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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Small business payments and accounting platform Autobooks unveiled a new initiative today that works directly with small businesses to help them receive credit card payments online.
The program, Get Paid with Autobooks, deposits transaction revenue directly into the business’ existing bank account. The tool was previously only available to small businesses via Autobooks’ existing bank partners. In fact, Autobooks partners with more than 50 banks and credit unions to help them compete with fintechs such as PayPal and Square by offering their small business clients an online payment acceptance tool.
Autobooks is waiving its $10 monthly fee for Get Paid through the end of this year. This offer comes at a time when many businesses have been pushed to accept payments online in order to provide a no-contact experience for their clients. Businesses will still be charged the standard 2.75% on each transaction.
Autobooks lowers the barrier of entry for businesses to accept payments by using a model called payment facilitation. “Non-bank providers such as PayPal, Square, and Stripe have long benefited from this model and it’s now time financial institutions can too,” said Autobooks CEO and Cofounder Steve Robert. “By providing a digital, self-service onboarding and automated underwriting process – a small business can now begin receiving payments directly into their existing checking account within a few minutes.”
Autobooks was founded in 2015 and has since raised $17.5 million in funding. The company offers banks a range of tools, including invoicing, accounting, and billpay, to help them support their small business customers.
China-based internet giant Tencent laid out $300 million to acquire a 5% stake in buy-now-pay-later firm Afterpay.
The move is part of a strategic partnership that will offer Afterpay easy access and collaboration opportunities with Tencent, a Hong Kong-based fintech giant with a $500 billion market capitalization. In comparison, Afterpay’s market capitalization on the Australian Stock Exchange tops just over $8 billion.
Afterpay was founded in 2014 by Nicholas Molnar and Anthony Eisen, who now serves as the company’s CEO. The Australia-based company has 4.6 million users and its revenues totaled over $160 million last year.
“Afterpay’s approach stands out to us not just for its attractive business model characteristics, but also because its service aligns so well with consumer trends we see developing globally in terms of Afterpay’s customer centric, interest free approach as well as its integrated retail presence and ability to add significant value for its merchant base,” said Tencent Chief Strategy Officer James Mitchell.
Tencent’s move comes shortly after its rival Ant Financial took a minority stake in Afterpay competitor Klarna. Afterpay has 3x the web traffic of Klarna and 1.5x the traffic of its other major competitor Affirm.
The buy-now-pay-later segment of fintech has been heating up this year, despite– or perhaps because of– the current economic and health crises. A few weeks back, Goldman Sachs launched MarcusPay, a tool to help borrowers make purchases ranging from $750 to $10,000 and pay for them over the course of 12 to 18 months.
Mambu, the cloud-based banking platform based in Germany, is partnering with U.K. business banking platform Tide to power the company’s revolving credit facilities and overdrafts for small businesses.
“There is a need to be flexible, agile, and customer-centric in the design of financial products,” Managing Director of Mambu EMEA Eelco-Jan Boonstra explained. “Legacy technology constraints can undermine even the best innovation strategy.”
The collaboration will enable Tide to overhaul its product suite in order to better serve customers in a number of locations around the world. This includes offering larger overdrafts, credit cards, and invoice financing, as well as enabling Tide members to lend to each other leveraging solutions managed by Mambu.
“When today’s customers evaluate financial institutions, they no longer compare different banks, they compare experiences,” Boonstra said. “We see this partnership approach as the future of banking technology.”
Regtech is all the rage in fintech these days. From helping businesses negotiate a wave of new regulation – from GDPR to PSD2 – to empowering firms to combat fraud, companies involved in developing technologies to ensure that businesses are getting and staying compliant are enjoying rare attention from the rest of the industry.
A recent review of top regtech startups in Europe in Fintech News was an example of the light increasingly shining on these companies and their vital role in supporting a fintech industry that a growing number of financial services customers – and other businesses – are relying on.
