Envestnet | Yodlee’s Terry McKeown on Thin Files, Fintech, and the Foundation of Credit

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What are reliable credit assessments made of? These days the answer could be anything from FICO scores to feedback from social media activity on LinkedIn or Facebook. And while Terry McKeown, practice manager of credit analytics at Envestnet | Yodlee, finds some of the newer approaches to risk and credit assessment novel—and in some instances worth pursuing—his expert opinion is to to keep all eyes on the prize: the borrower’s ability to repay the amount borrowed and a track record of making those payments consistently.

Yodlee_TerryMcKeown“I’m a big fan of the foundations of credit,” McKeown said in a telephone conversation last week, harkening back to the days when lending discussions took place over a desk in an office rather than over the internet. Besides traditional credit-bureau data, he sees interesting potential in alternative and nontraditional data such as checking-account transactions and utility-bill payments when it comes to risk assessment, especially for those with short or even nonexistent credit histories. Populations with slim to invisible histories include millennials, immigrants, the elderly, the unbanked and underbanked. McKeown also sees value in examining traditional data in nontraditional ways, such as using checking account or mobile wallet payment data as a guide to a borrower’s consistency when it comes to paying bills. “This data can show both income stability as well as income verification by way of direct deposit,” he explained.

Other data alternatives he finds interesting include using LinkedIn to verify employment history and patterns, reviewing milestones in a Facebook profile for potential life changes, or perusing the Yelp reviews of a small business person seeking a loan. That said, McKeown sees many of these alternative metrics as still works-in-progress, saying that while they are “incredibly insightful,” many of these approaches are still very much “in early stages from an analytic standpoint.”

The interest in alternative credit and risk assessment becomes more important as the availability of new forms of data (including new technologies to access that data) converges with financial institutions determined to “catch up” with their increasingly mobile, increasingly young, potential customer base. “It’s been very much an education,” McKeown said, pointing out that millennials have different needs compared to, for example, those of gen-Xers when they were the same age.  The upshot: Traditional credit-bureau data becomes less relevant owing to data viewed at a summarized level and not being updated daily as is the transaction-level data that Envestnet | Yodlee provides.

So what’s the solution? McKeown points to two key dynamics: creative engagement and higher expectations. For McKeown, millennials—and to an extent other underbanked communities—”want a partner in their finances that thinks and behaves like them.” This means everything from meeting the customer on their channel (or channels) of choice to greater flexibility and understanding when it comes to matching customers with products. This also means that FIs need to be ready to do more to meet the changing expectations of their potentially less patient, more technologically savvy clientele. “Millennials expect to have real-time pricing information based on real-time data available at the click of a mouse or via their mobile device,” McKeown said. “They expect an intuitive, simplified application process, whether it is delivered in person or over the Internet, or through a phone app.”

That said, the key to attracting and better engaging with millennials is less a technological challenge and more a cultural one, as McKeown sees it. “Problems with accurately credit-scoring people in their 20s and early 30s [are] nothing new,” he says. What is new is a generation that is simultaneously more free and more connected than its predecessors, giving financial services professionals both new challenges and new opportunities when it comes to engaging both “America’s largest generation” and the underbanked alike.


About Envestnet | Yodlee

Envestnet acquired multiple Best of Show winner Yodlee for $680 million almost one year ago. The company announced a strategic partnership with United Capital earlier this month, in which the company’s data-aggregation technology will support United Capital’s FlexScore solution. FlexScore, a Finovate alum, was acquired by United Capital in February. More than 1,000 firms, including more than half of the 20 biggest banks use Envestnet | Yodlee’s platform to drive apps for millions of customers around the world.

FinDEVr APIntelligence

FinDEVrSV16-withdateOur FinDEVr New York developer showcase was a success! FinDEVr Silicon Valley will be held 18/19 October in Santa Clara. Register today to save your spot.

