Fintech Trending: Alt-Lending Woes, Asia Grows and Everbank Exits

A look at the trending topics of the past two weeks.

Trending highest: No Lush Life for Alt Lenders

LushLIfe_Coltrane_albumcoverIf unanimously positive perceptions are the hallmark of a bubble, then rest assured that the alt-lending market has moved past that stage. For every headline-grabbing C-level departure at Lending Club (F09)—CEO Renaud Laplanche stepping down in June, CFO Carrie Dolan announcing her resignation in August—there are successes: Prosper (F09) revealed its plan to sell $5 billion in loans to a group of private investors over the next two years; small business lender OnDeck (F12) surpassed earnings expectations despite its second consecutive quarterly loss and reported year-over-year quarterly revenue gains, as well as a year-over-year increase in loans under management of 47%.

So if there’s no bubble in the alt-lending part of the fintech universe, should we fear a bust? Diverging fortunes among these companies is a good sign. The more the fates of alternative lenders are linked to the decisions of individual corporate leaders, their business plans, and their customers rather than investing trends among venture capitalists (or hedge funds in the case of alt lenders gone public), the better. Looking at the P2P lending market in the U.K., LendInvest CEO Christian Faes told Business Insider, “Over the next few years, the businesses that can prove they can make a profit will be the ones [still] around in another ten years, making a lasting impact on finance.” In other words, just like any other business.

For Lending Club, the challenge is diversifying away from “fickle funding sources.” In addition to Prosper’s $5 billion move, Social Finance went so far as to launch a hedge fund, the $15 million SoFi Credit Opportunities Fund, to purchase its loans as well as those of its competitors.

  • OnDeck Loan Originations (And Loan Loss Provisions) Soar – PYMNTS.com
  • OnDeck Defends Strategy After $17.9 Million Loss – American Banker
  • Online Lenders Have a Tough Job Ahead – Wall Street Journal
  • The U.K.’s historically low interest rate could benefit alternative lenders – Business Insider
  • Lending Club’s latest results tell us a lot about the online credit business model – FT Alphaville

Other trending topics

Fintech Advances in Asia
While investors have been bullish on the tech scene in Asia for some time, a slew of new reports appeared this month. TechCrunch recently reported that in 2015 and the first half of 2016, fintech accounted for 21% of all VC funding in Southeast Asia. In a recent blog post, Trulioo (F15) said that fintech startups in Asia garnered $4.5 billion in 2015, triple what European fintech firms received during the same period. Recent developments include:

It’s no coincidence that Finovate is returning to Asia now to bring the innovators together in one place. Join us November 8, 2017, in Hong Kong for FinovateAsia 2016 as we showcase the latest and greatest.

Blockchain Developer, UNICEF Wants YOU!
The United Nations Children’s Emergency Fund is looking for a developer interested in using blockchain technology to help “solve the problems of the developing world.” Interested parties can find out more about the position here. And if the combination of blockchain and the developing world sounds familiar, it may be because you’re thinking of recent Finovate Best of Show winner BanQu (F16) which has developed a blockchain-based identity platform that promotes financial inclusion and empowerment among the underbanked, including refugee populations.

Hello, It’s Me: Voice Auth Comes to Barclays
Barclays adds instant voice authentication for all 12 million retail customers, ending 30 years of maneuvering through tedious telephone prompts and redundant authentication questions. – Bank Innovations

Everbank’s Awesome Exit
1990s digital banking pioneer Everbank exits for $2.5 billion in sale to TIAA. After PayPal (F12), this is the most successful fintech company to come out of the original 1990s dot-com era. – PYMNTS.com

Mastercard on the Move
Early Warning’s clearXchange saw some growth as of late. Mastercard, which announced this week that its Mastercard Send U.S. debit cardholders can send and receive money through the clearXchange network. Fiserv (F16) will also become a distribution partner for clearXchange, leveraging the partnership to provide a turnkey solution for banks.

Speaking of Mastercard, the company is looking at the newly announced partnership between PayPal and Visa (FD14), with an eye toward striking a similar deal. Finextra talked with Mastercard CEO Singh Banga who said it will be “important for Mastercard to provide something in addition to what Visa’s offered” as Mastercard “doesn’t have as much to offer PayPal” as Visa did because it has fewer consumers.

