David’s column

People, Communication, and Fintech Innovation: Greg Palmer on the Banking on Digital Growth Podcast

People, Communication, and Fintech Innovation: Greg Palmer on the Banking on Digital Growth Podcast
By David Penn Posted on
Categories: David's column, Podcasting

Finovate VP and host of the Finovate Podcast Greg Palmer (@GregPalmer47) recently sat down with James Robert Lay of the Banking on Digital Growth podcast. The two talked about a wide range of topics, from Finovate’s return to live, in-person fintech conferences to the challenges of building a truly people-focused fintech business in a post-COVID world.

Palmer: “What I didn’t necessarily expect was the way that the financial industry was going to respond to the pandemic by really diving in to technology and seeing a lot of these kinds of older holdouts all of a sudden saying, “wait a minute, we really have to do things differently.” This impetus, this drive to change, I think is the thing that surprised me the most.”

Lay and Palmer also talked about what it takes for a fintech company to manage the balance between creating novel, ground-breaking technology on the one hand, while remaining accessible, and easy to use for consumers on the other.

Palmer: “(Financial technology) tends to draw people in who are comfortable with numbers, who are comfortable in front of a computer screen, who want technology to do things that it hasn’t been able to do before, which is obviously really impressive and these are intelligent people. But what sometimes gets missed is the idea that, at the end of the day, you’re not building technology for yourself.”

To whet your appetite for the full, 40-minute conversation, here are a handful of excerpts from the discussion.

On Finovate’s return to live, in-person events.

Palmer: “The number of people, the number of interesting companies that came across our radar over 2022 was really exciting. And I think, for me, obviously getting people there is great, getting the right companies on stage is great, but the energy of the room was what was really positive for me. Hearing those conversations, watching people connect and engage with each other organically and discovering where you have common interests or places where you can help each other out, that’s really why we do what we do at Finovate.”

On the challenge of putting people first in fintech and financial services

Palmer: “Well, I think you hit the nail on the head when it comes to people. I think people forget that financial technology is ultimately about serving people … at the end of the day, you’re not building technology for yourself. You’re building technology for other people to use. And if I look back and say, what is one of fintech’s biggest failings over my time (in) fintech, I think it’s really been around people.”

On leveraging data to become a more people-focused business

Palmer: “The first step is understanding the data that you have, looking at this and really making sure that you have a good idea of how people are engaging with your technology. The other one, which is almost so simple that I can’t believe I need to say it, (is) you need to hire up. You need to hire people who have this as a skill.”

Listen to the complete interview, which includes examples of some of the fintech innovators that Greg Palmer has worked with in recent years – from Dreams to MX – who truly “get it” when it comes to creating innovative, people-first, fintech innovations. And be sure to catch up with the latest episodes of the Finovate podcast, including an interview with Ukrainian fintech founder Igor Tomych of Fintech Garden.

Photo by John-Mark Smith

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M&A Monday: Best of Show Winner TipRanks Acquires The Fly; TreviPay Agrees to Buy Apruve

M&A Monday: Best of Show Winner TipRanks Acquires The Fly; TreviPay Agrees to Buy Apruve
By David Penn Posted on
Categories: Acquisition, Alumni News, Daily news, David's column, Mergers & Acquisitions, TipRanks, TreviPay

2023 is only a few days old but the merger and acquisition action in the fintech industry has already begun.

2022 featured a number of major fintech acquisitions – from Vista Equity Partners $8 billion purchase of tax compliance specialist Avalara to Technisys’ $1.1 billion acquisition of SoFi to Fiserv’s $650 million deal with Finxact. As the new year begins amid economic uncertainty and a technology industry that is contracting, will 2023 produce more deal-making activity in fintech or less?

With this question in mind, here’s a look at recent year-ending and year-beginning M&A activity from a pair of our Finovate alums: TipRanks and TreviPay.

We learned last week TipRanks had agreed to acquire real-time financial news digital provider, The Fly. Terms of the transaction were not disclosed. Founded in 1998 and headquartered in New Jersey, The Fly is a leading digital publisher that offers a live-streaming subscription service featuring short form stories and content on publicly-traded companies.

“TipRanks is a natural home for The Fly,” company President Ron Etergino said. “Both companies strive to level the playing field for investors and TipRanks’ institutional-grade research tools and data will enhance The Fly’s financial news products.”

With its technology that provides market research tools to retail investors and traders, TipRanks took Finovate audiences by storm in its debut appearance in 2013. The New York-based company won Best of Show at both FinovateSpring in May of that year and again at FinovateFall in September.

More recently, the Tel Aviv, Israel and New York-based company launched a new solution that determined risk factors for publicly traded companies, as well as a tool that analyzes publicly traded companies’ online traffic. In 2021, the company raised $77 million in funding in a round led by Prytek. Last year, TipRanks introduced country-specific websites for Australia, Canada, and the U.K.

TipRanks’ acquisition of The Fly is designed to further the company’s mission of becoming a “one-stop-shop platform for the retail investor,” according to CEO Uri Gruenbaum. “We see a lot of synergy between our companies and are excited that we can expand our offerings to provide breaking news – one of the top requirements of our Enterprise customers and end users,” Gruenbaum said.

Subject to customary closing conditions, the transaction is expected to close in Q1 of this year.

