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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
From the rise of digital commerce to the growth of the gig economy to the challenge of a global pandemic, digital identity technology has been one of the bigger beneficiaries of a number of trends sweeping societies around the world. Add to this a new emphasis on financial inclusion and social equity, and you have a recipe for opportunity for many innovators in the digital identity space.
The latest company to take advantage of the current moment is OCR Labs, which made its Finovate debut at our developers conference, FinDEVr Silicon Valley, in 2016. The company, headquartered in Sydney, Australia and founded by Matthew Adams and Daniel Aiello, returned to the Finovate stage the following summer, earning a Best of Show award for a demo of its ID verification solution.
OCR Labs combines five different technologies – ID document OCR, document fraud assessment, liveness detection, video fraud assessment, and face matching – in a single, end-to-end digital identity experience. The company’s technology has been deployed in a wide range of verticals – from financial services and e-commerce to telecommunications and real estate – to provide AML and KYC-compliant digital ID verification and customer onboarding.
This week OCR Labs announced that it had raised $15 million (EUR 12.5 million) in Series A funding. The round was led Oyak Group of Turkey and will enable the company to expand into markets into Turkey, the U.K., and throughout Europe. OCR Lab currently maintains an international headquarters in London.
“No one wants to spend hours trying to prove who they are, whether it’s for a job or for a bank account, and we also want to know we’re protected against identity theft and fraud,” OCR Labs co-founder Daniel Aiello said. “Digital ID verification has a key role to play, but this year we’ve also seen the limitations if hybrid models are used. People are a barrier and a risk, but fully automated technology can have a huge impact on many industries and privacy. OCR Labs is built to be secure, frictionless and fast, and capable of recognizing ID documents the world over.”
Enjoying triple-digit growth since its launch, OCR Labs has partnered with Reed Screening to help businesses verifying candidate identities during the COVID crisis ahead of a potential in-person COVID check mandate later this month. There is some pressure to allow businesses to continue remote COVID checking, an idea with which OCR Labs understandably sympathizes.
“The need for digital verification is growing exponentially,” Aiello said. “This past year we’ve seen more demand from new sectors as they try to navigate the pandemic and an inability to operate in-person. We believe it has accelerated what needed to happen.”
On the consumption side of personal finance, managing credit is one of the most important aspects of financial wellness. And for more than a decade, Credit Sesame has been among the more innovative companies in this space. From its origins as a hub for financial planning tools, insights into credit scoring, and advice on smart borrowing, Credit Sesame has grown into a leader in the financial wellness industry with new solutions like its Sesame Cash debit account, which topped one million customers less than a year after emerging from its beta launch.
“With Sesame Cash and features like real-time cash back rewards and rewards for improving their credit score,” Credit Sesame GM and Head of Global Banking Miro Pavletic explained when the solution was introduced last September, “we are helping customers put more money back in their pocket than any other digital banking service. Whether you’re looking to buy groceries or debating where to grab takeout, we can connect you with the brands you love and give you cash back instantly,” Pavletic said.
The $51 million in new funding the company raised this week is a testament both to the journey Credit Sesame has been on since its launch in 2010, as well as the potential the firm has to continue to play a leading role in helping millions of consumers better understand and manage their finances.
“Creating access to better credit and finance is critical for financial prosperity for consumers in our country, and it’s enlightening to see major banks and the federal government also taking action,” Credit Sesame CEO Adrian Nazari said. “The impacts of the past year have only made those needs greater, and through our recent acquisition and fundraising, we are proud to be expanding our platform offerings and leading the charge in opening more doors to financial inclusion and wellness for all.”
The company sees its current mission as closing the “credit chasm,” which it believes limits economic opportunities for more than 44 million “credit invisible” Americans. Part of this effort includes Credit Sesame’s decision to acquire Zingo, a transaction that was completed recently. A fintech company headquartered in Portland, Oregon, Zingo helps renters improve their credit scores via timely rent payments. With almost 80% of its 15 million members renting, rather than owning, a home, Credit Sesame expects the acquisition to represent a “significant growth opportunity for the company” while enhancing “financial inclusion for its customers.” Credit Sesame anticipates integrating Zingo’s rent reporting technology into its financial wellness platform over the summer.