Azimo Goes Social
London-based Azimo (F13) took a step toward facilitating P2P payments by launching money transfers via Facebook Messenger. Interestingly, the transfer is initiated within the Azimo app (via Facebook integration) and completed in Facebook Messenger.

Insurance for Everything
Insurance startup investors are betting big that the smartphone platform allows a new breed of insurance products to flourish, so-called insurance on demand. The classic example is an alert when arriving at the airport asking if you would like to buy travel insurance. But the bigger market automobile/motorcycle policies are offering coverage only when you are using the vehicle. Our Insurance for Everything example of the week? On-demand insurance for your drone courtesy of Verifly. – Techcrunch

Also keeping our eyes on …

  • On August 2, 2016, Bitcoin dropped 20% after $70M worth of bitcoin (around 12,000 BTC) was stolen from Bitfinex exchange. The company is now offering a reward of up to $3.6 million for the recovery of the digital currency. Bitfinex said it has taken “significant steps” to improve its security, and resumed trading on its platform on Thursday, August 10. – TechCrunch
  • The U.K.’s FCA has granted app-only bank Mondo a banking license, thereby joining the ranks of neobanks Atom Bank, Tandem, and Starling. – The Financial Times
  • “An Interview with the Inventor of the Credit Card Chip Reader” – The New Yorker
  • “The Dawn of the Virtual Assistant” – The New York Times

Parentheticals after a company name refer to the year of their most recent Finovate or FinDEVr conference appearance (F = Finovate, FD = FinDEVr).

Fintech Trending: Germany Grows, Pokemon Goes, PayPal Partners

PokemonGo_videoimage

Today we unveil our fintech trends column, a look at trending topics of the past week or two, compiled by the Finovate research team.


Trending highest: Pokemon Go

Our inaugural post leads with the Pokemon Go phenomenon which has fintech innovators rethinking their strategies around not just mobile, but the power of gamification, location-based marketing, and the diversity of data, as well.

Sberbank (F16) was clever enough to offer free accident insurance for distraction-prone Pokemon Go players. But the Russian-based bank has bigger plans to engage potential customers via the game, including bonuses for players who catch Pokemon in a Sberbank branch. Sberbank also plans to use lures to help drive traffic to its locations, an initiative already underway at CenterState Bank in Florida. Read our take on the technology, and its potential as a marketing tool for FIs.

It comes as no surprise that fintech’s foremost futurist, Brett King, makes the most far-reaching case in favor of a connection between Pokemon Go and fintech. Calling the game “a glimpse into how very different the world of banking, investing, and financial advice will be in 10 year’s time,” the Moven (F16) CEO and author of Augmented: Life in the Smart Lane tells The Financial Brand’s Jim Marous: “(Pokemon Go) illustrates why banking is no longer a place you go, but something you do—on a phone, in AR, and as a person lives their life.”

Other quality Pokemon posts:

  • Lessons Pokemon Go Can Teach the Banking Industry – The Financial Brand
  • Is Pokemon Go the Killer App for Location-Based Marketing – AdvertisingAge
  • Urban gamification: can Pokemon transform our public spaces – The Guardian
  • Pokemon Go Is Inspiring Small Retailers. So Has Augmented Reality Gone Mainstream? – AdWeek
  • Pokemon Go has reinvented the power of data – IT Pro Portal
  • Capture your business spend: no Pokeball needed – TradeShift blog


Other trending topics

Brexit a Boon for German Fintechs?
With the strong fundraising performance of Germany’s fintech startups in late June, and news this week that Peter Thiel took a $3.5 million stake in Cologne-based nextmarkets, London’s position as Europe’s fintech capital may be weakening. And Germany seems to be the likeliest beneficiary.

  • Brexit spurs London startups to investigate Berlin move – Reuters
  • ‘Over a hundred’ London startups have asked to relocate to Berlin since Brexit – International Business Times
  • Berlin bids to replace London as post-Brexit fintech capital – Financial Times

Nasdaq Fintech Index Goes Live
You know Wall Street loves you when they render your likeness in an index. This week, Nasdaq launched its Fintex Index which tracks the performance of 49 fintech companies including 17 Finovate/FinDEVr alums. The index of publicly traded fintechs excludes banks and is limited to companies that “mainly sell financial services,” are not brick-and-mortar based, and generate revenues from fees rather than interest.

