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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Google Cloud has unveiled its latest data center and announced that PayPal will be among the first to move key components of its payments infrastructure to Google’s cloud region. The news is the latest example of a partnership between the two technology giants that extends back at least as far as 2017, when PayPal became an authorized payment method for Android Pay (which later became Google Pay).
The new cloud region, Google’s 22nd globally, will be based in Salt Lake City and is designed to provide customers in the western U.S. with better, more reliable cloud services.
“When it comes to processing a financial transaction, security and speed count,” PayPal VP for Employee Technology & Experiences and Data Centers Dan Torunian said. He added that Google Cloud will provide PayPal with the “security, quality, and velocity” it needs, particularly when it comes to managing seasonal payment transaction volume surges and keeping regional expansion costs low.
In fact, PayPal reportedly chose Salt Lake City in part for low-latency access to its own data center, which will make it easier for PayPal to commit additional resources to the cloud over time. The partnership will also allow PayPal to establish a migration pattern that can be used to convert more on-premises infrastructure to the Google Cloud – at the Salt Lake City data center or to any other Google Cloud platform region.
More than 300 million consumers and merchants in 200 markets use PayPal’s payments technology for financial services and commerce. The San Jose, California-headquartered company began the year forging a strategic partnership with UnionPay International that will boost its merchant and consumer business in the Chinese market. PayPal reported adding more than 37 million net new active accounts last year, processing “nearly $200 billion” in total payment volume in the fourth quarter alone.
Two of the biggest themes in fintech – digital identity and the rise of fintech in Central and Eastern Europe – meet in the latest announcement from biometric authentication specialist and Finovate Best of Show winner iProov. The company’s facial recognition technology now makes it easier for users of SK ID Solutions’ Smart-ID Service in countries like Estonia, Latvia, and Lithuania to renew their accounts without having to visit a physical bank branch.
“This is a major development for all digital identity providers,” iProov CEO Andrew Bud said. “Estonia has proved, for the first time, that a remote, automated, biometric ID verification service can deliver the highest possible levels of security.”
Recognized as equal to a handwritten signature throughout Europe, Smart-IDs enable users to authenticate themselves and provide permissions online using a smartphone app. iProov’s facial recognition technology adds a three-second scan to compare the image of the user to the image on their presented ID document to help defend against fraud and identity theft.
Smart-ID also leverages NFC-based ReadID document verification technology from InnoValor.
Financial crime risk management innovator Featurespace will be helping Enfuce combat fraud and money laundering courtesy of a newly announced partnership. Enfuce, a financial services firm based in Finland, will use Featurespace’s ARIC Risk Hub to enhance its ability to protect its customers from fraud and financial crime.
“Our clients deserve industry-leading services that allow them to freely and fully concentrate on the success of their core business, without worrying about ever-evolving fraud,” Enfuce co-founder and chair Monika Liikamaa said.
ARIC Risk Hub offers real-time transaction monitoring for fraud and financial crime, enabling institutions to identify and act against anomalous and potentially dangerous behavior as it occurs. The technology also reduces the number of false positives by as much as 70%, keeping anti-fraud processes efficient. Featurespace introduced its fraud-fighting technology to Finovate audiences at FinovateEurope 2016.
Here is a round up of recent news from our Finovate alumni.
Sezzleunveils new logo along with its first annual report.
Flybitsexpands its executive team in New York, Toronto, the U.K., and Dubai.
Yseop and Automation Anywhere join forces to scale intelligent automation.
Lighter Capitalappoints Kevin Fink at CTO and Patricia Elliott as CSO.
InCommlaunches Roblox gift cards in France and Germany.
Finovate Alum Features and Profiles
Revolut’s $500 Million Round Boosts Valuation to $5.5 Billion – Global financial platform Revolut has secured its place as the U.K.’s most valuable fintech.
Dealing with Deepfakes in Fintech – The fintech industry is ripe with security firms, such as iProov, that use AI to combat both video and audio deepfakes with anti-spoofing technologies.
Envestnet | Yodlee Acquires Indian Data Aggregator FinBit.io – Envestnet | Yodlee has acquired another asset in its strategy to further grow and develop its data aggregation and analytics business.
Meet Sonect: Cash Network Builder, Finovate Newcomer, Best of Show Winner – What’s better than having a large pizza with all your favorite toppings delivered to your front door? How about a side order of cash, saving you a trip to the ATM or bank branch?
