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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Remember when Andreessen Horowitz’s Angela Strange said that every company will be a fintech company? Though there has been much debate over the now-infamous catchphrase, there is news this week from automaker Ford Motor Company that further proves its truth. Ford announced it has signed a five-year partnership agreement with ecommerce technology company Stripe.
Ford aims to leverage Stripe to scale its ecommerce capabilities. “Stripe’s platform will help us deliver simpler, outstanding payment experiences in any channel customers choose and scale improvements faster,” said Ford CEO Marion Harris.
Under the deal, Stripe will process ecommerce payments for Ford’s personal and commercial customers. Beginning in the second half of this year, Stripe will power vehicle ordering, reservations, digital functions, and charging services. Stripe’s payment services will also be brought into Ford’s tech stack as the automaker develops more ecommerce offerings.
Specifically, Ford will implement Stripe Connect, a set of programmable APIs that helps businesses facilitate purchases between third-party buyers and sellers, to scale new ecommerce services. Ford will use Connect to facilitate payments between customers and their local Ford or Lincoln dealer. Among Stripe’s other customers for its Connect tool are Squarespace DocuSign, Mindbody, and Jobber.
The deal comes at a time when shoppers are more willing than ever to try digital experiences. “During the pandemic, people got comfortable paying online for groceries, health care, even home haircut advice from barbers,” explained Stripe CRO Mike Clayville. “Now, they expect to be able to buy anything and everything online. Ford is making ecommerce possible, too, and scaling that strategy with Stripe’s help.”
Founded in 2010, Stripe has millions of customers. Today’s partnership with Ford, however, marks one of the biggest deals the California-based fintech has landed. During a funding round last March, Stripe’s valuation was boosted to $95 million, ranking it among the most valuable fintech startups.
Digital investment services and infrastructure company WealthKernelsecured $7 million in Series A+ funding to start the week. The round was led by XTX Ventures and featured participation from Digital Horizon, Big Start Ventures, and ETFS Capital. The U.K.-based company said that it will use the capital to fuel expansion across Europe.
“I’m incredibly excited to take this next step in WealthKernel’s journey,” WealthKernel CEO Karan Shanmugarajah said. “Our investors’ backing will not only help us bring our product to a wider audience and expand our platform, but also achieve our goal of becoming the leading provider of API-based wealth and investment infrastructure across Europe.”
WealthKernel offers businesses the building blocks they need to power their digital investment offering. From client onboarding and trading to portfolio management and custody, WealthKernel enables neobanks, roboadvisors, PFM apps, and embedded finance platforms to focus on building their brand and customer experience while leaving the heavy lifting to WealthKernel’s all-in-one investing API.
“We often describe what we do as the plumbing for wealth management companies,” Shanmugarajah explained. “The current industry is built on leaky legacy pipes and that leakage directly impacts the savings and pensions of millions of people, particularly those with smaller sums of money. Our mission is to enable the change that makes financial services and investing better for everyday people.”
This week’s Series A+ round is an extension of the company’s $6 million Series A round from 2020. In addition to supporting the company’s growth plans in Europe, the funding will enable WealthKernel to expand its investing infrastructure to accommodate intraday trading, as well. The company currently has $13.9 million in total equity funding according to Crunchbase.
A leading embedded investing solution provider in the U.K., WealthKernel’s platform supports more than 100,000 transactions a month, and more than 72,000 trades per month are executed using its technology. The company’s clients include U.K.-based financial coaching app Claro Money, Sharia-compliant ethical investment platform Wahed, and wealth management service provider Rosecut. More recently, WealthKernel has forged partnerships with GOODFOLIO, an ESG-based investment platform, and investment app Stratiphy, which offers personalized investment and trading strategies. WealthKernel was founded in 2015.
Yesterday, Mastercardunveiled two new clients for its Mastercard Track Business Payment Service. The New York-based payments giant announced that BMO and Moneris Solutions Corporation have joined Mastercard Track.
Mastercard launched the new service for Canadian businesses earlier this year. Mastercard Track creates efficiencies for business users by simplifying and automating the exchange of payments data between buyers and suppliers. The service seeks to modernize the $135 trillion B2B payments market.