Looking out over the balance of 2021, Credit Sesame appears to be taking a page from Zingo’s book by launching a new feature that will enable consumers to use their cash to help them improve their credit rating. Requiring no credit check, the new solution will allow Credit Sesame customers to leverage their cash and credit together to help build a strong financial foundation and create a path toward better financial health.
How are banks and fintechs leveraging the lessons learned during the global health crisis to provide consumers and businesses with financial products that do an even better job than before of addressing their needs? And when it comes to innovation in technology and financial services, is disruption or collaboration dictating the pace of change?
To talk about these and other issues, we caught up with Andrea Zand, co-founder and Chief Operating Officer of FISPAN. Headquartered in Vancouver, British Columbia, Canada, FISPAN made its Finovate debut in 2017, demonstrating its cloud-based platform that leverages APIs to enable banks to deliver new business banking solutions to their corporate customers.
How are the banks you work with doing now – a little over one year after the onset of the pandemic?
Andrea Zand: Open-banking infrastructure and data sharing are helping banks and governments around the world better respond to the recovery post-pandemic. We are starting to see evidence that governments are beginning to use open banking data to help inform their pandemic responses and help small businesses. The banks we work with are feeling positive about the recovery going into 2021.
In what ways should banks expect customer behavior to change and how should they respond?
Zand: We’ve already seen that the pandemic has sped up innovation in financial services. Customers are getting more and more comfortable doing their personal banking online, and business banking customers are also turning to digital banking platforms as an alternative to in-person branch visits. Banks are struggling to keep up with this rapid shift in the types of online service offerings their clients are demanding.
Because of this, banks are looking to deploy innovations that will have an immediate impact on the client experience. This is where we see a huge opportunity with embedded banking. By embedding the banking experience inside the platforms that business customers use to run their businesses (such as ERPs or accounting software), banks are able to easily provide their business clients with a more automated and streamlined treasury management process. The banks that are ahead of the curve and partnering with fintechs like us are beginning to better understand how their customers use their products in context, allowing them to innovate smarter and faster.
Technology has moved too fast for the banks to build those capabilities themselves. The best way for B2B banks to manage the impact of rapidly evolving customer expectations is to partner with agile, innovative fintech services.
Connecting with their clients as much as possible and understanding their needs will be essential in driving the agenda for the new capabilities the banks should be focusing on. Leveraging tech and automation will manage and rise to customer expectations while still allowing for more face time during this transition period to explore and understand customers’ needs and wants.
What are some of the other challenges that banks will encounter as the recovery picks up steam – and how will FISPAN help them?
Zand: Banks will continue to be challenged by continually changing customer expectations. They will also be challenged by the need to adapt to an open exchange of data that will happen as a result of the many new fintech upstarts that are creating new business models and finding ways to better meet these changing client demands.
FISPAN helps by collaborating with FIs to understand what will make their customers happier by joining forces across all levels of the product discovery and implementation phases. Getting in front of the customers and understanding their day-to-day ERP and accounting struggles is a large part of how we meet and overcome the challenges that have risen due to the digital shift during our global pandemic. More specifically, we enable banks to extend their service offering to their business clients by embedding commercial banking applications within the organization’s ERP or accounting software.
For those institutions that engaged in digital transformations, how do they make sure those efforts truly pay off?
Zand: Continue to be open to new ways of thinking and working with new partners. In partnering, serving, or investing in innovation by way of technology upstarts, financial institutions are able to position themselves for future growth and adaptation through real-time, easy access to products, services, data, and channels. Delivering a product or service that truly resonates with their customers and meets them where they are with the current challenges they face in a rapidly growing digital market.
What does collaboration between banks and fintechs look like in a post-COVID world?
Zand: Collaboration between banks, fintech, and other providers is becoming more important as the payments landscape is becoming more complex. Banks that are open to partnering have a competitive advantage because they can provide better services at scale. Not to mention that some banks are at risk of getting disintermediated by nonbank providers for some of these types of solutions. The time that bank partners spend helping integrate their banking services into different platforms is markedly less than the time it would take for the bank to develop it themselves. That same time investment from the bank also leads to countless saved hours for their business clients, increasing their value as a business bank.
What has been your biggest professional takeaway from 2020?
