List series

6 Benchmarks TCH Reached Before FedNow Even Launched

6 Benchmarks TCH Reached Before FedNow Even Launched
By Julie Muhn (@julieschicktanz) Posted on
Categories: List series, Thought Leadership

By now you’ve likely heard that the U.S. Federal Reserve launched its FedNow instant payments solution. Using the new tool, banks and credit unions can enable their customers to instantly transfer money at any time of day, any day of the year.

The release comes 10 years after the Fed first started talking about creating a real-time payments (RTP) solution in 2013, and five years after it began developing an RTP offering. The Fed’s instant payments solution also comes after a handful of competing companies in the private sector– including Orum, Visa Direct, and The Clearing House (TCH)— had already launched.

The latter of these– TCH– just released an update that details some of the metrics it has reached in the instant payments realm after launching its RTP network in November of 2017. Here is what the company has achieved in six years:

Increased transaction number

The number of transactions on the RTP network in Q2 2023 totaled 58 million, up from 41 million transactions during that same period last year.

Increased transaction volume

The value of transactions during Q2 2023 reached $29 billion, up from $18 billion in the same quarter last year.

Gained financial institution customers

More than 350 financial institutions are providing real-time payments on the RTP network to their customers and members.

Gained business adoption

150,000 businesses are sending payments over the RTP network. This is a 50% increase since December 2022.

Reached end consumers

3+ million consumers each month are sending account-to-account payments and Zelle payments that leverage the RTP network

Reached demand deposit accounts

The RTP network currently reaches 65% of U.S. demand deposit accounts.

These milestones signify three things. First, they are a reminder to always question claims of “industry firsts.” The launch of FedNow is buzz-worthy because it is a government-led initiative, not because its the first player in the U.S. to enable real-time payments.

Second, TCH’s milestones indicate that consumers are not only conceptually ready for the change, they are open to trusting the process behind the change. “As more banks and credit unions join the RTP network, their customers and members are experiencing the benefits of real-time payments,” said TCH Senior Vice President of RTP Product Management Rusiru Gunasena. “Surpassing 500 million RTP payments signifies the accelerating growth and demand on the RTP network.”

The last thing TCH’s stats demonstrate is that there is still room for a lot of growth in this area. FedNow may not have been the first player to enter the market with an RTP solution, but that’s not to say it won’t be successful. There are currently 57 banks and credit unions planning to participate in FedNow, and Forbes estimates that number will increase to 200 by the end of the year and will reach 500 by the end of next year.

Photo by Hasan Albari

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Five Reasons to Look for a Fintech Funding Rebound in the Second Half of 2023

Five Reasons to Look for a Fintech Funding Rebound in the Second Half of 2023
By David Penn Posted on
Categories: Funding, List series

Stocks might be soaring over the summer. But the headlines of late have been filled with dour reflections over fintech investment in the first half of 2023. The first half of the year – and the second quarter in particular – have been tough on fintechs seeking funding. But here are five reasons why fintech funding in the second half of 2023 – and beyond – is likely to be better than the first half.

The first half was pretty bad

One of the reasons why the second half of the year might see higher levels of fundraising in fintech is because the first half has set a fairly low bar. In its analysis of H1 fintech investment this year, S&P Global Market Intelligence noted that Q2 2023 was the “slowest quarter on record over the past two and a half years” in terms of deal count. In the U.S., H1 funding was down 28% from the previous year. Declines in the U.K. were even more severe, with H1 2023 trailing H1 2022 by a whopping 83%.

S&P Global Market Intelligence was careful to add that while the slowdown in investment impacted the first half significantly, the declines began late last year rather than at the beginning of this year. And while the report writers expressed anxiety over the continued low deal count, the report did note approvingly overall deal value growth, the potential for a stabilization in interest rates, and the underlying robustness of digital trends in financial services as factors that support a recovery in the second half of 2023.

About that recession

Despite layoffs in the tech sector and high-profile tremors in the banking industry like the collapse of Silicon Valley Bank, the widely anticipated recession – and its accompanying 5%+ unemployment rates – has yet to occur in the U.S. or Europe. As economic confidence grows, and the date for a potential economic slowdown gets pushed further into the future by economists, investors are likely to feel more comfortable putting capital at risk.

In addition to the potential for moderation on the interest rate front mentioned above, S&P Global Market Intelligence also highlighted the fact that many venture capitalists remain “flush with cash.” According to Pitchbook, the money available for investment by venture capital is at an all-time high of more than $279 billion for U.S.-based funds alone. That capital will only remain on the sidelines for so long.

Curbed enthusiasm

The popular embrace of emergent GenerativeAI solutions helped give the technology industry writ large a boost at a time when the focus was on shrinking workforces and a sense of stagnation in terms of post-smartphone innovation. At the same time, the strong but relatively muted response to Apple’s metaverse-manifesting VisionPro suggests that market for innovation is still strong, but it may be a little more sober than it’s been in awhile.

This could be a particular benefit for fintech companies where the solutions and services are geared toward clear human challenges in a way that some other areas of technology are not (more on this later). As investors return to the market in search of promising startups, those companies in industries with proven ways of using enabling technologies like automation and machine learning could see early interest.

More tech layoffs, More tech companies

It can be a delicate point. But in the same way that companies like Facebook and YouTube emerged from the wreckage of the dot.com bust, and Airbnb and Uber (and Finovate!) were born out of the ashes of the Great Financial Crisis, one door closing in the economy often signifies the opening of another. The talent that is leaving some of the biggest and most successful technology companies in history is likely to go on to launch and staff the next round of big, successful technology companies. Savvy investors know this, and will be watching to see who ends up where, and what they are up to.

