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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
The decision by digital asset platform Bakkt to pivot toward B2B technology solutions and away from consumer-based crypto products appears to be part of the greater re-evaluation that many fintechs are doing in the wake of the crypto crash of 2022. The company, which made its Finovate debut at FinovateFall last September, announced this week that it was turning the page on its consumer-facing app, launched in March 2021. Instead, the Alpharetta, Georgia-based fintech will focus on helping businesses provide crypto and loyalty experiences to its customers via SaaS and API solutions.
“As we continue to gain traction with our B2B2C strategy, we are laser focused on providing our partners and clients with seamless solutions that best serve their needs,” Bakkt President and CEP Gavin Michael said. “The discontinuation of the app ensures we are supporting the relationship our partners and clients have with their customers. With this move, we are focusing our investment on our core solutions that have product-market fit and are positioned to scale quickly.”
Bakkt’s decision to shutter its consumer-based crypto app comes in the wake of the company’s agreement to acquire crypto trading platform Apex Crypto from Apex Fintech Solutions back in November 2022. With more than 30 fintech partners and more than five million customers, Apex Crypto is expected to help support Bakkt’s B2B2C strategy of bringing more crypto-based solutions to clients in a range of verticals.
Bakkt’s consumer crypto app is set to sunset just over one month from now, on March 16. Current users of the app will continue to be able to access their crypto and cash on the platform courtesy of a new online, device-agnostic solution. The new experience will enable users to check crypto balances, as well as access transaction reports for tax purposes.
Founded in 2018, Bakkt demoed its Crypto Connect technology at FinovateFall last year. The solution helped consumers use their current financial services institution’s mobile app to buy, sell, and hold cryptocurrencies in a secure, trusted environment. In December, Bakkt laid off 15% of its exempt employee base in a bid to better control costs as the cryptocurrency downturn and FTX scandal soured the much of the public – as well as investors – on the space.
A publicly traded company on the New York Stock Exchange since the fall of 2021, Bakkt is listed under the ticker “BKKT.” The firm has a market capitalization of $433 million.
FIS is letting go of its Merchant Solutions business, along with the Worldpay brand, which it originally acquired for $34 billion in 2019.
The company states that Worldpay needs a different capital allocation strategy to enable the brand “to pursue more aggressive investment opportunities, including M&A.”
The spin-off is expected to take 12 months.
FISacquiredWorldpay for $34 billion in 2019, and after rumors of a break-up swirled last week, the Florida-based firm announced plans to let go of and restore the Worldpay brand. Specifically, FIS is spinning out the Merchant Solutions business it created from the Worldpay acquisition.
Jeffrey A. Goldstein, FIS Chairman of the Board, said that “… the spin-off of Worldpay will unlock shareholder value by improving both companies’ performance, enhancing client services, and simplifying operational management. We are confident that this is the right time for the separation of Worldpay.” Goldstein added that the Merchant Solutions business requires “increased investment in growth and a different capital allocation strategy” than FIS.
In its press release announcing the change, FIS explained that this different capital allocation strategy will enable Worldpay “to pursue more aggressive investment opportunities, including M&A.” The long-term goal of the spin-off is for Worldpay to expand geographic coverage of its eCommerce tools, strengthen its enterprise offerings, and shift toward software-led payments.
After the split, which is expected to be completed in the next 12 months, FIS and Worldpay will retain strong ties. As a result, FIS’ Merchant Solutions business will take on the Worldpay brand, which will be restored. Originally founded in 1971, Worldpay conducted $2 trillion in payments volume in 2022. Charles Drucker, who was Worldpay CEO from 2004 until the acquisition in 2019, will oversee the spin-off and will once again serve as the company’s CEO when the separation is finalized.
Founded in 1968, banking technology company FIS has acquired a total of 17 companies, two of which were purchased after the Worldpay acquisition in 2019. The company offers 450+ solutions and processes more than 110 million transactions each day. FIS is publicly listed on the NYSE and has a current market capitalization of almost $40 billion.