Amid the flurry of year-ending news, one alumni acquisition we missed was TreviPay’s decision to acquire payments platform Apruve early last month. Headquartered in Overland, Kansas, and making its Finovate debut last September at FinovateFall, TreviPay supports B2B commerce with its payments and invoicing network designed to optimize transactions between buyers and sellers. The company’s acquisition of payment platform Apruve is designed to help complement and add to TreviPay’s current order-to-cash technology and merchant invoicing solutions.

“The acquisition of Apruve will accelerate our advancement in the technology manufacturing vertical and expand our geographic reach into key Asian markets,” TreviPay CEO Brandon Spear said.

Terms of the transaction have not been disclosed, but all Apruve employees will be retained post-acquisition. Apruve was TreviPay’s second acquisition of 2022, having purchased B2B invoice payments network company BATON Financial Services in February.

With 90,000 buyers and 80,000 seller locations around the world, TreviPay automates the order-to-cash process via omni-channel checkout options, localized B2B invoicing, managed receivables, and fraud and risk management. The company’s tailored payments and invoicing networks enable merchants and suppliers alike to develop more profitable and enduring trade relationships. TreviPay processes $7 billion in transaction volume across 32 countries and 19 different currencies.

Founded in 1980, TreviPay demoed its Small Business Supplier Network (SBSN) at FinovateFall 2022. The offering gives banks the ability to grow its small business product offerings by enabling them to tap into the small business B2B trade credit market.

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The State of Play in the Fraudtech Industry

The State of Play in the Fraudtech Industry
By David Penn Posted on
Categories: David's column

According to LexisNexis’ recent True Cost of Fraud Study, which looks at fraud trends in the financial services and lending sectors of the U.S. and Canada, the cost of fraud has grown significantly as the global pandemic has ebbed. The report noted that every dollar of fraud currently costs financial services companies in the U.S. $4.00, up from $3.25 in 2019 and $3.64 in 2020. The picture for lenders is even worse. In fact, the report notes that fraudsters have been especially aggressive in the mortgage lending business, sending mortgage lending fraud costs up by more than 23% since 2020.

The report also highlights the problem of identity: the challenge financial institutions have when it comes to identity verification and the rise of identity fraud as “a significant percent of fraud losses at the point of funds distribution.” Both banks and mortgage lenders surveyed also noted the difficult tasks of enhancing fraud detection while simultaneously keeping the customer experience as friction-free as possible.

Lastly, LexisNexis Risk Solutions Director of Fraud and Identity Christopher Schnieper pointed to the elephant in the room when it comes to fraud-fighting in general: the opposition is tough.

“It is difficult for even the best trained professional to detect the increasingly sophisticated crime occurring in the remote digital channels without the aid of solutions that detect digital behaviors, anomalies, device risk, and synthetic identities,” Schnieper said.

What can we learn from the findings of the LexisNexis team, as well as from other analysts and researchers who have pointed to the growing challenges we face when it comes to fraud and cybercrime in financial services?

Three Key Takeaways from the Current State of Fraudtech

Evolving threats demand continuous innovation

Innovation in fraud fighting is driven significantly by antagonistic competition, a “disloyal opposition” to borrow from the language of political science. The competition in fraudtech is not just between businesses and individuals all working to build better mousetraps. This competitive arena also includes actors whose goal, to extend the metaphor, is to help mice avoid being entrapped in the first place. This makes fraudtech an especially “rubber meets the road” part of fintech in which innovation is more than a way to gain market share, it is an existential requirement.

In a recent Experian webinar sponsored by Finovate, Experian’s Kathleen Peters and Prism Data’s Brian Duke underscored the importance of thinking of fraud “as a business.” And as a business, fraudsters will aggressively seek out new markets of opportunity, focusing particularly on areas where there are new, sizable streams of capital flowing. Think about the amount of fraud that accompanied both the housing boom in the late aughts. Think about the fraud uncovered as part of the unprecedented financial response to an unprecedented global health crisis. Think of what is currently taking place with the various meltdowns in the crypto space. Understanding fraud as a business not only helps fraud fighters better combat criminal activity, it also helps fraud fighters get a sense of where fraudsters might strike next.

Tech-enabled human talent to the forefront

In fraud-fighting, there is no debate on the importance of using technology to enhance and support human talent and insight. While there are some instances in which actual human activity is replaced by technology, much of this replacement is of manual, mundane, or routine tasks that are undesirable as work, and often error-prone compared to automated interventions. On the other side, AI and machine learning give human agents fast, rich data they can leverage alongside their own intellect and experience in the field to make superior judgements compared to technological or human actors alone.

Jody Bhagat, President of Americas at Personetics, used the term “Digital Plus Human” in a Mastermind Keynote at FinovateFall earlier this year. “Digital Plus Human” describes what Bhagat called a “sweet spot” between an all-tech versus all-human approach for midsized banks. This is a worthwhile concept that fraud fighters have embraced. The blending of human intelligence with AI, for example, to suss out bias inadvertently created by allegedly color- or gender-blind algorithms, is one instance of the digital plus human concept at work. Relying on human instinct to ferret out more complex identity challenges highlighted by technical tools is another key component of contemporary fraud fighting strategies.