Zand: If 2020 taught me anything, it was to always remain flexible and open-minded. One of the big plans we had was to go to some in-person events and start to talk face to face with end-users and really understand what kinds of pain points they were experiencing with their treasury management process. All of our events were either canceled or transferred to digital. We were still able to get the information we needed from customer interviews and case studies, but it just goes to show that sometimes your best-laid plans aren’t going to be in the cards and you need to pivot quickly.
What are you looking forward to most in 2021? Where do you see the greatest opportunities?
Zand: Besides being able to see our bank clients and end-users face to face, in 2021 I am looking forward to watching banks, payments providers, and fintech companies launching services and solutions that can help small businesses across the country emerge from 2020. I think the greatest opportunity for economic recovery and success post-pandemic lies in banks being better able to serve their small business clients.
Banking technology startup Zeta dominated the fintech headlines yesterday. The company raised $250 million, which boosted its valuation up over $1.45 billion.
The funding round was led by Softbank with participation from Sodexo. This is Zeta’s third investment round since it was founded in 2015. Notably, the cash brings the company into unicorn status.
So what is it about Zeta that has struck a chord in the fintech industry? The company offers a full-stack, cloud-native, API-ready core banking and transaction processing platform. The tools enable legacy banks to issue credit, debit, and prepaid offerings and provide modern fintech products to both retail and commercial clients.
In addition to its credit, debit, and prepaid card processing capabilities, Zeta’s products include:
Zeta Tachyon Loans – a BNPL and personal loan management platform
Zeta Tachyon Deposits – a modern core for DDA, checking accounts, savings accounts, and deposits
Zeta Tachyon Mobile – a ready-made, customizable mobile app for credit cards, checking accounts, prepaid, loans, BNPL, personal finance management, and more
Zeta’s tools help traditional banks compete with the onslaught of digital banks that are bringing consumers fresh new products and services to today’s digital-first customers. Those tools also help fintechs stay competitive in a world of super-apps by focusing on their core competencies.
“Most banks are using decades old software built at a time when Mainframes and Cobol were in vogue. As a result they have been slow to innovate and provide poor user experiences,” said Zeta CEO Bhavin Turakhia. “With Zeta, FIs can leverage a modern, cloud native platform and improve speed to market, agility, cost to income ratio and user experience.”
Turakhia showcased Zeta’s capabilities at FinovateWest 2020 last fall in his Best of Show-winning demo.
Zeta counts 10 banks and 25 fintechs across eight countries among its customers. The company plans to use the new funding to boost its growth in the U.S. and Europe by scaling its operations, team, and platform.
Earlier this year in our conversation on diversity in fintech and financial services, we looked at a partnership between Paybby, a challenger bank focused on Black and Brown communities; Carver Federal Savings Bank, an African-American owned bank; and Finovate alum Boss Insights.
Today, we pick up that conversation from the fintech’s perspective, talking with Boss Insights founder and CEO Keren Moynihan about her company’s innovations in the field of business-data-as-a-service, its participation in the Paycheck Protection Program, and the importance of impact and meaning when it comes to providing financial services.
Boss Insights specializes in Business Data as a Service. What does this mean?
Moynihan: We work with fintechs and private lenders, banks, and credit unions. We work with their business lending groups; it could be small and medium business lending, SBA, invoice factoring, commercial, all sorts of business lending types. And what we are giving the lenders is access to their business customers’ financial data in minutes. It sounds impossible, but actually only takes the lenders one hour of their time to set up.
What we’re enabling is for them to be able to pull real-time accounting information, banking, or commerce information on demand.
When you look back on 2020, what are your biggest takeways?
Moynihan: In March 2020 I was speaking with (a reporter) at a conference and she asked for a direct quote responding to “how are fintechs and entrepreneurial companies going to be responding to COVID?” And I’ll never forget it because I said, “Look, fintechs thrive on challenges and this is an unprecedented challenge but we will be looking at ways to respond to it.” Two hours later, we all got an order that the economy was going to shut down, that we were all going to isolate. I don’t think anyone knew what was happening. I called the reporter and said “I know what I said, but …” I knew I was going to eat my words, because this was on another level. She laughed and said, of course, and she appreciated my call.
That was more than a year ago. The next two weeks were an onslaught. This was before PPP. This was before any kind of government funding and people really did not know what was happening. And unless you were in it, it’s really hard to describe it. What we did as a company was that we saw in all the news articles there wasn’t enough personal protection equipment, we started to get reports out of Italy, it was a really scary time. Now people at Boss Insights could not create masks. But we did see that if you stopped a company from being able to make sales, they are not going to be able to say alive and to be able to grow.