Paytech HUMBL unveiled its new mobile wallet this week.
The new offering enables users to buy, sell, and hold digital assets, and includes a search engine and a social media platform.
Currently available for Apple users, an Android version of the wallet is expected “soon.”
California-based paytech HUMBL is the latest company to launch a mobile wallet with more than just money in mind. The company’s HUMBL Wallet offering not only enables users to buy, sell, and hold digital assets; it also serves as a search engine and a social media platform with independently verified user profiles and brands.
“The HUMBL Wallet allows global customers to quickly search, verify, and transact with each other in new ways in the digital economy,” HUMBL CEO Brian Foote explained. “As consumers move from Web 2 onto Web 3 via HUMBL, we believe that digital wallets, as well as verified people and products, will start to become a fundamental expectation of future customers.”
The iOS version of the wallet is now available in the Apple App store in more than 140 countries. For Android users, the Wallet and the company’s social media platform HUMBL Social are currently available as separate applications in the Google Play Store and will be merged together “soon.” The company noted that it will continue to bring new capabilities to the wallet, including the ability to accept SMB/merchant payments.
The addition of a search engine in the wallet makes it easy for users to find news, images, and videos online without having to leave the platform. But the technology also provides a blockchain-based search capacity to find verified NFTs across Ethereum, Polygon, BLOCKS, and more. The wallet can be used to store NFTs as well as connect to Web 3 social media platforms like Collab.Land. HUMBL Social, accessible via the wallet, offers a social media alternative that enables verified users to connect with other verified accounts.
The addition of HUMBL Social is designed to help users avoid the “fake profiles, ratings, reviews, and merchandise” of Web 2, according to Foote. Adding the problem of fake bots accounts and ad click fraud to the mix, Foote said that the HUMBL platform is designed to give online users an alternative. “The HUMBL platform is being built to help solve for those issues on Web3, using blockchain and other new technology solutions, such as KYC/KYB profile verification and decentralized blockchain registries for faster payments, goods, and services authentication,” Foote said.
Founded in 2019, HUMBL ended 2022 by raising $20 million in an equity financing agreement with GHS Investments. Also last year, the company entered into a strategic technology partnership with food delivery company Great Foods2Go, and acquired digital wallet BizSecure for an undisclosed sum.
A look at the companies demoing at FinovateEurope in London on March 14. Register today and save your spot.
Ender Turing has created the fastest-to-value AI-based speech analytics for financial services companies. The platform improves the quality of service, customer experience, and front-end employee experience.
Features
Includes AI analysis of calls, chats, and e-mails in near real-time in 24 languages
Delivers automatic alerts on every possible situation in communication with clients
Provides rich analytics on QM, CX, and EX
Why it’s great
Ender Turing’s platform brings financial services companies’ contact centers from cost to profit via AI-analysis of customer communication and front-end employee AI-based coaching.
Presenter
Olena Losifova, CEO Losifova has been bringing new technologies to the financial services industry for over 17 years. In 2020, she co-founded Ender Turing with two AI researchers and was happy to continue delivering innovation. LinkedIn
A look at the companies demoing at FinovateEurope in London on March 14. Register today and save your spot.
NF Innova is dedicated to the digital transformation of banks by helping them provide state-of-the-art digital banking services to their customers.
Features
Delivers personal finance management in augmented reality
Includes buy now – pay later shopping in augmented reality
Provides a futuristic way to bank digitally
Why it’s great
NF Innova’s Fintense is a ready-made digital banking platform that supports banks looking for a quick transformation into a digital leader.
Presenters
Gregor Bierent, CEO Bierent is an experienced c-level executive with a demonstrated history of growing and improving business in an international information technology and services company. LinkedIn
Slavko Milojevic, Product Director Milojevic is a product leader who specializes in driving vision and roadmaps for digital transformation for financial businesses. LinkedIn
A look at the companies demoing at FinovateEurope in London on March 14. Register today and save your spot.
