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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
With the support of PayU and Microsoft’s venture capital division M12, digital assets startup Bakkt has picked up a whopping $300 million in Series B funding. The round, which closed last Friday, also featured participation from Boston Consulting Group, Goldfinch Partners, CMT Digital, Pantera Capital, and Intercontinental Exchange (ICE), Bakkt’s parent company.
“Bakkt launched two years ago with the vision of building trust in and unlocking the value of digital assets for institutions and consumers alike,” company CEO Mike Blandina wrote in a blog post earlier this week. He pointed to the company’s launch last year of its end-to-end regulated market for bitcoin, as well as its institutional bitcoin custody offering, as examples of how the Atlanta, Georgia-based startup has been “focused on delivering that vision.”
These examples will soon also include a new app, slated for a summer launch, that will enable users to maximize the value of a widening variety of digital assets – from loyalty and rewards points to cryptocurrencies.
“Bakkt gives users control over their digital assets,” Blandina wrote. “Whether it’s miles from your favorite airline, loyalty points from the local grocery store, or bitcoin you’ve purchased, the Bakkt app enables you to aggregate all of these assets into a single digital wallet.”
The funding takes the company’s total capital to more than $482 million, and adds to its more than $1 billion valuation. Proceeds from the Series B will be used to help fund parent company ICE’s acquisition of loyalty solutions provider Bridge2 Solutions. Bakkt will leverage Bridge2 Solutions’ partnership network, and its Loyalty Pay offering, to help build and launch products of its own.
Powering more than 4,500 loyalty and incentive programs, including programs for seven out of the top ten financial institutions and two of the largest U.S. airlines, Bakkt was founded in 2018.
A collaboration between TransferWise and Chinese payments and lifestyle services platform Alipay will enable TransferWise’s more than seven million users to instantly send yuan to Alipay users. All that senders require is the recipient’s name and their Alipay ID to have funds from 17 different currencies converted to Chinese yuan and transferred to the account linked to the recipient’s Alipay profile.
“Our newest partnership with Alipay has been one of the most requested features from our users since our expansion to Asia,” TransferWise CEO and co-founder Kristo Käärmann said. “Alipay functions as the primary payment method for more than a billion people in China and we are excited to be bringing instant international transfers to the fingertips of Alipay’s users.”
Käärmann added that working with Alipay helps TransferWise move closer to fulfilling its Money without Borders mission, “and is a continuation of our vision of making cross border payments, instant, convenient, transparent, and eventually free.”
Transferees will also benefit from being able to send money based on the real exchange rate. Eligible currencies are GBP, EUR, BGN, CZK, DKK, HUF, NOK, PLN, RON, SEK, USD, CAD, AUD, HRK, HKD, SGD, and JPY. Up to five transfers to Alipay per month are permitted, with per transaction caps of 31,000 CNY, and an annual limit of 500,000 CNY. TransferWise is celebrating the new offering by giving fee-free, first transfers for the first 100 new customers – as well as a bonus payment of 10 yuan to the recipient on their first remittance from Alipay received. The promotion extends until April 8.
Working with Alipay represents a significant opportunity for TransferWise. Alipay serves more than one billion consumers around the globe, and China itself is believed to be one of the biggest remittance destinations in the world, with Chinese ex-pats abroad expected to send more than $66 billion (£54 billion) back home to China according to a 2019 report from the Migration Data Portal.
“We are committed to working with partners such as TransferWise, using innovative technologies to help global consumers gain access to inclusive financial services,” Alipay Head of Global Remittances Ma Zhiguo said, “creating greater value for society and bringing equal opportunities to the world.”
The announcement comes in the wake of TransferWise’s introducing global money transfers to six mobile wallet platforms in Indonesia (GoPay, Ovo, and Dana), the Philippines (PayMaya), and Bangladesh (bKash).
Founded in 2011 and based in London, U.K., TransferWise has been a Finovate alum since their FinovateEurope demo in 2013. The company has raised more than $772 million in funding, and has earned a valuation of $3.5 billion as of its May 2019, $292 million secondary share sale.
UAE-based foreign exchange platform Al Ansari has partnered with financial crime compliance company Pelican. Under the deal, Al Ansari will leverage Pelican’s PelicanSecure, a set of AI-based sanctions screening, anti-money laundering tools, and transaction monitoring solution.
Al Ansari selected PelicanSecure for its compliance accuracy, auditability, processing capacity, and AI-based risk classification approach. Company CEO Mohammad Bitar also noted that, because AI is a core part of Al Ansari’s strategy, Pelican’s use of the enabling technology was a factor in the partnership.
