Gusto Launches Challenger Banking Service

Gusto Launches Challenger Banking Service

Is there room for another challenger bank aimed at serving the underbanked? Payroll, benefits, and HR solutions firm Gusto thinks so.

The San Francisco-based company announced the launch of Gusto Wallet today. Exclusive to employees of the 100,000+ businesses that use Gusto’s payroll services, the mobile wallet offers direct deposit, banking tools, savings accounts, and access to emergency funds.

Among the benefits of Gusto’s new account are savings goals, a debit card with free ATM withdrawals, and a unique feature called Gusto Cashout. The new tool allows employees to access money in between paydays. The amount borrowed comes with no fees and no interest, and is repaid automatically from the employee’s next paycheck.

The accounts are aimed to promote financial wellness. In addition to the Gusto Cashout feature, Gusto pays a higher-than-average return on savings goals. Users can earn 0.34% APY on up to five goals. And in order to help encourage accountholders to save, Gusto Wallet offers users the ability to automatically route a portion of their paycheck into their savings accounts.

Like most U.S.-based challenger banks, Gusto is partnering with an incumbent to power its accounts. The company has teamed up with Kansas City, Missouri-based nbkc bank to back its accounts. Other fintechs that use nbkc bank to offer challenger banking services include Betterment, Joust, and Truebill.

Unlike most challenger banks, however, Gusto Wallet has direct deposits built into its design. Most banks fight hard to get their users to directly deposit their paycheck into their account by using expensive promotions and incentives. My personal bank once offered me $300 to sign up for direct deposit. Gusto, however, doesn’t need to do this, since payroll deposit is built into its mobile wallet and it is limited to users whose employers pay them via Gusto’s payroll service.

Along with the Gusto Wallet launch, the company also announced today it is helping small businesses set up health reimbursement accounts via a program called QSHERA.

While Gusto’s Cashout feature may be appealing to the lower income, underbanked population, the company may need to add another feature or two to compete with popular challenger banks such as Chime and Dave. For example, Chime offers fee-free overdrafts, and pays 1% APY on savings goals and Dave helps users build their credit score via a partnership with LevelCredit.


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Bitpanda Raises $52 Million in Round Led by Peter Thiel’s Valar Ventures

Bitpanda Raises $52 Million in Round Led by Peter Thiel’s Valar Ventures

Digital asset platform Bitpanda announced a round of venture funding today. The $52 million Series A round marks the largest Series A round in Europe so far this year.

The round was led by Valar Ventures, a VC firm backed by Peter Thiel. Today’s investment, combined with Bitpanda’s $51 million ICO last year and undisclosed venture round last year, brings its total funding to over $103 million.

As part of the agreement, Andrew McCormack and James Fitzgerald from Valar Ventures will join Bitpanda’s board. “With their extensive track record in growing digital champions like PayPal in its early years and supporting Peter Thiel during its IPO and eventual sale to eBay in 2002, we are more than confident in the choice,” Bitpanda CEO and Co-founder Eric Demuth said.

The company will use the funds to promote geographical expansion. Specifically, after its successful launches in France, Spain, and Turkey this year, Bitpanda plans to expand to more European countries before year-end.

The investment will also be used to “bring the Bitpanda platform and all our services to a new level.” The company has already slated new products for launch, including a new stock trading tool which will launch in 2021.

Much of Bitpanda’s focus is on financial empowerment and the democratization of investment. “Bitpanda will become an investment platform for asset classes for everyone,” Demuth said. “We will provide education, empower our users to take their future into their own hands and remove all those barriers that prevent people from taking part.”

Founded in 2014, Bitpanda has seen significant growth this year, boosting its client base to more than 1.3 million. Additionally, the company has brought on more than 70 new employees this year and plans to boost its total workforce to more than 300 by the end of this year.


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FIS and The Clearing House Help Bring Real Time Payments to Small Banks

FIS and The Clearing House Help Bring Real Time Payments to Small Banks

Financial services company FIS announced this week it has partnered with The Clearing House (TCH) in an effort to bring real-time payment processing and settlement to small-to-mid-sized banks and credit unions.

FIS will help its core banking system clients quickly and cheaply connect to TCH’s RTP network, a payments infrastructure that enables instant payments settlement and immediate availability of funds for banks participating in the network.

“As a long-time partner with The Clearing House, we are excited to see the RTP network continue to grow and to be working with banks across the United States to take advantage of the speed, power and scalability of real-time payments,” said FIS EVP, Head of Financial Institutions Payment Solutions Royal Cole. “We’ve designed our new managed service to ease the process of connecting to this emerging platform for small-to-mid-sized banks and credit unions that lack the resources of their larger competitors.”

Among FIS bank clients already participating in TCH’s RTP network are St. Louis, Missouri-based First Bank; and Nano Banc, a relationship-based bank headquartered in Irvine, California.