Work the problem, people

One thing that I appreciate about Finovate conferences – and all similar events, to be honest – is that they are a live, in-person reminder that there are people – many of them younger than you and me – who are enthusiastically pursuing solutions to problems in their lives, the lives of their friends and loved ones, as well as the communities they belong to and care about. They tend to not have a lot of time for fear, doubt, or lamentations about what can’t be done. Instead they are more likely to embrace the old motto: lead, follow, or get out of the way.

As long as there individuals who need help sending money to relatives overseas, families struggling to save for the future, businesses looking for ways to make their services both more profitable and available to more customers, there will be fintech innovators building solutions for them. And few people know that better than the investors whose vision and commitment has help make and will continue to help make those solutions possible.

Photo by The Lazy Artist Gallery

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5 Tales from the Crypto: Coinbase Partnership Boosts Fortunes of New Bitcoin ETFs

5 Tales from the Crypto: Coinbase Partnership Boosts Fortunes of New Bitcoin ETFs
By David Penn Posted on
Categories: Cryptocurrency, List series

The road to recovery for crypto may be long. And making meaningful headway may require more than a few instances of taking one step back in order to take two steps forward.

Case in point is the latest hurdle faced by BlackRock as the company seeks to launch a spot bitcoin ETF. On Monday, we learned that the Nasdaq refiled the ETF application with the U.S. Securities and Exchange Commission (SEC) after the regulator highlighted a number of concerns with regard to the original petition. Among the chief concerns was the fact that the Nasdaq did not indicate which crypto trading platforms would participate in “surveillance-sharing” to help combat fraud in the underlying bitcoin markets.

BlackRock was not the only asset manager to hit this regulatory snag en route to the launch of its bitcoin ETF. The SEC also criticized filings from the Chicago Board Options Exchange (CBOE) with regards to a handful of bitcoin ETF petitions from the likes of Fidelity, WisdomTree, VanEck, and a joint project from Invesco and Galaxy – based on similar grounds.

The beneficiary of this hiccup, ironically, appears to be Coinbase, the SEC’s crypto bête noire. In response to the regulator’s concerns, both the Nasdaq and the CBOE indicated in their refilings that they would rely on Coinbase to serve as their “surveillance-sharing” partner. This move both answers one of the primary regulatory concerns vis-a-vis bitcoin ETFs and puts the cryptocurrency innovator back at the center of crypto’s comeback – all this despite the SEC’s antagonistic attitude toward the fintech it filed a lawsuit against in June.

Revolut announced this week that its customers in the U.S. will no longer be able to trade three tokens – Solana (SOL), Cardano (ADA), and Polygon (MATIC). The decision stems from the SEC’s categorization of the three tokens as unregistered securities and the subsequent move by Revolut’s provider, digital asset platform Bakkt, to delist the assets. The delisting will be effective as of September 18th.

Revolut is not the only platform to announced an end to the availability of these tokens for U.S. crypto traders and investors. Both Robinhood and eToro also have either delisted or restricted access to SOL, ADA, and MATIC for U.S. customers. In the case of eToro, tokens such as Algorand (ALGO), Decentraland (MANA), Filecoin (FIL), and Sandbox (SAND) have also been made off-limits for U.S. customers.

Holders of SOL, ADA, and/or MATIC outside the jurisdiction of the SEC will continue to have access to the tokens.

Speaking of “outside the jurisdiction of the SEC,” the Monetary Authority of Singapore (MAS) announced a new set of guidelines designed to help cryptocurrency companies separate customer crypto assets from their own. The new rules insist that digital asset companies that are licensed in Singapore separate customer crypto assets from their own, as well as maintain a separate set of blockchain addresses for customer assets. Companies in the digital payment token business additionally will be required to do daily reconciliation of customers’ digital assets, and maintain accurate records of those assets, as well as access and operational control of customer’s DPTs in Singapore.

The move comes as regulators have become increasingly concerned that cryptocurrency firms have not done enough to “ring-fence” customer crypto assets and keep them segregated from company assets. This problem can be especially acute in the event that a cryptocurrency firm becomes insolvent, making it harder to recover customer funds. The new regulations require cryptocurrency firms to hold customer crypto in trust – though the relative lack of independent, third-party custodians has forced the MAS to offer crypto firms some leniency when it comes to relying on independent custodians at this time. To this end, firms are only required to ensure that crypto custody functions are independent from the firms’ other business operations and divisions.

The new regulations are expected to come online later this year.

A study from Juniper Research from earlier this year indicated that the value of all payment transactions made via stablecoins will top $187 billion by 2028. This represents nearly a 3x gain from 2023 levels. The report, titled CBDCs & Stablecoins: Key Opportunities, Regional Analysis & Market Forecasts 2023-2030, notes the growing use of stablecoins in cross-border transactions, the benefits in terms of speed and traceability that stablecoins offer relative to existing, cross-border rails, and the nature of the competition between stablecoins and central bank digital currencies (CBDCs).

Stablecoins are cryptocurrencies that derive their value from a given fiat currency or commodity. CBDCs are actual digital currencies issued by central banks.

What will it take for stablecoins to reach the transaction levels suggested in the Juniper Research study? Report author Nick Maynard underscored the role of payment platforms and money transfer operators in supporting broader adoption of these digital assets.

“Stablecoins have vast potential to unlock the flow of money across borders, but payment platforms need to roll out acceptance strategies for this to progress,” Maynard observed. “MTOs (Money Transfer Operators) can leverage stablecoins in a wholesale manner, but this will need networks to be built across wide geographic footprints.”

Our last 5 Tales from the Crypto column looked at reasons why the so-called “crypto winter” could see a thaw sooner than many observers think. In a recent column, fintech thought leader and author Chris Skinner shared his thoughts on the resurgent mainstream interest in digital assets.