The review cited research from KPMG that anticipates regtech spending in 2022 climbing to $76 billion. Analysis from XAnge, a European VC firm, finds approximately 140 regtech startups in the E.U., divided fairly equally between compliance management, KYC/AML, and risk management solutions.
We were especially please to see that, of the ten regtech startups highlighted in the feature, four of the companies are Finovate alums. Apiax and NetGuardians, which most recently demoed at FinovateEurope and at FinovateAsia respectively, both hail from Switzerland. Apiax, recently profiled here on the Finovate blog, offers a comprehensive compliance solution that leverages APIs to integrate its compliance rules into digital processes. NetGuardians focuses on Big Data and uses it to help banks fight fraud and automate compliance.
Also earning recognition on the top European regtech list was Ireland’s Fenergo. The company, founded in 2009 and having made its Finovate debut back in 2012, specializes in client onboarding and account opening solutions for banks and financial services companies. Just this week, Fenergo announced that it was launching a new remote account opening solution in both the EMEA and APAC regions.
Half of the companies on Fintech News’ regtech roster are from the U.K. The Finovate alum among this group, Onfido, leverages automated machine learning, optical character recognition (OCR), and other technologies to provide identity verification to combat fraud. Demoing its technology at both FinovateEurope and FinovateFall in 2018, the company earlier this month announced a major $100 million fundraising that brought the company’s total capital to more than $182 million.
“We’ve naturally chosen the grow-fast path because we strongly feel that the time to solve the digital access problem is overdue, and urgently needs to be solved, for good,” Onfido CEO and co-founder Husayn Kassai said. “We didn’t fundraise to just get to the next milestone, we need the funding as we’re changing the world.”
The Buy Now Pay Later Revolution is sweeping the world. Check out Finovate Senior Research Analyst Julie Muhn’s coverage of Tencent’s $300 million investment in Australia-based Afterpay this week:
Tencent’s move comes shortly after its rival Ant Financial took a minority stake in Afterpay competitor Klarna. Afterpay has 3x the web traffic of Klarna and 1.5x the traffic of its other major competitor Affirm.
The buy-now-pay-later segment of fintech has been heating up this year, despite– or perhaps because of– the current economic and health crises.
Here is our weekly look at fintech around the world.
Asia-Pacific
V Capital, and advisory firm based in Malaysia, and U.S.-based Cross River Bank partner to apply for a digital banking license in the country.
Hong Kong-based Oriente, a fintech that provides digital infrastructure for financial services, secures $50 million in its still-open Series B round.
South Korean cryptocurrency startup Childly teams up with blockchain analysis company Chainalysis.
Sub-Saharan Africa
Nigerian fintech startup Okra, which facilitates the exchange of real-time financial between banks, customers, and apps, locks in $1 million in pre-seed funding in a round led by TLcom Capital.
Flutterwave, based in San Francisco, California and Lagos, Nigeria, introduces new portal for African e-commerce merchants.
Visa and Kenya’s Pesapal team up to support connected digital payments.
Central and Eastern Europe
Resistant AI, a cybersecurity startup based in the Czech Republic, raises $2.75 million in funding.
Azer Turk Bank (ATB), based in Azerbaijan, deploys technology from Lithuania’s Ashburn to manage EFTPOS networks.
Germany’s Celonis leverages its process mining platform to develop new AI-powered accounts payable solution.
Middle East and Northern Africa
Egypt’s Commercial International Bank acquires 51% stake in Kenya’s Mayfair Bank.
BenefitPay, Bahrain’s national electronic wallet, announces 1257% increase in remittance volume in March.
Tata Consultancy Services to launch a digital only bank in Israel.
Central and Southern Asia
Indian cryptocurrency exchange CoinDCX announces trading availability of two native tokens from Crypto.com, MCO and CRO, on its platform.
Amazon launches new credit service, AmazonPay Later, in India.
India-based ecommerce firm Paytm unveils contactless dining solution for restaurants in the coronavirus era.
Latin America and the Caribbean
paysafecard brings its payments platform, Paysafe, to Paraguay.
Latin Post looks at the use of fintech apps in Mexico.