“Current business payment processes often require manual reconciliation work that can be very labour intensive,” said Sasha Krstic, President of Mastercard in Canada. “The availability of Mastercard Track through our new partnerships with BMO and Moneris will help Canadian businesses gain freedom from an inefficient process by simplifying and automating the exchange of payments to make B2B payments work harder, faster and smarter.”
Using Mastercard Track will help BMO and Moneris modernize the business payments process for their customers. Ultimately, the service will free up working capital for businesses by offering them more control of their payments and helping them to optimize cash flow management.
Derek Vernon, Head of Payments Modernization of BMO’s North American Commercial Deposits and Corporate Card division said that the service “enhances the digital experience by offering a universal solution to simplify and automate B2B payments.” Specifically, Vernon noted that Mastercard Track will help reduce supplier friction and facilitate quicker speed-to-spend.
Mastercard is a public company listed on the New York Stock Exchange under the ticker MA. It has a market capitalization of $364 billion. Michael Miebach took the helm of the company as CEO in January of last year.
Latin American payments company EBANX is doubling down on its commitment to its business in Mexico, opening its first office in Mexico City and introducing a range of solutions designed to help Mexican companies offer new payment experiences for their customers in-country. These solutions include credit and debit cards, installments, OXXO and OXXOPay, SPEI, and digital wallets like Mercado Pago.
“The launch of these local solutions and the opening of the new office are part of our strategy for continuous growth in Mexico, a country where e-commerce is one of the most dynamic and relevant sectors,” EBANX co-founder and CEO João Del Valle said. “With these new initiatives, we became the ideal strategic ally to help e-merchants grow their operations in Mexico or other LatAm markets.”
For EBANX, bringing broader payment options to Mexican consumers is a way to better serve the country’s unbanked population. According to the Association of Mexican Banks, 53% of Mexican adults not have a bank account as of 2020. At the same time, the company’s own study on digital commerce in Mexico revealed that as much as 60% of the digital commerce in Mexico is conducted using payment methods ranging from digital wallets and cash vouchers to debit and credit cards. By enabling more merchants in Mexico to process both cash-based transactions as well as these methods preferred in digital commerce, EBANX believes it can help merchants in the country increase their reach and sales potential by 2x and increase their total addressable market faster.
Founded in 2012 and headquartered in Curitiba, Brazil, EBANX has been active in the Mexican market since 2015. Last year, the company grew the number of transactions processed in Mexico by 115%. Hibobi, SHEIN, Shopee, and Wish are among EBANX biggest customers in the country.
The acquisition is slated to take place in two parts. First, Itaú will acquire 50.1% of the share capital of Ideal, which was founded in 2019 and is one of the leaders in traded volume on the Brazilian stock exchange, B3. Second, the bank plans to execute its right to purchase the remaining 49.9% of the brokerage’s shares for approximately $117 million (R$651 million) securing control of the company. Stage two of the acquisition plan is reportedly not scheduled to take place for another five years.
“This investment materializes our mantra of client centrality because they are the ones who will get the most out of the transaction,” Itaú Unibanco president Milton Maluhy Filho said. “Ideal is going to help us expand and standardize the offer for different channels. Customers from various segments of the bank, such as iti, ion, or even Itaú Corretora, will be able to have access to the same products on whichever platform they prefer.”
The acquisition will add to the talent base for the 60-million customer financial institution, which bills itself as a digital bank with the convenience of physical banking. Ideal CEO Nilson Monteiro will continue to oversee operations at the company with Itaú serving essentially as one of Ideal’s financial institution clients. Itaú Unibanco’s Carlos Constantini, who runs Wealth Management and Services for the bank, underscored the importance of maintaining Ideal’s autonomy, citing the company’s market position and “well-defined strategy for its segment of activity.” Constantini added, “the company will play an important role in consolidating Itaú Unibanco’s investment ecosystem and maintaining our market leadership.”
