Daily news

Cheese Launches to Support Financial Wellness for Asian Americans

Cheese Launches to Support Financial Wellness for Asian Americans
By David Penn Posted on
Categories: Daily news, Diversity in Fintech

The launch of Cheese, a digital banking platform dedicated to serving Asian American communities, is the latest instance of entrepreneurs seeking to translate a renewed sense of ethnic identity among many Americans into greater financial wellness, if not empowerment, for those in their communities.

“I have always envisioned launching a digital banking platform that someone like me could easily access but also serves a deeper purpose, with the power to positively impact Asian communities,” Cheese CEO Ken Lian said. “Cheese is that banking platform.”

Cheese includes Ifly.vc and Amplify among its chief investors, having raised $3.6 million in seed funding from the two firms in a round that also featured participation from former Wealthfront CEO Adam Nash and Zillow co-founder Spencer Rascoff. As part of the company’s offering, Cheese accountholders get a debit card (issued by Coastal Community Bank), two-day early advance pay with direct deposit, a 3% deposit bonus for referrals, a 0.3% annual percentage yield, and as much as 10% cash back on purchases at more than 10,000 participating merchants.

And as part of its pledge to support Asian American communities, Cheese will donate $100,000 to nonprofit organizations and community service programs that support Asian neighborhoods and small businesses – especially those impacted by COVID-19. Communities in San Francisco, Los Angeles, and New York City are among the first areas of focus.

The Asian American community is characterized by its diversity and its rapid growth; there are nearly 21 million Asian Americans in the United States. The relatively high income and education levels common in this community compared to other minority communities in the United States makes them an attractive opportunity for providers in financial services – from digital banking to wealth management.

At the same time, the rising number of incidents of violence against Asian Americans in 2021 are reminders that discrimination and racism against Asian Americans continues to be a challenge in a rapidly-diversifying country. In financial services, this issue often manifests itself most acutely with new Asian immigrants who may have language barriers or lack a credit history and struggle to even secure a bank account. Lian, who immigrated to the U.S. from China in 2008, knows this problem well.

“I had been declined multiple times for basic bank accounts,” Lian said, “even with an 800+ FICO score.”

Cheese is headquartered in Pasadena, California. The company was founded in 2019.

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Fintech Innovation Expert Jeremy Balkin Joins JP Morgan Chase

Fintech Innovation Expert Jeremy Balkin Joins JP Morgan Chase
By David Penn Posted on
Categories: Daily news, Speaker series

Among the more popular members of our regular roster of Finovate speakers is Jeremy Balkin. An expert in retail bank management, fintech innovation, and strategic digital partnerships, Balkin spent six years as Head of Innovation with HSBC USA where he was part of the team that introduced humanoid robot Pepper to HSBC’s flagship Fifth Avenue branch.

So what’s new? Balkin announced today that he has joined JP Morgan Chase & Company as its new Head of Fintech and Innovation for Wholesale Payments. In his new capacity, Balkin will supervise fintech and innovation initiatives for wholesale payments, as well as help advise the company with regards to potential investments and partnerships with companies that can help JP Morgan become more effective in the space. JP Morgan’s wholesale payments business moves $7 trillion every day.

Balkin most recently shared his insights with Finovate audiences last fall as part of FinovateWest Digital. His discussion centered on how financial institutions can use innovations in customer experience to win new customers and better engage current ones. Adding new services, products, and rewards, Balkin argued, is a better strategy for most financial institutions than “the dead-end of price competition”. This customer-centric approach, which embraces fintech innovation, is all the more vital in a world in which Big Tech is effectively leveraging its digital platforms to offer financial services to its increasingly digitally-native customers.

In addition to his public appearances and work with banks and fintechs, Balkin is also an author. His books include Investing with Impact: Why Finance is a Force for Good and Millennialization of Everything: How to Win When Millennials Rule the World. We wish him luck in his new opportunity with JP Morgan Chase and look forward to seeing him on the Finovate stage again soon.

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NYDIG Raises $200 Million in New Funding to Bring Bitcoin to the Banks

NYDIG Raises $200 Million in New Funding to Bring Bitcoin to the Banks
By David Penn Posted on
Categories: Daily news, Funding

We noted the $200 million fundraising announced by cryptocurrency solution provider NYDIG earlier this week. Given the investors involved, the amount invested, and the potential implications for further popularization of digital assets, we thought the round was worth a closer look.

New York-based NYDIG is a leading provider of technology and investment solutions for Bitcoin. Founded in 2017 by Robert Gutmann (CEO) and Ross Stevens (Executive Chairman), NYDIG offers banks, corporations, insurers, and high net worth (HNW) individuals financing, custody, execution, and research and advisory services to help them manage their Bitcoin holdings. NYDIG also offers industry-leading expertise in the derivatives markets for institutional investors seeking customized opportunities, from generating yield to establishing hedges.