After ten years in the investment space, online brokerage platform Motif will be shutting down operations on May 20.
The company notified users via email on April 17 in a message saying, “At this time, we’ve made the decision to cease operations and transfer your account to Folio Investments.”
Motif was founded in 2010 by Tariq Hilaly and former Microsoft executive Hardeep Walia, who debuted the company’s build-your-own motif concept at FinovateSpring 2013. Since its launch, the company amassed $127 million in funding from investors including Y Combinator, TechStars, and 500 Startups. In March, Motif reported $604 million in assets under management between individual accounts and institutional clients. The company also reported around $264 million in assets held in the ETFs it launched in conjunction with Goldman Sachs.
Last month, Motif deepened its ties with Goldman Sachs, ringing the opening bell of the New York Stock Exchange in celebration of launching five new ETFs in partnership with the bank.
As mentioned in Motif’s statement to its users, the company is transferring users’ accounts to Folio Investing. “We appreciate the opportunity we’ve had to work with you, and we are confident that your investment needs will be well-served by Folio,” the email said. Folio was founded in 2010 and offers 2,000 commission-free, window trades per month, most of the ETFs listed on the U.S. national securities exchange, 1,100 no-load mutual funds, and almost 125 pre-made portfolios.
While some Motif users have publicly complained about the company’s choice in the new provider, some fintech firms, including M1 Finance, have taken the opportunity to bring Motif’s users over to their platforms.
As ThinkAdvisor noted in a piece published last week, Motif’s news is a signal of what’s to come for smaller players in fintech. In fact, many analysts have noted that the recent pandemic and economic crisis will drive consolidation in the industry.
A collaboration between BMO Harris Bank and incubator 1871 has been launched to help empower the next generation of women-led fintech startups. The innovation lab sponsored by the two organizations is now accepting applications for its female-focused startup leadership mentoring program, WMN•FINtech.
“Women face unique challenges when running any business, especially startups,” BMO Harris Bank head of U.S. business banking Niamh Kristufek said. “We designed this year’s program to help women innovators and entrepreneurs overcome barriers and bring new ideas to market.”
As many as five startups will be selected for WMN•FINtech, which seeks to help close the sizable gender gap in the technology startup industry. In their program announcement, BMO and 1871 note that only 20% of startups that raised their first funding rounds last year were led by women. To this end, WMN•FINtech will give women entrepreneurs the guidance, working space, and networking opportunities that can enable them to develop their fintech innovations.
1871 CEO Betsy Ziegler called the initiative a “doubling down on women founders focused on solving the hardest finance problems.” The three-month program includes a four-month membership and access to working space at 1871. The program’s curriculum will emphasize key topics such as enterprise sales cycles, vendor management, information security, and regulatory compliance. Participating startups also will benefit from pitch opportunities with venture capital investors.
“The time is now and BMO Harris Bank is the perfect partner given their strength as a financial institution and their long-held mission to provide opportunities for women to come up and be powerful,” Ziegler said.
Program participants also will be eligible to access PYROS, a 13-week series of workshops, seminars, and one-on-one mentoring sessions. Developed specifically for founders, the new initiative from 1871 provides startups with a path to scale their fintech solution or service.
Applications for WMN•FINtech will be accepted through May 11. Eligible companies must have a woman as founder or co-founder and be based in the U.S.
Headquartered in Chicago, Illinois, 1871 is among the top private business incubators in the world. Founded in 2012, the non-profit organization has 350 mentors available to its members, as well as 100+ partner corporations, venture funds, accelerators, and educational institutions. More than 650 of 1871’s alumni companies are active; they have raised more than $1.5 billion in follow-on capital combined.
Spain-based multinational bank Banco Santander announced today it has acquired a 50.1% stake in Ebury, an international payments, FX, and cash management firm.
Santander invested $435 million (£350 million) in the deal, which was first announced in November of last year. The bank plans to use Ebury to provide small-to-medium-sized businesses (SMBs) with global finance tools to expand internationally. In fact, Santander is using $87 million (£70 million) of its total investment in Ebury to boost the company’s international expansion efforts.
