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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Moov landed $45 million to refine its API that creates a modern payment stack.
Commerce Ventures led the round. Additional contributors include Andreessen Horowitz, Bain Capital Ventures, Visa, and Sorenson Ventures.
Moov’s total funding now sits at $77.5 million.
Modern money movement innovator Moov is going places. The Iowa-based company landed $45 million in a Series B financing round, bringing its total raised to $77.5 million.
As far as the company’s plans for the new funds, Moov Founder and CEO Wade Arnold said, “This new round of capital will help us refine our platform, address new payments use cases, and scale everything we’ve built so far. We’re a small and mighty team, so we’re looking forward to onboarding even more talented people…”
Moov will also use today’s funding to fuel its conference that fosters collaboration in the developer community. The company’s fintech_devcon event takes place once a year to share fintech building deep dives, best practices, and new ideas.
Arnold founded Moov in 2017 to offer a simpler way to move money. The company creates a cloud-based API that creates a modern payment stack that includes acquiring, ledgering, issuing, and disbursements. Since launch, Moov has built integrations to all major card brands, The Clearing House, and the Fed. The company won the Visa Everywhere Initiative in 2021 and was recently ranked on Built In’s list of top 50 fully remote startups and Purpose Job’s Best Remote Places to Work in 2023.
Understanding the impact Moov’s money movement platform has had in the fintech community, doesn’t even require a visit to the company’s website. The list of investors in today’s round– which was led by Commerce Ventures– includes big names such as Andreessen Horowitz, Bain Capital Ventures, Visa, and Sorenson Ventures. What’s more, Moov closed this Series B round in the midst of a difficult funding environment. While many fintechs have been able to close Seed rounds and even some Series A rounds, VCs have typically holding back on later stage rounds.
Trulioo unveiled a new global identity verification platform this week.
The new offering combines both individual and business verification with no-code workflow building, low-code integrations, and more into a single platform.
A Finovate alums since 2014, Trulioo won Best of Show in its most recent Finovate appearance at FinovateEurope last March.
Identity verification specialist Trulioolaunched a new global identity verification platform this week. The new offering combines individual and business verification solutions with no-code workflow building, low-code integrations, and more in a single platform. The platform will give companies the ability to provide a streamlined onboarding experience, as well as the kind of intuitive user experiences that help build both trust and inclusivity.
“Trulioo is the identity platform businesses turn to in order to solve the inherent complexity in onboarding customers globally,” Trulioo CEO Steve Munford said. “We enable businesses to offer their goods and services in nearly every country in the world and remain compliant. We provide our customers with industry-leading capabilities backed by best-in-class customer success so they can focus on their business and customers.”
With a single contract, the new offering will enable Trulioo customers to readily access:
Personally identifiable information matching
Identity document verification
Utility data for proof of address
Business verification for in-depth person-of-significant-control
Ultimate-beneficial-owner verification
Watchlist screening and monitoring
Anti-fraud capabilities
“Trulioo is the only company that delivers an integrated, high-performance platform with comprehensive capabilities, out-of-the-box processes and models, easy no-code configurability, and the ability to customize and amend functionality,” Trulioo Chief Product Officer Michael Ramsbacker said. “We are giving our customers the power to create verification workflows that best meet their needs with just one contract and in one intuitive platform.”
Founded in 2011 and headquartered in Vancouver, Canada, Trulioo has been a Finovate alum since 2014. Demoing its latest technology on the Finovate stage most recently at FinovateEurope 2022 in London, Trulioo won Best of Show for its GlobalGateway Business Verification to Identity Verification workflow. This functionality, using Trulioo’s GlobalGateway Orchestration, enabled easy-to-do business verification, simple verification of owner identities, and world-class orchestration and workflow building.