Azimo Taps Ripple for Cross-Border Payments to the Philippines – Fueling these payment transfers is Ripple’s On-Demand Liquidity (ODL) solution that uses XRP to source liquidity and complete money transfers within three seconds.
Lendio Lands $55 Million to Match Small Businesses with Lenders – The investment more than doubles the company’s previous funding, bringing its total to $108.5 million.
SheerID Expands Identity Marketing Platform – The move enables brands to identify and acquire new customers across the globe.
Customer segmentation identification company SheerIDlaunched its Employment Verification tool today in 191 countries. The move enables brands to identify and acquire new customers across the globe.
SheerID’s segmentation tool enables companies to identify consumer subsets such as military members, students, and teachers to help personalize communications and increase customer acquisition via gated, personalized offers for different employee groups. Today’s geographical expansion of SheerID’s technology will help brands build their acquisition efforts on a global scale.
Along with employment verification, SheerID has updated its age range verification tool, which is available in 23 countries. With this offering, brands can more efficiently target consumer groups such as seniors and young adults.
“With this latest expansion of verification types, we’re making it easy for brands to extend their identity marketing campaigns beyond the U.S. and personalize offers in new ways, to new potential customers,” said Jake Weatherly, SheerID CEO. “The opportunity to use personalized offers to acquire consumer tribes is endless, and this latest expansion is yet another step forward in meeting customer demand.”
SheerID leverages 9,000 data sources and 1.3 billion identity attributes. Among the company’s clients are Amazon, Lowe’s, Spotify, and T-Mobile. SheerID, which recently showcased at FinovateSpring 2019, has raised $96 million since it was founded in 2011.
With more than $1.1 billion (€1 billion) provided to small businesses in the U.K. and Germany, London-based SME lender iwoca announced today that it has received $109 million (€100 million) in debt financing from Insight Investment. The new capital will help iwoca continue its work in funding entrepreneurs in Germany.
The investment takes iwoca’s total debt and equity financing to more than $550 million (€500 million). The company, one of the largest fintech SME lenders in Germany, plans to double its workforce in the country to 100 employees and will use the funds to help scale its loan book to give institutional investors more opportunities to participate in the SME credit market.
“More than 90% of companies in Germany are small businesses, yet many of them suffer from poor access to finance as traditional lenders can’t support them the way they need it,” iwoca CEO and co-founder Christoph Rieche explained.
“Our mission is to change that. With Insight Investment we have found a very agile and responsive partner that complements our mission-driven way of working. They provide the perfect basis for us to enter a new phase of growth in Germany,” Rieche said.
Iwoca has gained more than 50,000 customers since offering its first loan in 2012, and lent more than $1.1 billion (€1 billion) to U.K. and German-based businesses. The company offers short-term financing of up to £200,000, and only charges interest – starting at 2% a month – for the days the borrower actually has the money. Iwoca also makes it easy for companies to apply for a top up in the event that additional financing is required, enabling their credit to grow along with their businesses.
The company partnered with German business banking platform Penta late last year, enabling the challenger bank to launch its credit solution. We took a look at challenger banks in Germany as part of our FinovateEurope coverage this month. Last summer iwoca launched a pair of real-time loan integrations with U.K.-based financial marketplaces Funding Xchange and Funding Options.
Among the first fintechs in the U.K. to leverage open banking to offer a lending API, iwoca has been named to the Deliotte Fast 50 and was recognized by cloud accounting platform – and Finovate alum – Xero as its Financial Services App of the Year in 2018 and its Emerging App Partner of the Year in 2017.
Online marketplace for small business loans Lendiolanded $55 million in combined debt and equity funding today. The investment more than doubles the company’s previous funding, bringing its total to $108.5 million.
The equity portion of the Series E round was led by Mercato Partners’ Traverse Fund, which contributed $31 million, and included contributions from existing investors Napier Park Financial Partners, Comcast Ventures, Blumberg Capital, Stereo Capital, and Runa Capital. Signature Bank led the debt facility with $24 million.
Founded in 2011, Lendio serves as a matchmaker that connects small businesses seeking funding with its network of over 75 lenders. Since Lendio launched at FinovateSpring in 2011, the Utah-based company has funded more than 100,000 loans totaling $2 billion. Over the past two years, Lendio has seen an average year-over-year growth rate of 75%.