Innovation in identity is key to better security

Lastly, it is increasingly clear that identity is the key to better security. In some ways, the more we can solve the identity issue, the easier it will be for us to solve and resolve security issues. Part of this lies in understanding identity as an access or action-specific factor, rather than a static representation of an individual in the physical, non-digital world. In other words, the interaction between a user and the user’s mobile device may tell more about the authenticity of the individual than a street address or even a social security number. This helps us understand the specific – and more precise – data requirements needed when it comes to establishing identity in digital contexts.

Here, companies like Trulioo are doing important work in helping financial institutions leverage digital identity to make the onboarding process a better and safer experience for the customer and business alike. Other firms, such as Instnt, are introducing innovations such as continuous identity assurance and portable KYC.

Photo by Sora Shimazak

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The Conversation Continues: Greg Palmer and the Finovate Podcast with FV Bank, Daylight, Microsoft and More!

The Conversation Continues: Greg Palmer and the Finovate Podcast with FV Bank, Daylight, Microsoft and More!
By David Penn Posted on
Categories: David's column, Podcasting

In addition to hosting the biggest FinovateFall to date, Finovate VP Greg Palmer has spent the month of September talking with some of the most interesting achievers in fintech. From CEOs of digital banks to entrepreneurs working to bring about greater financial inclusion, Greg Palmer’s Finovate Podcast is a great way to meet the people who are driving innovation in our industry.

Below is a rundown of recent episodes from late August through September.

Find the Finovate podcast at Soundcloud and follow Greg Palmer on Twitter for the latest in programming news and updates.

Miles Paschini, Chief Executive Officer, FV Bank

Finovate Podcast host Greg Palmer sits down with Miles Paschini to discuss FV Bank’s mission to serve fintechs and bring new technologies to the mainstream. Episode 147.

“The regulated segment of the industry was not matching up to the creator side of the industry … FV stands for Fintech Ventures Bank and the purpose of developing FV Bank was so that we could create a regulated banking environment where fintech creators would have a place to work with people who were really there to help them grow their business as opposed to keep(ing) them out.”

Suneera Madhani, CEO and Founder, Stax Payments

Suneera Madhani of Stax Payments and Greg Palmer talk about the challenges of building a more inclusive fintech ecosystem. Episode 146.

“I learned very quickly that men are actually given investment for their potential, while women are given investment for what they’ve done. That’s definitely been one of my biggest lessons. And the stats are also horrendous. You know, we’re in 2022 and less than 3% of the venture capital still just goes to women in general, less than 1% to minorities.”

Roman Chwyl, Managing Director Fintech Unicorns, Microsoft; Paul Walker, SVP, Revenue and Partnerships, Helix

Greg Palmer talks about the power of partnerships to help bring financial services to the unbanked and underbanked with Microsoft’s Roman Chwyl and Helix’s Paul Walker. Episode 145.

“Currently we’re helping several brands together, like Acorns, Credit Karma, Gusto … These are all brands that have real scale and are focused on (underserved) segments. One of my key goals today is just to make real impact and change, and (talk about) how Helix and Microsoft can share our partnership story and work with other companies out there looking to do the same.”

Brad Oberwager, Executive Chair, Linden Lab

Brad Oberwager of Linden Lab discusses virtual worlds and virtual economies with podcast host Greg Palmer. Episode 144.

“Linden Lab was started a long time ago, and is actually the parent company of Second Life, which is the sort of OG metaverse. You’ve heard a lot of talk about the metaverse and virtual worlds. Second Life was the first one that really created an economy … A guy named Philip Rosedale, who happens to be one of my closest friends, came up with the idea. Building a virtual world.”

Billie Simmons, Co-founder and Chief Operating Officer, Daylight

Billie Simmons of LGBTQ-supporting digital bank Daylight and Finovate podcast host Greg Palmer talk about supporting customers and enabling them to live their best lives. Episode 143.

“It’s an incredibly expensive, time-consuming, potentially dangerous process to get your name and gender updated across all of your banking services. You have to go to court. You have to get documents notarized. You have to out yourself multiple times as trans … I just realized through talking about these things that we can do so much better. That’s really how Daylight was born.”

Photo by SplitShire

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FinovateFall 2022: Three Takeaways from Finovate’s Biggest Show to Date

FinovateFall 2022: Three Takeaways from Finovate’s Biggest Show to Date
By David Penn Posted on
Categories: David's column, FinovateFall 2022

FinovateFall 2022 ended last week. If you were there, then thanks for helping make the conference our largest, and most well-attended yet.

And if you were not there, then we’ve got good news and better news for you. The good news is that we’re sharing some of the mainstage highlights from FinovateFall 2022 below. The better news is that we’re going to do it all over again next year — so stay tuned!

You’re Gonna Need a Bigger Boat

Whether the enabling force is a technology or a partnership, one big takeaway from the conversations on Day One of FinovateFall 2022 was this: it is critical for financial institutions to take advantage of the resources – technological and organizational – outside of their immediate purview in order to compete, grow, and thrive.

In the morning, with presentations from Apiture’s Chris Cox and InterSystems’ Joe Lichtenberg, the emphasis was on enabling technologies that empower financial institutions to turn data into business insights. Jody Bhagat of Personetics showed how even mid-sized banks can leverage the combination of human talent and digital technology to provide superior customer service and solutions like advanced money management.