The company’s new product launch this week comes as a growing number of businesses are pursuing opportunities in online commerce, mobile payments, and digital currencies. And while these avenues represent significant innovation and progress, they also bring with them new concerns over fraud and financial crime. Being able to know your customer, know your business, identify money laundering and more have become critical – and complex – compliance issues for businesses of all sizes. As such, it is as important for growing companies to have a verification solution that is customizable to their particular needs and workflows, while at the same time providing the requisite scale to support rapidly expanding enterprises. This is especially true when it comes to international expansion.
Trulioo’s platform reaches more than five billion consumers in 195 countries, and enables companies to access more than 450 data sources globally to provide broad, comprehensive identity and business verification. The company has raised more than $474 million in funding from investors including TCV, which led Trulioo’s $394 million Series D round in 2021; and Goldman Sachs, which led the company’s $52 million Series C in 2019.
European fintechs in search of venture capital funding are in luck this spring. The Startup Booster Program at FinovateEurope, taking place March 14 through 15, has been crafted to help early stage companies pitch their new ideas in front of investors from across the U.K. and Europe.
Fintechs that are less than five years old and haven’t closed a Series A round can apply now for the opportunity to have two hours to network and pitch their innovation to an audience of VCs, angels, corporate venture studios, and accelerators. Some of the investors participating in this year’s program include:
Here are three reasons why early stage, European companies in search of venture funding should make this year’s Startup Booster Program a priority:
Two-hour investor networking reception All startups accepted into the Startup Booster Program will have a table to pitch, ask and answer questions, and make an impression.
Your three-minute pitch video and pitch deck are shared with investor attendees Finovate provides startups with guidance and best-practices to make an engaging, three-minute pitch video. We’ll also share your video with the investor audience and event attendees.
A full event access pass for only £600 per ticket Startup Booster participants receive special, discounted tickets to FinovateEurope that grant access to the entire event for only £600 per ticket. That’s a discount of £1,199 when compared to the current rate of £1799 for general audiences.
We’re also hosting a dedicated stream with content aimed to help early stage companies on their journey towards growth. Session topics include discussions on scaling your startup, selecting the right funding, landing a bank client, regulations, and a look at the newest opportunities in the space.
Since we launched in 2007, we’ve actively looked for ways to foster growth in the fintech industry. Helping early stage companies find access to funding is one way we’re doing so– which helps build and better our industry, as well. If you meet the criteria listed above, apply today.
Digital communications platform Eltropy and collections platform provider AKUVO announced a new partnership, integrating Eltropy’s texting functionality into AKUVO’s Aperture solution.
The integration will enhance the collections process for community financial institutions (CFIs).
Eltropy made its Finovate debut in 2017 and returned to the Finovate stage last year for FinovateFall in New York.
A newly-announced partnership between digital communications platform Eltropy and cloud-based collections platform provider AKUVO will enable credit unions to leverage the texting capabilities of Eltropy’s platform to enhance collections operations. Now, credit unions, community banks, and other community financial institutions (CFIs) will be able to access Eltropy’s texting communications platform from AKUVO’s Aperture solution.
“Integration between Eltropy and AKUVO’s Aperture will provide collectors with a powerful texting platform to guide their account holders through a proactive, effective collections experience,” AKUVO Chief Revenue and Operating Officer Steve Castagna said.
Headquartered in California and founded in 2014, Eltropy made its Finovate debut in 2017 and most recently demoed its technology at FinovateFall 2022 last September. At the conference, Eltropy demoed its Eltropy One offering, an all-in-one omni channel solution that lets financial institutions manage both inbound and outbound member and customer communications from a single console. Text, secure chat, video, voice, co-browse, chatbot, and secure file exchange are among the functionalities Eltropy provides – all in a secure and compliant fashion.
In addition to facilitating the delivering of seamless omnichannel customer experiences, Eltropy’s platform leverages AI to help CFIs better resolve issues and consumer inquiries. The technology detects both subjective conditions like consumer sentiment and mood as well as objective data like specific relevant keywords and phrases to provide real-time guidance and personalized recommendations. The company’s partnership with AKUVO, according to Castagna, underscores a shared “visionary approach” to using both data and analytics to help enhance the financial wellness of members and customers.