BehaviorQuant brings behavioral science and machine learning to investment decisions. Their automated survey technology provides detailed data about financial professionals, clients, and investment teams.
Features
Improves performance for asset managers and teams
Allows investors to select the best fund managers for their needs
Allows advisors to tailor advice to their clients
Why it’s great
BehaviorQuant turns people making investment decisions into detailed profiles and predicts their future behavior and outcomes.
Presenters
Thomas Oberlechner, CEO & Founder Oberlechner is BehaviorQuant’s CEO and an expert in investor psychology. As a university professor, his research included many of the world’s leading financial institutions. LinkedIn
Gerlinde Berghofer, COO & Co-Founder Berghofer is an expert on behavioral assessments. Before co-founding BehaviorQuant, she lived in San Francisco where she developed decision support systems for investors. LinkedIn
Fintech in Africa has experienced a growth spurt in recent years. Last month, investment banking firm FT Partners took a deeper look into the state of fintech in Africa in a report titled Fintech In Africa: Momentum is Building and the World is Taking Notice. The report examines underlying drivers of recent growth, offers details of the fintech investment scene, and provides an update on the state of important trends such as challenger banking and open finance.
Below are a handful of highlights from the 207-page report, which you can check out in its entirety on FT Partners’ website.
Underlying drivers of growth
The report highlights the multiple factors currently creating the perfect storm for fintech growth in Africa at the moment. The continent’s young, underbanked, tech-savvy population has long-favored cash, but is showing increasing favor for mobile-first technologies as mobile adoption rises and governments seek to further financial inclusion.
Some of the supporting statistics include:
Almost half of the world’s mobile money customers reside in Africa
More than half of Africans are unbanked or underbanked
65% of those in Sub-Saharan Africa are unbanked or underbanked
90% of payments are still made using cash
Mobile penetration is 80%
47% have access to internet
The African Continental Free Trade Area Agreement went into effect in 2019, opening up cross-border payments and creating the potential for a single currency.
State of Open Banking
It is well known that open banking and open finance create a wealth of benefits to end consumers– including increased control over use of their data. In addition to this, Africa is poised to benefit from open banking, which is expected to extend banks’ reach to rural populations and lower costs and barriers to entry of banking services by facilitating innovation in the space.
Nigeria, Kenya, and South Africa have each made inroads into creating formal regulation surrounding open banking:
Nigeria’s Central Bank issued its regulatory framework for open banking in 2021 and is currently working on operational, technical, and security guidelines
Kenya’s Central Bank emphasized open infrastructure as a strategic pillar for the financial services industry as part of its four-year-strategy announced in 2020
South Africa is home to six banks currently offering customers open banking services.
Challenger banking scene
Many fintechs have risen to serve the underbanked or unbanked populations in Africa, a group that makes up more than half of the country’s total population. FT Partners reports that many challenger banks are finding initial success in serving as alternative lenders to customers that lack access to traditional banking channels, and then building out a more robust set of services on top of their lending offering. Key to this, the report notes, is an efficient and reliable underwriting model.
Fintech investment scene
In 2022, African fintechs garnered $1.5 billion in funding across 135 deals. This is up significantly from 2019, when the continent’s fintechs brought in $340 million across 27 transactions.
In such a cash-heavy, underbanked society, it is no surprise to see that payments and banking technology was the most popular sub-sector for investors in 2022, having received more than $2 billion in funding volume. The report also notes that the payments and banking technology is responsible for more than half of the fintech financing deals over the course of the past six years.
New investors in the African fintech space over the past two years include:
The new agreement enables Wirex to issue its crypto debit and prepaid cards to more than 40 countries.
The company is working on finalizing another partnership that will facilitate card issuance in Australia.