In the afternoon, our mainstage speakers turned their attention to the transformative power of good partnerships. As a theme that would extend into Day Two, forging productive partnerships between fintechs and financial institutions is a challenge that smart companies are more than willing to meet. Our Power Panel, featuring financial services professionals from Seattle Bank, Partnership Fund for New York City, FTV Capital, TD Bank Group, and Experian, showed why and how banks and fintechs can move from competition to collaboration and co-creation.

FinovateFall Best of Show winner Debbie during its live demo on stage in New York.

Getting It Done — The Right Way

If Day One of FinovateFall articulated the opportunity that exists for banks and fintechs, Day Two was all about helping them seize it. Experian’s Greg Wright led off in the morning with a discussion on how companies can maximize their successful innovation initiatives. Cornerstone Advisors’ Sam Kilmer followed-up with words of wisdom to help fintech companies seal more and better deals faster with financial institutions eager to supercharge their offerings with new fintech solutions.

In the afternoon, the discussion shifted to the new rules of engagement when it comes to customers and “future-proofing” innovation. Led by Beyond the Arc’s Steven Ramirez, our Power Panel on Customer Experience examined the new landscape in which banks thought of more as apps than as brick and mortar businesses. With experts from Oak HC/FT, Dave, Fidelity Investments, and Quavo, the panel showed how personalization, gamification, and visualization are key elements in the contemporary customer engagement strategy.

And speaking of “the right way”, VantageScore’s Rikard Bandebo shared insights into new tools to help financial institutions engage with “newly lendable’ customers and promote financial inclusion. Pointing out the differing impact of credit scoring models on different communities and demographics, Bandebo explained how new analytic approaches can empower both lenders and borrowers.

What We Learned from Best of Show

Our Best of Show award is more than a great opportunity for our attendees to reward those fintech innovators whose technologies they believe are most likely to make a big difference. The awards also serve as an excellent heat check on the latest developments from some of the world’s most innovative fintech companies and entrepreneurs.

Two of the companies to take home Best of Show trophies from FinovateFall 2022 are innovators that have proven their mettle before. Horizn, with its platform that maximizes the impact of digital transformation, is a five-time Finovate Best of Show winner. LemonadeLXP earned a Finovate Best of Show award back in 2019 for its Launchfire employee and customer engagement solution. Notice a theme? For one, both companies are great representatives of the fintech innovation taking place in Canada – Horizn is headquartered in Toronto, LemonadeLXP is based in Ottawa. For two, both Horizn and LemonadeLXP are examples of companies innovating in the critical second step in digital transformation: the challenge of turning “front line staff into digital experts” and driving “mass adoption of new platforms and digital capabilities” for customers and employees alike.

Hats off to our other Best of Show winners, as well – including Themis, Quilo, and Debbie, each of which won Best of Show last week in their Finovate debuts. And the second time was certainly the charm for New York-based data insights and analysis firm Stratyfy, which won Best of Show last week in its second trip to the Finovate stage. The company’s UnBias technology underscores the role that technology companies will play in helping financial institutions and fintechs to find and undo the bias that undermines fair and equitable policies and practices.

Ain’t Nothing Like the Real Thing

If there is a third takeaway from FinovateFall worth sharing here, it is this one: there ain’t nothing like a live, in-person fintech conference. And while there may be some events that do not feel much different to the average attendee regardless of whether the presentations are in-person or digital, the same cannot be said of Finovate, the so-called “DisneyLand of Fintech.” From the edge-of-your-seat excitement (and, sometimes, anxiety) during a live on-stage fintech demo to the must-see-it-to-believe-it antics of our Finovate Fintech Fight Club combatants to a fully-packed networking hall, Finovate is a people thing. And when events like ours help put the right people together, who knows what kind of magic our attendees, speakers, demoing companies, and sponsors will create?

Photo by Albin Berlin

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The Conversation Continues: Greg Palmer and the Finovate Podcast’s Summer Series

The Conversation Continues: Greg Palmer and the Finovate Podcast’s Summer Series
By David Penn Posted on
Categories: David's column, Podcasting

Greg Palmer’s Finovate Podcast continues to be the source of many of fintech’s most compelling conversations.

From discussions with innovation experts to deep dives with veterans of the VC world, the Finovate Podcast is a great way to learn about the trends that fintech enthusiasts are most enthusiastic about.

Here’s a rundown of recent episodes you might have missed over the summer.

Find the Finovate podcast at Soundcloud and follow Greg Palmer on Twitter for the latest in programming news and updates.

Michael Butler, President and CEO, Grasshopper Bank

Finovate Podcast host Greg Palmer talks with Grasshopper Bank President and CEO Michael Butler on surviving and thriving as a neobank, and lessons for the broader fintech ecosystem. Episode 142.

“(Grasshopper) is a company that is focused on providing digital financial solutions to the business and innovation economy, mainly SMBs that are focused on technology and are technophiles by nature. We think there’s a big demand pull that has been coming for some time in the business side, and we think it’s the next great place for disruption from a digital banking perspective.”

Tony Ulwick, Creator, the Outcome-Driven Innovation Process

Greg Palmer introduces Tony Ulwick, founder and CEO of Strategn and creator of the Outcome Driven Innovation process, to Finovate audiences in this podcast conversation. Ulwick explains the importance of focusing on innovation that matters and successfully bringing new ideas to the market. Episode 141.