“Something has changed,” Skinner wrote this week at The Finanser, “and maybe the biggest change is that treasury managers want to use cryptocurrencies. If the customer wants it, then the big banks have to service it and there’s the rub. The big banks have stirred and incorporated digital assets, and specifically cryptocurrencies, into their remit.”

Skinner cited an article at Decrypt.co – Wall Street is coming for crypto, whether early believers like it or not – as well as a June report from S&P Global Ratings titled How DeFi’s Operational Risks Could Influence Credit Quality, that have contributed to his thinking on the topic of late.

“You know that cryptocurrencies are going mainstream when Standard and Poor’s (S&P) start to rate them,” Skinner noted. “They don’t do that today, but they are moving that way.”

Check out the full conversation – as well as the Decrypt.co article and S&P Global Ratings report.

Photo by Alesia Kozik

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What Marqeta’s Survey Data Say about the State of Payments

What Marqeta’s Survey Data Say about the State of Payments
By Julie Muhn (@julieschicktanz) Posted on
Categories: List series

Marqeta released its 2023 State of Payments report this month. The firm surveyed 4,000 consumers across the U.S., Australia, and the U.K. to gain an understanding of how consumer behavior is shifting and how financial decisions are made.

The data paints a picture of how consumers interact with new and old payment methods. Here are the three main takeaways we gathered.

Consumer adoption of embedded finance is growing… slowly

It’s no secret that embedded finance is one of the biggest trends in the financial services space at the moment. Consumers, however, aren’t ready to race in on this trend. Of the consumers surveyed, less than half (47%) said that they would consider using financial services from a non-financial services provider.

The growth here has been slow. The percentage of people who said they would consider using financial services from a non-financial services provider last year was 45%, only down 2% from those who shared the sentiment this year.

Mobile wallets become less intimidating

One fintech concept consumers are more positive about is mobile wallets. The concept has been around for more than a decade, and mobile wallets and other non-traditional payment methods have finally found a sweet spot with consumers.

In the past year, 80% of survey respondents said they had made a contactless payment, 77% said that they had made a mobile payment, 67% said they had paid using a mobile wallet, and 50% said that they used BNPL to make a payment.

Of the 67% who had used a mobile wallet to make a transaction in the past year, 93% said that it was convenient to use their mobile device to make a payment. This is up from 87% last year, which indicates that either consumers are becoming more savvy, mobile wallets are more user-friendly, or a combination of the two.

Incumbents maintain their footing

With all of this technology, where do banks stand? It turns out, consumers still rely on traditional banks quite a bit. Of those surveyed, 81% said they still use traditional banks. More than half, 56%, have never changed their primary banking provider and 72% said that they are satisfied with their current provider.

This indicates that traditional banks have been able to keep up with consumer expectations, even as society begins to age into the digital era.

Photo by Marc Mueller

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5 Tales from the Crypto: Signs of a Comeback?

5 Tales from the Crypto: Signs of a Comeback?
By David Penn Posted on
Categories: Cryptocurrency, List series

Financial advisor, author, and CNBC commentator Josh Brown raised a few eyebrows this week when he told viewers that he thought that cryptocurrencies were entering a new phase, a phase that could spell the end of the crypto winter.

“This week, I think, with all of these new developments, really forces you to look back and say, ‘What’s really going on here? Why are these people running into a burning building” Brown asked. He referred to the passion for cryptocurrencies as “unkillable.”

Is Brown right? Let’s take a look at the latest round of reasons why the so-called crypto winter could turn out to deliver a milder season than many suspect.

Bitcoin breaks $30k

Prices for the leading cryptocurrency have been in a bear market since at least the fall of 2021 – though cryptoholders have been experiencing more than a little investment indigestion since the spring of that year. And while BTC has much more to go before it nears its old highs north of $60,000, the cryptocurrency has been on a tear since putting in a low in November 2022 just under $18,000. As of June 21st – the longest day of the year – BTC is up more than 90% from its November low. Ethereum, the other most-widely traded cryptocurrency has also performed well in 2023: ETC is up more than 56% year to date.

Many observers are pointing out that much of the velocity of the moves in these leading cryptocurrencies is due to traders who are now covering their earlier – profitable – bets against the assets. Nevertheless, market turnarounds are often initiated not by new participants coming off the sidelines, but by those already in the game deciding to change direction. And sometimes that’s all a new bull market needs to get going.

BlackRock, Invesco, WisdomTree pursue bitcoin ETFs

The news that some of the heaviest hitters in the exchange-traded fund business have expressed interest in bringing BTC to the ETF party is as strong an indication as any that crypto’s fortunes in the near-term may be brightening.

Last week we learned that BlackRock, a major, $9 trillion asset manager, is seeking to launch a spot bitcoin ETF – the iShares Bitcoin Trust – and has filed paperwork with the Securities and Exchange Commission (SEC) to do so. Investment management firm Invesco – which previously sought to launch a bitcoin futures ETF in 2021 but was beat to the market by ProShares – is back for a second bite of the apple. The company has teamed up with Galaxy Digital to apply for a spot bitcoin ETF – the Invesco Galaxy Bitcoin ETF. And lastly, WisdomTree has applied for approval to launch its WisdomTree Bitcoin Trust on the CBOE BZX Exchange.

The stated objectives for the funds vary. WisdomTree highlighted the value of providing investors with exposure to the price of Bitcoin in traditional investment accounts. Invesco and BlackRock both noted that a Bitcoin ETF would serve as a safer alternative for would-be investors leery of cryptocurrency brokerages and exchanges in the wake of the FTX and related crypto-scandals.