This week’s financing takes the company’s total funding to $305 million, according to Crunchbase. The strategic partners involved included Stone Ridge Holdings Group, Morgan Stanley, New York Life, MassMutual, Soros Fund Management, FS Investments, Bessemer Venture Partners, and FinTech Collective.

“These partnerships leave no doubt that institutional adoption of Bitcoin has arrived and, further, that NYDIG is the partner of choice for serious financial services firms with the highest fiduciary and diligence standards,” Gutmann said. He announced that the company plans to deliver “an explosion of innovation in Bitcoin products and services” over the balance of the year.

Gutmann also added that the round’s investors will help NYDIG on “strategic initiatives” ranging from investment management and banking to clean energy and insurance. To underscore the point, the company’s statement also reported that life, annuity, and property & casualty insurers currently own in aggregate more than $1 billion of direct and indirect Bitcoin exposure. This exposure is both facilitated exclusively by NYDIG and is held in the firm’s secure, audited, and insured institutional custody platform.

NYDIG has partnered with a number of Finovate alums in recent months. This year alone, the company teamed up with Best of Show winner Kasasa to bring bitcoin wallet functionality to community banks and credit unions. Also in February, NYDIG collaborated with NYMBUS to help financial institutions add Bitcoin products and services to their digital offerings.

“As a notable advocate for financial institutions, Nymbus stood out as a partner to take our vision for Bitcoin and banking to the next level,” NYDIG Head of Bank Solutions Patrick Sells said when the partnership was announced. “As a former banker and technology evangelist, I couldn’t be more excited to bring Bitcoin and banking together, and I see it as a win/win.”

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Still Moven: Digital Onboarding Alliance Underscores Financial Wellness Pivot

Still Moven: Digital Onboarding Alliance Underscores Financial Wellness Pivot
By David Penn Posted on
Categories: Alumni News, Daily news, Digital Onboarding, Moven

In a world of rebrands, reintroductions, and redirections, it is always impressive to see a pivot that sticks.

Moven, which announced its transition toward financial wellness and distributed smart banking a year ago this month, has teamed up with fellow Finovate alum Digital Onboarding. Together, the two fintechs will support user adoption of a turn-key digital bank-in-a-box, making it easier for banks and financial institutions to improve customer engagement on digital platforms.

“The pace of digital disruption in the banking industry is only going to quicken, and financial institutions have to rethink how they leverage digital channels,” Moven founder and Executive Chairman Brett King said. “Providing a new channel is one thing; getting existing and new customers to embrace that channel is an entirely different challenge, and frankly a tremendous opportunity for bankers.”

The partnership brings together Moven’s ability to provide users with data-driven, actionable insights into their financial health with Digital Onboarding’s digital messaging, personalized microsites, and proprietary action widgets to make account-related services more accessible and streamlined. The collaboration recognizes the challenge that digital banks represent to traditional banks and credit unions, and seeks to give them the tools to keep their own customers and better engage new, more digitally-demanding, ones.

“Neobanks are raising billions of dollars and investing heavily in advertising to lure U.S, consumers away from traditional financial institutions,” Digital Onboarding CEO Ted Brown said. “Now is the time for banks and credit unions to double down on investing in their existing customer and member bases. I am excited to collaborate with Moven to help banks and credit unions build long-lasting relationships by motivating financially health behaviors.”

The collaboration between Moven and Digital Onboarding is the most recent, big partnership Moven has entered into since its pivot. Late last year, the company announced that it was working on a turnkey digital bank-in-a-box project with another Finovate alum, Q2. Picking up its second patent for its financial wellness technology in January, Moven also has worked recently with New York-based digital asset manager NYDIG and Japan-based Kyushu Financial Group.

Speaking of NYDIG, the company secured $200 million in funding earlier this week in a round led by Stone Ridge Holdings Group and other strategic partners.

Moven will leverage its relationship with NYDIG to offer banks plugins that will enable them to offer bitcoin-related products. Moven CEO and CRO Kesh Talwar put the NYDIG partnership in the broader context of fintech and cryptocurrency’s parallel, but distinct paths toward prominence. “The growth of fintech platforms and of cryptocurrencies have both been striking, but the two worlds have largely been separate.” And because consumers are most likely to try new technologies when they are introduced by institutions they trust, Talwar sees a clear path to boosting cryptocurrency adoption by enabling banks to play a bigger part.