“I thought: if we just knew the metrics they were going to use to judge the value of our product a year and a half ago when we started developing it, we could just design the product to meet those metrics and we’d win in the marketplace. It sounds simple enough. But the (next) thought was: what are those metrics? How can we capture them? Do they exist?”

Tiffani Montez, Principal Analyst, Insider Intelligence

Podcast host Greg Palmer talks with Tiffani Montez, Principal Analyst with Insider Intelligence. In their conversation, Montez discusses strategies for keeping customers happy in times of economic uncertainty – and finding opportunity in challenging times. Episode 140.

“How do you safeguard consumer trust? We know that digital trust is the confidence that consumers place in their bank’s digital channels. And they have a prime opportunity to build this up as a commodity. We know over the last year the largest U.S. banks have come to aid in a time of pandemic related crisis. And customers have repaid that flexibility with greater trust in their primary financial institutions.”

Zach Noorani, Partner, Foundation Capital

Greg Palmer and Zack Noorani, Partner with Foundation Capital, talk about neobanks – the what, the why, and the what happens next. Episode 139.

“I would be remiss not to say that I struggle with startup nomenclature like this (neobank). These organisms evolve so quickly. Terms like “neobank” – at first they seem grandiose, way beyond what the businesses actually are. And then, before you know it, the end up feeling overly narrow and constricting.”

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Eight Alums Raised More Than $984 Million in Q2 2022

Eight Alums Raised More Than $984 Million in Q2 2022
By David Penn Posted on
Categories: Allied Payment Network, Altro, Autobooks, Backbase, Chekk, Crowdz, David's column, Funding, Fundings, Quarterly Funding, SumUp, Thought Machine

We may have missed an alum or two. But with the second quarter of 2022 in the books, here’s a look at our Finovate alumni funding for April, May, and June of this year.

As of our current count, eight Finovate alums have raised more than $984 million in Q2 of 2022. Of the eight alums that received funding in the quarter just ended, two – Allied Payment Network and Chekk – did not disclose the total amount of their investments.

Two of the quarter’s biggest investments were received in June, giving that month the lion’s share of capital raised by Finovate alums in the second quarter of the year.

Previous quarterly comparisons

  • Q2 2021: More than $2.8 billion raised by 14 alums
  • Q2 2020: More than $975 million raised by 15 alums
  • Q2 2019: More than $1.8 billion raised by 29 alums
  • Q2 2018: More than $1.5 billion raised by 25 alums
  • Q2 2017: More than $726 million raised by 25 alums

As we noted last year around this time, it is not unusual for second quarters to produce more moderate funding numbers compared to other quarters. And, as with last year, April proved to be an especially “cruel” month for fintech funding – at least as measured by our alums – with only FinovateEurope alum and relative newcomer Crowdz reporting funding that month.

That said, this year’s Q2 haul surpassed that of two of the previous five second quarters – and with significantly fewer alums participating.

Top Equity Investments

  • SumUp: $624 million
  • ThoughtMachine: $160 million
  • Backbase: $122 million

The top equity investment for the quarter was far and away the $624 million raised by London-based e-commerce innovator SumUp. In fact, all three of the top equity investments in Q2 of 2022 were greater than the largest investment in the previous quarter. SumUp’s massive capital infusion rivals all Finovate alum investments since NuBank raised $750 million in the second quarter of 2021.

Backbase’s fundraising of $122 million was notable because it was the first time the company had sought outside capital in its nearly 20 years of existence.

Here is our detailed alum funding report for Q2 2022.

April: $10 million raised by one alum

May: More than $178 million raised by three alums

June: More than $796 million raised by four alums

If you are a Finovate alum that raised money in the second quarter of 2022 and do not see your company listed, please drop us a note at [email protected]. We would love to share the good news! Funding received prior to becoming an alum not included.

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Innovating at the Network Edge: A Conversation with AT&T Business VP Rupesh Chokshi

Innovating at the Network Edge: A Conversation with AT&T Business VP Rupesh Chokshi
By David Penn Posted on
Categories: David's column

One of the more interesting conversations I enjoyed at FinovateSpring this year was a chat with Rupesh Chokshi, VP of Product Strategy and Innovation with AT&T Business. Often not a part of the general conversation on fintech innovation, communications companies like AT&T play a major role in providing both the infrastructure and technology that makes much of fintech innovation in 2022 possible. Chokshi discusses this – and more – in our conversation from FinovateSpring in San Francisco earlier this year.

On the relationship between fintech innovation and the revolution in connectivity

There is a trend right now in wireless connectivity, ubiquitous connectivity. And if you look at a lot of the innovation that’s happening in fintech, it’s associated with the user experiences. Whether it is an interaction on a mobile commerce kind of platform or some interaction with a call center that’s utilizing conversational AI or other technologies, connectivity plays a very important role and having ubiquitous connectivity that is high scale and on-demand is important.

A lot of the smaller, younger fintechs are banking on this infrastructure, this capability, this networking trend to be there to really differentiate the end user experience and the end game for their products and services.