On FinDEVr.com

  • Avalara Adds to Compliance Document Management Solution, CertCapture
  • GreenKey Launches Design Partner Program

The latest from FinDEVr New York 2016 presenters

  • OutsideIQ Brings Due Diligence Platform DDIQ to New
    International Markets
  • The International Swaps and Derivatives Association and Markit launch ISDA Amend 2.0.

Alumni updates

  • Kontomatik’s Konstantin Rabin shares his thoughts on successful lending in The Paypers.
  • Envestnet | Yodlee launches Transaction Data Enrichment to offer transparency into transactions.

Stay current on daily news from the fintech developer community! Follow FinDEVr on Twitter.

Finovate Alumni News

On Finovate.com

  • Interactions Garners $56 Million in its Largest Funding Round Yet
  • Automobile Title Lending Platform Finova Financial Raises $52.5 Million
  • Check out this week’s FinDEVr APIntelligence.

Around the web

  • Kontomatik’s Konstantin Rabin shares his thoughts on successful lending in The Paypers.
  • Forbes features Jon Stein, Betterment CEO and cofounder.
  • San Diego Business Journal names eMoney Advisor one of the “Best Places to Work in San Diego.”
  • Envestnet | Yodlee launches Transaction Data Enrichment to offer transparency into transactions.
  • TradeRiver Finance reaches milestone of lending GBP100 million to U.K. businesses.
  • Portland Business Journal takes a look inside Simple’s new office.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

FinDEVr APIntelligence

FinDEVrSV16-withdateOur FinDEVr New York developer showcase was a success! FinDEVr Silicon Valley will be held 18/19 October 2016 in Santa Clara. Register today and save.

On FinDEVr.com

  • From the Tech Side: Interview with Checkbook.io CTO PJ Gupta

The latest from FinDEVr New York 2016 presenters

  • Q2 Leverages MX Technology to Launch Contextual PFM
  • France’s Groupe BPCE Acquires Munich-based Fidor Bank
  • Venmo named a Breakthrough Brand on Interbrand’s 2016 report

Alumni updates

  • Pennsylvania State Employees CU implement account origination module from Temenos.
  • Envestnet | Yodlee Forges Strategic Partnership with United Capital
  • Token opens new London office.
  • Trulioo earns top honors for ID verification in 2016 Global RegTech report.
  • PC Magazine labels Xero the fastest accounting-software innovator.
  • Entersekt to bring its 2FA technology, Transakt, to Nigeria via partnership with First Authentication Services Ltd (FASL).

Stay current on daily news from the fintech developer community! Follow FinDEVr on Twitter.

Envestnet | Yodlee Forges Strategic Partnership with United Capital

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Envestnet | Yodlee’s data-aggregation technology will power United Capital’s FlexScore solution. And yes, that’s the same Finovate alum—FlexScore—that was acquired by United Capital earlier this year.

“By delivering innovative financial planning solutions and new data-driven insights, our partnership will empower FlexScore users to take control of their financial destiny,” Envestnet | Yodlee VP Julie Solomon said. As United Capital’s primary account data-aggregation partner, Envestnet | Yodlee will securely link users’ financial accounts and seamlessly onboard customers while aggregating the necessary data to generate each user’s individual financial health rating or FlexScore.

The FlexScores eventually will be offered as part of FinLifePartners, United Capital’s white-label advisory platform for independent advisers.

“Our business has helped transform the traditional wealth-management industry,” United Capital Head of Platform Mike Capelle said. “For us to continue innovating and benefiting customers, we needed a proven data-aggregation partner that could provide the tools our customers need to take control of their financial lives.”

United Capital is one of the fasted growing RIAs in the country. The firm has $16 billion in assets under management and more than 80 offices in the U.S. When the acquisition was announced in February, United Capital’s CEO called FlexScore “the missing piece” and anticipated that the technology would be used “to help promote customer engagement with retirement plans.”