The investment will help support Santander’s Global Trade Services business, which helps SMBs access international markets through trade finance, supply chain, payments, and foreign exchange.
“The investment in Ebury is a significant strategic milestone for the bank, allowing us to boost our capabilities in an exciting market with high growth potential,” said Sergio Rial, Chairman of Santander Brazil and Chairman of Ebury. “This new acquisition will provide us with the capabilities to further increase the Global Trade Services business with a new world-class platform with which we expect a significant return on investment in the coming years.”
Headquartered in the U.K., Ebury currently operates in 17 countries and 140 currencies. With Santander’s help, the company plans to expand into additional markets in Latin America and Asia.
Facilitating this move, Santander will offer Ebury the opportunity to expand its client base. Ebury will have access to Santander’s international network of more than four million SMB’s across the globe, 200,000 of which operate across international borders.
Ebury’s current client base includes 43,000+ SMBs. The company has increased its revenues by an average of 50% per year over the past three years and in its last reporting period boosted revenues by over 60%.
“In just over ten years, Ebury has grown from a small fintech company to a business with over 1,000 employees,” said Ebury Co-Founders Juan Lobato and Salvador Garcia. “Now, thanks to the support of Santander, we will be able to expand the business even more internationally and enter new markets.”
With $1.14 trillion (EUR 1.05 trillion) in assets under management and 145 million customers, Banco Santander operates 12,000 branches and has 200,000 employees. Last year, the bank made a profit of almost $8 billion (EUR 8.3 billion), an increase of 2% compared to the previous year.
Shortly after adding ETH, XRP, and three stablecoins to its platform, blockchain payment services provider BitPay announced today it has added one more to the mix.
BitPay is collaborating with digital asset exchange platform Binance to add the Malta-based company’s stablecoin, BUSD, to its platform. The new addition will enable BitPay’s 2 million users to top up their BitPay card and wallet using BUSD and will also allow the company’s merchant clients to accept BUSD as a form of payment in cross-border transactions.
Binance’s BUSD, which is pegged to the U.S. dollar, offers merchants across the globe a currency that is as stable as the dollar but offers the beneficial aspects, such as security and efficiency, of blockchain-based payments.
“The partnership with Binance is about more than supporting another stablecoin, it is about making cross border payments simple and easy for both businesses by leveraging the global influence of Binance Exchange,” said Stephen Pair, CEO of BitPay. “With BUSD, BitPay expands blockchain payment choices for all our customers across the global payments space who want the flexibility of paying on the blockchain with the stability of the U.S. dollar.”
“Stablecoin is the forerunner of blockchain-powered payments by its nature. Partnering with BitPay will enable merchants and businesses from around the world to accept BUSD,” said Binance Founder and CEO Changpeng Zhao. “We believe a growing number of merchants and businesses will start adopting crypto, and we are glad to provide the payment solution together with BitPay, making the process simpler and easier.”
Bitpay has processed more than $2.8 billion since it launched in 2011 and now operates a $250 billion crypto marketplace. The Atlanta, Georgia-based company offers bank deposits in 38 countries. Among Bitpay’s clients are Microsoft, Newegg, AT&T, and Dish Networks.
Founded in 2017, Binance ranks among the top digital asset exchanges by volume and number of users. On average, the company facilitates around $2 billion in trades each day and has more than 15 million users.
Support for BUSD in BitPay’s wallet goes live today. The company will launch support for merchants “in the coming days.”
Payment automation solutions company AvidXchangeannounced this week it added $128 million to its Series F funding round. When included with the $260 million the company raised earlier this year, the oversubscribed round tops $388 million.
The round includes funds from new investors Lone Pine Capital, Schonfeld Strategic Advisors, and clients of Neuberger Berman. Existing investors, including Pivot Investment Partners, Mastercard, and Sixth Street Partners also participated.
AvidXchange will use the funds to fuel strategic growth initiatives and innovation.