NYDIG Head of Bank Solutions Patrick Sells concurred. “Many banks have felt left behind with the rise of fintech, but today, banks have the opportunity to capitalize on the fact that their customers strongly prefer them to be in the lead when it comes to Bitcoin.”

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U.K. Challenger Starling Bank Scores $376 Million in New Funding

U.K. Challenger Starling Bank Scores $376 Million in New Funding
By David Penn Posted on
Categories: Daily news, Funding

In its biggest fundraising to date, U.K.-based challenger bank Starling Bank has secured ($376 million) £270m in funding. The Series D round was led by Fidelity Management and Research. Also participating in investment were the Qatar Investment Authority, RPMI Railpen, and Millennium Management.

Starling hopes to use the capital to grow its lending book and to expand throughout Europe. M&A activity is also on the table for the digital challenger. The fundraising, which remains subject to regulatory approval, will give the neobank a pre-money valuation of £1.1 billion.

Founded by Anne Boden and headquartered in London, Starling now has more than two million accounts, including 300,000 SME business accounts. Starling Bank says that it has 5% of the small business market in the country, as well as deposits of more than £5.4 billion. The firm has made loans valued at more than £2 billion – much of that while participating in the government’s COVID financial relief programs.

“Digital banking has reached a tipping point,” Boden said in a statement announcing the investment. “Customers now expect a fairer, smarter and more human alternative to the banks of the past and that is what we are giving them at Starling as we continue to grow and add new products and services. Our new investors will bring a wealth of experience as we enter the next stage of growth, while the continued support of our existing backers represents a huge vote of confidence.”

Starling reached profitability late last year. Since then, the company has forged partnerships with iZettle, Dingy Insurance, PensionBee, and Finovate alum SumUp. Boden has hinted recently that an IPO could be “two to three years” away for the digital challenger. “I didn’t do all of this to sell out to a big bank,” she said.

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Betterment Acquires Wealthsimple’s U.S. Investment Advisory Business

Betterment Acquires Wealthsimple’s U.S. Investment Advisory Business
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Betterment, Daily news, Mergers & Acquisitions

U.S. wealthtech player Betterment is building up its assets under management. That’s because the company acquired the U.S. investment advisory business of Canada-based Wealthsimple this week.

Terms of the deal– which notably does not include Wealthsimple’s technology, employees, or operations– were not disclosed.

“As we shift our focus to our Canadian business for the time being, finding a partner for our U.S. business that shared our commitment to putting clients first was our top priority,” said Wealthsimple Co-founder and CEO Michael Katchen. “It’s been a privilege to serve our U.S. clients, and we’re confident that their investments will continue to be in good hands with Betterment.”

To find a suitable home for its U.S. accounts, Wealthsimple selected Betterment in a competitive bidding process for its strong reputation and customer-first mentality. Wealthsimple’s U.S. clients will be moved over to Betterment in June of this year.

“This was an excellent opportunity for us to grow our customer base, and we’ll continue to be aggressive in opportunities that accelerate our business goals,” said Betterment’s newly-appointed CEO Sarah Levy.

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Meniga Enables Carbon Footprinting for Iceland’s Islandsbanki

Meniga Enables Carbon Footprinting for Iceland’s Islandsbanki
By David Penn Posted on
Categories: Alumni News, Daily news, Meniga

Interested in activism that’s truly “global” in its appeal? Then the news that Meniga has partnered with Íslandsbanki, one of the largest banks in Iceland, to launch its new green banking solution, Carbon Insight, should be music to your ears.

“With more and more people around the world growing anxious about the consequences of climate change, the need for solutions and initiatives that empower people to take action to help protect our planet has become a business imperative,” Meniga CEO and co-founder Georg Ludviksson said.

Carbon Insight enables users to estimate and track how their spending decision impacts the environment via their carbon footprint. This footprint is derived via the Meniga Carbon Index, which was developed by a team of data scientists who leveraged environment research into the carbon emissions of various products and services. Carbon Insight works by multiplying spending transaction amounts by a “carbon intensity value” to give the user a reasonable carbon footprint estimate. This information can be used to help inform the user to which activities are potentially more environmentally impactful.

“We have seen great enthusiasm for our Carbon Insight product over the past few months, from banks and other key financial players, which is an encouraging sign from our industry that more green initiatives are still to come,” Ludviksson said.

As part of the partnership with Meniga, Íslandsbanki has agreed to integrate Carbon Insight into its digital banking solution. The Icelandic bank sees the new offering as a way to increase customer engagement and build on its environmental, social, and governance (ESG) strategy.