New crypto exchange EDX launches

The launch of a new crypto exchange may not seem like big news. But given the pessimism surrounding the industry (“crypto winter” anyone?), it is especially noteworthy that entrepreneurs in the crypto space continue to forge ahead.

New Jersey-based EDX Markets launched its digital asset market this week. The digital asset marketplace provides investors with a trusted, efficient, and liquidy cryptocurrency trading environment. EDX offers competitive quotes and a non-custodial model designed to manage potential conflicts of interest. The company also provides a retail-only quote for crypto, enabling investors and traders to take advantage of better pricing for retail-originated orders. Participants can trade Bitcoin, Ethereum, Litecoin, and Bitcoin Cash on the platform.

The launch of EDX comes as the company secures new funding and additional strategic investors. The amount of the funding was not disclosed. The company did say that the capital will help EDX further develop its trading platform.

“We are committed to bringing the best of traditional finance to cryptocurrency markets, with an infrastructure built by market experts to embed key institutional best practices,” EDX CEO Jamil Nazarali said.

Deustche Bank applies for digital asset custody license in Germany

It’s no secret that cryptocurrencies are feeling more love outside the United States than they are inside the country. Another example of this comes from Germany as we learn this week that Deutsche Bank is seeking a digital asset license. The goal of the country’s largest bank is to leverage digital assets to expand its revenue streams, according to reporting in Bloomberg.

Apparently, Deutsche Bank’s announcement is the latest in a series of slow, cautious steps toward embracing digital assets. The firm’s corporate banking division has been considering digital asset-related services as an option for the past few years. But no firm timeline had ever been offered. This week, we have a destination, if not an itinerary. The head of the bank’s commercial banking unit David Lynne confirmed that the financial institution is building a “digital assets and custody business” and has applied to Germany’s Federal Financial Supervisory Authority (BaFin) in order to receive license to do so.

American crackdown: darkest before dawn?

It may be overly contrarian to suggest that some of the worst news for crypto’s present in recent weeks and months might also be some of the best news from crypto’s future. Many crypto backers lament the SEC’s aggressive policing of Coinbase and the growing share of crypto that is just Bitcoin. But it is possible that this is just the long, arduous process toward eventual regulation. This may mean, at least initially, a time for better, fewer digital assets and better, fewer crypto-related businesses. And while other regions than the U.S. are presently showing more enthusiasm and support for crypto, as with other financial innovations like open banking and instant payments, I’m convinced that once crypto does finally get moving again, the U.S., in its own way, will not hesitate to climb on board.

Photo by Worldspectrum

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Where Are They Now? Catching Up with FinovateSpring 2022’s Best of Show Winners

Where Are They Now? Catching Up with FinovateSpring 2022’s Best of Show Winners
By David Penn Posted on
Categories: Alumni News, FinovateSpring 2022, List series

FinovateSpring 2023 is only days away! If you have already registered for our annual spring fintech conference – May 23 through May 25 – great! We’re looking forward to showing you the latest innovations from many of fintech’s most exciting companies. We’re also happy to be returning to San Francisco, California – where there’s plenty of opportunity for both networking and leisure when the conference day is done.

And if you have not already registered, then there’s no better time than the present to visit our FinovateSpring 2023 hub and save your spot. To whet your appetite, here’s a look back at what the Best of Show winners from last year’s event have been up to in the time since taking home Finovate’s top prize.

Array

  • HQ: New York City, New York
  • Founded: 2020
  • CEO: Martin Toha
Pictured: Leigh Gross, SVP, Sales and Business Development

Demoed Array’s financial enablement platform, specializing in embeddable tools and white label solutions, used by leading financial institutions. Demo video.

Updates since Spring 2022

  • Partnered with Jack Henry to offer consumers personalized credit and financial insights.
  • Teamed up with Alkami to helps banks boost digital engagement.
  • Integrated with Q2’s digital banking platform to offer products including My Credit Manager.
  • Launched Credit-Builder Loans-as-a-Service solution, BuildCredit Loan, a private-label installment loan product.

FinGoal

  • HQ: Boulder, Colorado
  • Founded: 2019
  • CEO: David Nohe
Pictured: Ariam Sium, VP of Product | Jenn Underwood, Product Analyst

Demoed FinGoal’s insights platform that cleans, enriches, and analyzes personal financial data to better understand users and provide actionable insights. Demo video.

Updates since Spring 2022

Horizn

  • HQ: Toronto, Canada
  • Founded: 2011
  • CEO: Janice Diner
Pictured: Colm Bermingham, Director Sales | Steve Frook, SVP Global Sales

Demoed Horizn’s platform that helps banks globally accelerate digital banking knowledge, fluency, and adoption with both customers and employees. Demo video.

Updates since Spring 2022

  • Partnered with ebankIT to support digital transformation.
  • Won Best of Show at FinovateFall 2022 in New York.
  • Teamed up with Coventry Building Society to provide skill development for branch workers.

Keep Financial Technology

  • HQ: Atlanta, Georgia
  • Founded: 2022
  • CEO: Rob Frohwein
Pictured: Rob Frohwein, CEO | Troy Deus, Co-founder & Head of Experience

Demoed Keep Financial Technology’s innovation that solves the hiring and retention challenges of companies by introducing a new form of employee compensation called Cash Vesting Plans. Demo video.

Updates since Spring 2022

  • Raised $9 million in seed funding in a round led by Andreessen Horowitz.
  • Launched its Keep compensation platform and initial Keep Vesting Cash Plans.
  • Introduced KEEP Performing, adding defined goals to its platform.