FIS was founded in 1968 and made major news headlines last year when it acquired Worldpay for $34 billion.

The Clearing House launched its RTP scheme in 2017. Today the RTP network’s real-time payment capabilities are accessible to banks that hold 70% of U.S. demand deposit accounts (DDAs). The network currently reaches over half of all U.S. DDAs.


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New Funding Takes Robinhood’s Series G Round to $660 Million

New Funding Takes Robinhood’s Series G Round to $660 Million

A little over a month after announcing a $200 million investment from D1 Capital Partners as part of its Series G round, the Millennially-targeted stock trading app Robinhood is back in the fintech funding headlines with another $460 million in new capital raised. The investment gives the company a valuation of $11.7 billion, and brings the Series G’s total to $660 million.

The company’s total funding stands at $2.2 billion.

The financing comes from a quintet of investors: Andreessen Horowitz, Sequoia, DST Global, Ribbit Capital and 9Yards Capital. A Robinhood spokesperson said that the funds will be used to support Robinhood’s core product as well as “new offerings like cash management and recurring investments.”

Robinhood has been on an impressive fundraising pace this year, locking in more than $1 billion in 2020 alone as a rapidly advancing stock market – and the blunting of sports gambling due to pandemic restrictions – have brought new investors and traders to the platform. Robinhood offers commission-free trading in stocks, exchange-traded funds (ETFs), and options via Robinhood Financial, as well as the ability to buy and sell cryptocurrencies with its Robinhood Crypto platform.

Founded in 2013 and headquartered in Menlo Park, California, Robinhood has more than 13 million users. Earlier this month, the company announced a set of updates on its options trading offering, giving investors and traders greater control over exercising options, and adding improvements to the early assignment process, as well as enhancing both education and eligibility criteria for options trading. In August, Robinhood introduced a pair of new Chief Compliance Officers – Norm Askhenas for Robinhood Financial and Kelly Zigaitis for Robinhood Securities – who are veterans of Fidelity and Wells Fargo Advisors, respectively.


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Virgin Money Goes Live on Experian’s Pre-Qualification Platform

Virgin Money Goes Live on Experian’s Pre-Qualification Platform

Virgin Money announced today it has become the latest brand to join Experian’s pre-qualification platform.

The deal means that Virgin Money will now appear on Experian’s panel of lenders that are aggregated on lending websites and advisor platforms to help prospective borrowers check their eligibility and make informed decisions on their home purchase.

“Going through a lengthy mortgage application just to be turned down can be frustrating for everyone involved, not least the buyer who has found their dream home,” said Lisa Fretwell, Managing Director of Data Services, at Experian UK&I. “By checking eligibility at the beginning of the journey, potential customers can see which mortgages they are likely to be accepted for based on their financial circumstances, while at the same time avoiding damage to their credit score.”

Ultimately, Experian’s solution offers an automated decision based on credit history. If the system accepts the borrower, they will see details of the maximum amount they can borrow.

Borrowers can find Virgin Money’s mortgage products on pre-qualification platforms including Mortgage Gym, New Homes Group, Mojo Mortgages, Property Pal Mortgages and Iress Xplan Mortgage.

Experian offers a range of tools to help lenders make more informed decisions more efficiently in a way that safely leverages consumer data. Among these tools is Experian Lift, which the company launched last year. Experian Lift is a suite of credit score products that combines traditional credit, alternative credit, and trended data to provide a holistic picture of consumer creditworthiness.

Tools like these are especially useful in today’s economic environment, when uncertainty persists throughout many areas of consumers’ lives.


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More Fuel for the BNPL Fire: Affirm Raises $500 Million

More Fuel for the BNPL Fire: Affirm Raises $500 Million

In a series G round, buy-now, pay-later company (BNPL) Affirm brought in $500 million, bringing the company’s total raised to $1.3 billion.

Leading the round were Durable Capital Partners LP and existing investor GIC. Other returning investors Lightspeed Venture Partners, Wellington Management Company, Baillie Gifford, Spark Capital, Founders Fund, and Fidelity Management & Research Company LLC also contributed.

Affirm Founder and CEO Max Levchin referred to the new round as a “vote of confidence” that will help the company advance its mission “to build honest financial products that improve lives.”

Along with the funding announcement, Affirm also unveiled an interest-free and fee-free bi-weekly payment product for transactions over $50. The new product aims to help Affirm’s tools compete with credit cards. “Affirm is now an even more attractive payment option for everyday wants and needs,” Levchin added. “We can also now better support merchants who offer smaller ticket items and bring their customers a more transparent, flexible way to pay.”

Affirm’s BNPL tools reach 6.5 million shoppers across the U.S. and Canada. The company has 6,000+ merchant partners in the U.S., including brands such as Walmart, Peloton, Oscar de la Renta, Audi, and Expedia.

