25 from the 11 last year. It’s partly a reflection of increased transparency into global valuations. For example, China has four alt-lenders on the list compared to zero last year. But mostly it’s a dramatic increase in private company valuations, especially in the lending sector.

In addition, we’ve listed 34 “semi-unicorns” (narwhals?) with estimated values of $500 million to $800 million. In total, there are 70 companies with a total estimated value of about $100 billion (~ 2 Ubers).

Here is the sector breakdown:

Sector Unicorns Semi-Unicorns Total
Lending 11 11 22
Payments 11 6 17
Investing 1 5 6
Real estate 2 3 5
Insurance 3 1 4
Accounting 2 0 2
Credit reports 2 0 2
Security 1 1 2
Bitcoin 1 2 3
Other

 2

 5

 7
Total 36 34 70

 

Some caveats:
1. For private companies (28 of the 36 unicorns), values are hugely dependent on the terms of the deal (read this), so they are not comparable to public company valuations.
2. About half the unicorn valuations are derived from public statements by the companies or investors during recent rounds or acquisitions. However, half are estimated by analysts/algorithms from tracking firms, especially Funderbeam, an Estonian startup that’s relatively new on the scene. So there is a lot of room for error in these valuations.
3. For the “near-unicorn” list we’ve added a number of companies that have recently raised large rounds, but have not made public statements about valuation. We estimated most of those at $500 million, but these are simply educated guesses.
4. We are using a broad definition of fintech including real estate. Also, we’ve included a few Finovate alums that are not pure-play fintech, but that have a significant financial services business.

—————-

The Fintech Unicorn List

Company Sector Finovate Alum? Value ($Bil) Value Source
1. Lufax Lending No 10.0 WSJ (4/15)
2. LendingClub Lending Yes 6.5 Public
3. Square Payments No 6.0 Oct 2014 round
4. Zillow Real estate No 5.4 Public
5. Zenefits Insurance No 4.5 May 2015 round
6. Stripe Payments No 3.5 Dec 2014 round
7. Powa Technologies Payments Yes 2.7 Nov 2014 round
8. Klarna Payments Yes 2.5 Mar 2014 round
9. Xero Accounting Yes 2.4 Public
10. CommonBond Lending No 2.0 Funderbeam
10. CreditKarma (note 1) Credit Reports Yes 2.0 Funderbeam
10. Oscar Insurance No 2.0 Funderbeam
10. One97 Payments No 2.0 Feb 2015 round
14. Prosper Lending Yes 1.9 April 2015 round
15. Dataminr Analytics No 1.6 Funderbeam
16. Zuora Payments No 1.5 Funderbeam
16. FinancialForce Accounting No 1.5 Funderbeam
16. LifeLock Credit Reports No 1.5 Public
16. Adyen Payments No 1.5 Dec 2014 round
20. iZettle Payments No 1.4 Funderbeam
21. SoFI Lending No 1.3 Feb 2015 round
21. Housing.com Real estate No 1.3 Funderbeam
21. Qufenqi Lending No 1.3 Funderbeam
21. Revel Systems Payments No 1.3 Funderbeam
25. On Deck Lending Yes 1.2 Public
26. FundingCircle Lending No 1.0 CB Insights
26. Jimubox Lending No 1.0 Funderbeam
26. Kofax Doc mgmt Yes 1.0 Acquired (Lexmark)
26. TransferWise Payments Yes 1.0 CB Insights
26. Trusteer Security No 1.0 Acquired (IBM)
26. Mozido Payments No 1.0 Finovate est
32. Avant Lending No 0.9 Forbes (4/15)
32. IEX Group Investing No 0.9 Funderbeam
32. RenRenDai Lending No 0.9 Funderbeam
32. Coinbase Bitcoin Yes 0.9 Funderbeam
32. ClimateCorp Insurance No 0.9 Acquired (Monsanto)
Semi-unicorns
Wonga Lending Yes 0.8 Finovate est
Wealthfront Investing Yes 0.8 Funderbeam
Rong360 Lending No 0.8 Funderbeam
Betterment Investing Yes 0.8 Funderbeam
Braintree Payments Yes 0.8 Acquired (PayPal)
Q2 Banking Yes 0.8 Public
WorldRemit Payments Yes 0.7 Funderbeam
Taulia Payments Yes 0.7 Funderbeam
Radius Marketing Yes 0.7 Funderbeam
Oportun (Progreso Financiero) Lending Yes 0.7 Finovate est
Circle Internet Finance Bitcoin No 0.6 Funderbeam
AnJuke Real estate No 0.6 Funderbeam
Kabbage Lending Yes 0.6 Funderbeam
EzBob Lending Yes 0.6 Funderbeam
FangDD Real estate No 0.6 Funderbeam
VivaReal Real estate No 0.5 Funderbeam
Motif Investing Investing Yes 0.5 Funderbeam
Snowball Finance Investing No 0.5 Funderbeam
PolicyBazaar Insurance Yes 0.5 Funderbeam
Credorax Payments No 0.5 Funderbeam
Cardlytics Marketing Yes 0.5 Funderbeam
Zopa Lending Yes 0.5 Finovate est
CAN Capital Lending Yes 0.5 Finovate est
Receivables Exchange Lending Yes 0.5 Finovate est
Affirm Lending No 0.5 Finovate est
Ayadsi Analytics Yes 0.5 Finovate est
21 Inc Bitcoin No 0.5 Finovate est
Bill.com Payments Yes 0.5 Finovate est
FreeCharge Payments No 0.5 Finovate est
U51 Lending No 0.5 Finovate est
Financial Software Systems Risk Mgmt No 0.5 Finovate est
Strategic Funding Source Lending Yes 0.5 Finovate est
Ping Identity Security Yes 0.5 Finovate est