Founded in 2008 via the merger of Banco Itaú and Unibanco, Itaú Unibanco is headquartered in São Paulo, Brazil. With total assets of more than $377 billion and 90,000 employees, Itaú Unibanco is the largest private sector bank in the country. The institution is publicly traded on the Brazilian stock exchange and has a market capitalization of $41 billion.
FinovateEurope 2022 is right around the corner. If you are an innovative fintech company with new technology to show, then there’s no better time than now and no better forum than FinovateEurope. To learn more about how to demo your latest innovation at FinovateEurope 2022 in London, March 22-23, visit our FinovateEurope hub today!
Here is our look at fintech innovation around the world.
A partnership between India-based private sector bank RBL Bank and Google will enhance the customer experience and potential for expansion for its digital platform Abacus 2.0.
FundThrough noted that the deal is designed to accelerate both its commitment to embedded finance as well as fuel expansion plans for the U.S. market. Specifically, FundThrough believes the acquisition of its American rival will enable it to increase its U.S. clientele by 2x, boosting the number of customers in the States who use its technology to turn unpaid invoices into access to working capital.
“We are committed to helping small businesses grow and thrive – especially those who sell to large customers where long payment terms and a lack of financing options stand in the way of growing a business,” FundThrough co-founder and CEO Steven Uster said. “BlueVine was one of our biggest competitors in the U.S. market, and through this acquisition we can fulfill our mission on a much larger scale.”
With growth of more than 10x since its founding in 2014 and 3x growth over the past year, FundThrough has scaled to process more than $120 million in funding each month. The company’s AI-powered funding platform, along with its partnerships with companies like Intuit and Enverus, has enabled it to cut the standard amount of time it takes for SMEs to get their invoices paid by as much as 97%.
Invoice factoring was BlueVine’s founding business – and the centerpiece of the company’s 2014 Finovate presentation. The company has grown significantly since then, adding a range of new financing solutions for small businesses and giving the Redwood City, California-based fintech the ability to choose which area of small business financing it will focus on going forward.
“Since launching BlueVine, we’ve been focused on the financial needs of small businesses and are very proud of what we’ve been able to accomplish,” BlueVine co-founder and CEO Eyal Lifshitz said. “As we evolve our products and services, we continuously examine how we can better serve our customers at scale. We determined that FundThrough is perfectly positioned to serve our factoring clients with the care and individual attention they need and deserve. Our factoring clients will be in great hands with FundThrough.”
As part of the acquisition, BlueVine’s invoice funding division employees will join the FundThrough team. The transaction will enable BlueVine to focus on other elements of its business including its BlueVine Business Checking, Payments, and Line of Credit offerings. Since inception in 2014, the Redwood City, California-based fintech has helped SMEs access more than $14 billion in financing.
Consumer credit reporting agency TransUnion is moving in the direction of Web3. The Illinois-based company announced this week it will bring off-chain consumer credit, identity, and compliance information to public blockchain networks.
The move is made possible via a partnership with Spring Labs, a company that offers decentralized infrastructure for credit and identity data. Spring Labs allows network participants, such as financial institutions, to share information about credit and identity data without needing to share the underlying data itself. Specifically, TransUnion will bring its VantageScore to Spring Labs’ ky0x Digital Passport, a tool that enables blockchain and smart contract applications to access off-chain data sources to create new, permission-controlled decentralized Web3 services and applications.
“We believe in the growth potential of DeFi,” said TransUnion President of U.S. Markets and Consumer Interactive Steve Chaouki. “Providing credit and identity data on-chain is a huge step towards improving the financial products available in the space. Working with Spring’s ky0x, we now have a solution for users to control and share their data on blockchain in a privacy-preserving way, enabling them to safely interact with a broader set of financial products.”
Transporting consumer credit data to the blockchain allows users to offer up information about themselves while maintaining privacy and anonymity of their identity. This secure data sharing allows users to access smart contract applications and helps DeFi and Web3 apps to scale.
Ultimately, the move should benefit both end users and lenders. By having their credit score available on-chain, users can receive better interest rates from DeFi lenders. Simultaneously, DeFi lenders can reduce their risk.