“We selected Pelican as we are convinced they can support us enhancing our anti-money laundering and sanctions compliance frameworks to make them more robust through the use of innovative technology, said Bitar. “This is the start of a long-term partnership with Pelican and we look forward to working closely to streamline our operations around sanction screening, transaction monitoring and AML, both now and in the future.”
Pelican is headquartered in the U.K. and was founded in 1993. Among the company’s clients are ADCB, Standard Chartered Bank, Al Mulla Exchange, Wells Fargo, State Bank of India, and Bank of Barbado.
Al Ansari opened its first branch in 1966 and has since expanded to 190 branches. The company has 2,500 employees that help facilitate 80,000 transfers each day for 2.5 million customers every month. Last year, Al Ansari transferred $11.3 billion (AED 40.5 billion) via its network.
Faster payments for freelance workers? That’s the goal of the new partnership between freelance career platform UnderPinned and payments platform Banked. The two companies are now offering a commission-free service that reduces the amount of time it takes to process a freelancer’s invoice from more than three minutes to less than 30 seconds.
The service works via UnderPinned’s Virtual Office platform, which leverages open banking to retrieve data from invoices and automatically generate bank transfers that can be readily authorized by any U.K. banking provider.
“The number of people choosing freelance work has grown rapidly in recent years, but the infrastructure that supports this type of employment has failed to keep pace with the trend,” said Albert Azis-Clauson, UnderPinned founder and CEO. He highlighted payments as a major pain point. “The traditional process of paying an invoice for a freelancer is extremely clunky and time-consuming,” he said, “and that’s (why) we’ve decided to launch this new service.”
UnderPinned’s Virtual Office provides freelancers and gig economy workers with resources they need to make their jobs easier. The cloud-based hub helps freelancers manage portfolios and projects, invoices, contracts, and more. The Virtual Office also features educational tools and support resources to give freelancers additional assistance with things like finding work spaces to securing insurance. Founded in 2018, and launching its technology earlier this year, UnderPinned already has more than 2,200 users on its platform. The company, which is headquartered in London’s Bethnal Green, is in the final few weeks of its crowdfunding campaign, having raised 93% of its £500,000 ($614,000) target.
In working with Banked, UnderPinned has partnered with a firm that, since its founding in 2017 and launch early last year, has been dedicated to improving the payments process. Banked offers an API platform that fully leverages open banking by connecting to banks to enable payments and authentication of user information with their third party solutions. Based in London, the company includes account top-ups for e-money, trading, and gaming businesses, and payment linking for charities, marketplaces, and crowdfunding platforms among the use cases for its technology.
“We started Banked because we wanted to build a platform that allowed businesses and consumers to do more with their financial lives,” Banked CEO and founder Brad Goodall said. “Our new partnership with Underpinned delivers on this, helping freelancers and businesses save a huge amount of time and ultimately money. It provides a new way of paying invoices that will transform the freelancer experience.”
German online lender Kreditech announced a rebrand this week. Now known as Monedo, the company has completed a major C-suite overhaul – including a new Chairman, CEO, CFO, and CTO, and is gearing up for an expansion into the near-prime lending markets of India, Russia, Poland, and Spain.
“The name change marks the next stage in the fundamental transformation we have been undergoing, as the company moves from a start-up to a scale-up fintech,” Monedo CEO David Chan explained. “Throughout 2019 we have been focused on successfully transitioning the company back to growth by focusing on improving operational efficiency, risk, and cost management capabilities, and strengthening our products and services.”
Chan credited this emphasis – along with the financial support of the company’s investors – for making the company “perfectly positioned” to reach its growth goals.
Monedo says that it plans to reach €1 billion in revenue by 2025, propelled both by growth in current markets as well as expansion into new ones. Founded in 2012, the company has been a Finovate alum since 2014.
A new partnership between two Finovate alums – SecureKey Technologies and Onfido – will combine AI-enabled, physical identity document proofing with real-time authentication and verification.
“Our partnership demonstrates positive market movement towards a more secure digital future for consumers,” SecureKey Technologies CEO Greg Wolfond said. “At SecureKey, we believe strong, privacy-based digital identity requires the collaboration of multiple players and are pleased to continue our track record of developing market-leading digital identity services and offerings alongside like-minded organizations.”
Toronto, Ontario-based SecureKey is a Finovate alum since its FinovateFall debut in 2010. Ondot, which is headquartered in Santa Clara, California, first demoed at Finovate 2014 and most recently presented its latest technology at FinovateSpring in 2018.