I asked myself, how do you support the economy? Right away we said we will offer part of our technology for free for any lenders who will support new businesses. And by new businesses, I meant new business relationships with the lender. That is a harder uplift. And as a result of that, everything started to grow for us. Technology companies reached out. Banking companies reached out. We were covered in an industry journal and, as a result of just that one piece, we had so many people call us. And we learned so much just by being able to say we can help.
How much of what you’ve learned will you be able to translate into new initiatives and future growth?
Moyinhan: There are a lot of things that I see changing, and then there’s an even bigger category of things I wish would change and hope will change. And time will tell. One word, very overused, is digitization. That’s going to endure. CB Insights reported that banks were losing about 1% market share each year, so give or take 9% or 10% over a nine year period. In 2020, 9% was lost in one year. A couple more years like that and we’re looking at a very different economy.
That really made the industry stand up and take notice. Back in March 2020, the same lenders that were telling me that they had everything under control and were ready to go, were the same ones that admitted to me on private calls that they were placing orders for laptops at Costco. They literally could not get laptops from regular commercial suppliers and were ordering them from Costco because they couldn’t get them anywhere else.
This points to one trend: people were a lot more honest about where they were (in terms of digital transformation) because you couldn’t just say you had digitized, it was actually being tested. I believe that trend is going to endure because the expectations of people, of businesses, have changed. We all ordered groceries online for awhile. I don’t think that was true before 2020. We are all expecting that these documents and forms that you have to go into branches for will be available online.
That is the biggest thing I can say that has changed. The one thing that I hope will change is the collaboration. We put out something in the American Banking Association saying that social distancing led to social collaboration. What I mean by that is that people stopped talking and they started listening. This includes Boss Insights. We stopped talking about what we’re selling and we started just asking “what do you need?” And I do hope that trend continues. It’s mirrored in other areas outside of financial services. We think these things were long overdue. It’s not a trend that is continuing in the way that I would have hoped. But I do see a lot of changes and this issue surfaced in the second round of PPP. People were open to having conversations. They brought decision-makers in the room. People didn’t want to have high-level discussions. They wanted to clearly tell you “I need this. Can you get it for me?” Then it’s our turn to talk about what we can do.
That amount of collaboration is unprecedented before COVID, and we just hope that it continues.
Tell us about the importance of working with small business owners who struggled to access support from relief programs like PPP.
Moyinhan: In the middle of PPP I was on a podcast called The Powerful Ladies podcast and it was with Kara Duffy. All of this got arranged because of Sharifah Hardie, who also runs a podcast and we had been on her podcast also. There was a woman there named Ronda Brunson. She has a consulting practice where she works with people to educate them on financial health, people who would not necessarily have had that training. We learn a lot of things in school, but financial health is not one of them, and if you have not had that education elsewhere where are you going to get it? She empowers people.
As I’m listening to all of these incredibly accomplished women and what they do in their business lives, she heard what I was doing. I was a little bit the oddball out because I was working with businesses and everyone else was working with individuals. She said, “I hear what you do, but the first round of PPP got a little bit of social notice because it’s supporting large businesses.” The second round of PPP did correct for this. But at that time we didn’t know that was going to happen. She said “how are you actually working to get capital into the hands of people who wouldn’t get access to it?”
I knew exactly what she meant. I knew that she meant people who were either female-run companies or visible minority-run companies. She didn’t say it explicitly, but that was exactly what she meant because those were the people that she was working with on a daily basis.
The way the lending industry works is that it’s based on a percentage of the amount of the loan. Everything is based on that. The costs are the same whether the loan is two million dollars or $200,000 – so who’s going to get more resources? It’s not that banks and credit unions and private lenders are trying to do it this way, it’s that the costs don’t scale down but the revenue does. What I saw from banks at that time is they were working until two or three in the morning. What I’ve heard from the CEO of Carver Bancorp, Michael Pugh, is that he’s been on the phone with clients to get their documents in – which people couldn’t believe, but this is the dedication. And what (Brunson) was asking me was: “what exactly are you doing to ensure your technology gets in the hands of people who will make sure that the disenfranchised will get access?”