“Enabling access to an industry-standard, trusted credit risk score like VantageScore on-chain and in a consumer permissioned, anonymous way opens the door to greater growth and financial inclusion in the DeFi space,” said TransUnion SVP Consumer Lending Business Leader Liz Pagel. “Paired with ky0x’s AML and KYC capabilities, DeFi lenders can transact with confidence at lower rates, potentially paving the way for lending without the over-collateralization that is standard today.”
To be honest, there is a potential downside to this partnership. Traditional credit scores are prone to racial bias and have negative consequences for borrowers who have no established credit. By porting this imperfect risk underwriting model to the decentralized world, we may be doing ourselves a disservice.
A fundraising round of $1 billion has given Checkout.com a valuation of $40 billion, more than 20x the valuation the company earned upon its first fundraising three years ago. The investment takes Checkout.com’s total capital raised to $1.8 billion, and the company said that it plans to use the funds to support growth in the U.S. market, launch its marketplaces solution, and strengthen its position in Web3.
“At our core, we help enterprise merchants to navigate the complexity of moving money around the world, whether in fiat currency or bridging the gap to Web3,” Checkout.com founder and CEO Guillaume Pousaz said. “By combining an elegant technology stack with industry expertise and an ‘extra-mile’ approach to service over the past decade, we’ve built deep partnerships with some of the world’s most innovative companies.” Pousaz added that while he considered this week’s investment to be a “validation” of the firm’s work to date, “we’re still in ‘chapter zero’ of our journey.”
Investors in the Series D included Altimeter, Dragoneer, Franklin Templeton, GIC, Insight Partners, the Qatar Investment Authority, Tiger Global, the Oxford Endowment Fund and “another large west coast mutual fund manager.”
With customers ranging from Netflix and Pizza Hut to fintechs like Klarna, Revolut, and Coinbase, Checkout.com offers a full-stack online platform that makes payments easier for global businesses. Enterprise merchants that face significant challenges in moving money around the world have partnered with Checkout.com for its flexible, cloud-based payment platform that offers improved authorization rates, feature parity, and direct connection to local networks in key geographies and for all major alternative payment methods.
Looking forward, Checkout.com plans to launch a solution to service both marketplaces and payment facilitators later in 2022. The new offering will combine identity verification, split payments, and treasury-as-a-service functionality with Checkout.com’s Payouts solution, which helps companies send funds to both cards and bank accounts worldwide by way of a single integration. Checkout.com reports that both TikTok and MoneyGram have taken advantage of the service, with “billions of dollars in payout transactions” processed.
Headquartered in London and founded in 2012, Checkout.com spent 2021 opening new offices in six countries across four continents and making numerous major C-suite additions. These include a new Chief Financial Officer, a new Chief Technology Officer, and a new Chief Product Officer. The company announced an extension of its strategic partnership with JCB in September, and led a $110 million funding round for Saudi Arabian-based fintech Tamara in April.
Founded in 2015, Tandem Bank used to be among the ranks of U.K. challenger banks Monzo and Starling. But Tandem Bank has remained relatively quiet for the past year-and-a-half– seemingly sidelined from the digital banking race taking place across the globe.
That’s changing today, however. Tandem Bank announced it has acquired lending platform Oplo. Financial details about the deal were undisclosed.
“I think this is a really exciting business combination,” said Tandem Bank Group CEO Susie Aliker. “We have a shared and common purpose to create a greener and fairer banking proposition. We want to build on our digital and technology capabilities to really create a really exciting but also profitable challenger bank.”
Oplo was founded in 2004 and has since lent over $1.2 billion (£900 million) to mainstream customers. The U.K.-based fintech offers car finance, personal loans, and secured loan products as alternatives to traditional bank loans. When it combines with Tandem, the digital bank will have $1.64 billion (£1.2 billion) in assets.
Tandem is very focused on the ESG initiative that has been sweeping the fintech industry; this includes digital banking players in particular. Tandem Bank currently holds $315 million (£230 million) in its Green Loans, a product that helps accountholders “save the planet whilst saving money.” Last year, the digital bank provided customers with loans for home improvements that contributed to over 12,000 tonnes of CO2 reductions.