CEO Brock Blake called today’s investment a “significant milestone” for the company. “With these funds, we are strongly positioned to grow our existing platform as a trusted loan facilitator that supports both lenders and borrowers, while building out a range of new integrated lending services that get the right loans into the right hands at the right time.”
Lendio will use today’s investment to increase the scope and precision of its flagship loan marketplace; expand lender services functions, which provide lenders access to a white-labeled online loan application; and enhance its small business bookkeeping platform, Sunrise by Lendio. The company launched Sunrise last year after acquiring online bookkeeping startup Billy. The new service aims to help Lendio’s small business clients manage their cash flow and monitor their overall financial health.
“Lendio’s ability to combine data analytics with the human touch to connect small businesses quickly and precisely with ideal lending partners has made all the difference in its success,” said Ryan Sanders, senior investor at Mercato Partners Traverse Fund. “Lendio uniquely solves the problem of inefficient capital for small businesses by bridging lenders and borrowers. They are able to connect both sides and facilitate loans faster and more effectively between small business owners and lending institutions. Lendio’s impressive growth is a result of its technology-backed personalized service which has created a loyal and growing following in the industry.”
Digital money transfer service Azimoannounced today that it has partnered with fellow Finovate alum and blockchain payment solutions company Ripple to power cross-border payments to the Philippines.
Fueling these payment transfers is Ripple’s On-Demand Liquidity (ODL) solution that uses XRP to source liquidity and complete money transfers within three seconds. This time reduction results in a 40% to 60% cost savings over the traditional method that requires businesses to hold cash in pre-funded accounts. ODL has proven especially useful for international payments in emerging markets. The technology is currently available in the U.S., Mexico, Australia, Europe, and the Philippines, with plans to expand across APAC, EMEA, and LATAM.
Azimo, which plans to expand its use of ODL to more markets in 2020, opted to start with the Philippines because it is one of the top remittance destinations. In 2018, the region received $34 billion in remittance payments.
Ripple’s ODL
“We’ve been interested for a long time in the potential of digital assets like XRP to make cross-border payments better for customers,” said Azimo CEO Richard Ambrose. ”Ripple’s ODL solution has significantly reduced the cost and delivery time for cross-border transfers, and our customers are seeing the benefits. As more banks and financial institutions use ODL, we believe it has the potential to replace current methods of foreign exchange trading and to reduce settlement time to close to zero.”
Founded in 2012, Azimo has amassed one million customers. The company facilitates money transfers from 25 countries to more than 200 regions across the globe.
Ripple has 300+ customers in more than 45 countries and six continents. The company’s flagship global blockchain network, RippleNet, facilitates faster and cheaper payments in 40+ currencies.
Continental challenger banks like N26 may be pulling away from the U.K. market. But that is only creating room for newcomers like London’s social payments app B-Social which has raised $10 million (£7.8 million) en route to its transformation into Kroo, a fully-licensed bank.
The funding, part of a seed round, brings the company’s total capital to more than $17.8 million (£13.25 million). Participating in the round was Karlani Capital’s Rudy Karsan, along with additional undisclosed investors.
“Our seed 2 funding round is another key milestone towards building the greatest social bank on the planet and changing the relationship people have with money for good,” B-Social CEO Nazim Valimahomed wrote on the company’s blog. He noted that B-Social has signed up more than 9,000 users and will soon introduce functionality to enable account funding via bank transfer. Valimahomed also added that the company plans to double the size of its team at its headquarters in Holborn.
Most significantly, the investment will help B-Social as it transitions into becoming a bank, to be called Kroo. Valimahomed said that the company is currently in the final, pre-application phase for obtaining a U.K. banking license and hopes to finish the application process “in the very near future.” He referred to the rebrand as a change to an “exciting new brand that fully embodies who we are – intuitive, talented, empowering, social, and collaborative.”
Founded in 2016, B-Social helps users manage shared expenses. The company’s app, available in both iOS and Android, supports bill splitting and group expense tracking, and instant payments between B-Social account holders. The solution also comes with a contactless debit Mastercard that can be used, fee free, both at home and abroad wherever Mastercard is accepted.
Global financial platform Revolut has secured its place as the U.K.’s most valuable fintech. The London-based company secured a $500 million investment, bringing its total funding to $836 million.
With this, Revolut’s valuation tripled, escalating to $5.5 billion. As a comparison, digital bank Monzo was valued at $2.6 billion last year. Revolut’s funding was led by U.S. investor Technology Crossover Ventures while a handful of undisclosed existing investors also contributed.