In acquiring Yodlee just over a year ago for $680 million, Bill Crager, Envestnet president, said he hoped the addition would make it easier for Envestnet to ink deals with independent and smaller financial advisers unaffiliated with the larger firms such as Merrill Lynch and Morgan Stanley. The company’s new strategic partnership with United Capital is a big step in this direction.

Headquartered in Redwood City, California, and with offices in London and Bangalore, India, Envestnet | Yodlee provides data aggregation and analytics to more than 1,000 companies, including 11 of the top 20 U.S. banks. The company trades on the NYSE under the ticker symbol “ENV” and has a market capitalization of $1.6 billion. Yodlee, which went public a year before being acquired by Envestnet, demonstrated its latest technology at FinovateSpring 2016.

Finovate Alumni News

On Finovate.com

  • Envestnet | Yodlee Forges Strategic Partnership with United Capital
  • Finovate Debuts: Cyberfend’s BotFender Detects Attacks in Real-Time

Around the web

  • TransferWise partners with Raphaels Bank as part of Faster Payments Service integration.
  • Token opens new London office.
  • Trulioo earns top honors for ID verification in 2016 Global RegTech report.
  • Check Point Introduces First Real-Time Zero-Day Protection for Web Browsers
  • P2Binvestor Delivers Biggest Line of Credit Yet at $10 Million
  • CR2 teams up with Diamond Bank to bring next-generation ATM technology to Nigeria.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Ready for a Sneak Peek? How to Best Prepare for FinovateFall

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To give you a sense of the many new ideas at the upcoming FinovateFall conference in New York, we’ve launched our Sneak Peek series. Eight companies are featured each week leading up to the 8/9 September event (tickets now available).

In the meantime, here is a quick summary of the 66 announced companies (six more are in stealth mode). It’s a lot to take in; pace yourself!