QuickFi

  • HQ: Fairport, New York
  • Founded: 2018
  • CEO: Bill Verhelle
Pictured: Nate Gibbons, Chief Operating Officer | Jillian Munson, Technology Project Manager

Demoed QuickFi’s 100% digital, self-service mobile equipment financing platform that enables business equipment financing in minutes. Demo video.

Updates since Spring 2022

  • Won “Best SMB/SME Banking Solution” at the 2022 Finovate Awards.
  • Announced a partnership with 3D printing ecosystem manufacturer Ackuretta.
  • Named “Best Overall LendTech Company” in the 2023 FinTech Breakthrough Awards for a second year in a row.

Spave

  • HQ: East Lansing, Michigan
  • Founded: 2021
  • CEO: Susan Langer
Pictured: Susan Langer, CEO | Sarah York, Chief Marketing and Digital Officer | Christen Wright, Head of Product

Demoed Spave’s all-in-one financial wholeness app that allows users to effortlessly save and give as they spend. Demo video.

Updates since Spring 2022

  • Announced that its founder CEO Susan Langer has been named a “2022 Dealmaker of the Year” by Smart Business Dealmakers of Charlotte, North Carolina.
  • Featured its partnership with non-profit chaplaincy, Salt & Light Partners.
  • Commemorated Financial Literacy Month with new nonprofit partner Lemonade Day Houston.

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6 Main-Stage Keynotes that Will Capture Your Attention at FinovateSpring

6 Main-Stage Keynotes that Will Capture Your Attention at FinovateSpring
By Julie Muhn (@julieschicktanz) Posted on
Categories: FinovateSpring 2023, List series, Marketing

Finovate always goes to great lengths to scout and bring together the brightest minds for keynote presentations, showcasing the most thought-provoking ideas on the main stage.

FinovateSpring, which takes place in San Fransiscso May 23 to 25, is no different. We’re thrilled to host six keynote presentations from all-star speakers. Get ready to gain valuable insights, discover innovative strategies, and be inspired by these speakers as they delve into crucial topics shaping the future of finance and technology.

Check out our six main-stage keynotes below:

Capitalizing on Competitive Advantages, Avoiding Moat Mirages

Ben Clayman, Engineering Leader at Square, will offer his deep understanding of the fintech landscape to guide attendees through the intricacies of leveraging competitive advantages while avoiding the pitfalls of false market barriers. His insights and practical strategies will empower professionals to chart a course for sustainable success in the ever-evolving fintech industry.

The Global Economic & Geo-Political Outlook – What Next? What Are The Challenges & Hidden Icebergs Ahead?

John C. Hulsman, President & Managing Partner at John C. Hulsman Enterprises will offer up his knowledge of global economics and geopolitics. Hulsman will unravel the potential risks and opportunities that lie ahead for the fintech and financial sectors. Gain invaluable foresight into the intricate interplay of geopolitical factors and economic landscapes, which will equip you to navigate the challenges and seize emerging opportunities with confidence.

Understanding The Recent Banking Instability Through The Lens Of Geopolitical Risk – How This Impacts Central Bank Policy And What It Means For Fintechs & Financial Institutions

Manas Chawla, CEO at London Politica, will share his expertise in geopolitics and shed light on the correlation between political dynamics, central bank policies, and their impact on the stability of the banking sector, offering valuable perspectives for fintech professionals.

Quick-Fire Keynotes

Climate Change, ESG & Financial Services, What Do Wall Street & Your Customers Want? How Can Banks Avoid Greenwashing? Why Digitisation & Sustainability Go Hand In Hand

Cathryn Peirce, Founder & CEO at Carbon Zero Financial

Financial Inclusion & Financial Wellness – Harnessing Data and Segmentation To Help Your Customers To Achieve Long Term Financial Health In Tough Economic Times

Ashish Gupta, Chief Risk Officer at LendingPoint

The Intersection Of Financial Services And Commerce – How Embedded Finance Can Generate Over $100 Billion in Revenue for Banks

Sam Kilmer, Managing Director, Fintech Advisory at Cornerstone Advisers

Photo by Pixabay

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Twitter Needs these 6 Things to Become an “Everything App”

Twitter Needs these 6 Things to Become an “Everything App”
By Julie Muhn (@julieschicktanz) Posted on
Categories: List series, Thought Leadership

Ever since Elon Musk purchased Twitter last October for $44 million, he has been hinting of spinning the social media giant into what he is calling “X, the everything app.” In fintech, “everything apps” are known as super apps, and they exist primarily in Asia.

One of the latest developments in transitioning Twitter into a super app is Musk’s move to change Twitter’s name to X Corp. But a super app is much more than a name. Here’s a look at what the social media app currently offers, what it’s working on, and what it still needs to become a fully fledged super app.

What it has

Social
Social is most certainly Twitter’s strongest attribute. The micro-blogging platform was founded in 2006 and currently has around 450 monthly active users. While this is a considerable user base, however, it pales in comparison to well-known super app WeChat, which counts 1.3 billion monthly active users.

Investment tools
Earlier this month, Twitter partnered with eToro to not only offer real-time pricing data for stocks, but also to facilitate trades. The trades, however, do not take place within Twitter’s interface. Instead, users are routed to eToro’s website for stock details and to make trades.

What it’s (publicly) working on

Generative AI
Last week, Musk unveiled a new company called X.AI, The move confirmed rumors of his plans to launch a generative AI product after he purchased thousands of graphic processing units. X.AI is expected to compete with OpenAI, which Musk co-founded in 2015 but left in 2018 to avoid a conflict of interest.

While most super apps do not boast their own generative AI tool, adding a powerful chatbot such as OpenAI’s ChatGPT would be a major differentiating factor

Payments
Musk is publicly vociferous about his plan to add Venmo-like payments capabilities to Twitter. And it’s not just talk. Twitter filed with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and is also in the process of obtaining necessary state licenses, as well.