Affirm’s funding comes days after Klarna unveiled its $650 million raise, which brought its total funding to $1.4 billion and boosted its valuation to $10.6 billion.


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Striata Acquired by Doxim

Striata Acquired by Doxim

Secure messaging company Striata announced this week it has been acquired by Doxim, a customer communications management (CCM) software company. Terms of the deal were not disclosed.

Doxim will use Striata’s technology to expand its CCM platform and provide personalized digital interactive experiences in a secure manner. Doxim CEO Mike Rogalski expressed that the global pandemic has accelerated the need for communications technologies. “Especially with the impact of COVID-19, which has meant fewer face-to-face meetings,” noted Rogalski, “organizations need to find scalable ways to orchestrate and distribute multi-channel communications that are both personalized and legally compliant.”

“The joint strength of Striata and Doxim will power a world-class digital CCM platform and expert team for enterprises and small to mid-sized businesses,” said Striata CEO Michael Wright (pictured). “We look forward to working with Doxim to integrate our technology, systems and culture. The value proposition of the combined organization promises to be a formidable force in the market.”

Striata was founded in 1999 and, with a focus on security and compliance, has worked heavily in the financial services industry. The company’s services include message design, generation, security, delivery, and storage across multiple channels.

Striata is headquartered in New York City, with operations in London, Johannesburg, Hong Kong, and Sydney and partners in North and South America, Africa, Europe and Asia Pacific.


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Square Staves Off Competition with the Launch of Two New Payroll Features

Square Staves Off Competition with the Launch of Two New Payroll Features

Since its launch in 2009, Square has always catered to small business owners. The payment services company is best known for offering micro-to-medium sized merchants an easy way to accept payments and today Square is launching two services to make those business’ payrolls even more robust.

Explaining the problem, Square Payroll GM Caroline Hollis said, “The traditional payroll process is slow and rigid, creating cash flow constraints for employees and businesses alike. This is even more pronounced now given the current economic conditions.”

The new features include On-Demand Pay for employees and Instant Payments for employers. On-Demand Pay will allow employers to offer their workers early access to some of the wages they’ve earned, while Instant Payments helps businesses fund payroll faster than the typical time of three-to-four days.

There is a bit of a catch with these services, however. Both offerings hinge on Square’s Cash App, a mobile wallet that effectively serves as a checking account for P2P payments. With On-Demand Pay, employees can transfer up to $200 of their earned wages to Square’s Cash App for free. Transfering the funds to a third party debit card, however, incurs a 1% or $2 fee. As for Instant Payments, employees that elect to be paid via Square’s Cash App receive their pay within minutes, while those paid via direct deposit get paid “as soon as the next business day.”

The new features are not new to the fintech scene. They will, however, help Square compete with new offerings from other third party fintechs and serve as a way to help Square maintain its multi-million user base of sellers.


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Marcus and the Marriage of Banking and PFM

Marcus and the Marriage of Banking and PFM

On the day that Goldman Sachs announced that its digital banking solution Marcus would now feature a suite of PFM tools, FinovateFall Digital attendees were busy listening to the architect of this new feature – Adam Dell, Head of Product at Marcus – making the case for, among other things, the union of digital banking and PFM.

Successful digital financial services offerings in the post-COVID era will have three main features, Dell said. They will have a low cost means of delivery, they will represent a fair deal for the consumer, and they will provide what he called “delightful digital experiences.”

The new PFM solution, known as Marcus Insights, is currently available on iOS and will be made available on Android platforms and on the web soon. Marcus Insights aggregates the user’s financial information in a single dashboard, and offers tools and trackers to provide an easy-to-understand overview of their finances. After linking their checking, savings, loans, and/or investment accounts, users can analyze their spending in pre-set categories such as travel, shopping, and dining, as well as get instant insight into their spending and saving patterns, and their investment performance.

Interestingly, due to a restrictive data sharing agreement, users will not be able to link their Apple Cards to Marcus Insights. This is despite the fact that Apple is a Goldman partner. Also partnering with Goldman and Marcus on this initiative is Finovate alum Plaid, which was acquired by Visa for $5.3 billion at the beginning of the year.

Goldman launched Marcus, which was named after the investment bank’s founder Marcus Goldman, in 2016 and, just this year, unveiled a mobile app for the online bank. As of January, Marcus has $60 billion in customer deposits, and $5 billion in loans. CNBC reported that Marcus plans to add a digital checking account and an investing service in 2021.


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Klarna’s $650 Million Funding Round Boosts Valuation to $10.6 Billion

Klarna’s $650 Million Funding Round Boosts Valuation to $10.6 Billion

As the buy-now, pay-later (BNPL) craze explodes, some fintechs are in just the right place to catch the sparks. Payment services company Klarna is one of these players, and it has just landed $650 million in funding.