  • Agreement Express offers an an end-to-end platform that helps traditional financial institutions automate labor-intensive parts of the customer onboarding process to remain compliant while quickly opening customer accounts.
  • Aleo’s marketplace uses e-procurement, e-commerce and supplier financing bundled in a single open platform to offer small and medium enterprises an online procure-to-pay solution.
  • AutoGravity’s mobile-first digital marketplace helps digitally minded customers, looking to buy and finance a vehicle, circumvent the inefficiencies of the auto-financing process by leveraging the full potential of their smartphone.
  • Avoka’s customer-acquisition platform integrates multiple fintech services to help banks, wealth managers and insurers use mobile and digital channels to onboard customers.
  • Backbase offers 60-second onboarding for financial services companies to accelerate customer acquisition with a simple, fast, and seamless omnichannel onboarding journey.
  • Bankjoy offers developers a banking API for a modern, real-time, holistic interface for credit unions and community banks.
  • Bitbond’s automated, international credit-scoring mechanism compares small business-loan applicants from different countries by using machine learning and data from the applicant’s business accounts.
  • Bluescape offers large financial services companies a highly interactive, visually collaborative platform that uses real-time, cloud-based architecture that’s ultra-scalable, all-capturing, and accessible anytime from any device.
  • BondIT offers financial advisers and portfolio managers a data-driven solution that uses machine learning advanced algorithms to manage fixed-income portfolios and solve optimization challenges.
  • brandCrowder has developed an alternative investment platform focusing on branded franchises. It leverages 45+ years of franchise-operations experience to help retail investors finance franchises, helping to bring them to market quicker.
  • Clinc’s mobile, voice-activated personal financial adviser uses artificial intelligence to help consumers get answers to financial questions and tasks.
  • Consdata offers banks and financial institutions a comprehensive platform for e-form management and customer-communication complexities.
  • Currencycloud’s dedicated API services use intelligent APIs to help businesses with the cost, limitations, and boundaries of existing payment infrastructure.
  • Daon bridges convenience and security by offering financial services companies a mobile biometric authentication platform that turns a smartphone into a mobile capture device.
  • Divy’s app and social investing community uses an approachable interface and engaging content to help first-time and emerging investors access direct marketing and financial literacy material.
  • Dynamics offers issuers and their cardholders interactive payment cards and an authorization-based, real-time loyalty processing system.
  • ebankIT’s platform offers financial institution clients an omnichannel experience.
  • Econiq’s Conversation Hub uses color-coded conversations to help bank and insurer frontline staff, and operational management and executives avoid disconnected customer conversations in branches and contact centers.
  • Envestnet | Yodlee offers millennials a solution for measuring financial health and promoting a healthy financial lifestyle.
  • Experian CrossCore is a single platform that helps manage customer identities, fraud-prevention tools, workflows and decision strategies in an easy-to-use and scalable format.
  • EyeVerify’s Eyeprint ID offers banks and other financial services companies eye biometrics via smartphone cameras for convenient, secure and private authentication.
  • Featurespace’s ARIC Engine helps financial services clients spot and prevent fraud attacks in real time using adaptive behavioral analytics.
  • Finicity offers an API for companies to build financial apps.
  • Fiserv helps financial institutions enable social finance by providing customers access to a safe, collaborative bank-secured social funding product.
  • Full Profile uses the blockchain and smart contracts for real-time settlement and reporting of physical agri-commodities to help farmers, buyers, banks and government counter party and credit-risk exposures.
  • FutureVault’s cloud-based filing cabinet helps financial service providers and their clients organize asset documents and accounts using a secure, structured and collaborative B2B2C cloud environment.
  • GainX’s SaaS platform uses decades of market research and leading-edge technology to help large financial institutions overcome innovation and adaption failures.
  • GoodData helps large banks, credit-card processing and insurance companies commercialize and monetize their data using a scalable, manageable and secure platform that is exclusively designed for data products and embedded analytics.
  • iBank Marketing offers millennials a multifunction digital wallet to help them achieve personal goals around life events by using its local eco-system that bridges consumers and small- to medium-sized enterprises.
  • identitii uses tokens and blockchain to help financial institutions with KYC, CTF and AML compliance using an information layer over legacy systems.
  • InSpirAVE’s social e-commerce platform curates advice and financial support from the user’s friends and family, financial institutions, and merchants. It helps multiply savings, for big-ticket purchases for customers who otherwise may not be able to afford them, by placing important goals for life’s special moments within reach, without the crushing burden of debt.