After Twitter begins facilitating peer-to-peer payments, it may begin offering more digital bank-like tools such as a high-yield savings account or even an X-branded payment card. This leads the conversation into what Twitter still needs to become a super app.

What’s missing

Personal finance
Twitter already offers stock trading (through a third party) and it is working on offering peer-to-peer payments. There is more to personal finance, however, than just investing and spending. In order to truly become an “everything app,” Twitter must offer brick-and-mortar payments, as well as an in-app dashboard that helps users track their spending, savings, and investments.

Shopping
This may end up being one of the most challenging aspects for Twitter to add in a way that would compete with the current top super app contenders in the U.S.– Walmart and PayPal. Currently, Walmart offers consumers access to goods from an Amazon-like supplier base, as well as to goods in their local Walmart store. PayPal’s shopping experience is less compelling, but offers deals from major service providers and retailers (including Walmart).

For Twitter to start a shopping experience from scratch wouldn’t be unfathomable, but it would take a long time. If it is seeking to compete with Walmart as a super app, it will likely need to find success via a partnership.

Transportation
A few of the most well-known super apps– Grab, Gojek, and Ola– began as transportation apps. Adding transportation capabilities has the potential to draw users into the app on a daily basis because they not only facilitate commutes via ride-hailing or public transportation payments, they also facilitate hyper-local delivery, grocery delivery, and restaurant delivery. These aspects play major roles in the lives of consumers.

Health services
Amazon, Walmart, and others have tackled the fragmented healthcare industry. Providing affordable health services, such as appointment booking, tele-health calls, records management, and ask-a-nurse services in a single place provides a lot of value for end users.

Health services will not be a primary driver bringing users into Twitter’s super app, but it will certainly help to keep them around and may even help target the app’s older users.

Insurance
Similar to adding health services, insurance tools will not serve as a primary draw for users. However, offering tools such as a digital lock box with insurance cards, contact information, coverage options, and payment history is a valuable add-on and can help reach older users not necessarily seeking social or payment capabilities.

Government and public services
To become a well-rounded super app, Twitter should add government and public services, such as public transportation payment and tracking, library cards, and tax preparation services. In the U.S. however, with the advent of FedNow and the potential addition of a CBDC, the government may end up beating Twitter to the punch with a super app of its own.

Photo by Possessed Photography on Unsplash

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Celebrating Earth Day with Finovate’s Environmental/Sustainability Demo Scholarship Winners

Celebrating Earth Day with Finovate’s Environmental/Sustainability Demo Scholarship Winners
By David Penn Posted on
Categories: Alumni News, Daizy, Energy Shares, List series, Little Blocks

The Finovate Sustainability and Inclusion Scholarship Program is an opportunity to showcase innovative startups that are embracing strong ESG principles as a key part of their offering. To commemorate Earth Day this weekend – and the importance of the “E” in ESG – we’re highlighting three companies that have earned scholarships in the Environmental/Sustainability category.

Daizy

Founded in 2019, Daizy won the Sustainability category of our Finovate Scholarship program in FinovateFall 2022. The company’s technology leverages AI to help investors access the data-driven stories behind the biggest companies in the U.S. Daizy has combined its expertise in ESG, analytics, data visualization, and natural language processing to offer an app that enables users to link their brokerages accounts, build watchlists, as well as track and search for new investment ideas using Daizy’s NLP portfolio, stock, and crypto search functionality.

Daizy Chief Operating Officer Andrew Peddar at FinovateFall 2022.

Based in the U.K., Daizy has raised $3 million in funding. Deborah Yang is co-founder and CEO. Follow Daizy on Twitter. Connect with Daizy on LinkedIn.

Energy Shares

Energy Shares won the Environmental category of our Finovate Demo Scholarship program for FinovateFall 2022. The company is a FINRA-registered broker-dealer and equity crowdfunding platform for utility-scale renewable energy projects in the U.S. Energy Shares facilitates access to investment opportunities in renewable energy projects, opportunities that were previously only available to institutional, corporate, and select retail investors. Via the Energy Shares platform, investors and developers can connect and collaborate to support renewable energy initiatives and support the growth of the renewable energy industry.

Energy Shares Social Media and Community Manager Chloe Breau and CMO Mark Kapczynski at FinovateFall 2022

Energy Shares was founded in 2020. The company is headquartered in Pasadena, California. Follow Energy Shares on Twitter. Connect with Energy Shares on LinkedIn.

Little Blocks

Hyderabad, India-based Little Blocks won the Environmental category of the Finovate Demo Scholarship program for FinovateEurope 2023. The company leverages industrial IoT sensors and blockchain technology to foster access to risk capital for expenses like machinery purchases. Little Blocks’ technology tokenizes each machine and ownership is distributed among the token holders, each of whom has a stake in the underlying cash flows. This enables manufacturers to pay based on the actual use of the machine rather than a fixed monthly loan repayment.

Little Blocks co-founder and CEO Hanu Panchakarla at FinovateEurope 2023.

Little Blocks was founded in 2022 and is funded by a grant from the Startup India Seed Fund.

Photo by Harry Cunningham @harry.digital

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10 Topics We Can’t Wait to Discuss at FinovateSpring

10 Topics We Can’t Wait to Discuss at FinovateSpring
By Julie Muhn (@julieschicktanz) Posted on
Categories: FinovateSpring 2023, List series

FinovateSpring is just over a month away, on May 23 through May 25, and we’re already excited to watch the stage fill with fresh fintech demos and discussions about the hottest industry topics.