And I never forgot it and I started looking immediately. Because for the people at Boss Insights, it is about accelerating business lending from months to minutes. But it’s also about impact and meaning and making sure businesses are evaluated on their merit. It is because of Paybby that we got connected to Carver. And it is because of Paybby and Carver that we are in a position to answer her and say, Ronda, now I can tell you we are doing something.
In some ways, we just started listening. We listened for when the SBA announced that there was going to be a week in advance for lenders focused in this area. And we listened when Paybby said “we have a lender who is ready to do this uplift.” And the collaboration that Paybby and Carver and Boss Insights have is a daily investment to make sure that things are running smoothly so businesses can apply.
Read more about the partnership between Paybby, Carver Federal Savings Bank, and Boss Insights.
Founded in 2008, Dwolla is one of the fintech originals. Because of its long-standing history in the fintech space, the Iowa-based company has been through a lot of changes as it evolves with banks, fintechs, and consumer demand.
Since its start, Dwolla has focused on offering an alternative to the traditionally slow ACH money transfer system. Initially, the company tackled this objective through a direct-to-consumer (DTC) product, which allowed individual users to sign up for Dwolla to make peer-to-peer money transfers and transact with the company’s merchant partners.
As part of its DTC solution, Dwolla even offered a cardless credit product called Instant. The tool would lend users up to $5,000 for one month, with no interest, in exchange for a $3 per month subscription fee.
As an evolution of its credit offering, the company partnered with Alliance Data to launchDwolla Credit. The ecommerce point of sale product worked much like PayPal in that users would select a Pay with DWOLLA button at the point of sale to complete their purchase. Funds would transfer on Dwolla’s rails to enable merchants to receive the funds instantly in their Dwolla account.
Despite the company’s numerous innovations in the consumer space, Dwolla received the most traction from its bank-focused product, FiSync, a payments protocol for real-time money transfers. The success of this tool prompted the company to exit the consumer space in 2016 to focus on creating payment APIs.
Today, Dwolla’s API helps organizations integrate payments into their application to send, collect, and facilitate payments. Earlier this year the company doubled down on its roots in faster payments to deliver real time payments in collaboration with Cross River Bank. The new, instant payment option leverages the RTP Network to send money directly to a bank account in seconds.
In a post-COVID world in which consumers have been trained to conduct more of their daily transactions online, Dwolla’s real-time payments capability will play a key role. “The immediacy of real-time payments will fundamentally change how businesses operate,” said Dwolla CEO Brady Harris. “As electronic payments continue to grow in adoption, RTP is the perfect complement to our ACH and Push-to-Debit offerings.”
Dwolla, a three-time Finovate alum, most recently demoed at FinovateSpring 2015 where it debuted FiSync. The company has raised $51.4 million from investors including Union Square Ventures, High Alpha, and Foundry Group.
When it comes to European wealthtech companies, Nutmeg is the original gangster. The London-based company was founded in 2011 and demoed at FinovateEurope a year later in 2012.
Today, the company reached a milestone, topping almost $4.2 billion (£3 billion) in assets under management. The news comes after the company experienced a 72% year-on-year growth in assets under management in the first three months of this year.
Nutmeg has seen a 53% increase in the number of investors on its platform over the past year, and now counts 130,000 investors total.
The growth spurt can be attributed to a few things. First, the company brought on a new CEO, Neil Alexander, after taking a $30+ million loss in 2019. Another big factor in Nutmeg’s recent growth is the increased interest in investing during a low interest rate environment.
“While the last year has been financially difficult for many people, we have also seen many new and existing clients who have been fortunate enough to have more disposable income as a result of reduced expenditure on leisure, hospitality, commuting and holidays,” said Alexander. “Nutmeg has been a beneficiary of this shift, welcoming tens of thousands of seasoned investors wanting to take advantage of a digital-first wealth management service, along with first-time investors looking for the support they receive from our wealth services team in helping them to achieve their financial goals.”
Nutmeg offers ISAs, pensions, and general investment accounts. The firm offers a range of investment options including fully managed, fixed allocation, socially responsible. Earlier this year, Nutmeg partnered with J.P. Morgan Asset Management to offer a new investment option, Smart Alpha.