The collaboration will enable users to scan physical ID documents and have additional personal information verified in real-time from trusted sources such as financial institutions, credit bureaus, and government agencies. The companies said that this combination of credential and login document validation is key to both expanding digital capabilities worldwide as well as making identity verification a more secure and safe process for consumers.
“At Onfido, our mission is to create a more open world, where identity is the key to access,” company CEO Husayn Kassai said. “SecureKey clearly shares this same drive to build a more secure landscape where customers can have privacy, security, and consent all in one easy-to-use process,.”
Here is our weekly look at the latest news from our Finovate alums.
Signifydlaunches its Commerce Protection Platform to maximize e-commerce conversion, automate customer experience, and eliminate fraud and customer abuse.
Zenoo selectsID R&D for its passive facial liveness digital onboarding solution.
Revolut Users Can Now Diversify with Gold – Digital alternative banking company Revolut announced this week it is helping users diversify their portfolios even further by enabling in-app purchases of gold.
Mastercard and Samsung Make Going Digital More Accessible – “This partnership with Mastercard is our way of making that future available to everyone by helping to close the digital divide, especially in emerging economies and countries,” explained KC Choi, executive vice president of Global Mobile B2B at Samsung.
Airwallex Integrates with Xero to Help SMEs Reconcile Cross-Border Payments – Small and medium-sized businesses working with Australian cross-border payments company Airwallex will be getting some help with their books. The company has announced a new partnership with New Zealand-based, cloud accounting company Xero.
Credit Sesame Launches Digital Bank Account – Financial health platform Credit Sesame announced this week it has launched Sesame Cash, a debit card aimed to help consumers reach financial stability while optimizing credit.
SpyCloud Integrates with ThreatConnect to Help Stop Account Takeover Attacks – A new partnership between intelligence-driven security operations platform ThreatConnect and account takeover prevention solution provider SpyCloud will help individuals take action during the critical time between credential exposure and account breach.
Natural language processing technology innovator Eigen Technologies has added $5 million (£4 million) to its Series B, taking the round’s total to $42 million and giving the firm more than $60 million in overall capital. The funding comes from ING Ventures and is part of a “broader strategic partnership” that blends Eigen’s NLP technology with ING’s experience in applying machine learning to financial services.
Eigen Technologies co-founder and CEO Dr. Lewis Z. Liu put the investment from ING in the context of the two firms’ years-long relationship. “(We) have found them to have some of the most advanced thinking in the market in the application of machine learning in financial services,” Liu said, “something that comes from their fantastic innovation culture.”
ING currently uses Eigen’s NLP technology in its LIBOR replacement and loan operations. Via the strategic partnership, the companies will accelerate deployment of Eigen’s technology in other areas, including trade finance and small business banking.
Eigen leverages machine learning to extract data from a diverse range of documents, and then integrate that data into the workflows of its customers. The company’s algorithms use pattern recognition to examine words, phrases, and sections of text to help businesses review documents for compliance purposes, automatically extract granular information from asset portfolios, and has applications in fraud identification, contract negotiation, and other activities.
ING Chief Innovation Officer and CEO of ING Ventures Benoît Legrand praised Eigen’s ability to deploy its technology in multiple use cases such as retail and wholesale banking. “This partnership will allow both companies to work closer together when implementing use cases through data and process analysis,” Legrand said, “so as to accelerate Eigen’s advantage in NLP as well as ING’s digital transformation.”
Eigen Technologies demonstrated its technology at FinovateFall 2019. The company has teamed up with more than 25% of the G-SIBs (globally systematically important banks), as well as major asset managers, insurers, hedge funds, and law firms. Eigen was founded in 2014 and has offices in London, U.K. and New York City.
Digital alternative banking company Revolutannounced this week it is helping users diversify their portfolios even further by enabling in-app purchases of gold.
The U.K.-based company, which first started with cryptocurrency holdings, then began offering investment in stocks, will enable customers on its Premium and Metal plans to purchase and transfer gold. Users cannot, however, make purchases with their gold holdings using their Revolut card. If a user attempts to make a purchase when they only have funds in gold, Revolut will convert a portion of their gold into fiat currency and use that.
Revolut makes it clear that since gold is not regulated by the U.K. Financial Conduct Authority, funds used to purchase gold – and the gold itself – will not be safeguarded under the U.K. Electronic Money Regulations 2011, the Payment Service Regulations 2017, or the Financial Services Compensation Scheme.