  • KORE’s platform transforms enterprise applications, online banking and mobile apps into personalized, conversational engagements to help financial institutions meet customer-experience expectations using the power of bots and simplicity of messaging.
  • LendingFront’s lending platform leverages a cloud-based system that furnishes small businesses with capital using their cashflow data.
  • Lidya offers African small- to medium-sized enterprises access to finance using online receivables-based lending and proprietary credit scoring.
  • Liferay’s Digital Experience offers banks a richer understanding of customers by orchestrating personalized customer experiences.
  • M1 Finance places assets held in low-yielding cash accounts into an asset-linked bank account and intuitive investment platform.
  • MapD’s Immerse helps quantitative hedge fund and asset managers query datasets with billions of rows in real-time by applying the parallel processing power of GPUs to the challenges of databases, visualization and analytics.
  • MarketX’s cross-border investment platform helps international investors with the lack of liquidity for U.S. startup shares and limited access to U.S. pre-IPO investment opportunities.
  • ModoPayments offers financial companies a digital payments hub to connect disparate sources of value to diverse destinations using Modo’s COIN technology.
  • Moonraft Innovation Labs helps banks innovate and evolve by rapidly adapting to changing market needs using Catamera, its unique customer experience delivery framework.
  • Moven’s growing platform reaches the millennial, mobile first, digital native audience by bringing banking (specifically savings) into the moment.
  • MX helps financial institutions become true advocates for their account holders by using analytics to power a revolutionary category of data-driven money management.
  • nanoPay offers a payments and loyalty solution for merchants.
  • Overbond’s digital platform offers transparency, efficiency, and liquidity in the fixed income market for corporate issuers, investors, and dealers.
  • Personetics offers financial services providers a digital personalization platform that uses real-time, ultra-scalable predictive analytics to keep customers engaged in the digital age.
  • ProActive FinTech uses a phone app and debit card featuring unlimited mini bank accounts and pre-purchase categorization to help millennial moms with cash-flow management.
  • QE Data offers commercial banking systems a real-time predictive model for net cash-flows that uses machine learning, rich visualization, speedy deployment and real-world banking experience.
  • Qumram uses 100% real-time, video-like recording of every mouse movement, keystroke and button click to help financial services organizations with compliance and transparency issues relating to digital business.
  • RightCapital’s financial and tax-planning platform helps advisers deliver unbundled, quality financial planning and tax-planning services. It works to efficiently and digitally help consumers with the lack of viable business and technology solutions.
  • SaleMove offers financial institutions a live engagement platform to help sell and service complex financial services products online. The platform uses instant video chat and guided browsing with no downloads or installations.
  • Sindeo’s self-directed consumer rate quote and prequalification tool simplifies home financing and refinancing using an integrated platform that offers consumer, real estate partner, and adviser tools that conform to CFPB regulation and ensure a simple and easy consumer experience.
  • SpeechPro’s customer onboarding solution offers multichannel access to help CTOs, developers and other technologists focus on KYC, identity and verification.
  • Swych’s mobile gifting platform offers gift-card recipients a better way to buy, gift, and manage gift cards.
  • Tango Card’s RaaS API 2.0 uses simple-yet-complete delivery technology and domain expertise to help enterprises deliver incentives efficiently and effectively.
  • TokBox’s Financial Services Accelerator Pack offers banks and financial organizations secure and easy-to-embed, real-time communications technology.
  • TransUnion’s interactive data-visualization solution uses big data and analytics to connect and interpret consumer financial data for lenders.
  • Trulioo’s GlobalGateway uses traditional and cyber ID data sources to offer banks, financial services providers, and online marketplaces secure access to reliable, global data sources for instant ID-verification.
  • Trusona’s anti-replay and TruToken technology offers an insured identity platform for sensitive assets.
  • Unbill’s API enables companies to offer bill pay in their app or technology platform without complicated integration or high costs.
  • Uniken’s REL-ID, a card-not-present approval solution, uses mobile API tool kits and DMZ software appliances to help enterprises secure mobile communications.
  • Urban FT’s enhanced, white-label digital banking platform gives financial services organizations, wireless carriers, and other consumer-facing organizations a long-term, competitive advantage that makes their brand integral to customers’ daily financial and online social activities, financial tools, and social features.
  • Xentral Station’s supply-chain funding app helps vendors of all sizes receive cash for trade financing within 24 hours.
  • Zenmonics uses a single, common platform to help banks and their customers minimize friction in customer engagement with channelUNITED.
  • Zooz offers an agnostic, cross-border payments platform to help merchants act on payment processes and save money to maintain their client base.