Personal Capital Investing Yes 0.5 Finovate est

————

Source: Compiled by Finovate, 8 May 2015

Notes:
1. Update (24 June 2015): Credit Karma now valued at $3.5 billion (source: Finovate)

Picture credit

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Finovate Alumni News

By David Penn Posted on
Categories: Betterment, CAN Capital, Check Point, FutureAdvisor, itBit, LearnVest, Lending Club, MiiCard, Motif Investing, Personal Capital, Prosper, Seergate, SigFig, Wallaby Financial, Wealthfront, Yodlee

On Finovate.com

  • itBit Raises $25 Million, Earns New York State Trust Charter Ahead of Finovate Debut Next Week in San Jose

Around the web

  • The Fiscal Times features Wealthfront, Betterment, Personal Capital, FutureAdvisor, SigFig, and Motif Investing in a column on the rise of the robo-adviser.
  • FierceFinanceIT highlights Lending Club and Prosper in its look at growing investment in P2P lenders by Wall Street.
  • Version 3.5 of Wallaby Financial’s new Android app provides ambient alerts to help consumers save on gasoline.
  • MiiCard CEO James Varga quoted in a column on Edinburgh’s tech pioneers.
  • CAN Capital reaches milestone of $5 billion in working capital facilitated through its platform.
  • Report on fintech in The Economist references Lending Club among key disruptors.
  • Nokia partners with Checkpoint for telco cloud security.
  • MyECheck completes acquisition and integration of Seergate.
  • Yodlee adds LearnVest acquirer, Northwestern Mutual, as client.
  • Javelin Strategy & Research lists 4 trends to watch at Finovate next week. Come see them unfold live at FinovateSpring 12/13 May.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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Fintech Fundings: 14 Companies Raise $975 Million Week Ending May 8

By Jim Bruene Posted on
Categories: Funding

money_treeIt’s another unicorn week in fintech, although “only” $750 million of the nearly $1 billion in new funding was equity. Affirm’s $275 million round was rumored to include about $200 million in debt to fund its alt-lending efforts.

But that wasn’t even the biggest deal this week. Zenefits, founded by serial entrepreneur and multiple Finovate Best of Show winner Parker Conrad (SigFig, Wikinvest), took in $500 million for its health insurance disruptor. The $4.5 billion valuation puts it at the top of the worldwide fintech private-company valuation-list. Assuming it hasn’t slipped, Square still holds claim to #1 with a $6 billion valuation (October 2014).