On the challenges financial services companies are facing right now

I think there is still a lot of siloed, legacy infrastructure. There are still a lot of companies that are dealing with the question of how do you take what you have on to a new platform or to have some of that journey in the cloud or the multi-cloud. They are also understanding the kind of modernization of the app structures and modernization of the networking capabilities that you need. I feel there is an opportunity to do a little bit of a catapult or a breakthrough because (companies) have figured and mulled over all of these things for such a long time.

On what AT&T Business is doing to help fintechs and financial services continue to innovate

We’ve all talked about the digital acceleration that took place. Ten years of innovation happened in two years. We’re grappling with this whole hybrid work environment … In order to make all that a reality, the way we’re thinking about it, is that the investments we are making in our fiber footprint, in our 5G capabilities, are going to provide that baseline connectivity. And from there we’re thinking about enablers. We’re making our networks more programmable and open to those APIs that can be consumed by the application layer to make the end user experience very much differentiated.

So if I think about it, it’s a layered cake. For us, it’s the core connectivity, the infrastructure, put the enablers at the top of it, and then go into some deeper partnerships into the ecosystem, startups, large tech, hyperscalers, integrators … And then going to the true end customers and the verticals we support.

Listen to the rest of our conversation at FinovateTV.

Photo by Abhiram Prakash

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Trendspotting: What’s Driving Fintech Innovation Today?

Trendspotting: What’s Driving Fintech Innovation Today?
By David Penn Posted on
Categories: David's column, FinovateSpring 2022

This year at FinovateSpring, we asked a handful of Finovate attendees, presenters, and demoing companies what ONE trend they think we should all be paying attention to in fintech over the next 12 months.

Will it be the return of cryptocurrencies or the ability to deliver better financial advice at scale? Embedded finance or the continued rise of personalization and niche banking? And what about macro-economic trends, and their impact on the ability of fintech startups to raise capital and fuel growth?

This is what they told us.

Be sure to check out the videos from our FinovateSpring demoing companies – including Best of Show winners Array, Horizn, Keep Financial, FinGoal, QuickFi, and Spave – coming soon to our Finovate video archives.

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BMO Harris Bank Cardholders Support Reforestation; Rabobank Offers Carbon Insights

BMO Harris Bank Cardholders Support Reforestation; Rabobank Offers Carbon Insights
By David Penn Posted on
Categories: Daily news, David's column

Last week for Earth Day we talked about the different ways that the fintech industry is responding to the climate challenge. Since then, there’s been even more news on that front – in this case from a pair of banks that are giving their customers the ability to contribute personally to climate sustainability.

First up, BMO Harris Bank announced late last week that it is enabling its cardholders to support reforestation by donating their points to support the Priceless Planet Coalition. The Priceless Planet Coalition reforestation initiative was launched by Mastercard in 2020 and is partnered with Conservation International and the World Resources Institute. The Coalition has a goal of restoring 100 million trees by 2025.

BMO Harris Bank’s policy will enable cardholders in the U.S. to donate up to 500 of their accumulated points to Conservation International. Donating points is easy; cardholders can sign up for the program via BMO Digital Banking on their mobile app or online, then select the credit card account from which the points will be donated.

“Being part of Mastercard’s Priceless Planet Coalition is just one of many actions BMO is taking to support a sustainable future,” BMO Financial Group Head of North American Personal and Business Banking Ernie Johannson said. “What we do today will determine how our world looks tomorrow. In addition to BMO’s own bold actions to grow the good, we are proud to invite customers to join us and to make action as easy as redeeming their card points. Together, our efforts can make a big impact toward sustaining a healthy environment.”

Carbon tracking, as we mentioned last week, is among the more popular ways that fintechs and financial services companies have empowered consumers to better understand the impact of their spending habits on the environment. Rabobank, a Dutch multinational banking and financial services company, just announced that it will enable 1,000 of its Rabo payments accountholders to see the impact of their consumption on the climate – courtesy of a Carbon Insights feature on their Rabo app.

“With Carbon Insights, we make consumers part of the solution, just like we do with sustainable farmers who can earn carbon credits through carbon storage in their farmland,” Rabo Carbon Bank CEO Barbara Baarsma said. “Together our eight million private customers can make a difference and combat climate change by changing their spending patterns towards a smaller carbon footprint. For example, by buying different, less carbon intensive food they also stimulate supermarkets to offer more sustainable products.”

Rabobank developed its Carbon Insights capability in partnership with green fintech Ecolytiq, which has partnered with a number of financial services companies to help them develop climate sustainability-based solutions. Ecolytiq, leveraging the European Union’s Open Payment Standard, provides Rabobank with Dutch CO2 values per euro and spending category (food, transportation, clothing, etc.). Rabobank manages the secure environment in which accountholder payment data is processed, ensuring that customer data remains with Rabobank and that data is not used for any other purpose.

Underscoring the emphasis on privacy, Rabo Carbon Bank Product Manager for Carbon Bank Retail Fadoua Ajjaji explained, “Of course we don’t know the exact products somebody buys in the supermarket, so the CO2 emissions remain an estimation. For the calculation we look at the payment itself, not the actual receipt. Customers can provide additional information, if they eat meat or own a car, which allows us to make the calculations more accurate.” Ajjaji called carbon tracking “a missed opportunity” when it comes to meeting the climate challenge “as gaining insights is the first step in making more sustainable choices.”