The funding will be used to enhance Revolut’s customer experience, grow its workforce, and create new products that entice users to log into their accounts more frequently. As a part of this, Revolut will use the funds to enhance Premium and Metal subscription account offerings. These paid products are not only a significant part of Revolut’s business model, they also show huge promise, growing by 154% last year alone.
“We’re on a mission to build a global financial platform – a single app where our customers can manage all of their daily finances, and this investment demonstrates investor confidence in our business model,” said Revolut CEO and founder Nik Storonsky. “Going forward, our focus is on rolling-out banking operations in Europe, increasing the number of people who use Revolut as their daily account, and striving towards profitability.”
Revolut employs 2,000 people across 23 global offices. The company counts more than 10 million customers and has processed one billion transactions worth $130 billion since it was founded in 2013.
The company has seen significant success since its early days. Just last year Revolut increased customer growth by 169%, boosted the number of daily active customers by 380%, and saw year-over-year financial revenues grow by 354%. The company aims to continue this growth by launching lending services for retail and business customers, extending high interest savings accounts beyond the U.K., improving customer service, and rolling out banking operations across Europe.
There is not much fintech to come out of the state of Wyoming (a quick search on Crunchbase yields 28 results). Today, however, one more startup is added to that mix.
That’s because Avanti Financial, headquartered in Cheyenne, Wyoming, announced plans to launch a bank to serve the digital asset industry. The company recently applied to obtain a bank charter from the Wyoming Division of Banking under the Cowboy State’s special-purpose depository institution (SPDI) law.
If Avanti’s application is approved by the state of Wyoming, the startup will begin operations in early 2021.
Avanti seeks to fill the gap where traditional U.S. financial institutions fall short. In many cases, institutional customers that use digital assets lack a place to engage in payment, custody, securities, and commodities activities.
Founder and CEO Caitlin Long said, “A crucial step in the digital asset industry’s evolution is the formation of a new bank dedicated to bridging digital assets with the U.S. dollar payments system in a compliant manner, and the provision of custodial services that meet the strictest institutional standards.” Long added that Avanti’s launch will “unlock many new products and services around digital assets that only a regulated U.S. bank can provide directly.”
Avanti, which recently landed an undisclosed amount of seed funding, is partnering with Blockstream, a Canada-based group that creates “products and networks that make financial markets more efficient.”
Dr. Adam Back, Blockstream CEO and co-founder, said, “This partnership combines the best in Bitcoin applications with the optimal regulatory vehicle for delivering products and services to institutional customers that require regulated providers. Blockstream’s platforms fit well with Wyoming’s property-rights centric digital asset laws, which will enable Avanti to introduce products into U.S. dollar markets that do not exist today.”
For consumers with credit scores below 600, options for securing financing can be a major challenge. A new company on the scene, Self, has locked in $20 million in new funding to help make those financial hurdles a little easier for Americans with poor credit histories to overcome.
In a Series C round led by Altos Ventures and Conductive Ventures, Self has added $20 million to its total capital, which now stands at $37 million. The Austin, Texas-based company, founded in 2015, offers a Credit Builder Account in which borrowers apply for a modest loan with a Self bank partner that is held on a certificate of deposit. Borrowers make monthly payments, which are reported to the major credit agencies to help establish a credit history. Once the term is complete, the CD matures and the principal amount comes back to the customer.
“Our goal from the beginning was to create a mission-driven company that gives the power back to consumers and helps them achieve their financial goals,” company founder and CEO James Garvey said.
Since inception, Self has worked with 500,000+ customers and provided $400 million in CD-secured loan originations. The company recently launched its Self Visa Credit Card, a secured card that does not require a credit check. The card allows holders to build their security deposit in installments rather than with one large deposit upfront. The card has an annual fee of $25, average for secured cards, but features a higher than average minimum APR for secured cards at 23.74% based on a review by U.S. News.
Named one of the best fintech places to work in 2020 by Ariznet Brands – publishers of American Banker – Self rebranded itself from Self Lender last August and reincorporated as Self Financial. The fintech has partnered with firms including Atlantic Capital Bank, an Atlanta, Georgia-based bank holding company with assets of $2.9 billion, income optimization platform Steady, and nonprofit social enterprise Neighborhood Trust Financial Partners.