A Week in the Blockchain
While in Florida, a judge ruled that Bitcoin isn’t money, the EU commission made a step fostering the cryptocurrency, proposing the creation of a central database that keeps a record of bitcoin users. With the new measure, the executive arm of the EU aims to prevent the use of the currency to fund terrorists.

Mastercard Accentuates the Digital
Mastercard (F14) enhanced Masterpass, allowing consumers to make in-store payments at 5 million brick-and-mortar stores. The company rebranded its logo with a lowercase ‘c’ to focus less on a physical card and more on a digital wallet. One week later the company purchased a majority stake in U.K.-based VocaLink for $1.14 billion, giving Mastercard a potentially larger role in the overall U.K. payments universe.

Pump Up the Visa Volume
Visa (F10) and PayPal (F12, FD16) partnered, putting to bed a long-standing conflict. PayPal will encourage users to make Visa their preferred payment method. And more importantly, PayPal will stop steering Visa cardholders to pay via ACH bank transfer, increasing the transaction volume sent to Visa and its card-issuing banks. In turn, Visa is adding PayPal to its Visa Digital Enablement Platform, allowing consumers to use PayPal mobile wallet at the physical POS at major retailers. PayPal has been trying to engage consumers with physical POS payments since 2012, when it first introduced its pay-by-phone-number at Home Depot.

More Fintech Companies Choose Chatbots
This ongoing trend saw new entrants with Polly Portfolio (F16) launching a chatbot, along with MyKAI and YouInvest. Additionally, text-based savings service Dyme (F15) launched the first prototype of its Facebook Messenger Bankbot.

We’re also keeping our eyes on:

  • Amazon partnered with Wells Fargo to offer a 0.50% discount on student loans for Amazon Prime members
  • Square adds same-day bank deposits for merchants. While relatively pricey, adding 1% of the transaction amount to the processing cost, it’s a simple way to improve cash flow for certain businesses.
  • Cambridge Savings Bank partnered with SigFig (F11) to become one of the first U.S. banks to offer a robo-adviser investment service.

Parentheticals after a company name refer to the year of their most recent Finovate or FinDEVr conference appearance (F = Finovate, FD = FinDEVr),

FinDEVr APIntelligence

FinDEVrSV16-withdateOur 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

  • Venmo Enables Payments in Merchant Apps
  • Prevoty Wins 2016 Stratus Award for Best Small Company Cloud Security Service
  • Mexico’s Grupo Bursátil Deploys Messaging Tech from Solace Systems

The latest from FinDEVr New York 2016 presenters

  • A look at fintech in Berlin and London highlights Mambu.
  • Espresso Capital features Outside IQ’s creativity in raising capital.

Alumni updates

  • Kontomatik introduces Financial Health Indicator for smal-l and medium-sized lenders.
  • Kabbage turns to Marketo for new marketing solutions.
  • ITProPortal interviews Ben Robinson, chief strategy and marketing officer for Temenos.
  • Mastercard to Buy VocaLink for Up to $1.14 Billion After Masterpass Expansion to Retail
  • Cloud Lending Solutions adds new online modules to its Learning program.
  • Google Cloud Platform opens its first West Coast region.

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

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.

Screen Shot 2016-07-25 at 2.52.11 PM

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).

Quick & Dirty Details of the PayPal – Visa Partnership

Screen Shot 2016-07-22 at 10.50.54 AM

Launched in 1998, PayPal is no stranger to fintech. However, most consider the company a competitor rather than an ally to banks and traditional financial services companies such as Visa. This week’s news may change that perspective, though not all PayPal shareholders were enamored with the deal, as the stock fell 7% today.