“One of our primary goals in 2023 is to build stronger integrations with vendors who have strengths in areas of need from our CFI customers, so we look forward to partnering with AKUVO who is making waves in the collection industry with their Aperture platform,” Eltropy VP of Strategic Partnerships Jason Smith said.
With $25 million in funding, Eltropy closed out 2022 with new partnership announcements with digital banking solutions provider Tyfone and credit union lending technology company Origence. Also last year, Eltropy acquired both video banking company POPi/o and AI conversational intelligence platform Marsview.ai. Ashish Garg is Eltropy’s founder and CEO.
Marqeta is acquiring credit card program management platform Power Finance.
The company will add Power Finance’s credit card program management capabilities to its own card issuing platform.
Financial terms of the deal were not disclosed.
Global card issuer Marqeta agreed to acquire credit card program management platform Power Finance. Terms of the deal, which is scheduled to close in the first quarter of this year, were not disclosed.
Power Finance was founded in 2021 by CEO Randy Fernando and CFO Andrew Dust to offer credit card program management services to companies seeking to create new credit card programs. The company’s platform takes care of credit card management, customer experience, application decisioning, transaction processing, and more. And because Power Finance is pre-integrated with third-party data vendors, it saves companies time when setting up KYC and underwriting processes.
“Companies like ours were made possible because of the path Marqeta blazed in modern card issuing, demonstrating the possibilities in payments with flexible and modern payment infrastructure,” said Fernando. “At Power, we built a full-stack, cloud-native credit card issuance platform, and by becoming a part of Marqeta we have the ability now to bring this innovation to a much larger market at global scale.”
Once the deal is finalized, Fernando will lead the product management of the Marqeta credit card platform.
Marqeta will leverage the acquisition by adding Power Finance’s credit card program management capabilities to its own card issuing platform. “It will allow us to accelerate processing revenue derived from credit programs, and improve our competitive positioning when competing for new deals, offering our customers a holistic credit card program management solution,” Marqeta said in a blog post announcement.
Marqeta launched its card issuing platform in 2010 to enable clients to manage their own card programs. The company offers configurable and flexible payment tools and customizes payment cards for their end customers. Earlier this month, Marqeta launched a Web Push Provisioning Solution to enable consumers to transact from their mobile wallets without having to download a separate mobile app.
Marqeta is a publicly traded company listed on the NASDAQ under the ticker MQ. The company has a market capitalization of $3.54 billion.
This week on Finovate Global, we feature an extended conversation with Paga founder and CEO Tayo Oviosu.
Serving more than 21 million unique users in Africa, Paga is a payments and financial services ecosystem that makes it easy for people to request, send, and receive money; pay bills; get remittances and more. Founded in 2009, Paga is Nigeria’s leading mobile money company.
We caught up with Tayo Oviosu to discuss the current state of fintech in Nigeria and in sub-Saharan Africa, in general. We also talked about how Paga is helping boost financial inclusion and empowerment in the region, and what we can expect from the company in 2023.
Paga was recently recognized with placement on the CB Insights 250 list – one of seven African start-ups featured. What is going right with fintech in sub-Saharan Africa these days?
Tayo Oviosu: It was an honor to be ranked by CB Insights in its Fintech 250 list and, as one of only seven African start-ups featured, it speaks to the pioneering approach we are introducing to the world – revolutionizing payments and creating a financial services ecosystem for Africa.
As sub-Saharan Africa gains recognition on the global stage, we are seeing innovative and pioneering products emerge and rise in popularity amongst consumers, diversifying the products they can choose from.
In 2020, we saw Stripe acquire Nigerian fintech Paystack – which disrupted the ecosystem and spoke to a future-oriented outlook that has validated the region as an exciting space, full of potential. This speaks to the increase in funding and investment opportunities in the region.