Two demoing companies at next week’s FinovateSpring (register here) received money this week:

  • ItBit ($25 million) a NYC-based global bitcoin exchange
  • Trizic ($3 million) a new wealth-management-platform provider

In total, 14 companies raised $974 million and change (includes about $200 million of debt). Here are the deals from 2 May through 7 May ranked by size:

Zenefits
Human resources and benefits platform
HQ: San Francisco, California
Latest round: $500 million Series C (at $4.5 billion valuation)
Total raised: $583.6 million
Tags: Health insurance, SMB, payroll, 401k, benefits
Source: Crunchbase

Affirm
Alt-lending at the point-of-sale
HQ: San Francisco, California
Latest round: $275 million (including an undisclosed amount of debt, about $200 million according to TechCrunch)
Total raised: $320 million (including debt)
Tags: Indirect lending, underwriting, point-of-sale financing, SMB, payments
Source: Crunchbase

Real Matters
Real estate risk management (aka Solidifi and iv3CUS)
HQ: Markham, Ontario, Canada
Latest round: $60 million Private Equity
Total raised: $127.1 million (includes $5 million debt)
Tags: Risk management, property valuation, real estate, residential, commercial, enterprise software
Source: Crunchbase

RobinHood
Simple mobile trading service
HQ: Redwood City, California
Latest round: $50 million Series B
Total raised: $66 million
Tags: Investing, stocks, trading, mobile
Source: Crunchbase

ItBit
Global bitcoin exchange
HQ: New York City, New York
Latest round: $25 million
Total raised: $28.3 million
Tags: Bitcoin, crypto-currency, Singapore (market), FinovateSpring 2015 presenter
Source: TechCrunch

Artivest
Curated investing
HQ: New York City, New York
Latest round: $15 million
Total raised: $15 million
Tags: Investing, hedge funds, private equity
Source: Crunchbase

Fintellix (formerly iCreate)
Business analytics and risk management for banks
HQ: Bengaluru, India
Latest round: $15 million
Total raised: $27.4 million
Tags: Enterprise, BI, risk management, compliance
Source: FT Partners

Digit
Automated savings/investing platform for beginners
HQ: San Francisco, California
Latest round: $11.3 million Series A
Total raised: $13.8 million
Tags: Investing, savings
Source: Crunchbase

Zanbato
Private placement tools
HQ: Mountain View, California
Latest round: $8 million Series B
Total raised: $12.1 million
Tags: Investing, institutional investors, alt-investing
Source: FT Partners

VersaPay
Merchant payment processing and electronic invoicing
HQ: Vancouver, British Columbia, Canada
Latest round: $4.8 million Post-IPO equity
Total raised: Unknown
Tags: Payments, acquiring, SMB, merchants, invoicing
Source: Crunchbase

Third Financial Software
Wealth management software
HQ: London, United Kingdom
Latest round: $3.8 million
Total raised: Unknown
Tags: Tercero (brand), investing, portfolio management
Source: FT Partners

Trizic
Wealth management platform
HQ: San Francisco, California
Latest round: $3 million Seed
Total raised: $3 million
Tags: Investing, wealth management, FinovateSpring presenter
Source: Finovate

Omise
Digital payment provider in Southeast Asia
HQ: Bangkok, Thailand
Latest round: $2.6 million Series A
Total raised: $2.9 million
Tags: API, payments, mobile, 500 Startups (investor)
Source: TechCrunch

TradeLab
Indian provider of software for trading platforms
HQ: Bangaluru, India
Latest round: $390,000
Total raised: Unknown
Tags: Banking software
Source: FT Partners

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Finovate Alumni News

By David Penn Posted on
Categories: Arxan Technologies, Digital Insight, Lending Club, TransferWise

Around the web

  • itBit wins New York State Trust Company charter. See itBit at FinovateSpring 2015 next week.
  • PC Magazine features Arxan Technologies in a column on security and the “internet of things.”
  • London Evening Standard highlights TransferWise in its tribute to the young unicorns of London’s Silicon Circles.
  • PYMNTS.com looks at Lending Club and sees good things for the P2P marketplace.
  • NuMARK Credit Union deploys digital banking solutions powered by Digital Insight.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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FinovateSpring 2015: Fintech Across America & Beyond

FinovateSpring 2015: Fintech Across America & Beyond
By Julie Muhn (@julieschicktanz) Posted on
Categories: FinovateSpring 2015

Finovate_SP15_FINAL

With FinovateSpring just over the horizon, we took a look at where the 72 presenting companies will be traveling from before they arrive in San Jose on 12/13 May.