Cryptocurrency payments company Wirex unveiled a strategic partnership with Visa this week. The agreement makes Wirex a member of Visa in the U.K. and in the Asia Pacific region and will enable the fintech to issue its crypto debit and prepaid cards to more than 40 countries.
The two players began their partnership at Wirex’s launch in 2015, when the U.K.-based company unveiled its crypto-enabled Visa card. The payment card enables users to buy, hold, exchange, and sell 150 currencies– from traditional to cryptocurrencies. Additionally, Wirex customers can use their Visa card to spend their currency holdings at live rates at more than 80 million locations where Visa is accepted.
In addition to the live crypto-to-fiat conversion, Wirex offers free international ATM withdrawals, zero monthly fees, free fiat-to-fiat exchanges, and up to 8% back in crypto rewards on every purchase.
“It’s great to strengthen our partnership with Visa, who have played an important role in allowing us to bridge the gap between the traditional and digital economies,” said Wirex APAC Regional Managing Director Svyatoslav Garal. “Visa’s proven commitment to safety, security and innovation will help us to continue developing a next-generation app and card.”
The partnership aligns well for payments giant Visa, which is working to position its brand in the Web3 space. “Visa wants to bring more payment options to consumers by connecting digital currencies with our network of banks and merchants,” said Visa Head of Digital Partnerships, Asia Pacific Matt Wood. “We’re excited that Wirex is expanding their focus on Asia Pacific, making it easy and seamless for people to spend their crypto balance at the millions of merchants that accept Visa in the region.”
Wirex was founded 2014 by Pavel Matveev and Dmitry Lazarichev. Since then, the company has raised $27.8 million in funding and facilitated more than $20 billion in crypto transactions. Wirex, which expanded to the U.S. last year, said it plans to make a partnership announcement “in the coming weeks” that will facilitate card issuance in Australia.
Cross-border payments company Tazapay raised $16.9 million in Series A funding.
The investment, which brings the company’s total funding to $21.9 million, was led by Sequoia Capital Southeast Asia.
Tazapay processes “hundreds of millions” of dollars each year in card and local, real-time payment methods.
Singapore-based cross-border payments company Tazapayclosed $16.9 million in Series A funding for its cross-border payments technology today. Today’s round, when combined with the company’s Seed rounds, boosts Tazapay’s total funding to $21.9 million.
Investors include Sequoia Capital Southeast Asia, which led the round, along with new investors EscapeVelocity (escp.vc), PayPal Alumni Fund, and angel investor Gokul Rajaram; and existing investors Foundamental, January Capital, RTP Global, and Saison Capital.
Commenting on the investors, Tazapay CEO and co-founder Rahul Shinghal said, “These partners will help us realize our vision to be the foremost cross border infrastructure for global platforms as we double down on growing our market presence and consolidating every real-time banking network in the world under one API. We are grateful to both our new and existing investors for acknowledging the evolving needs of our ecosystem and supporting our aspirations.”
Tazapay will use today’s investment to scale across Asia, expand in the Middle East and Europe. enhance its core capabilities, and add more local payment methods for cross-border e-commerce, education technology, Software-as-a-Service, and travel.
Founded in 2020, Tazapay facilitates card and local, real-time payment methods for businesses and consumers. The company’s API offers access to a global network of 170+ markets for its card coverage and 85 markets and processes “hundreds of millions” of dollars each year.
The investment comes at a time when both interest in and development of real-time payment technologies are on the rise across the globe. PhonePe, one of India’s largest fintechs, recently announced it will make its UPI payments available in the UAE, Singapore, Mauritius, Nepal and Bhutan. And in the U.S., the Federal Reserve’s FedNow payment scheme is nearing completion. In fact, banking-as-a-service provider Finzly just unveiled a new API yesterday that offers connection to the U.S. FedNowService in a sandbox environment.
Hong Kong and Shanghai Banking Corporation (HSBC)launched a new digital payments solution this week. The new offering, called HSBC Merchant Box, is designed to make it easier for SMEs to make international payments across regional and global e-commerce platforms using real-time exchange rates.