The two payments companies entered into a strategic partnership in which PayPal aligned itself with Visa, conceding some of its turf in the fintech arena. The details below:

Benefits to Visa

  • During customer enrollment, PayPal will present Visa cards as a “clear and equal payment option,” making it easy for consumers to set visa as their preferred payment method
  • The image of Visa digital cards will be incorporated into payment flows
  • PayPal will not encourage Visa cardholders to link to a bank account via ACH (PayPal used to do this to avoid paying fees to the card networks)
  • PayPal will work with issuers to identify consumers who choose to migrate existing ACH payment flows to their Visa cards
  • Consumers can use their Visa debit cards to move money from their PayPal and Venmo accounts to their bank account

Benefits to PayPal

  • PayPal joined the Visa Digital Enablement Program (VDEP), meaning that consumers can pay using their PayPal wallet at all physical retail locations where Visa contactless transactions are accepted
  • Visa is paying PayPal for increasing the number of transactions on its rails
  • Visa has promised “greater long-term Visa fee certainty,” meaning the company will not raise or impose new fees charged to PayPal when a customer uses a Visa card to make a purchase on PayPal

 

For more in-depth analysis, check out the Wall Street Journal’s coverage.

PayPal, which spun-off from eBay in 2015, released financial and growth figures in tandem with this announcement. The company’s earnings are up 11% YTD. From PayPal’s Braintree division, Venmo transactions increased by 141% in Q2 of 2016 to $3.9 billion. PayPal’s quarterly earnings rose from $305 million to $323 million and its quarterly revenue was up 15% to $2.65 billion.

PayPal’s last Finovate demo was in 2012 where it debuted Instant Account Creation. The company’s Braintree Developer Evangelist, Justin Woo, presented at FinDEVr New York 2016. Visa has also presented at FinDEVr. The company’s VP of Product Development M. Tad Tilahun and Senior Director of Digital Developed Markets
Alan Johnson presented at FinDEVr San Francisco 2014. The company’s last Finovate presentation was at FinovateSpring 2010, where it demoed a tool to help consumers collect and organize products.

Finovate Alumni News

On Finovate.com

  • Sberbank Earns Multiple Honors in Global Finance Awards.
  • California Bankers Association Selects Vantiv as EFT Processing Partner.

On FinDEVr.com

  • Prevoty Wins 2016 Stratus Award for Best Small Company Cloud Security Service.

Around the web

  • ITProPortal interviews Temenos Chief Strategy and Marketing Officer, Ben Robinson.
  • Fiserv launches Grapevine6 to help deliver content over its wealth management network.
  • Quantopian adds new Head of Trading, Dragan Skoko.
  • VISA and PayPal enter strategic partnership to improve payment experience for consumers.
  • Mobile Payments Today quotes Prairie Cloudware co-founder and CMO Michael Carter on banks and mobile wallets.
  • Wealthfront unveils updated iPhone app.
  • ProfitStars earns 2016 Top Workplace commendation from The Tennessean.
  • Espresso Capital features Outside IQ’s creativity in raising capital.
  • Yoyo Wallet expands to Singapore.
  • ThetaRay opens office in Singapore.

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.

Seven Alums Make the Fortune 500 List

Fortune500Homescreen

Fortune Magazine released its famed list of 500 companies, a ranking of top U.S.-based companies by revenue. This year, seven Finovate and FinDEVr alums made the cut. Here are a few quick facts about these seven companies:

  • Almost half ranked in the upper half of the list
  • Combined revenues of the alums make up almost $88 million
  • Companies represent 170,000 employees
  • This is the first time on the list for both PayPal and Fiserv

Qualcomm (Firethorn)

  • Rank: #110 (up from #113 in 2015)
  • Revenues: $25.3 million
  • 17th year on the Fortune 500 list
  • 33,000 employees
  • Headquartered in San Diego, California
  • Ranked #448 on Fortune’s Global 500 list
  • FinovateFall 2009 demo

CenturyLink

Visa

  • Rank: #204 (up from #238 in 2015)
  • Revenues: $13.9 million
  • 8th year on the Fortune 500 list
  • 11,300 employees
  • Headquartered in Foster City, California
  • Ranked #47 on Fortune’s list of World’s Most Admired Companies
  • FinDEVr San Francisco 2014 demo

MasterCard

  • Rank: #294 (up from #308 in 2015)
  • Revenues: $9.7 million
  • 8th year on the Fortune 500 list
  • 11,300 employees
  • Headquartered in Purchase, New York
  • Ranked #11 on Fortune’s list of Change the World
  • FinDEVr San Francisco 2014 demo

PayPal

NCR

Fiserv


*This was PayPal’s first year as a stand-alone company. The company’s CEO Daniel Schulman explains what the honor means to the company in a short video.