Stay tuned on the blog for more detailed descriptions. And don’t forget to register now to reserve your spot.

A Look at the First Week of Nasdaq’s Fintech Index

While many of you were busy catching Pikachu last week, you may have missed that Nasdaq, in collaboration with KBW, launched an index to track financial technology. Officially named KBW Nasdaq Financial Technology Index (KFTX), the fund tracks 49 fintech companies, including 17 Finovate and FinDEVr alums.

On Monday, 18 July, the index opened at 1,000 points and closed at almost 1,014 points on Friday, 22 July.

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Finovate and FinDEVr alums listed in the index include:

According to Nasdaq’s press release, the companies in the index “represent roughly one-fifth (18%) of the investable domestic financial universe and nearly 4% of the investable domestic equity universe to account for approximately $785 billion in total market cap.”

It’s worth noting that the index, which will be rebalanced quarterly, does not consider activity from private companies, startups, or banks. Large, public companies may not be as sprightly as two guys in a garage, but they create their fair share of cutting-edge products and services. When creating the index, KBW and Nasdaq adhered to three guidelines:

  1. The companies mainly sell financial services
  2. Not primarily brick-and-mortar operated
  3. Income is generated from fees, rather than interest

Other companies in the index include (each company in the index is weighted equally):

Alliance Data Systems Corp. (ADS); Bankrate Inc. (RATE); Black Knight Financial Services Inc. (BKFS); BofI Holding Inc. (BOFI); Broadridge Financial Solutions Inc. (BR); Cardtronics Inc. (CATM); CBOE Holdings Inc. (CBOE); CME Group Inc. (CME); CoreLogic Inc. (CLGX); Dun & Bradstreet Corp. (DNB); Euronet Worldwide Inc. (EEFT); EverBank Financial Corp. (EVER); EVERTEC Inc. (EVTC); FactSet Research Systems Inc. (FDS); First Data Corp. (FDC); FleetCor Technologies Inc. (FLT); Global Payments Inc. (GPN); Intercontinental Exchange Inc. (ICE); MarketAxess Holdings Inc. (MKTX); Moody’s Corp. (MCO); MSCI Inc. (MSCI); Nasdaq Inc. (NDAQ); S&P Global Inc. (SPGI); SEI Investments Co. (SEIC); Square Inc. (SQ); SS&C Technologies Holdings Inc. (SSNC); Total System Services (TSS); The Western Union Co. (WU); VeriFone Systems Inc. (PAY); Verisk Analytics Inc. (VRSK); Virtu Financial Inc. (VIRT); and WEX Inc. (WEX).

Finovate Alumni News

On Finovate.com

  • GBG Group Agrees to Acquire IDScan Biometrics
  • Check out this week’s FinDEVr APIntelligence.
  • Kreditech Launches Online POS Financing Solution
  • Fenergo Adds Enhanced Rules, Remediation to its CRS Compliance Solution
  • From CEO to Deputy Mayor, Xendpay’s Rajesh Agrawal Heads to City Hall

Around the web

  • The Paypers interviews ACI Worldwide’s Craig Saks, group president of strategic products.
  • The Media Line’s column on CyberWeek 2016 at Tel Aviv University features ThetaRay.
  • PYMNTS.com chats with Jeff Hampton, TSYS director of product marketing.
  • Greg Smith, Blooom president; Aaron David Bauer, Envestnet Executive MD; and Andy Swan of LikeFolio earn spots on Investment News’ 40 Under 40 list.
  • Matt Fellowes resigns as chief innovation officer at Morningstar—which bought HelloWallet in 2014—to build retirement software.
  • ID Analytics secures patent for systematic detection of fraud rings.
  • Fenergo enhances CRS compliance solution with enhanced rules and remediation.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

FinDEVr APIntelligence

FinDEVrSV16-LogoV2(wdate)

Our FinDEVr New York developer showcase was a success! FinDEVr Silicon Valley will be held October 18 & 19 in Santa Clara. Register today and save.

On FinDEVr.com

  • “OakNorth, “The First Cloud-Based Bank in the U.K.” is Powered by Mambu”
  • “Mobeam Barcode Beaming Technology Gains Broader Integration with Samsung Pay”
  • “Up from Down Under: VIX Verify Chooses Atlanta’s Transaction Alley for Americas Headquarters”
  • “Speed of Lightning, Roar of Thunder: Blockchain Unveils Off-Chain Bitcoin Payments Network”

The latest from FinDEVr New York 2016 presenters

  • Version 6.0 of PayPal app discontinues support for Amazon Fire, Windows, and Blackberry phones.

Alumni updates

  • “Twilio Readies for $100 Million IPO”
  • Let’s Talk Payments takes a look at the post-acquisition relationship between Envestnet and Yodlee.
  • Neyber selects Cloud Lending Solutions for loan automation.

Stay current on daily news from the fintech developer community! Follow FinDEVr on Twitter.