As the ecosystem continues to rapidly grow, the vision of an integrated African market is closer to being realized, with new opportunities constantly emerging. At Paga, this is something particularly pertinent to our mission of making life possible for businesses and individuals. Our consumer ecosystem (Paga) helps people send, pay, and bank digitally. We now serve over 21 million unique users at our agents and consumer direct channels. We developed our seller ecosystem (Doroki) to help businesses digitize their payments and to manage their business operations digitally. Our Platform-as-a-Service offering enables ecosystem businesses and developers to build, launch, and grow, via our API infrastructure.
Looking at Nigeria specifically, what is the most interesting thing going on in fintech in Nigeria right now?
Oviosu: We are seeing more options for customers come to fruition through a growing market. Fintechs are competing innovatively to meet customers’ different needs with various tailored products.
Subsequently, there are more lending products and services, which are crucial in affording consumers more flexibility, and options to help them reach their goals and needs, and unlock their potential.
Overall, the landscape is improving in terms of communication between companies and regulators – helping firms overcome short and long-term obstacles in compliance.
The recognition of Paga amongst such a global cohort speaks to the innovation we are driving – and the calibre of our ecosystem. Our market potential, investor profile, technological innovation, and business relationships are on a global scale. To have a Nigerian platform lauded globally is an achievement in the Nigerian fintech space in and of itself.
Let’s talk about Paga. What services does Paga offer and who is the company’s target market?
Oviosu: Paga offers an extensive, hybrid payments ecosystem for online and offline customers. We make it easy for people to send, pay, and bank digitally.
For the individual customer, we allow simple seamless payment transactions, transfers, and bill payments – embedding our services into the daily needs of our users. We also help businesses to achieve their goals; powering reliable, real-time transactions, allowing online payment collections, and bill payments – all with minimal transaction charges. For Paga agents in our offline channels, we create jobs and incentives for those helping serve their communities – and also offer financial support via our overdraft offering. We also help developers to build, by enabling them to leverage our extensive platform via our (payment) APIs and providing them with the needed technical support.
In November, we launched our cards in partnership with Visa – both physical and virtual cards – enabling our consumers to pay at over 100 million merchant locations globally, anywhere Visa is accepted. This is just another example of how we make life possible for all our users.
Our current target market is largely contained in Africa, and driving accessibility to what is still a comparatively under-served market. That said, we have plans to expand beyond this and we will keep you posted on our journey.
What makes Paga unique in the payments business?
Oviosu: Paga emerged within the context of a largely cash-dependent economy, with both individuals and businesses suffering from this inefficiency. We took on the mission of improving financial accessibility in Africa as part of the digital payments revolution – and our growth is ever-accelerating as we do so. Our transaction values are soaring: from achieving our first two trillion Naira (over $4 billion based on current official exchange rates) from January 2012 to March 2020, to achieving our most recent two trillion Naira from February 2022 to September 2022 – in just eight months!
Our ecosystem aims to solve payments and services for consumers and sellers, but what makes us unique is our ecosystem approach. We understand that cash is still popular in Africa, and so we provide onramps and offramps in order to increase our reach. Our on-and-offline infrastructure makes us accessible and we pride ourselves on our deeply connected ecosystem – connecting our users to all the banks, enabling seamless transactions to individuals and merchants, and ensuring convenience for our users in their day-to-day lives.
Our customer-first approach is embedded into our DNA, and as we enter new phases of innovation, we strive to solve problems and provide opportunities for our users – whether that be helping people to save, helping businesses digitize, or offering lending services to consumers and SMEs amongst others. Foundational to this is our Platform-as-a-Service and our strong infrastructure – for consumers, sellers, and third parties.
You recently launched a Visa-branded virtual naira card. Why virtual first?
Oviosu: We wanted to address the need in Nigeria for effective virtual cards. As a digital financial services company, we felt a digital product would adhere to our mission and address our customers’ needs quickly and effectively. We have always sought to simplify the use of and access to payments and financial services.
Customers are able to activate their digital cards in less than 20 seconds – immediately gaining access to Visa’s global network. Moreover, for both physical and virtual, we offer benefits unique to Paga’s digital platform, such as real-time transaction notifications, seamless payments via unique ‘JustPaga.me’ pages, and unique Nigerian Uniform Bank Account Numbers (NUBANs) that serve as added protection for the card.