“With only 40 percent of U.S. businesses automating their accounts payable processes, we continue to solve a real problem for companies that still rely on paper invoices and checks, fundamentally changing the way they pay their bills” said AvidXchange Co-founder and CEO Michael Praeger. “This has become even more evident as we see businesses implementing continuity plans and shifting to work from home models, making automation essential to support mission critical processes and keep operations running.”
AvidXchange offers solutions to help businesses manage the entire payments process– from invoice to payment– in a completely digital manner. The firm also facilitates payment fulfillment and manages supplier relationships to help companies focus on their business.
AvidXchange’s SaaS-based technology solves a huge pain point for U.S. businesses, as a full 60% of them still pay bills with paper checks.
While there is no word on an updated valuation for AvidXchange, the company was thought to be valued at $2 billion in January of this year.
Commerce monetization company Empyrannounced this week it has been acquired by its long-time partner Augeo, a loyalty and engagement firm. Financial terms of the deal were undisclosed.
Under the agreement, Empyr will rebrand as Figg, combining Augeo’s card-linking technology with Empyr’s publisher experience. Figg will benefit from Augeo’s existing 60 million users and $300 billion in transaction volume for loyalty offers.
Empyr launched in 2011 and has since raised $48.2 million in funding. The company’s API relies on data partnerships with VISA, Mastercard, and American Express to power card-linked loyalty rewards for offline businesses.
“While the timing might seem counter-intuitive, we believe there is an urgent need to bring advanced technology and more encompassing advertiser offer content to consumers seeking greater value,” said Augeo CEO David Kristal. “Some retail sectors like grocery, household essentials and health-related products are near capacity, while the travel industry, hospitality, restaurants and many local service businesses are battling to stay afloat. As things begin to improve, Figg will be uniquely positioned to connect consumers with advertisers to help accelerate commerce in the U.S. market.”
Valor Siren Ventures provided an undisclosed amount of financial support. “This is a compelling combination, to have VSV lead with new capital invigorating the operational and technology investments made by Augeo and Empyr in recent years,” added Bill Ruh, former Chairman of Empyr.
Kristal, who is also Executive Chairman of Figg, said the company chose the name Figg because it reflects its mission. “Figs define persistence and reflect the enduring quality that we felt spoke to our adaptability, sustenance and resolve,” he said.
The name also demonstrates the company’s adaptability, which is especially relevant in a time of pandemic. “Augeo was first launched during challenging times, and that experience has fortified our ability to press through adversity and grow. Today, we are looking through this current challenging time toward the “next normal.” We have a unique strategic focus around cash preservation coupled with ingenuity, adaptability and where possible, growth,” added Kristal.
When Movenannounced a transition away from being a provider of consumer banking services and toward business partnerships, few questioned the company’s capacity to win with enterprise customers. Founded in 2010 by Brett King, Moven has secured partnerships with financial institutions around the world, including Westpac in New Zealand, BCA in Indonesia, TD Bank in Canada, and, most recently, STC Pay in Saudi Arabia.
But there was some question as to what would happen with Moven’s customer accounts, which the company announced it would close by April 30, 2020.
We now have our answer: Moven will transition its customers to San Francisco, California-based Varo Money, which is in the process of securing its status as a challenger bank in the U.S.
“Moven has been a pioneer in the digital banking space and a long-time inspiration,” Varo Money CEO Colin Walsh said. “We are excited to welcome their customers and deliver on the types of technology and features they have grown to love.”
Moven CEO Marek Forysiak said the decision to choose Varo stemmed in part from compatibility with the company’s commitment to fostering financial wellness. The two companies are also looking into ways that Varo can leverage not just Moven’s former customers but also the business’ current and future digital banking technology as Varo continues on the path toward full bankhood.
“We are excited to partner with Varo ahead of their official national charter,” Walsh said. “Our patented financial wellness technology aligns with Varo’s efforts to help everyday Americans gain access to better financial insights and opportunities.”