“Self inspires us with their dedication to helping consumers take control of their financial future,” Conductive Ventures’ Paul Yeh said. “Today, it’s imperative to be aligned with partners with a shared vision that is meaningful and delivers change for the greater good.”
How’s $7 billion for good karma? One of Finovate’s earliest alumsCredit Karma is reportedly the target of what would be Intuit’s biggest acquisition to date. According to The Wall Street Journal, the cash and stock deal could be announced as early as Monday.
Credit Karma will continue to function as an independent company with founder and CEO Kenneth Lin at the helm. The acquisition gives Intuit, maker of online tax filing service TurboTax, another contact point with the online personal finance world. Credit Karma provides its members with access to their credit scores and borrowing histories, helps them monitor their accounts for security breaches and, perhaps most relevantly, has offered a free online tax preparation service since 2017.
If the deal holds up, Intuit will be paying a significant premium for Credit Karma. The personal financial wellness company was last valued at $4 billion, based on a 2018 private market transaction.
With another Finovate conference in the books, our Finovate Best of Show ranks has a new set of members. Congratulations to Dorsum, Glia, Horizn, iProov, Sonect, and W.UP for taking home top honors earlier this month at FinovateEurope!
The victory may have been especially sweet for Sonect, whose Best of Show award-winning demo was also the company’s Finovate debut. The Switzerland-based start-up offers what it calls “the world’s first social cash network” that enables consumers to access cash without having to visit a bank branch or ATM. Sonect offers merchants the ability to grow their business via increased traffic and gives financial institutions a way to extend their ATM networks without the cost of additional hardware.
The Best of Show win was also a first for Horizn. The company, which made its Finovate debut three years ago at FinovateEurope, offers a platform that helps employees and customers maximize the opportunities of digitized financial services. Horizn uses simulator microlearning, as well as gamification and advanced analytics, to promote digital adoption across channels.
And last but not least, a special tip of the hat to Dorsum, Glia, iProov, and W.UP, all of whom won Best of Show honors at FinovateEurope for a second year in a row.
Here’s a round up of recent news from our Finovate alumni.
Larkyenters reseller agreement with Access Softek.
Bison Bank in Lisbon, Portugal selects PSD2-ready software from ndigit.
OurCrowdexpands focus on growing early stage tech companies.
Finovate Alum Features and Profiles
eToro’s Evolution – Social trading and investment platform eToro has never been one to stand still for very long. The company’s development cycle is fast enough to make even the most sprightly fintech jealous.
Lending Club Snaps Up Radius Bank for $185 Million – When Lending Club was founded in 2007, the startup aimed to serve as a place to help borrowers avoid dealing with banks. In a somewhat ironic move today, that same startup is becoming a bank itself.
Banking giant BBVA and VC firm Anthemis have backed U.K.-based Wollit in a $1.3 million (£1 million) Seed round.
Founded last year, Wollit aims to support the 43% of U.K. residents who lack a stable income by helping gig economy workers and independent contractors smooth out their cashflow.
Wollit will use the funds to fuel its flagship product, the Wollit Income Promise. According to Wollit CEO Liad Shababo, the new tool “offers a financial safety net for the 14 million U.K. workers whose income fluctuates from month to month.”
The Wollit Income Promise is different from credit cards and loans because it personalizes financing to each user’s individual financial situation. When workers earn less than usual, Wollit provides interest-free top-ups that the user repays once they start earning more.
“With this, we set to end [gig workers’] monthly gamble of feast or famine and provide a safer, more sustainable option than the short-term, risky alternatives,” said Shababo. “Wollit is here to establish a new status quo in financial services. We want to make sure everyone has access to financial wellbeing.”
The investment is one of the first from the BBVA & Anthemis Venture Creation Partnership, which was formed in 2018. “The BBVA & Anthemis Venture Creation Partnership identifies early-stage fintech companies who are looking for both financial and strategic support to accelerate the growth of their business,” said Farhan Lalji, Principal at Anthemis. “This means Wollit now has access to mentors and resources inside the Anthemis and BBVA ecosystems beyond pure capital – including product development, data science, business development, and talent resources – as they grow their business.”
Startups such as Wollit underscore society’s need for financial services geared toward the gig economy. Banks have historically failed to serve consumers with unpredictable income. As Ron Shevlin points out in his piece Gig Economy Banking Is Booming (And Banks Are Missing The Boat), fintechs and challenger banks have been the first to take a chance on this growing consumer segment by serving them with unique products and services that cater to their fluctuating income.