We’ll be hosting companies from 23 states and six countries.

It turns out that 17 of the companies are already based in Silicon Valley and will not need to travel far to get to the City National Civic Center on Tuesday morning. The company with the longest travel distance is Persistent Systems, which is headquartered in Pune, Maharashtra, India.

No matter what your commute to Finovate’s eighth event in the Silicon Valley looks like, you should be getting excited to come check out what’s new in fintech.

Still don’t have your ticket? Pick one up soon.

You can check out more information about the presenting companies on the FinovateSpring event page or browse our Sneak Peek blog series.

FinovateSpring 2015 is sponsored by The Bancorp, CapitalSource, City National Bank, Envestnet, Financial Technology Partners, Hudson Cook LLP, KPMG, Kyriba, Life.SREDA, and Zions DirectTV.

FinovateSpring 2015 is partners with Aite Group, American Banker’s Association (ABA), Bank Innovators Council, Bankers Hub, BayPay Forum, bob’s guide, Breaking Banks, California Bankers Association, Canadian Trade Commissioner Service, Celent, ebankingnews, Filene Research Institute, fin-tech.org, HotWire, Javelin Strategy & Research, Mercator Advisory Group, The Paypers, SME Finance Forum, and Western Independent Bankers.

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Delivering High-touch Service without Breaking the Bank

Delivering High-touch Service without Breaking the Bank
By Jim Bruene Posted on
Categories: Branch Banking, Service

idea_bank_mobiledeposit_car_rightThere continues to be a healthy debate about the future of bank branches. Usually the focus is on whether bank customers of the future will go to physical branches for help. The answer to that depends not only on consumer preferences—clearly a large segment desires a branch option— but also on costs to deliver on those preferences.

The bigger question: To what extent do consumers want to interact with humans to optimize their financial experiences? And if human interaction is still needed/desired/preferred, how can it be most effectively delivered accounting for cost, effectiveness, customer satisfaction, revenue generation, and so on.

We’ve looked at technology solutions—chat, call backs, IVR, etc.—over the years. But one area we haven’t explored here is the idea of delivering the human help at the customer’s location instead of at the bank’s. I got to thinking about it after hearing an interview with Ron Johnson at today’s Collision conference. Johnson, the mastermind of Apple’s retail stores, and former JCPenney CEO, just launched Enjoy, which adds a human component to the buying process for higher-end electronics (screenshot below, news coverage).

enjoy_homepage

Like Best Buy’s Geek Squad, when you buy something online at Enjoy, one of its employees actually delivers and sets up your new equipment (currently only in San Francisco and NYC) at no extra cost over retail prices. When pressed on how they could make money doing this, Johnson said they were taking all the overhead expense of a brick-and-mortar location and instead investing it into talented employees who can deliver a better experience at the customer’s location—or at a nearby coffee shop.

Banks can do the same thing. If someone wants to open an account and doesn’t want to, or can’t, do it online, the bank can dispatch someone to take care of it at a location chosen by the customer. Already a typical model for many financial professionals—e.g., mortgage brokers, insurance brokers, business bankers, stock brokers, financial planners, etc.—the key to making it work is to simultaneously downsize physical brand costs; otherwise, mobile bankers are just an added expense.

You can see this idea playing out in Poland, where small-biz focused Idea Bank has deployed four high-tech electric BMW i3 cars (see inset above) to collect deposits from small business customers via an ATM built into the side (see demo here). As with Uber, visits from the roving depositories are scheduled via smartphone app. Security-wise, I’m not sure this is the best way to handle cash, but I do like the idea of mobilized bankers.

Bottom line: Branch or no branch, many customers still need occasional hand-holding. It will be interesting to see how that plays out with a smartphone-wielding customer base.

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Trizic Raises $3 Million in Seed Funding from Operative Capital

Trizic Raises $3 Million in Seed Funding from Operative Capital
By David Penn Posted on
Categories: Trizic

Trizic_homepage

Less than a week away from its Finovate debut in San Jose, wealth-advisory technology innovator, Trizic has closed a $3 million seed funding round with Operative Capital.