This is good timing on behalf of Revolut. Since the stock market and crypto assets are extremely volatile at the moment, many people are purchasing to gold to grasp onto some stability. And now they don’t even need to leave Revolut’s app to do so.
There is no word on if or when the company will allow trading of other precious metals such as silver or platinum.
Mastercardannounced a partnership with Samsung’s security platform, Samsung Knox today in a move that will serve to foster digital inclusion across emerging markets.
“This partnership with Mastercard is our way of making that future available to everyone by helping to close the digital divide, especially in emerging economies and countries,” explained KC Choi, executive vice president of Global Mobile B2B at Samsung.
The two will use Mastercard’s Pay on Demand platform which offers consumers device financing via a pay-as-you-go model. Built by Mastercard Labs, Pay on Demand brings together banks, equipment manufacturers, and telcos to solve issues limiting device financing in underserved markets. The program consists of four components:
A lending marketplace that aggregates lenders who offer affordable device financing
Samsung’s Knox security platform that ensure the safety of consumer data and transactions
Tools that help consumers analyze and build their credit history from usage data
Virtual card numbers that can be used for everyday transactions and to make payments on a device
“At Mastercard, we see a connected world where opportunity and prosperity are possible for everyone, everywhere,” said Jorn Lambert, executive vice president of Digital Solutions at Mastercard. “The Pay on Demand platform enables us to deliver on that vision and foster financial inclusion, giving consumers an opportunity to participate in digital commerce. By combining Samsung’s device management and security expertise with Mastercard’s innovative technology, we are creating an ecosystem that can deliver measurable, positive impact to the communities we serve.”
Pay On Demand will be launched in the Middle East and Africa in early 2020 and will extend to other geographical locations later this year.
For all the talk of challenger banks in Europe, Southeast Asia, and the U.K., the movement to bring alternative banking options to consumers and small businesses in the U.S. may deserve more attention than it tends to get. And this week’s news that SME-based challenger bank NorthOne has raised $21 in Series Afunding, is a reminder of why.
“We created NorthOne to serve businesses that are often underserved by big banks,” bank CEO Eytan Bensoussan explained. “Having grown up in a family of small business owners myself, I know first-hand what to expect when it comes to small business banking.”
The round was led by Battery Ventures’ Shiran Shalev, and featured participation from Redpoint Ventures and Tom Williams. The investment takes the bank’s total capital to more than $23 million.
“With this funding,” Bensoussan added, “NorthOne will be able to continue to develop solutions that simplify the most painful part of managing a small business, its finances.” The additional capital will also enable the challenger bank to add to its product and engineering teams, as well as spend more on marketing and customer acquisition.
NorthOne offers small and medium-sized businesses a digital, FDIC-insured, business checking account with mobile ACH, wires, check deposits, and access to 300,000 fee-free ATMs across the U.S. NorthOne’s mobile-first, API-enabled platform also offers overseas vendor payments, and software integration with expense management, accounting, and e-commerce systems. The company noted that, in the second half of last year, it has signed up 1% of all small businesses that applied for bank accounts in the U.S.
“Millions of dollars are spent using NorthOne debit cards every month,” Bensoussan wrote on the company’s blog today. “And we expect those numbers to keep rising as we open thousands upon thousands of new NorthOne bank accounts each month.”
Founded in 2016, NorthOne launched its small business banking account last fall, in partnership with Radius Bank.
Small and medium-sized businesses working with Australian cross-border payments company Airwallex will be getting some help with their books. The company has announced a new partnership with New Zealand-based, cloud accounting company Xero.
Specifically, the newly-announced collaboration will enable Airwallex customers to reconcile their domestic and international payments by connecting their multi-currency financial transactions in Airwallex to Xero. Businesses will get daily updates of their transactions via their Xero bank feeds, accelerating and simplifying the reconciliation process, and saving companies both time and money.
“As more small businesses enter overseas markets, it’s important that their multi-currency payments flow seamlessly in Xero and are automatically reconciled,” Xero Financial Industry Director Ian Boyd said. “This integration with Airwallex will ensure our mutual customers spend less time on administrative tasks and more on what’s important to them – running their business.”
The integration is live in Australia and will be made available in both the U.K. and Hong Kong later in 2020.
Airwallex leverages its proprietary technology and infrastructure to facilitate low-cost, high-speed payments and collections around the world. The company allows SMEs to access interbank FX rates on international transactions, and enables them to open Airwallex accounts in the U.S., U.K., and European Union to conduct their international operations. Airwallex’s partnership with Xero comes on the heels of its teaming up with Visa for the launch of its Airwallex Borderless Card, which makes it easier for SMEs to do their banking business online.