Just as fintech is a constantly changing industry, so are the conversations, advice, and relevant themes. So when we hit the networking floor next month in San Francisco, here are the top 10 topics we can’t wait to talk about with everyone:

  1. Metaverse
    When it comes to the metaverse and Web 3, it seems like you’re either in or you’re out. While a handful of banks have already jumped in with two feet by purchasing real estate in the metaverse, others are dismissing it as a passing fad.
  2. ESG
    ESG discussions are happening around the globe, and formal ESG reporting strategies are on the verge of becoming more than just nice to have. With proposed regulation in the U.S. and beyond, now is the time to begin paying attention to this space.
  3. Generative AI
    The topic of generative AI transcends Open AI’s ChatGPT. While organizations are leveraging the technology to save costs, it still bears risk if used improperly. If you’re not a first-mover in this space, however, you certainly don’t want to be the last.
  4. Partnerships
    Regardless of whether you call them bank-fintech partnerships or fintech-bank partnerships, these tie-ups matter, and they are trickier than they seem. In many cases, keeping good partners can be just as difficult as finding good partners in the first place.
  5. Digital acceleration
    We may be three years past the golden age of digitization, but we’re not going back. Whether you’re a bank or a fintech, if you haven’t digitized your offerings and back-end processes, you may be left behind.
  6. Economic outlook
    Last year we were worried about a pending recession. This year, we’re sweating about the impact of bank failures. Does anyone know what we’re in for next?
  7. Decentralized finance
    The concept of decentralized finance (DeFi) was tarnished last year after the FTX scandal took place, and U.S. regulators have been on high alert ever since. There is more to DeFi than cryptocurrency, however, and much of the industry has yet to embrace– or even explore– the possibilities.
  8. VC investing and fintech valuations
    Venture capitalists are being much more careful with their dollars these days, and many are focusing their investments on early-stage companies. But how can mid-to-late stage startups get much-needed liquidity? Many have advised focusing on unit economics, saying that companies should focus on customer lifetime value and customer acquisition cost.
  9. Embedded finance
    Non-fintech and banking companies such as retailers and service providers are looking to make it as easy as possible to make a sale, and embedded finance may be the answer. Fintechs can not only help remove the friction from the checkout flow, they can remove the “checkout” all together by moving the processes into the background.
  10. Customer experience
    We’ve been talking about ways to win when it comes to the customer experience for almost a decade now, so the topic can seem a bit hackneyed. There’s a reason for that, however. Customers have a broad range of needs, and because their preferences are always changing, it can be difficult for banks and fintechs to keep up with their expectations.

Don’t want to miss out on any of these discussions? Be sure to register before April 21 to save $300 on your ticket.

Photo by Volodymyr Hryshchenko on Unsplash

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5 Tales from the Crypto: M&A, CBDCs, Banks, Bonds, and the Blockchain

5 Tales from the Crypto: M&A, CBDCs, Banks, Bonds, and the Blockchain
By David Penn Posted on
Categories: Coinbase, Cryptocurrency, List series

Canadian Crypto Combo: A trio of Canada-based cryptocurrency exchanges announced plans to merge into a single entity. Vancouver-based WonderFi, along with Toronto-based Coinsquare and Coin Smart Financial, are the firms involved. Together, they represent more than $600 million CAD in assets under custody and more than 1.65 million users. The merger will create what the companies are calling “Canada’s largest regulated crypto asset trading platform.”

The road to the three-way union had its complications. At one point, Coinsquare had been poised to acquire CoinSmart. At another point, a merger with WonderFi was allegedly on the table. CoinSmart had been both cold and hot to an acquisition by Coinsquare and reportedly was prepared to seek monetary damages in court when the acquisition deal did not work out. But those days are gone, and the three companies have decided they are better off serving cryptocurrency customers together than they are on their own.

UAE and ANZ Get Busy with CBDCs: There have been a few CBDC-oriented stories in fintech and crypto headlines in recent days. First up is news that the UAE has selected technology and legal partners ahead of the launch of its CBDC strategy. The country’s central bank has picked Clifford Chance to provide legal oversight. R3 and G42 Cloud will serve as technology and infrastructure providers. This will enable the central bank to begin Phase 1 of its CBDC project. This initial phase has three components: initiating real-value cross-border CBDC transactions for international trade settlement, proof-of-concept work for bilateral CBDC bridges with India, and proof-of-concept work for domestic CBDC issuance covering wholesale and retail use. Phase 1 is expected to take place over the next 12 to 15 months.

Meanwhile in Australia, ANZ bank reported that it had concluded one of its projects in the country’s CBDC trials. The project involved using the ANZ stablecoin to settle tokenized carbon credit transactions. ANZ Bank is involved in four of the 15 use cases and projects in the country’s CBDC pilot. With regard to this specific use case – applying tokenization to the carbon markets – ANZ Banking Services Lead Nigel Dobson expressed optimism. He highlighted the potential to improve both efficiency and transparency, as well as “preserve the unique characteristics of underlying projects to incentivize investment in climate solutions.”

Speaking of the relationship between crypto and the climate, SEB and Crédit Agricole announced this week that they are jointly launching so|bond, a sustainable and open platform for digital bonds built on blockchain technology. The platform enables issuers in capital markets to issue digital bonds onto a blockchain network in an effort to enhance efficiency and support real-time data synchronization between participants. Additionally, the network is using a validation protocol, Proof of Climate awaReness, that encourages participants to minimize their carbon footprint.

“Crédit Agricole CIB is proud to contribute to the emerging market of digital assets,” Crédit Agricole CIB Head of Innovation and Digital Transformation Romaric Rollet said. “The platform’s innovative approach, both to the blockchain infrastructure and to the securities market, is coupled with the strong commitment to green and sustainable finance that is at the center of our Societal Project.”