FinDEVr APIntelligence

FinDEVrNY16-V2(wdate)We’re taking our FinDEVr developer showcase to New York on March 29 & 30, 2016. Register today.

Developer news

The latest from FinDEVr San Francisco 2015 presenters

  • Aerospike unveils version 3.7 of its NoSQL database.
  • Mitek to combine its Mobile Verify solution with fraud prevention and risk management technology from IdentityMind Global.
  • Wallaby’s Chrome 2.0 provides access to credit card advice in the browser.
  • Markit acquires systems integration technology from JP Morgan.

Alumni updates

  • VISA launches consumer transaction controls for card-issuing FIs.

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

Finovate Alumni News

On Finovate.com:

  • Welcome to FinovateEurope 2016, Day Two.
  • FinovateEurope 2016 Best of Show Winners Announced.

Around the web:

  • Betterment and Wealthfront featured in Bloomberg column on the disruptive power of roboadvisors.
  • Reduced costs for Nutmeg yield lower fees for investors using the platform.
  • Markit acquires systems-integration technology from JP Morgan.
  • VISA launches Consumer Transaction Controls for card-issuing FIs.
  • PYMNTS.com takes a look at Expensify and its expansion into Europe.

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.

 

Finovate Alumni News

Around the web:

  • Blackhawk Network acquires NimbleCommerce, a digital commerce platform and network.
  • Wipro wins seven-year, IT-infrastructure contract with international insurer RSA.
  • Visa unveils its new Visa Developer Program, giving developers API-based access to many of Visa’s payment technologies.

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

FinDEVr2016-NY-(Stacked)V2Are you building new financial technology? Be sure to check out coverage from our recent developers conference in San Francisco. We’re taking the fintech developer tool showcase to New York on 29/30 March 2016. Stay tuned for details.

Developer news

  • “The Next Web: How to Design with Developers”

The latest from FinDEVr San Francisco 2015 presenters

  • Think Big Data mentions Praesidio as a startup using machine learning in its cyber-security solution.
  • “Xignite Surpasses 50 Billion API Calls in a Single Month”
  • VentureBeat: Twilio rolls out new feature set designed to help developers build messaging apps using its platform.
  • Arxan Technologies extends its app-security protection to Apple TV.
  • “Digital Asset Holdings Acquires Blockchain-as-a-Service Innovator, Blockstack.io
  • Security solutions from Arxan Technologies now running on more than 500 million devices.

Alumni updates

  • Tradier teams up with Equities Lab to bring real-world trading experience to college students.
  • Google appoints Entersekt CTO Christiaan Brand as product manager for security and identity teams.
  • Pymnts looks at how SimplyTapp is addressing host card emulation.
  • Visa Inc. to Acquire Visa Europe.
  • Fierce Finance IT features BehavioSec.
  • Avoka partners with Trulioo to provide digital identification authentication to international banks.

Stay up-to-date on daily developments by following FinDEVr on Twitter.

Finovate Alumni News

On Finovate.com

  • “Xignite Surpasses 50 Billion API Calls in a Single Month”
  • “Feedzai Unveils its New Antifraud Solution, Data Science Studio”

Around the web

  • Comarch supports insurance sales and after-sales service by automating sales force at UNIQA Poland.
  • Let’s Talk Payments talks about Photo Verify with Sarah Clark, Mitek VP of product.
  • AcceptEmail and Kansys team up to provide email billing and payment options to telecoms via OCPay.
  • Fiserv and Early Warning partner to enable real-time bill pay and deposit services for U.S. FIs (financial institutions).
  • Corporate One partners with Gro Solutions to expand credit unions’ digital platforms.
  • Mitek launches mobile multicheck-capture for Commercial Mobile Deposit.
  • USAA and Coinbase partner to bring bitcoin to USAA members.
  • The Daily Telegraph features SocietyOne.
  • Euronext launches sentiment analysis partnership with Heckyl Technologies.
  • GEICO employees get access to HelloWallet, helping them manage their 401(k).
  • Visa Inc. to Acquire Visa Europe.
  • DriveWealth teams up with CQG, Direct FX to launch new, multi-asset trading platform.
  • FX Street calls Ayasdi “the next evolution in science.”
  • Arxan Technologies extends its app-security protection to Apple TV.
  • Mobile World Magazine looks at Fastacash and its new partnership with Xpress Money Services.

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