“Consumers are increasingly interested in improving their carbon footprint and having a positive impact on the environment,” Birna Einarsdóttir, Íslandsbanki CEO said. “Meniga’s Carbon Insight solution will enable Íslandsbanki’s customers to estimate the carbon footprint of their private consumption, identify carbon intensive purchases, and ultimately reduce their carbon footprint while saving money at the same time.”

Founded in 2009, Meniga most recently demonstrated its technology at FinovateFall 2019. Last fall, the company launched in the U.S. and, that summer, announced a $9.4 million fundraising that took the firm’s total funding to more than $43 million.

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Plaid Releases Income Verification Tool

Plaid Releases Income Verification Tool
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, Plaid

Banking technology player Plaid announced Plaid Income this week, the company’s new income verification tool.

Income offers a secure and fast way to help consumers prove their salary in order to qualify for and secure loans, rent apartments, lease vehicles, and more. Lenders benefit from this data by being able to make better-informed risk decisions, issue pre-approvals or approvals faster, and allocate fewer resources to manually reviewing documents. 

Plaid places consumers in control of their own data by offering them the option to choose whether to share their data. With Income, they can opt to share their salary information by connecting to their employer account, payroll provider account, or by verifying their salary using documents such as paystubs, W2s, and some 1099s.

To help users connect directly with their payroll provider, Plaid supports real-time payroll authentication for over 250,000 of the largest employers in the U.S. The company is also developing credential-less authentication capabilities with leading payroll providers, including ADP.

The new Income tool is part of the Plaid for Payroll suite, which also includes the company’s Deposit Switch offering launched earlier this year.

Plaid’s income verification tool is similar to an offering from its competitor Finicity, which launched its Verification of Income and Employment solution in 2019. Among Finicity’s clients are Freddie Mac, Quicken Loans, and Experian.

Interestingly, Finicity was acquired by Mastercard late last year, just days after the U.S. Department of Justice filed a civil antitrust lawsuit to block Visa’s ability to acquire innovative fintech.

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Aon Pilots Decentralized Insurance Offering

Aon Pilots Decentralized Insurance Offering
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news

Aon announced partnerships this week that are helping the insurance broker to pilot a decentralized insurance offering. The new product will cover risks associated with DeFi platforms. More specifically, it will cover clients who experience losses as a result of hacks or buggy software.

The firm formed partnerships with smart insurance contracts provider Nayms, decentralized lending platform Teller Finance, and Relm, an insurance company that embraces new and emerging business categories.

“The Nayms platform puts the tool of smart contracts in the hand of regulated underwriters (like Relm) and brokers (like Aon), to open up a new capital source when underwriting crypto risk,” Nayms CEO Dan Roberts told NASDAQ via email. “This could be in either crypto (ETH, BTC) or in fiat (via a stablecoin). Aon is assessing both options as part of longer term programs.”

Aon and Nayms are conducting the pilot through Teller Finance, while Relm is underwriting the insurance contract.

While other players have offered insurance protection for crypto wallets in the past, Aon aims to be different. That’s because not only is the firm staying above board with fully regulated players, it is also focused on keeping the underlying processes straightforward and intelligible. Both of these attributes are difficult to achieve in the crypto world.

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Square Launches Business Bank

Square Launches Business Bank
By David Penn Posted on
Categories: Daily news

It’s just a little business banking between friends for now. But the announcement this week that SME payments platform Square is launching an in-house bank is the latest instance of fintechs leveraging banking services to maximize customer engagement and grow their customer base.

Square Financial Services, based in Salt Lake City, Utah, began operations at the beginning of the week, and will function as an independently governed subsidiary of Square offering business loans and deposit products for its merchant sellers. Previously leveraging a partnership with a third-party bank to offer financing via its Square Capital solution, the new “industrial bank” will now provide underwriting and loan origination for the company’s lending product.

According to Square, its Square Capital division facilitated 57,000 loans in Q4 of 2020 and facilitated $857 million in Paycheck Protection Program (PPP) loans to 80,000+ SMEs. Additionally, 58% of Square Capital’s loans go to women-owned businesses, with 35% going to ethnic minority-owned firms. These figures compare favorably to those of traditional lenders, whose financing tends to support female-owned SMEs 17% of the time and minority-owned companies 27% of the time.

“Bringing banking capability in-house enables us to operate more nimbly, which will serve Square and our customers as we continue the work to create financial tools that serve the underserved,” Square Chief Financial Officer Amrita Ahuja said. Ahuja, who is also Executive Chairwoman of the board of directors for Square Financial Services, added, “We thank the FDIC and Utah DFI for their partnership enabling us to reach this milestone, and look forward to continuing to expand access to financial services at this critical time for small businesses.”