Photo by Pixabay

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Elevating the Customer Experience: A Look at the New Credit Monitoring Solution from CuneXus

Elevating the Customer Experience: A Look at the New Credit Monitoring Solution from CuneXus
By David Penn Posted on
Categories: CUneXus, David's column, Interview

A Finovate alum since 2014, CuneXus specializes in enabling lenders to deliver personalized, mobile customer experiences while helping financial institutions grow loan volume and revenue. The company has reached more than $60 million in loans funded daily, $500 billion in client combined assets, and represented 28 million consumers in the U.S.

Last fall, the company announced the launch of its new credit and identity protection monitoring solution. The technology enables credit union members to both optimize their financial picture as well as monitor their accounts for any fraudulent activity from within the credit union’s dashboard.

We caught up with Barry Kirby, CuneXus SVP to talk about the company’s new offering and the CuneXus’ broader commitment to financial wellness.

Can you tell us a little about the decision to launch this new credit monitoring solution. Why this and why now? 

The reality is that the entire banking system is backwards. Meaning this is the only industry where consumers do the heavy lifting, like applying for credit, only to be told 70% of the time that they can’t buy the product. This results in a dissatisfied customer who will most likely look elsewhere.

Moving forward, it is crucial that financial institutions strategize a new method of engaging with their customers and members through personalized offers that match their needs, especially as spending continues to return to normal. To remain a central role in their communities and the main line of financial support for their customers, financial institutions must implement a business model that promotes the importance of financial awareness and delivers customers next level services and products best suited for their lifestyle.

At CuneXus, we are dedicated to helping banks and credit unions achieve this through our first-to-market digital storefront for account holders, addressing the need for a personalized, on-demand banking experience. This storefront is empowering banks and credit unions to provide a new level of support to their customers and members, by eliminating the loan application process and offering the convenience and immediacy that they expect.

Our new real time credit monitoring solution, which is embedded within the CuneXus storefront, allows us to enter the financial wellness market and elevate the customer experience. We have traditionally provided unparalleled transparency into consumers’ borrowing power through a perpetual pre-approval process. This new product, which provides a transparent view into credit health, is a natural addition to the CuneXus storefront.

What are some of the unique aspects of CuneXus’ new tool? 

Our credit monitoring solution has the ability to pull credit information from all the three credit bureaus. Our tool gives financial institutions the option to display information from any of the three bureaus (their bureau of choice), or they can opt to provide their account holders with scores from all three bureaus. This gives the consumer the ability to monitor and compare, and gives the financial institution the flexibility to provide consumers with the best loan options and highest approval odds.

Unlike other credit monitoring solutions on the market that encourage more debt, this new solution helps consumers make informed financial decisions for their futures. The CuneXus storefront is not on a mission to solicit more debt, but rather to offer an array of viable options that the consumer can choose from in their moment of need. Now, with the help of simulators, this new tool can offer account holders suggestions and advice based on their real time credit scores, empowering them to better understand their financial standings. This education component is crucial. Our well-rounded tool balances between education and offering account holders access to credit, to ensure they make the best next move for their future.

How does the new tool give users more control over and visibility into their financial health? 

Imagine logging onto online banking and a loan offer with a personalized note pops up explaining how to improve your credit; or it offers details on how boosting your score by 50 points may lead to an even better rate. Financial institutions have a timely and unique opportunity here to step in and help their communities by providing alternative credit options or displaying suggestions for future financial decisions based on each individual’s real time, credit rating. This is exactly what our new tool does – displaying tailored advice and personalized suggestions based on internal data paired with real time credit scores. Account holders can view these relevant offers and advice as soon as they log onto their account and decide their next step on their own. This allows lenders to give end-users more control and visibility over their financial health and elevate consumer confidence, transparency, and awareness to new levels.

What is the advantage of providing multi-bureau information and credit scores as this solution does? 

Financial institutions have the ability to either display credit scores from all or one credit bureau. However, those who choose to display more than one, give consumers the ability to monitor and compare their credit ratings and enables financial institutions to offer them the best loan options and highest approval odds. The ability to view all of this information right inside the digital storefront provides financial institutions’ account holders with a more consistent and seamless digital experience, eliminates the need to monitor them elsewhere, and empowers them to track their financial wellbeing over a period of time with ongoing transparency – all which ultimately helps them optimize their financial picture.

It’s been reported that the new solution serves as an identity theft alert system, as well. How is this so? 

This credit monitoring tool has the ability to automatically identify any adjustments or changes that have been made to an account holder’s credit score, alerts the user, and automatically suggests steps to correct issues. This capability can also act as a fraud examiner by monitoring any fraudulent activity and alerting both the financial institution and customer.

The credit monitoring tool was introduced last fall. What has the response been since the launch? 

We announced that we were building this tool last fall. However, it just hit the market this spring. We have financial institutions on the waitlist to launch and would be happy to offer a follow up story with any measurable benefits/results after they have gone live.

Will we see more from CuneXus on the financial wellness front going forward? 

Absolutely. CuneXus makes banking simple, enabling consumers to more easily interact and transact with their institutions through digital channels. As part of our ongoing commitment to helping banks and credit unions navigate an increasingly complex and changing landscape, we recently made a few additional strategic investments in partnerships that will help these financial institutions also understand where and how financial wellness can and should fit into their digital strategy.