Paga and Visa have worked together before. What makes Visa a good partner for Paga right now?
Oviosu: On our mission to power payments and accessibility, our partnership with Visa has facilitated the growth of our reach. Visa’s significant coverage means we can reach even more consumers and diversify our offerings for our existing consumers. Through our strategic partnership, we can carry more Africans into the financial system and bridge the accessibility gap.
The partnership has also further strengthened aspects such as reliability and security – facilitated in collaboration with Visa’s Cybersource in launching our direct online card processor. The partnership has been instrumental in bettering the user experience.
What can we expect from Paga in 2023? New services? New markets?
Oviosu: We are focused on deepening our current offerings in our ecosystem. We are staying true to our customer-focused mission and are constantly seeking to better serve all our users.
In 2023, we expect to see more significant partnerships occurring in the fintech space, as well as more niche focuses. This will widen options for businesses and consumers to meet their needs. More widely, this will accelerate economic growth as jobs are created, and infrastructure is improved. We are also looking to increase our reach. Currently, our customer base stands at over 20 million, with 140,000 agent points. We are projected to reach 40 to 50 million users in Nigeria – but are also looking beyond this. Earlier last year, we announced our operational license in Ethiopia – in partnership with the Bank of Abyssinia – and as we continue to work towards making it simple for people to send, pay, and bank digitally, we invite you to watch this space!
Here is our look at fintech innovation around the world.
OneSpan is acquiring blockchain-based document storage company ProvenDB.
The purchase will help OneSpan add document storage to its existing product offerings.
Terms of the agreement, which is expected to close this quarter, were not disclosed.
Digital agreements security company OneSpan agreed to acquire blockchain-based document storage company ProvenDB. Financial terms of the deal were not disclosed.
Headquartered in Australia, ProvenDB was founded in 2018. The company provides a blockchain-based database that enables users to store data, cryptographic signatures, documents, and more. The company also offers a product that adds proof, trust, and integrity to clients’ existing databases.
Under the agreement, ProvenDB will enhance OneSpan’s Transaction Cloud Platform to public and private blockchains. Integrating ProvenDB’s technology into OneSpan’s existing offerings will also add a new product offering that provides customers with secure vaulting capabilities and helps OneSpan secure digital agreements.
“Digital artifacts are simply too easy to fabricate, tamper, or delete in the era of Web3 leading to security breaches and loss of trust in digital information. In this world of evidence tampering and deep fakes, it is critical that we have non-repudiation and copies of the original artifact with an immutable chain of custody throughout the entire customer journey,” said OneSpan President and CEO Matthew Moynahan. “Securing business processes end-to-end leveraging blockchain technology will play an increasingly critical role in preserving the integrity of digital transactions and agreements to fuel this modern digital era. We have an ambitious plan to disrupt the digital agreement market and ProvenDB will accelerate that plan. OneSpan’s mission, the focus of our entire go-to-market strategy, is to restore trust and confidence in today’s most critical customer experiences, such as revenue-generating transactions or customer and vendor onboarding, and ensure that their integrity is never in question.”
The transaction is expected to close the first quarter of this year.
Founded in 1991 and formerly known as VASCO, OneSpan offers a range of digital identity and anti-fraud solutions. The Chicago-based company authenticates four billion users each year and counts 60% of the world’s largest banks as clients. OneSpan went public in 1997 and has a current market capitalization of $540 million. Matt Moynahan is CEO.
Frost & Sullivan is a growth-focused research and consulting company that offers a wealth of expertise across more than 10 industries. Frost & Sullivan’s Information & Communications Technologies Research Team conducts an annual voice-of-customer survey that contains inputs from key decision makers across industries.
The banking, financial services, and insurance (BFSI) industry includes commercial banks, insurance companies, non-banking financial companies, and other entities.