Calling an integration with Xero, “one of the most requested integrations from our customers,” Airwallex Co-founder and CEO Jack Zhang said that the partnership was part of a “wider international rollout” the company will launch over the course of the year. “This is the start of a series of capabilities that we plan to introduce with Xero to improve the way small businesses manage their finances across platforms,” Zhang said.
With ten international offices, including locations in Hong Kong, London, Shanghai, San Francisco, and Bangalore, Airwallex has raised more than $200 million in funding from investors including DST Global, Sequoia Capital China, and Tencent. The company was founded in 2015.
Founded by former CEO Rod Drury and a Finovate alum since 2011, Xero has grown into one of the world’s major, cloud-based accounting software platforms. This year, the company announced a partnership with Square to power instant invoice payments in Australia, and collaborated with Macquarie Group on a new initiative to help support the financial advisory and planning industry in Australia.
Steve Vamos took the helm as Xero’s CEO in 2018. The following year, the company reached 1.8 million subscribers and positive free cash flow for the first time.
Financial commerce technology provider Wirecard announced today it has partnered with Grab, a super app based in Southeast Asia that provides users with everyday services including on-demand transportation and food delivery.
Under the partnership Wirecard will process transactions made using Grab’s ewallet GrabPay in Malaysia, the Philippines, and Singapore.
Grabpay, which is accepted by 600,000+ merchants, works for both online and brick and mortar transactions. Along with payment processing, Wirecard will help introduce Grabpay to more merchants, expanding acceptance across Southeast Asia.
While mobile payment functionality may not be impressive to U.S. users, keep in mind that mobile wallets are much more popular in Asia. In fact, mobile wallets are almost 2x more popular in Southeast Asia than they are worldwide. Among consumers in the region, 44% regularly choose their mobile wallet as a payment method. In comparison, the global average mobile wallet usage is 25%.
Senior Managing Director of Grab Financial Group Reuben Lai explained that Wirecard will help the company build a cashless economy for millions of businesses across Southeast Asia. “Wirecard’s innovative mobile payments solutions will not only complement our GrabPay e-wallet platform, but also offer businesses and consumers the opportunity to transact with greater security, convenience and flexibility,” he said.
Today’s announcement comes just days after Wirecard partnered with another player in the gig economy. Earlier this month the Germany-based company partnered with Xolo to offer more robust financial tools to entrepreneurs and micro-businesses.
Financial health platform Credit Sesameannounced this week it has launched Sesame Cash, a debit card aimed to help consumers reach financial stability while optimizing credit.
The San Francisco-based company, which sees 500,000 new members every month, said that more than five million of its existing members want a digital banking service that integrates their cash and credit. Sesame Cash does just that.
“Through the use of advanced machine learning and AI, we’ve helped millions of consumers improve and manage their credit. However, we identified the disconnect between consumers’ cash and credit—how much cash you have, and how and when you use your cash has an impact on your credit health,” said Credit Sesame Founder and CEO Adrian Nazari. “With Sesame Cash, we are now bridging that gap and unlocking a whole new set of benefits and capabilities in a new product category. This underscores our mission and commitment to innovation and financial inclusion, and the importance we place in working with partners who share the same ethos.”
The Sesame Cash account includes a fee-free Mastercard debit card with no overdraft fees, no minimum balance, and no service fees. Cardholders have free access to more than 55,000 ATMs, the option for early payday, real-time transaction notifications, the ability to freeze or unfreeze the debit card, and virtual card integration with other mobile wallets.
Unique to Credit Sesame’s bank account are daily credit score updates, cash rewards for credit score improvement, and free identity theft protection.
Future advancements include a billpay service that helps users lower their interest payment and pay down debt faster, a roundup autosave tool, rewards programs, and budgeting tools.
This move by Credit Sesame comes at a time when many fintechs are launching debit accounts and high yield savings accounts in order to compete with traditional financial institutions for not only consumer deposits but also mindshare. One of the company’s closest rivals, Credit Karma, launched a high interest savings account last October that yields 1.30% (down from 2.03% at launch).
Credit Sesame’s decision to offer a debit card instead of a high yield savings account will ultimately prove to be a winning strategy. Many fintechs that have launched high interest accounts in the past couple of years have little differentiation now that the U.S. Federal Reserve has cut interest rates to 1.25%.