And while on the topic of the blockchain use cases, we report that Acre, a blockchain-based mortgage platform, has raised $8.1 million (£6.5 million). The fundraising is the second major capital infusion for the London-based company and brings the firm’s total equity funding to $14.3 million (£14.3 million). The round was led by McPike, an investor in Starling Bank, as well as Aviva and Founders Factory.

Acre helps traditional brokers compete with their digital counterparts by using blockchain technology to enhance the mortgage and insurance application process for advisers. The company’s technology brings together all aspects of the process into a single “record of the transaction.” This, according to Acre founder and CEO Justus Brown, helps brokers deliver “speedy, efficient advice that meets the individual requirements of each case in a dynamic market.”

Acre was founded in 2017. Brown reports that the company grew by 10x in 2022, and processes £10 billion in annual mortgage volume. In the wake of the latest investment, Acre will focus on forging new partnerships with lenders and insurers to enable brokers to recommend the most competitive financial products and services for their clients.

Coinbase Announces Derivatives Exchange Upgrade: Last up for this edition of 5 Tales from the Crypto is news from one of the industry’s banner companies, Coinbase. The firm announced this week that it had partnered with Transaction Network Services (TNS). The partnership is designed to enable faster, more efficient transactions on its derivatives exchange (CDE).

“Crypto has witnessed both volatile and liquid markets, and with institutional adoption remaining strong, we believe the time is right for the offering that TNS brings to the table,” Coinbase Derivatives Exchange CEO Boris Ilyevsky said. “Dedicated cloud infrastructure connectivity coupled with our derivatives exchange represents a mission-critical step toward supporting and maintaining a vibrant and reliable crypto derivatives market.”

Coinbase launched its Derivatives Exchange in June of last year with the goal of attracting more retail traders to its platform. This week’s news shows that the company recognizes the potential attraction its exchange could have for institutional investors, as well. Regulated by the Commodity Futures Trading Commission (CFTC), the CDE will leverage its new TNS-provided financial trading infrastructure to enable institutional investors to grow their storage capabilities and process large data sets with less delay.

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GPT-4 Has Arrived. Here Are 6 Things You Should Know about the New Iteration.

GPT-4 Has Arrived. Here Are 6 Things You Should Know about the New Iteration.
By Julie Muhn (@julieschicktanz) Posted on
Categories: List series, Thought Leadership

If you need a break from bank failure news, here’s something refreshing. OpenAI’s GPT-4 was released yesterday. The new model is the successor to GPT-3.5-turbo and promises to produce “safer” and “more useful” responses. But what does that mean exactly? And how do the two models compare?

We’ve broken down six things to know about GPT-4.

Processes both image and text input

GPT-4 accepts images as inputs and can analyze the contents of an image alongside text. As an example, users can upload a picture of a group of ingredients and ask the model what recipe they can make using the ingredients in the picture. Additionally, visually impaired users can screenshot a cluttered website and ask GPT-4 to decipher and summarize the text. Unlike DALL-E 2, however GPT-4 cannot generate images.

For banks and fintechs, GPT-4’s image processing could prove useful for helping customers who get stuck during the onboarding process. The bot could help decipher screenshots of the user experience and provide a walk-through for confused customers.

Less likely to respond to inappropriate requests

According to OpenAI, GPT-4 is 82% less likely than GPT-3.5 to respond to disallowed content. It is also 40% more likely to produce factual responses than GPT-3.5.

For the financial services industry, it means using GPT-4 to power a chatbot is less risky than before. The new model is less susceptible to ethical and security risks.

Handles around 25,000 words per query

OpenAI doesn’t measure its inputs and outputs in word count or character count. Rather, it measures text based on units called tokens. While the word-to-token ratio is not straightforward, OpenAI estimates that GPT-4 can handle around 25,000 words per query, compared to GPT-3.5-turbo’s capacity of 3,000 words per query.

This increase enables users to carry on extended conversations, create long form content, search text, and analyze documents. For banks and fintechs, the increased character limit could prove useful when searching and analyzing documents for underwriting purposes. It could also be used to flag compliance errors and fraud.

Performs higher on academic tests

While ChatGPT scored in the 10th percentile on the Uniform BAR Exam, GPT-4 scored in the 90th percentile. Additionally, GPT-4 did well on other standardized tests, including the LSAT, GRE, and some of the AP tests.

While this specific capability won’t come in handy for banks, it signifies something important. It highlights the AI’s ability to retain and reproduce structured knowledge.

Already in-use

While GPT-4 was just released yesterday, it is already being employed by a handful of organizations. Be My Eyes, a technology platform that helps users who are blind or have low vision, is using the new model to analyze images.

The model is also being used in the financial services sector. Stripe is currently using GPT-4 to streamline its user experience and combat fraud. And J.P. Morgan is leveraging GPT-4 to organize its knowledge base. “You essentially have the knowledge of the most knowledgeable person in Wealth Management—instantly. We believe that is a transformative capability for our company,” said Morgan Stanley Wealth Management Head of Analytics, Data & Innovation Jeff McMillan.

Still messes up

One very human-like aspect of OpenAI’s GPT-4 is that it makes mistakes. In fact, OpenAI’s technical report about GPT-4 says that the model is sometimes “confidently wrong in its predictions.”

The New York Times provides a good example of this in its recent piece, 10 Ways GPT-4 Is Impressive but Still Flawed. The article describes a user who asked GPT-4 to help him learn the basics of the Spanish language. In its response, GPT-4 offered a handful of inaccuracies, including telling the user that “gracias” was pronounced like “grassy ass.”

Photo by BoliviaInteligente on Unsplash

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