The Green Loans product comes courtesy of Tandem Bank’s 2020 acquisition of Allium Money, an alternative lender that offers consumers financing to improve the energy efficiency of their homes.
“By joining forces, we will be able to offer a wider range of products and higher quality of service to more people than ever before,” Oplo said in a blog post announcing the change. “And together, as Tandem, we will build a fairer and greener bank for all.”
In a video, Aliker described the company’s recent shift to double-down on its ESG focus. “Our target market going forward will be what we call The New Mainstream.” We want to give them the choices so that they can also help contribute towards a fairer and greener future.”
CBANC, the biggest verified professional network for U.S. commercial banking institutions – and the professionals that run and work for them – announced the launch of its new platform this week. The CBANC Marketplace will host data and information on 1,000 products from more than 450 companies – all designed to meet the unique needs of small banks and credit unions.
“Over the past 10 years, CBANC has been a place for all financial professionals to connect and discover the information they need to succeed,” CBANC CEO Tom Ferries said. “Today, the speed of technological innovation is outpacing awareness, and community banks and credit unions need a place to discover what’s available for them and feel confident in their decisions.”
The CBANC Marketplace gives companies the ability to have their solutions accessed by a verified audience of community banking and credit union professionals. Both the CBANC Community and Marketplace are free for all employees of U.S. financial institutions, and there is no cost for fintechs and other companies that want to add their product or solution. For more information, and to request inclusion in the CBANC Marketplace, visit the network’s vendor hub.
Headquartered in Austin, Texas, and founded in 2009, CBANC benefits from the collective wisdom of more than 8,600 financial institutions with a combined total of more than $22 trillion in assets. The CBANC Community consists of 65,000 verified financial professionals representing more than 80% of all financial institutions in the United States. A unique opportunity to connect and collaborate with peers in the industry who are innovating in a wide range of technologies from AI to the blockchain to cryptocurrencies, the CBANC Network earned a spot on the 2020 Inc 5000 list of the fastest growing private companies in the U.S. Ferries, who took over at CEO days before the Inc 5000 announcement, credited CBANC’s three-year revenue growth of more than 6.5x for helping the organization secure the listing.
“Our strong revenue growth is a testament to the value we deliver to our Members and Partners,” Ferries said. “Look for new and exciting product launches later this year to continue our mission of helping our Members preserve the diversity of the American banking system.”
Credit card and cash management solutions company Brexclosed a $300 million D-2 round today. The round, which values the company at $12.3 billion, was led by Greenoaks Capital and Technology Crossover Ventures (TCV).
Brex will use the fresh capital to expand its product portfolio to serve more of companies’ financial needs. The California-based fintech’s funding now totals $1.2 billion.
“Brex is a market disruptor and the opportunity to create economic opportunity for millions of people and businesses globally through innovation in financial products is incredibly exciting,” said Brex Chief Product Officer Karandeep Anand. “The opportunity ahead for Brex is expansive, and I’m grateful for the opportunity to create products that will help our customers grow their businesses.”
Brex was founded in 2017 to create a digital-first business banking solution. The company offers business bank accounts with credit cards that have built-in rewards, spend controls, and expense tracking. The accounts give businesses early access to their online revenue, billpay tools, and integration with popular accounting tools– all with zero fees. The company serves “tens of thousands of businesses” ranging from small private companies to large public brands, including Airbnb and Classpass.
“Brex has always moved fast. But as the company has scaled, they’ve managed to get even faster, accelerating their growth since our last investment,” said Greenoaks Founder and Managing Partner Neil Mehta. “Brex is building a full financial operating system that keeps getting more comprehensive, all of which will delight existing customers and attract new ones.”
In addition to the funding announcement, Brex is also highlighting a noteworthy personnel change. The company appointed Karandeep Anand as Chief Product Officer. Anand comes to Brex from Meta, where he led the business products group, which served more than 200 million businesses globally. Before his start at Meta, Anand spent 15 years at Microsoft leading the product management strategy for Microsoft’s Azure cloud and developer platform.