Smart Alpha combines Nutmeg’s core investment principles, ETF experience, and fractional investment expertise with J.P. Morgan’s in-house, multi-asset knowledge to provide investors a globally diversified, dynamic portfolio.
A new partnership between AbbyBank and FinovateFall Best of Show winner Sensibill will enable the Wisconsin-based community bank to give its customers the ability to de-clutter and digitize their financial lives.
“In today’s online world, customers expect more convenience to bank how they want,” AbbyBank AVP of Marketing Natalyn Jannene said. “Our partnership with Sensibill will help our customers and employees with digitizing the shoebox of receipts or overstuffed purses and wallets, making it easier for them to track receipts, exchanges, and warranties in one place.”
Founded in 2013 and headquartered in Toronto, Ontario, Canada, Sensibill offers a receipt management solution that makes it easier to organize and track everything from Health Savings Account receipts to expenses from government relief programs like the Paycheck Protection Program. Sensibill’s everyday financial tools give financial institutions the ability to tap into – and act upon – SKU-level transaction data in order to provide their customers with the kind of personalized financial insights that can help them build better financial habits. More than 60 million individuals across North America and the U.K. use Sensibill’s AI-powered technology.
The company’s newest solution – Sensibill Platform – features a pair of new tools – Spend Manager and Spend Insights – that provide financial institutions with more ways to drive digital engagement with their customers and members. Spend Manager leverages predictive analytics to help customers track and manage their everyday spending, while providing personalized tips and custom advice based on their transactions. Spend Insights enables financial institutions to draw upon more than 150 unique points of data from purchases, and pair them with transaction data to anticipate customer needs and preferences in real-time.
“Sensibill is empowering institutions of all sizes to harness SKU-level data to offer personalized experiences and recommendations that help make customers’ hard-earned money go further,” Sensibill co-founder and CEO Corey Gross explained when the platform was unveiled in January. “The time to act is now – by better contextualizing the transaction-level data they already have with SKU-level insights, institutions can help their customers make smarter financial decisions. Those that do will retain loyalty and expand market share while making financial wellness more attainable for all.”
In addition to its newly-announced partnership with AbbyBank, Sensibill in recent months has also teamed up with Leaders Credit Union of Jacksonville, Tennessee ($520 million in assets) and Progress Bank, a $1.4 billion asset bank that serves customers in Alabama and in the Florida panhandle. Last month, Sensibill earned recognition as the winner of the “Personal Finance Innovation” category of the FinTech Breakthrough Awards.
A Finovate alum since 2017, Sensibill has raised more than $55 million in funding. The company’s investors include First Ascent Ventures, Information Ventures Partners, Impression Ventures, Mistral Venture Partners, and Radical Ventures. Sensibill also secured $5 million in debt financing from CIBC Innovation Banking a year ago.
This week’s partnership with Sensibill is only the latest instance of AbbyBank working with innovative fintechs in order to add to its own offerings. Last month, the Wisconsin-based community bank – with more than $616 million in assets – teamed up with another Best of Show-winning Finovate alum, MX, to power its new PFM solution.
“The goal is to help our customers improve their financial awareness,” Jannene said when the collaboration with MX was announced in March. “Knowing where money is spent allows you to manage your money more effectively. When our customers succeed, we succeed and that is truly what AbbyBank is here for.”
Alternative banking services company SoFi unveiled a new product last month that will enable eligible members to participate in upcoming IPOs.
The tool will sit within SoFi Invest, a suite of investment tools that offers automated investment services, retirement accounts, a cryptocurrency wallet, and more.
Here’s how it works- users with at least $3,000 in their Active Invest accounts can select the IPOs they’d like to participate in by submitting an indication of interest. Once the IPO is live, investors will receive a notification asking to confirm their order and secure their shares.
If you’re a fintech veteran, this concept may sound familiar. There have been a handful of companies that have opened up IPO participation for retail investors, which are generally excluded from IPOs since they don’t generate the same revenues as institutional investors or high net worth individuals.
The first fintech to offer IPO access to retail investors was Loyal3, which was founded in 2008. The company launched a social IPO platform in 2014 that partnered with pre-IPO companies to enable them to include consumers, employees, partners, and fans in their IPO. Investors were required to purchase a minimum of $100 in stock but were not charged a fee. Loyal3, however, may have been ahead of its time. The company closed its doors in 2017.