Operative Capital initially invested $1 million in Trizic, and this week increased its investment by another $2 million. The funding will help the company roll out Trizic Accelerator, its digital wealth-advisory platform for broker-dealers and asset managers, as well as FIs and wealth-management firms.

Speaking for Operative Capital, founding partner Drew Sievers highlighted Trizic’s potential for disruption in the wealth-advisory digital space and the fact that, as a technology company, Trizic does not compete with its customers. Sievers is the former CEO and founder of mFoundry, (a Finovate alum).

“Well-known, direct-to-investor sites offering their solution to financial firms, asset managers, and RIAs have a direct conflict: Trizic isn’t a competitive threat to the wealth-management providers that are implementing Trizic Accelerator,” says Sievers.

Available as a white-label offering, Trizic Accelerator helps wealth-management professionals onboard and manage both new and existing clients, and automates up to 80% of back-office functions. Wealth managers can create model portfolios and execute trades. The platform’s algorithms ensure that processes are “tax-aware” and meet regulatory and fiduciary requirements. Clients can have different degrees of access to the platform on the front end based on their own technological and financial sophistication.

Founded in 2012, Trizic is headquartered in San Francisco, California. Brad Matthews is founder and CEO. See the company’s technology live on stage at FinovateSpring 2015 in San Jose.

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Finovate Alumni News

By David Penn Posted on
Categories: Asseco, BizEquity, CashStar, Digital Insight, Dwolla, FinanceIt, FIS, Lending Club, LendKey, Nomis Solutions, Ripple, Trizic, Wallaby Financial, Xero, Zopa

On Finovate.com

Around the web

  • Wallaby Financial partners with NXT-ID to bring Wocket Smart Wallet to Wallaby customers.
  • Asseco SEE teams up with UniCredit CEE to launch its fully native new generation tablet banking solution in six Eastern European countries.
  • Nomis Solutions taps Michael DeGusta as vice president and chief architect.
  • Service Credit Union offers mobile banking services with Touch ID, courtesy of pilot program run by Digital Insight.
  • Financeit partners with eOriginal Inc., bringing eSignature technology to Financeit customers.
  • Studio Movie Grill launches digital gift cards powered by CashStar.
  • Banking Exchange column on real-time payments in the U.S. features FIS, Dwolla, and Ripple.
  • Zopa to help provide financing for Uber drivers looking to buy their cars, rather than rent them.
  • American Banker features LendKey. Check them out at FinovateSpring next week in San Jose.
  • American Banker reports that partnerships fuel Lending Club’s unexpectedly fast growth.
  • BizEquity launches new ‘Adviser Office’ service.
  • Pepperi partners with Xero to extend cloud accounting with mobile sales automation.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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Tuesday Tactics: Attracting Young Customers via the Parents

Tuesday Tactics: Attracting Young Customers via the Parents
By Jim Bruene Posted on
Categories: FutureAdvisor, Investing, Youth market

futureadvisor_collegesavings

This is a continuation of Friday’s post about using apartment rent-and-chore-tracking app HomeSlice to attract younger customers. The app is a classic Trojan Horse tactic, though not a nefarious one. The thing is, once you get customers digitally locked-in to your platform, they may never leave. And while this works on any age group, the younger set is more attractive in many ways, because they are not already set in their financial ways, and they have massive revenue potential if you are able to hold onto them through the next few decades.

Today, automated investment management platform, aka a robo-adviser, FutureAdvisor launched its own youth play, but targeted it to the parents of the kids it hopes to serve for the next 70 years. The service, dubbed FutureAdvisor College Savings, aims to get funds earmarked for college into its managed savings plan. The startup is forgoing its usual 0.5% wrap fee and is offering the account at zero cost. An impressive graph (inset) charts the savings growth in its plan (optimistically predicted at a 7.1% annual return) vs. a bank savings account (pessimistically pegged at 0.5%) over 2o years. Even though the spread is likely to be less dramatic than the indicated 6.6%, the benefits are large.

Bottom line: For most financial institutions, the parents are probably the easier path to landing the under-21 crowd. So financial services companies should consider similar offerings whether it be student-loan management, regular savings accounts, starter credit, apartment loans, first-car loans, and so on (for more ideas, see previous posts).

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