Square Financial Services won charter approval with both the FDIC and the Utah Department of Financial Institutions. The entity will be led by CEO Lewis Goodwin, with Brandon Soto serving as Chief Financial Officer and Samantha Ku as Chief Operating Officer.

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Five On It: Black Neobank First Boulevard Raises Seed Funding

Five On It: Black Neobank First Boulevard Raises Seed Funding
By David Penn Posted on
Categories: Daily news, Diversity in Fintech, Funding

First Boulevard, a challenger bank dedicated to serving the African American community, announced a $5 million seed funding round this week. Participating in the investment were Barclays, Anthemis, and a number of angel investors including actress Gabrielle Union and AutoZone CFO Jamere Jackson. Donald Hawkins, CEO and co-founder of the Overland, Kansas-based neobank, said that the funding would help First Boulevard build out its business marketplace of black-owned SMEs for its Cash Back for Buying Black program.

The capital will also enable the company to grow its team, its customer base, and its platform. Co-founded last August by Hawkins and COO Asya Bradley during the George Floyd/anti-racism protests of 2020, First Boulevard anticipates launching in Q3 of 2021. Among the neobank’s initial offerings will be a no-fee debit card, solutions to automate savings and wealth-building, as well as financial education resources.

As we noted last month in our Black History Month look at African-American based digital banks, the fledgling challenger bank already has forged an innovative partnership with Visa. First Boulevard will pilot a new suite of Visa’s crypto APIs that enable the trading and custody of digital assets.

“The First Boulevard mission is to help Black America build wealth,” Hawkins said last month when the initiative was announced. “We are thrilled to partner with the leader in digital payments, Visa, and leverage their crypto APIs to provide another channel for the Black community to access crypto as a new asset class that can help build Black wealth.”

First Boulevard’s participation in the cryptocurrency project is a reminder of the growing intersection between the African American community and digital assets. A growing number of black observers of and participants in the cryptocurrency space have advocated Bitcoin and other digital assets as a way for African Americans to achieve independence from a financial structure many believe is systemically stacked against them.

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Klarna Scores Big in New Billion Dollar Funding Round

Klarna Scores Big in New Billion Dollar Funding Round
By David Penn Posted on
Categories: Alumni News, Daily news, Funding, Klarna

Europe’s most valuable fintech startup just got a lot more valuable.

Klarna announced on Monday that it has raised $1 billion in new funding and earned a lofty valuation of $31 billion. The company, which set out to raise $500 million in the just-ended round, credited investor demand for the exceptional amount raised. Klarna CEO Sebastian Siemiatkowski also cited strong growth in the U.S. as a reason why investor dollars are flocking toward his company.

“What definitely has accelerated and changed is the success in the U.S. market,” Siemiatkowski said. “Investors are seeing Klarna getting ahead of its competitors. I think that has changed the perspective and changed the view on our valuation.”

According to Siemiatkowski, investors are seeing Klarna as the king of an e-commerce wave that is making Buy Now Pay Later a mainstream financing approach. The reverse layaway strategy of enabling consumers to receive goods and services now and pay for them in equal installments over time has made BNPL the hottest new thing in online shopping. Klarna, which was founded in 2005 and made its Finovate debut seven years later, has been a pioneer in “after delivery payment” and other forms of consumer financing for years. This week’s financing is, in part, a recognition of this fact and a bet that, amid rising competition, Klarna will come out on top.

Right now, both Siemiatkowski and Klarna’s backers seem equally eager to take on legacy consumer financing options as well as Klarna’s BNPL rivals. Pointing out how the buy now pay later approach is fairer insofar as it makes the same offer to all consumers, Siemiatkowski adds, “There’s a number of investors out there that agree with us. They see that this credit card industry is actually at its core flawed and needs some innovation.”

In addition to using the new capital for acquisitions, the company is more interested in synergies that will “help people save time and money” than it is in purchasing rivals. That said, Siemiatkowski does have a few novel uses for at least some of the company’s new funding: Klarna will donate approximately $10 million to organizations that are dedicated to fighting climate change.

More than 30 current and new investors participated in Klarna’s latest fundraising, including Silver Lake, Sequoia Capital, BlackRock, and HMI Capital. Other investors included Singaporean sovereign wealth fund GIC and individual investor, rapper Snoop Dogg.

Headquartered in Stockholm, Sweden, Klarna claims 90 million users and 250,000 merchant partners around the world. The company is optimistic about its growth in the U.S., saying they expect it to overtake Germany as its biggest market by the end of this year. The company has inked partnerships with 20 of the top 100 brands in the U.S., and said it gained a million new customers a month in the States in the final quarter of last year.

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