HSBC Merchant Box will be available to selected HSBC commercial customers initially. The technology is subscription-based and is fully integrated into HSBC Business Internet Banking. A range of fee options helps make the offering more affordable for businesses of different sizes and payment requirements. The company noted that it will extend the service to all customers in Hong Kong “in the coming months.”
Cross-border ecommerce is a significant factor in China’s external trade operations, HSBC Head of Commercial Banking Frank Fang explained. As a major regional trade hub, Hong Kong is seen as especially well-located to take advantage of the opportunity for greater and easier trade between companies in the area. HSBC Merchant Box also arrives at a time when there is greater travel between Hong Kong and mainland China due to the easing of COVID restrictions regionally.
“Simple and cost-efficient payment management solutions are key to the success of small- and medium-sized ecommerce merchants,” HSBC Managing Director and Regional Co-Head of Global Payments, Asia Pacific Yvonne Yiu said. “HSBC Merchant Box reduces the complexity of cash flow management for SMEs by giving them speed, control, and visibility on their international receivables and payments.”
Speaking of Hong Kong and payments, HK-based digital payment platform developer Yedpayannounced a new partnership this week. Yedpay is teaming up with Venture Cap, the Thailand-based subsidiary of ASL Securities, as well as the Hong Kong Polytechnic University and Easylink to help drive fintech innovation in the ASEAN region. “ASEAN” refers to the Association of Southeast Asian Nations and includes Vietnam, Thailand, Singapore, Philippines, Myanmar, Malaysia, Laos, Indonesia, Cambodia, and Brunei.
The announcement was made as part of the 16th Asian Financial Forum (AFF). YedPay offers an open payment platform that helps merchants process credit card transactions and e-wallet payments in brick-and-mortar locations as well as online. The firm has played a major role in developing Hong Kong’s cashless market, and in helping Hong Kong’s taxi industry go digital. At the forum, Yedpay COO Beatrice Tai said that the company planned to expand its business across borders, with an initial stop in Thailand. Yedpay also expects to launch new diversified financial products and build an “ASEAN Payment Hub” that would connect markets in ASEAN, Hong Kong, Taiwan, and mainland China.
Co-founded in 2014 by Chief Operating Officer Beatrice Tai, Yedpay offers an all-in-one payment platform for merchants. The company’s solution supports multiple payment methods on a single device, giving customers greater flexibility when making payments and making the collection process easier for merchants. Yedpay is also known as The Payments Cards Group Ltd.
Hong Kong-based digital bank ZA Bankintroduced new CEO and Executive Director Ronald Iu. He was appointed to his new position after serving as Chief Strategy Officer for Za Bank parent company ZA International in February 2022, and was subsequently promoted to Chief Risk Officer at ZA Bank. The banking and finance executive has more than 20 years of experience in the industry, having been chief executive at Airstar Bank, a General Manager and Executive General Manager at China CITIC Bank International Ltd, and CEO of HKCB Finance Ltd.
Iu takes the top spot from outgoing Rockson Hsu who was ZA Bank CEO for nearly four years. ZA Bank has not yet announced a new Chief Risk Officer.
One of the first virtual banks to be established in Hong Kong, ZA Bank received its license from the Hong Kong Monetary Authority in 2019, publicly launched in 2020, and introduced its business banking services for local SMEs in 2021. The firm currently has more than 600,000 users.
Here is our look at fintech innovation around the world.
Sub-Saharan Africa
Is Nigeria ready for a “cashless economy”? Techpoint Africa looks at the country’s attempt to redesign its currency as a cautionary tale.
Tempo France and Nairagram teamed up to enable remittances from the EU to 20 countries in Africa.
TechCabal reviewed the “State of Buy Now, Pay Later” in South Africa.
Finzly has released an API connection to the U.S. FedNow Service.
The API enables developers to test out the new set of payment rails in a sandbox environment.