Linqto, which recently demonstrated its platform at FinovateWest 2020, allows accredited investors to invest in pre-IPO unicorns. The company requires investment minimums ranging from $5,000 to $10,000. Among the companies currently available to investors are Impossible Foods, Ripple, and Nerd Wallet.
Yet another fintech in this arena is MarketX, a cross-border marketplace that allows investors to browse deals and invest in pre-IPO companies across the globe. MarketX currently offers investors access to pre-IPO companies in the U.S., China, Singapore, Indonesia, India, the UAE, and more. While MarketX advertises to accredited retail investors, the company requires a minimum of $50,000, a figure that is much higher than others working in this space.
With higher minimums and accredited investor restrictions, the IPO investment offerings from Loyal3, Linqto, and MarketX aren’t as accessible as SoFi’s proposed IPO investment tool. Stock trading app Robinhood, however, is also rumored to be entering this space with an offering that will compete on the same level as SoFi.
Reuters reported last month that Robinhood plans to democratize IPO investing by enabling its users to buy into IPOs. According to the news source, Robinhood is allowing its users to buy into its own IPO (which is slated for later this year) and will then use the technology it built to create a more general IPO investment tool for its 13 million users.
SoFi showcased at FinDEVr New York 2017 in a presentation about leveraging bank authentication. FinDEVr will be returning to the Finovate lineup with its own stage at this year’s FinovateSpring digital event. Check out the event page to learn more.
Analytics company GoodData may have been founded 10 years ago but, as the company recently explained, it is just now exiting stealth mode.
That’s because GoodData is transitioning from focusing on white-labeled OEM analytics, where companies provide self-service insights to their clients, to focusing on Data-as-a-Service (DaaS). As GoodData Founder and CEO Roman Stanek explained, “It takes 10 years to become an overnight success.”
GoodData’s analytics now power over 140,000 businesses across the globe, and the company has spent the past two years building for the next chapter. Starting April 15, GoodData will expand its focus to offer DaaS. The offering transcends “business intelligence” to enable companies to make every decision a data-driven decision.
“Data-as-a-Service is the future of analytics: real-time, governed, secure, and scalable,” Stanek said. “Within the context of DaaS, we are opening our platform and making our experience with large scale analytics, data privacy, security, and operational excellence available for anyone to leverage to build and scale any of their data use cases; from self-service and embeddable analytics, to machine learning and IoT.”
Unlike GoodData’s initial offering, which was limited to running on Rackspace and Vertica, the DaaS platform will be available to companies of all sizes running on any cloud and cloud database. Additionally, the new build focuses on helping users gain insights from the data instead of simply presenting charts that still required significant interpretation.
Headquartered in San Francisco, California, GoodData most recently demoed at FinovateFall 2017. The company has received $151 million in funding from 20 investors including Visa Ventures, General Catalyst, and Andreessen Horowitz.
“International trade and foreign exchange can be a complex business for financial institutions of any size to manage successfully,” Finzly CEO and founder Booshan Rengachari said. “With one integration to the core, our FX STAR and EXIM STAR solutions help institutions like Fulton Bank to more efficiently, securely, and cost-effectively meet the needs of their customers.”
Finzly specializes in connecting banks and their customers via a real-time payment services hub and cloud-based bank operating system, BankOS, delivering a modern, digital banking experience. The company’s platform leverages open APIs and integrations into core technology to enable financial institutions to subscribe, try, and launch both Finzly’s and third-party fintech apps and solutions. With FX STAR, Finzly’s customers are able to execute foreign currency transactions, purchase foreign currencies in bulk using multi-currency accounts, as well as initiate payments. EXIM STAR serves as an international trade finance solution to help financial institutions manage the transaction lifecycle for commercial letters of credit, standby letters of credit, and documentary collections.
“We recognize Finzly as a proven provider that understands the unique business needs of regional financial institutions,” Fulton Bank International SVP and Manager Amy Sahm said. “Through the implementation of their user-friendly platform, our bank has been able to achieve better standard functionality across the board – from improved access to reports and confirming trades, to upgrades in investigation and reconciliation capabilities.”
Fulton Bank operates more than 223 financial centers in Pennsylvania and New Jersey, as well as in the mid-Atlantic states of Maryland, Delaware, and Virginia. The firm is a subsidiary of Fulton Financial Corporation, a financial holding company based in Lancaster, Pennsylvania, with $26 billion in assets.