Recently we teamed up with Equifax to offer CuneXus credit union customers a better view of their members’ financial wellness and help ensure they are receiving the most relevant offers in a timely and effective manner. The CuneXus platform will leverage insights and predictive analytics that ‘Only Equifax’ can provide in the pre-screen and segmentation phases of the loan process, empowering credit unions to understand more intimately their account holders’ financial standing and create a new level of consumer transparency and awareness.

Another example of this is our new partnership we just announced with Zest AI, the leader in software for more inclusive underwriting. By leveraging Zest AI’s fair credit scoring model within the CuneXus platform, credit unions and banks will be able to extend firm offers of credit to more members than ever before, especially those who are often overlooked by legacy credit scoring. This enables a more inclusive underwriting process, improves consumer access to affordable lines of credit, and helps consumers on the lower credit spectrum build healthier credit scores, improving their long-term financial wellness.

Photo by Karolina Grabowska from Pexels

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Innovation in the Face of Invasion: Flying the Flag of Ukrainian Fintech

Innovation in the Face of Invasion: Flying the Flag of Ukrainian Fintech
By David Penn Posted on
Categories: David's column, Finovate Global

Russia’s invasion of Ukraine has sent shockwaves around the world – and the fintech industry has not been immune to the reverberations. As Axios noted last week, fintechs such as money transfer giant Wise and financial services company Brex have limited or halted fund transfers altogether to Russia and Ukraine. The reasons given for the service changes have varied, with some organizations emphasizing solidarity with Ukraine and others citing operational challenges. But the fact remains that the Russian invasion of Ukraine has forced many fintechs, in Europe especially, into scramble mode is impossible to deny.

The crisis in Ukraine also has brought renewed interest in the role of cryptocurrencies. As economic sanctions – including the expulsion of a number of Russian banks from global financial messaging service SWIFT – take their toll on the Russian economy, the idea that Russia and the country’s elites could turn to cryptocurrencies to limit the financial damage may be edging from possibility to probability. The Ukrainian government has asked cryptocurrency exchanges to freeze the accounts of Russians and Belarusians and, at this point, it appears that some of the world’s biggest cryptocurrency exchanges are moving in that direction.

Ukrainian fintechs are also committing their technology and talent to the cause of defending their country from Russian aggression. For one, the country’s leading neobank Monobank is accepting SEPA transfers to help fund the Ukrainian army, and announced that it has raised more than 11 million Ukrainian hryvnia ($395,830) to date.

That said, one of the biggest concerns from Ukrainian tech companies in general and fintech companies in specific is panic from these companies’ customers. TechUkraine’s Nataly Veremeeva urged clients of Ukrainian firms to maintain their relationships, noting that the income from these partnerships helps support both the Ukrainian economy and the Ukrainian military. Importantly, the fact that Ukraine has been under threat from Russia for nearly a decade has helped Ukrainian companies develop a resiliency that is being brought to bear today, Veremeeva explained.

This point was underscored by Senka Hadzimuratovic, spokesperson for one of the more famous Ukraine-founded tech companies, Grammarly. Backup communications and temporarily transferring certain critical business responsibilities to Grammarly team members living outside of the country have been among the precautions taken by the company.

Ivan Kaunov, Head of Growth and co-founder of Finmap.online, a Ukraine-based financial management app for SMEs, spoke for many of his fellow Ukrainians late last week. “Today Russia (has) invaded Ukraine. All our teammates (are) in safe places, We, as a nation, unite(d) and ready to resist.”

A brief primer on fintech in Ukraine

There is a wide variety of fintech companies in the Ukraine. These firms range from neobanks like Monobank, a five year old financial institution with more than four million customers, to payments companies like IBox and EasyPay, to financial services technology companies like Neofin and Wallet Factory, to cryptocurrency exchanges like Kuna. One way to get a broad cross-section of the country’s fintech sector is via the Ukrainian Association of Fintech and Innovation Companies (UAFIC). The organization, founded in 2018, is a membership-based NGO designed to support the development of Ukraine’s fintech industry. Approximately 66% of the association’s members are fintechs, with another 14% representing IT companies and MFOs, and banks making up 6%.

Last fall, the UAFIC announced a collaboration with leading financial sector associations in Ukraine- including the Independent Association of Banks of Ukraine (NABU), the Association of Financial Institutions, the All-Ukrainian Association of Credit Unions, and the Insurance Business Association. The goal of the alliance is to help design legislation to support the development of open banking and payment services in the country.

“Recently, fintech companies and banks have realized that working on the basis of OpenBanking technologies is much more profitable than competing with each other,” UAFIC Board Chairman Rostislav Duke said. “The financial ecosystemn is receiving new signals of openness and willingness to cooperate and partner in the market. Our work will promote greater access to information for all financial market participants.”

Another way to learn more about the Ukraine fintech industry is via TechUkraine, a platform dedicated to supporting the country’s technology ecosystem. A spin-off from the Export Strategy of Ukraine for ICT Sector, TechUkraine is geared toward encouraging what Director Veremeeva called “a great story of government and business working together to achieve a truly significant goal – Ukraine (as) an innovation-driven, universally recognized tech destination that delivers high value for the global economy.”

Photo by Katie Godowski from Pexels

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