This study uses an integrated 360-degree research methodology to provide insights from end-user organizations, IT decision-makers, and influencers within the BFSI sector.
An analyst perspective on the state of adoption and future investment plans highlights opportunities for financial services organizations to equip their workers with the advanced tools they need to achieve operational agility and interact with customers via the channels they wish to engage.
This study also discusses opportunities for improving customer and employee experiences.
Digital mortgage lending company Better launched a new product, One Day Mortgage, that offers borrowers a mortgage commitment letter within 24 hours of applying for a loan.
During a period of beta testing, Better reported that it processed over $50 million in commitments, offering commitment letters in an average of 12 hours.
To qualify for the One Day Mortgage, borrowers must be salaried, make a down payment of at least 3%, and upload required documents within four hours.
Digital mortgage lending company Better launched One Day Mortgage, a new tool that does what it says– it enables borrowers to get a mortgage in a single day.
Using One Day Mortgage, home loan borrowers can get pre-approved, lock-in their rate, and receive a mortgage commitment letter, all within 24 hours. This timeframe is weeks faster than the industry average of more than 30 days.
Today’s announcement comes a couple of weeks after Better first launched the service in beta to a small group of customers. Since then, Better has processed over $50 million in commitments from its One Day Mortgage product. What’s more, it has helped customers receive a commitment letter in an average of 12 hours.
The One Day Mortgages are available to borrowers working in a salaried job and making a downpayment of at least 3% on a Fannie Mae or Freddie Mac mortgage. To further qualify, applicants must provide requested documents– including pay stubs, W2s, bank statements, and more– within four hours of locking in their rate.
Better’s One Day Mortgage product is a fairly large step forward for the mortgage industry, which has not seen much innovation in the past decade, despite the onslaught of new enabling technologies. The fast turnaround is made possible by Better’s digital-first approach that takes place completely online. This model enhances the user experience by offering a fully digital document upload and tracking tool.
“One Day Mortgage unlocks it all,” said Better shareholder and Partner at Novator Capital Prabhu Narasimhan. “It takes away the weeks of uncertainty that permeate the entire real estate transaction. If we can execute mortgage commitments in one day and closings in three days, we can complete entire transactions in less than one week to make the entire process better.”
Offering customers a mortgage commitment letter within 24 hours is certainly a competitive advantage for Better. As company chairman Harit Talwar explained, “This milestone will add immense value to the consumer, create a significant strategic moat for Better, and be a near impossible act for competitors to follow.” And he’s most likely right– for the time being. We probably won’t see other mortgage lenders offering 24-hour mortgage loans any time soon, but it’s quite possible the new offering will be industry standard by the end of the decade.
Founded in 2016, Better has seen its share of hardships in the past year. Last year, Better conducted its fourth round of layoffs in less than nine months, letting go of almost 4,000 employees during that time. What’s more, the company’s CEO Vishal Garg made headlines numerous times last year for his contributions to what employees described as a toxic work environment.
Lenders have always faced some level of uncertainty, but the past few years have truly put the industry to the test. While many have enhanced their systems with new enabling technologies, there are still a number of uncertainties– including inflated income due to Covid relief funds and increased spending power thanks to a student loan repayment pause– that create confusion in the underwriting process.
We spoke with PayNearMe’s Senior Director of Sales Jill Bohlken for some insight into how today’s lending environment has changed and what we can expect to see going forward into this year.
Describe the current lending environment and how it has changed over the past few years.
Jill Bohlken: In one word, the current lending environment is unpredictable. A number of converging market forces are causing some uncertainty among lenders, merchants, and borrowers alike.
We have consumer prices continuing to rise, leading to less disposable income and more borrowing by consumers to cover costs. According to the New York Fed’s Q3 report, households last year increased debt at the fastest pace in 15 years, and credit card balances collectively rose more than 15%.
Meanwhile, seven interest rate increases led to lower margins for lenders at the same time they face increased competition to attract new customers.