Finzly made its Finovate debut in 2019. The Charlotte, North Carolina-based company most recently demonstrated its digital account opening solution at FinovateWest 2020, earning a Best of Show award from conference attendees. This year, in addition to its partnership with Fulton Bank, Finzly teamed up with Lead Bank, a Kansas City, Missouri-based “community-minded” commercial bank. Lead Bank implemented Finzly’s Payment Hub – part of Finzly’s Bank OS – to boost its own payment and digital capabilities.
“The ability to service our fintech and corporate clients with a Banking as a Service solution, as well as communicate messages to and from the core platform, is crucial to fulfilling and facilitating the requirements of Lead Bank and our channel partners,” Sheila Stratton, Director of Digital Strategy, Lead Bank said. “Finzly’s solution provides a modern technology platform in which our bank can expand payment capabilities while tapping a flexible and innovative solution to support our bank in delivering on the specialized needs of our clients.”
As well as partnerships, 2021 marked the launch of Finzly’s SWAP STAR solution. The new technology provides an end-to-end, sales, trading, and post-trade processing system for interest rate derivatives. SWAP STAR is available as an app within Finzly’s BankOS cloud-based bank operating system.
From its role as a digital currency innovator to its controversial, politics-free workplace stance, Coinbase continues to be one of fintech’s most compelling stories. And with the company moving ever closer toward a becoming a publicly-traded firm, attention on the San Francisco, California-based digital currency exchange only has intensified.
There may be no better example of this dynamic than an article published on Bloomberg.com this week headlined “Coinbase Is a $100 Billion Crypto Cult.” The author, Jared Dillian, is an investment strategist who wastes little time in letting readers know where he stands on a platform that “has frequent service outages, nonexistent customer service, and sky-high transaction costs.”
Nevertheless, as Dillian acknowledges, there are precious few alternatives for individual cryptocurrency investors. Moreover, much of his dissatisfaction seems to stem from an unfavorable comparison between Coinbase and discount stock brokerages – which have very different histories as well as very different ways of generating revenue.
As for the cult reference, that too has less to do with Coinbase and more to do with the author’s take on the contemporary enthusiasm/mania for cryptocurrencies. If you believe that investment in Bitcoin and other digital assets “has crossed over into religion territory” and represents “an investment cult,” then it is understandable to be critical of an institution that facilitates the behavior. But that, as Dillian indicates, is akin to blaming the store for selling picks and shovels to the gold miners.
What is Coinbase eight and a half years after its launch in 2012 (and six and a half after its Finovate debut)? Will its going public mark the beginning of a new era in digital asset adoption by institutions and individuals? Or, as has been the case in the past, will the news signal, if not an end, then at least a pause in what has been a surge in interest in cryptocurrencies since the spring of 2020?
Here’s what we know: Coinbase has filed with the SEC to go public by way of a direct listing, selling shares directly to the public rather than via a traditional IPO. The company will trade on the Nasdaq under the ticker COIN. In terms of the company’s current valuation, at its most recent funding in 2018, Coinbase was valued at $8 billion. More recently, Axios has reported that Coinbase was valued at $100 billion when it sold shares on the Nasdaq Private Market earlier this year.
Coinbase currently has 43 million verified users (up from 12,000 in 2012). The company has a lifetime trading volume of $456 million and currently has more than $90 billion in assets on its platform. In fiscal 2020, the company experienced trading volume of $38 billion more than double that of fiscal 2018. And perhaps most critically, Coinbase has begun to secure the kind of institutional support that both the company and the cryptocurrencies it manages need. The company reported having 7,000 institutional customers as of the end of 2020, a seven-fold increase over 2017. Revenue growth also has been strong for Coinbase, with the company achieving revenues $1.3 billion in fiscal 2020 compared to $533.7 million in fiscal 2019.
What does this mean for a publicly-traded entity? The best case for $COIN may rest in its ability to serve as a safer haven for crypto-curious investors who do not have the interest in analyzing – or even deeply understanding – individual digital assets. Coinbase could find itself serving a role, in the near-term, that might otherwise be played by a Bitcoin or cryptocurrency exchange-traded fund. And if we are still in the early days of the Digital Asset Age, that may not be a bad place to be.