FedNow, the U.S. Federal Reserve’s real-time payment rails, is set to launch later this year.
Banking-as-a-service provider Finzlyreleased its new API that offers connection to the U.S. FedNowService in a sandbox environment.
Through its sandbox, Finzly enables fintech, bank, and third party developers to use its API to build real-time payment experiences via the FedNow’s pilot version.
“The future of the economy is connected and real-time. Insurance payouts, government benefits, healthcare payments, online commerce, subscriptions, point of sale, investment, lending, treasury, and several other platforms are expected to connect to the new FedNow Service for an integrated, cardless, bank-to-bank, instant payment experience,” said Finzly Founder and CEO Booshan Rengachari. “Finzly APIs and its direct connection to the FedNow service will accelerate the adoption of instant payments in several use cases. We are excited about being the world’s first player to offer access to FedNow service via an API.”
Launching later this year, the U.S. Federal Reserve’s FedNow Service is a set of new, real-time payment rails. The service will facilitate instant money transfers to and from any U.S. financial institution at any time of day, on any day of the week for both commercial and retail customers.
Today’s news comes a little over two years after Finzly announced it was among 110 other organizations participating in the FedNow pilot program, a beta test of the new rails. Other non-bank pilot participants include ACI Worldwide, Finastra, Jack Henry & Associates, and Q2 Software.
Founded in 2012, Finzly offers banking-as-a-service tools via Finzly OS— which it demoed at FinovateSpring last year– that enable users to launch a modern bank from scratch. The company offers an API that connects to all U.S. payment rails, including Fed ACH, Fedwire, RTP, SWIFT, and now FedNow. Formerly known as SwapsTech, the North Carolina-based company recently added a handful of clients, including Veritex Community Bank, Coastal Community Bank, First Internet Bank, and ICBA Bancard. Finzly recently
A new fintech called Fierce has emerged from stealth with $10 million in seed funding.
The company’s iOS-based app features a cash account with an APY of up to 4.25%; a Rewards Credit Card is planned for later this year.
Fierce is backed by investors including Pendrell, AP Capital, Wheelhouse Digital Studios, and Space Whale Capital.
Fierce, a fintech based in New York, emerged from stealth this week with an iOS-based app and $10 million in seed funding. The investment came from institutional investors including Pendrell, AP Capital, Wheelhouse Digital Studios, and Space Whale Capital, as well as angel investors. The funding will help Fierce add to its team, build up its customer base, and market its solution.
“Fierce is a customer focused, feel-good finance app,” Fierce founder and CEO Rob Cornish said. “We are truly mission-driven in our effort to bring the best of fintech to people, so we built an incredibly advanced platform with a simple UX to give as much yield as possible to our customers. Our goal is to help users increase their wealth while enjoying an empowering, positive experience on the app.”
Founded in 2021 by a team of financial services professionals with backgrounds in both challenger and traditional banking, as well as cryptocurrencies and U.S. stock exchanges, Fierce offers users an all-in-one financial app for savings, spending, investing, and more. Fierce features an FDIC-insured cash account with an APY of up to 4.25% and no monthly fees. The app also enables users to buy shares of both stocks and ETFs – including the purchase of fractional shares – as well as participate in Fully Paid Securities Lending (FPSL) through which investors can earn passive income by lending their stocks. Note that FPSL does not prevent investors from trading their shares at any time.
Fierce also said that it plans to introduce a Fierce Rewards Credit Card later this year. The card will offer 1.5% cash back on all spending, and all interest and rewards earned are automatically redeemed into the user’s portfolio. Additional functionality – such as access to personal loans, mortgages, insurance, and more – is planned, and Fierce expects to offer an Android version of its app later in 2023.
“Fierce is entering the market with a powerful solution that allows customers to take control of their finances while calming the financial anxiety that many people face today,” Fierce angel investor David Krell said. “We’re confident in the company’s ability to provide customers with the means to create financial stability for the long run.”