External forces like supply chain disruptions continue to inhibit some lending markets, such as auto. And emerging trends such as longer loan terms (upwards of seven years for an auto loan) and instant financing carry increased risk of delinquency, prompting lenders to build reserves and reduce overhead to cover themselves in case of default.
Can you discuss any notable trends or changes in consumer borrowing behavior that you have observed?
Bohlken: Last year, the economy saw unprecedented demand for goods and services driven by a surplus of Covid relief funds combined with a shortage of supply. More recently, we’ve seen loan demand start to normalize due to inflation and higher interest rates. For billers, managing risk and delinquency is always a priority. According to Experian, 60-day delinquencies for new car loans sat at 0.48% by Q3, with used car loans at 1.17%.
A more positive trend was the rise in online loan applications completed exclusively by web and mobile devices. This self-service innovation improved the speed of transactions and accelerated loan approvals, not to mention making the experience more convenient for consumers.
What tools, data, or technologies can help lenders mitigate the risk of default before extending a loan?
Bohlken: The expanding use of artificial intelligence and machine learning to analyze large swaths of data and produce actionable insights is by far the most exciting tool lenders should pursue. Payments platforms can feed a data warehouse to store transaction data in one place, then apply machine learning models to either an individual client’s data or aggregated industry data to create smarter risk models.
For instance, AI can be used to analyze cohorts of customers using hundreds of data points (zip code, income level, credit score, etc.) and assign the group a risk score. AI can even bring in data from government sources, such as unemployment and GDP reports to shed light on risk further. This research helps lenders determine how and where to find high-probability, low-risk customers and adjust their risk analysis and marketing spend accordingly.
How about once the loan has already been extended?
Bohlken: A payments provider can help lenders prevent late or missed payments using a number of tools and strategies, such as sending payment reminders by text, email, or push notification. The provider can offer a wide range of payment channels to allow customers flexibility in how they pay. In cases of chronic late payment, the provider can intervene with offers to help avoid default, such as flexible repayment plans.
What’s especially exciting is that AI and ML now make these strategies even more effective. For example, AI can be trained to constantly scan payments behavior to identify customers who have multiple late payments, then automatically initiate a series of engagement messages that move the customer toward payment. AI can also automate solutions to common payment problems. For instance, if a customer has multiple ACH returns, AI can apply a business rule requiring them to pay with cash or card only.
These automated solutions save lenders both time and money. Not only does the AI circumvent many behaviors that could lead to default, but it also eliminates the time and labor of manually resolving payment problems.
Looking ahead in 2023, will lenders be more hesitant to extend loans to borrowers?
Bohlken: It’s hard to say with certainty, but demand does remain fervent. According to a recent Consumer Pulse study, one in four Americans plan to seek new credit or refinance in 2023. However, according to Experian, auto loan balances have grown by 7.6%, so lenders may want to shore against risk, adjusting the credit profiles of their customers and trimming back-office budgets to keep a higher level of reserves.
At the same time, lenders may lean into the adage, “a bird in the hand is worth two in the bush.” That means putting more emphasis on servicing existing portfolios and maximizing return by reducing delinquency, lowering the cost to collect, and improving operating efficiency through automation and optimization.
If lenders cut back on extending loans, where will the overflow in demand go? Will consumers turn to payday loans, or will alternative lenders be able (and willing) to fill loan demand?
Bohlken: In my interactions with many large lenders I have noticed that many are reducing their workforce, a way of battening down the hatches and right-sizing operations to suit the precarious lending environment.
In terms of consumer overflow, I see movement in several “alternative” types of loans, including buy-now-pay-later, which breaks payments for a large-ticket item into several payments; and buy-here-pay-here, which allows car dealerships to act as both seller and lender. Both these options appeal to customers who may have poor credit and/or limited options for securing traditional financing.
Payday loans, on the other hand, are losing their luster after almost a decade of bad press and heavy regulatory oversight. They still play a part in some consumer borrowing, but most consumers who can find alternatives will do so to avoid the heavy interest rates and fees.
Germany-based fraud prevention and AML solution provider Hawk AI has raised $17 million in Series B funding this week.