Founded in 2015, Varo Money offers a mobile banking app, products such as a high-yield savings account, and services including early direct deposit. Available on both iOS and Android platforms, and charging no fees, Varo Money earned regulatory approval from the FDIC in February, insuring the firm’s deposits and giving Varo a major boost in its effort to become a full-fledged bank. To this point, the company has leveraged its partnership with Bancorp as its custodian; Bancorp is slated to transfer those customer deposits to Varo this quarter.
Named one of the 9 Best Checking Accounts for April 2020 by NerdWallet, Varo has raised more than $178 million in funding from investors such as Warburg Pincus and The Rise Fund. The company has an estimated valuation of $418 million.
Application security company Arxan Technologiesannounced yesterday that it has joined forces with two other industry firms, CollabNet VersionOne and XebiaLabs, to form a new entity, Digital.ai. Financial terms were not disclosed.
The three businesses will combine their expertise– business agility, software delivery, and application security– into a single platform. Overall, Digital.ai seeks to aid companies pursuing digital transformation to deliver digital experiences that customers trust.
“Digital.ai enables enterprises to focus on business outcomes instead of outputs, unifying value creation, delivery, and protection practices to drive efficiencies and create engaging, secure digital experiences that customers value and trust,” said Digital.ai CEO Ashok Reddy. “Now more than ever, it is critical that organizations leverage the power of business agility to optimize processes and make decisions rooted in customer centricity. Doing so will result in higher quality, more secure products that are delivered faster and drive stronger customer and employee engagement.”
Arxan’s approach to security is to protect apps “from the inside out.” The company protects the app’s binary code, JavaScript, and cryptographic keys to guard common entry points from fraudster attacks.
Digital.ai serves companies across multiple sectors including automotive, finance, digital media, gaming, insurance, medical devices, and more. The company’s customers include ABN AMRO Bank, KeyBank, KLM/Air France, Siemens, and Toyota.
Today’s news comes almost 20 years after Arxan’s launch. The San Francisco-based company was founded in 2001 by Hoi Chang and Mikhail Atallah. Since then, Joe Sander has taken the role as CEO.
One of my favorite stories about financial management involves a new broker who becomes alarmed during a major market meltdown. The broker is fearful of hearing from anxious clients and investors, who he is convinced will demand that he sell everything. He asks his supervisor for advice and his boss replies, “call them.” When the broker hesitates, his boss continues, “call them. If you don’t another broker will. “
Communication with clients is key for all successful financial managers – whether they are long-term customers or new prospects. And this engagement is all the more important when the markets are volatile and nerves are on edge. This is what makes the new service from SmartAsset, unveiled today, a valuable resource for financial managers as well as their customers and clients.
Live Connections, from SmartAsset, enables financial advisors to connect directly with prospective clients by phone. The service is available to U.S.-based certified financial advisors, Registered Investment Advisors (RIAs) and advisory firms via SmartAsset’s SmartAdvisor platform.
Michael Carvin, CEO and co-founder of SmartAsset, said the new innovation was part of the company’s goal to enhance what he called “the match-making experience between consumers and financial advisors.” He added that the service would enable customers to more easily reach financial advisors “when intent is at the absolute highest.” The company notes that the average investor using its platform is 57 years old and has significant assets of nearly $900,000. Yet the vast majority of them – more than 75% – report not having a financial advisor.
The technology also enables advisors to spend more time working with clients and less time hunting for them. “For advisors, Live Connections cuts through the noise as we’re able to instantly connect them with validated consumer leads over the phone,” Carvin said. “All advisors have to do is pick up the call and focus on what they’re good at: advising clients.”
Today’s launch of Live Connections follows a 2019 pilot program in which advisors and firms reported a 100% contact rate and a 20% close/conversion rate with prospects.
One of the world’s most viewed sources of personal financial information, SmartAsset reaches more than 65 million people each month. Most recently demoing its technology at FinovateSpring, New York-based SmartAsset was founded in 2012 and has raised more than $51 million in funding. The company includes Focus Financial Partners, IA Capital Group, and Javelin Venture Partners among its investors.