With its acquisition of financial analysis as a service company FlashSpread, digital mortgage platform BeSmartee’s ability to deliver a complete, digital lending experience just got that much more complete.
“We are excited to welcome FlashSpread and Ariel Trybuch to the BeSmartee family,” CEO and co-founder of BeSmartee Tim Nguyen said in a statement. “This is an acquisition that not only brings new clients, technologies, and talents to BeSmartee, but one that also sparks further innovation into all lending verticals, including mortgages, consumer, and commercial.”
Founded in 2017 and headquartered in Glendale, California, FlashSpread specializes in instant tax spreading for commercial lenders and fintechs. The company’s proprietary algorithms enable lenders to convert scanned tax returns into customized and comprehensive financial reports with the click of a button. The technology brings significant efficiencies to the commercial loan process – from origination to servicing – and empowers lenders to make accurate, data-driven credit decisions quickly.
Via its acquisition of FlashSpread, BeSmartee will be able to accelerate its growth strategy, prioritizing increased automation as it expands into the commercial lending space. FlashSpread is integrated with some of the largest loan origination systems in the commercial lending industry, with more than 100 financial institutions relying on its technology to automate manual processes. Post-acquisition, FlashSpread will continue independently to serve customers as a “BeSmartee Company” with FlashSpread founder and CEO Ariel Trybuch taking on the role of General Manager.
“This partnership will provide the resources necessary to support the hyper-growth FlashSpread is currently experiencing, as well as allow us to provide our customers with an even higher level of customer support, rapidly introduce new features and functionality, and expand our ever-growing library of supported document types,” Trybuch said. The company will continue growing its document library to support a broader range of financial statements, as well as launch a no-code reporting module to offer instant custom reports, and unveil an ongoing credit monitoring tool.
BeSmartee’s acquisition announcement comes just days after the company reported a partnership with Freddie Mac. The Huntington Beach-based fintech will integrate Freddie Mac’s automated underwriting system, Loan Product Advisor, improving workflows for lenders by automating risk assessment, and both asset and income data review. The integration will also improve lenders’ ability to make smart business decisions, leveraging actionable insights from Loan Product Advisor’s rich data visualization features.
PayPal has confirmed recent rumors regarding plans to launch its own stablecoin. According to Bloomberg, which broke the news last week, a developer found evidence of PayPal’s future stablecoin in the form of the below logo inside the fintech’s iPhone app.
Photo credit: Bloomberg
SVP of Crypto and Digital Currencies at PayPal Jose Fernandez da Ponte later confirmed the suspicion. “We are exploring a stablecoin; if and when we seek to move forward, we will of course, work closely with relevant regulators,” Fernandez da Ponte told Bloomberg.
Developer Steve Moser made the discovery by looking at hidden code inside the PayPal app. The code unveils work on PayPal Coin, a PayPal-specific stablecoin that would be backed by the U.S. dollar. After PayPal was made aware of the discovery, the company confirmed that the code was part of a recent internal hackathon and that details surrounding the project will likely change.
If the project comes to fruition, the stablecoin would be just one initiative among a host of other cryptocurrency efforts. In October of 2020 the company partnered with cryptocurrency company Paxos to allow PayPal users in the U.S. to buy, hold, and sell cryptocurrencies. And last March, PayPal launchedCheckout with Crypto, a tool that enables users with cryptocurrency holdings to transact using crypto at the online point of sale.
When it comes to working on a stablecoin launch, PayPal is in good company. Meta (formerly Facebook) was developing its own stablecoin, Diem, until it experienced regulatory hurdles and pivoted to work with the Pax dollar instead. On top of that, Visa is looking to leverage a stablecoin to settle transactions.
In addition to its stablecoin ambitions, PayPal is also hoping to gain a reputation as the first super app in the U.S. The company revamped its mobile app last September and now offers a range of features including direct deposit, billpay management, rewards, and more. Founded in 1998, PayPal is now listed on the NASDAQ under the ticker PYPL. The company’s market capitalization currently sits at $213 billion.