The round was led by Sands Capital and featured participation from DN Capital, Coalition, BlackFin Capital Partners, and Picus Capital, and adds to the $10 million Hawk AI raised in 2021.
Hawk AI made its Finovate debut at FinovateSpring 2022.
In a round led by Sands Capital and featuring participation from DN Capital, Coalition, BlackFin Capital Partners, and Picus Capital, Germany-based fraud prevention and anti-money laundering solution provider Hawk AI has raised $17 million in Series B financing. The capital adds to the $10 million in Series A funding the company raised in June of 2021, and will be used to help fuel both product development and global expansion.
“My co-founder Wolfgang Berner and I started this business based on the strong belief that only leading edge, real-time surveillance technology can deliver the change needed to fight financial crime,” Hawk AI CEO and co-founder Tobias Schweiger said. “This contrasts (with) the obvious, drastic deficiencies in legacy technology. Hawk AI’s growth will continue to be fueled by industry-wide demand for AI, cloud outsourcing, and a convergence of fraud and AML technology.” Schweiger added that this week’s investment would help Hawk AI “become the leading global surveillance platform faster.”
Founded in 2018, Hawk AI made its Finovate debut last year at FinovateSpring in San Francisco. At the conference, the company demoed its AML Surveillance Suite, which combines explainable AI with traditional rule-based strategies to monitor transactions for fraud and evidence of potential money laundering in real time. The technology alerts financial crime specialists when suspicious behavior is detected while at the same time significantly limiting the number of false positives – by more than 70% – compared to legacy systems.
In its funding announcement, Hawk AI noted that more than $2 trillion is laundered every year, with U.S. fraud losses in 2022 topping $41 billion. Additionally, for what the company referred to as “high-growth markets,” fraud increased by more than 37% over the past 12 months. This has put additional pressure on institutions as both the volume and sophistication of financial crime continue to grow. Complicating matters further are an ever-changing array of regulations which Sands Capital’s Chris Eng said has made fighting financial crime “historically” challenging. To this end, Eng noted that, “Hawk AI’s sophisticated technology and use of explainable artificial intelligence present critically needed straightforward solutions for institutions across the payments landscape.”
Hawk AI’s funding news comes in the wake of a year in which the company realized year-over-year revenue growth of nearly 3x. Hawk AI also expanded its operations to Singapore last year, and now operates in more than 60 countries across Europe, North America, Asia, and Latin America. Hawk AI includes fellow Finovate alums VISA, Diebold Nixdorf, and Mambu among its partners.
Finovate alums raised more than $2.7 billion in equity funding in 2022. The sum makes the $8.4 billion raised in 2021 seem all the more an outlier as our alumni funding levels return to those common in 2020 and before.
The fourth quarter of 2022 saw Finovate alums secure more than $380 million in funding. This amount recalls the relatively modest fundraising haul from Q4 2020, with a comparable number of alums raising capital.
Previous Quarterly Comparisons
Q4 2021: More than $1.2 billion raised by seven alums
Q4 2020: More than $472 million raised by 17 alums
Q4 2019: More than $876 million raised by 21 alums
Q4 2018: More than $800 million raised by 19 alums
Q4 2017: More than $730 million raised by 23 alums
Outsystems’ $228.4 million fundraising was easily the quarter’s standout investment. Also raising sizable amounts in the final three months of 2022 were Moneyhub, which raised more than $61 million over the course of the quarter, and Banyan, which secured $28 million in funding.
Top Quarterly Equity Investments
Outsystems: $228.4 million
Moneyhub: $61.6 million
Banyan: $28 million
Cinchy: $14.5 million
Buckzy: $14.5 million
Here is our detailed alum funding report for Q4 2022.
October 2022: More than $316 million raised by eight alums
If you are a Finovate alum that raised money in the fourth quarter of 2022, and do not see your company listed, please drop us a note at research@finovate.com. We would love to share the good news! Funding received prior to becoming an alum not included.