Today’s round adds to the company’s $1.4 billion in previously raised funds, bringing its total to just over $2 billion. The investment also boosts Klarna’s valuation to $10.6 billion, ranking the company as the highest-valued private fintech in Europe and the fourth highest worldwide.

The round was led by Silver Lake, GIC (Singapore’s sovereign wealth fund), and accounts managed by BlackRock and HMI Capital. Additional funds came from Merian Chrysalis, TCV, Northzone, and Bonnier, which have acquired shares from existing shareholders.

Klarna will use the funds to invest in product development, fuel global expansion, and build on its growth.

“We are at a true inflection point in both retail and finance,” said Klarna CEO and Co-founder Sebastian Siemiatkowski. “The shift to online retail is now truly supercharged and there is a very tangible change in the behavior of consumers who are now actively seeking services which offer convenience, flexibility and control in how they pay and an overall superior shopping experience. Klarna’s unique proposition, consumer preference and global retailer network will prove an excellent platform for further growth.”

As consumers seek alternative methods to finance their purchases, Klarna’s BNPL tool that enables users to pay in interest-free installments has gained impressive traction. The company’s shopping app has more than 12 million monthly active users worldwide, with 55,000 daily downloads.

And Klarna’s game is also strong on the merchant side of things, as many retailers have sought to increase online sales during stay-at-home orders. During the first half of 2020, the company added more than 35,000 new retailers to its existing merchant base of more than 200,000 partners including Sephora, The North Face, Timberland, and Ralph Lauren.

As a result of this growth, the company’s volume grew 44% over the first half of this year to more than $22 billion and its revenue increased 36% year-on-year to $466 million over the same period.


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ABN AMRO Adds Subscription Management Courtesy of Subaio

ABN AMRO Adds Subscription Management Courtesy of Subaio

ABN AMRO is updating its Grip app this week by integrating Subaio’s white label subscription management feature for banks.

The integration comes at a time when users are spending more than ever before on subscriptions, especially digital subscriptions such as movie streaming services and cloud storage products. According to the New York Times, consumers spent an average of $640 on digital subscriptions in 2019, up 7% from 2017.

ABN AMRO’s Grip PFM app now leverages Subaio’s subscription management feature that enables users see all of their recurring payments in one place. The tool alerts users of any changes in subscriptions and even helps them cancel subscriptions from within the app. Subaio relies on an algorithm that uses machine learning to detect patterns in frequency, amount, merchant name, and more.

“Since the launch we’ve already seen tens of thousands of Grip users coming in to see their overview and also cancel subscriptions. It’s fantastic to help people get control of their subscriptions,” said Subaio CEO Thomas Laursen.

Today’s partnership with ABN AMRO is Subaio’s seventh bank partnership. Among the company’s other partners are Nordea and challenger bank Lunar. The company has found that the average user has eight different subscriptions, and that the users are saving $253 (€213) every time they use Subaio’s solution to cancel a subscription.

Founded in 2016, Subaio showcased at FinovateEurope 2020. The company has raised $2.4 million and has 20 employees.


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Credit Suisse Launches Challenger Bank Competitor

Credit Suisse Launches Challenger Bank Competitor

Challenger banks have been slowly making their way into the mainstream banking sector. By offering competitive rates, unique services, and digital-first user experiences, this new breed of banks has disrupted the traditional banking scene, causing some incumbents to rethink their approach.

This certainly seems to be the case with Credit Suisse, a 164-year-old bank. The Switzerland-based firm is steeling itself against challengers by launching its own digital bank, CSX. The new offering aims to be a hybrid approach between challengers and incumbents, and “combines the flexibility and cost effectiveness” of a digital bank with “the comprehensive range of services and expertise” of a traditional bank.

“CSX is intended for all private clients in Switzerland who want to complete their banking business swiftly and easily and who value digital, professional financial advice,” said Anke Bridge Haux, Head of Digital Banking at Credit Suisse. “Of course, we are still available to serve our clients in person. CSX clients can decide for themselves how they want to interact with us, depending on their individual needs.”

In order to serve clients from a range of demographics, Credit Suisse’s new digital bank will be divided into two offerings, CSX and CSX Young. Both take a mobile-first approach, from onboarding to a virtual debit card. Credit Suisse will launch the two accounts at the end of next month. After launching, the app will add services including investments, pensions, and mortgages.

In conjunction with today’s digital banking announcement, Credit Suisse also unveiled plans for a new concept branch that focuses on personalized advice. The bank is piloting the new concept at a new branch in Zurich and is building out the idea with a Digital Bar that offers interactive, personalized advice via video conferencing. Branch locations will also include co-working spaces, multimedia group rooms, and an event zone that can be booked by third parties.


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