This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.
Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
U.K. digital bank Monzo is officially entering the U.S. market this week. The startup announced it’s now allowing U.S. clients to apply for a Monzo account.
Monzo has been in closed beta for the past 18 months, during which time it has onboarded thousands of new U.S. customers, processed millions of dollars of transactions, and gathered user feedback.
The company has launched new features inspired by this feedback, one of which is a salary sorter. This tool that helps users divide their paycheck, separating their spending, savings, and bills once their paycheck is received.
This week’s news comes after Monzo withdrew its U.S. banking license application last October. “While this isn’t the outcome we initially set out to achieve, this allows us to build and scale our early-stage product offer in the U.S. through existing partners and invest further in the U.K.,” a Monzo spokesperson told CNBC last year. “We have big ambitions for Monzo U.S. There are many routes to market we’re exploring that have been successful for other market entrants who are now major players.”
One of those “routes” is a partnership with a traditional bank based in the U.S. While Monzo is a fully licensed bank in the U.K., the startup is partnering with Ohio-based Sutton Bank to provide its U.S. accounts. Sutton will hold user deposits and provide protection with FDIC insurance.
Monzo was founded in 2015 and seeks to be a hub for users to manage their entire financial lives via its mobile app. In addition to financial management and budgeting, Monzo also offers a Mastercard debit card with no overdraft fees, no minimum balance, and no foreign exchange fees.
The digital bank has five million U.K. customers. This number is small when compared to competitor Revolut,whichcounts more than 14.5 million users. However, Monzo U.S. Product Manager Thomas George noted that it’s not just about the number. “We don’t believe it’s possible to build a globally impactful company without considering the impact we have on the communities we serve,” George said. “Too many people around the world lack access to vital banking services. So we’re also working to improve financial inclusion, support customers in vulnerable circumstances, and play our part in creating a more just society.”
Finovate kicks off its African-American History Month commemoration with a conversation with Rodney Williams, co-founder of SoLo Funds. Along with company co-founder Travis Holoway, Williams was named to Cause Artist’s “40 Social Entrepreneurs to Watch for in 2022.”
SoLo Funds is a mobile lending platform that brings borrowers and lenders together for peer-to-peer microloans – with terms set by the borrower. Headquartered in Los Angeles, California, SoLo Funds has processed more than 150,000 loans and served more than 400,000 customers since 2018. The company serves as a viable, non-predatory option for the nearly 80% of Americans who live paycheck to paycheck.
Featured in Tech.co’s “Seven Tech Startups to Watch Out for in 2022”, SoLo Funds in December became the only African-American owned fintech to acquire B Corp certification. This designation, granted by global nonprofit network B Lab, is given to companies that achieve a balance between “purpose and profit.” SoLo Funds earned a 10 out of 10 for its impact business model and 4.1 out of 5 for customer stewardship. “By SoLo Funds certifying as a B Corporation, it has met the highest form of verification for its commitment to people and the planet,” B Lab U.S. and Canada Director of Equitable Growth Andy Fyfe said.
We caught up with Rodney Williams to discuss SoLo Funds and its mission to improve the lives of “responsible, yet largely ignored” underbanked individuals and their families.
What problem does SoLo Funds solve and who does it solve it for?
Rodney Williams: SoLo Funds is a solution for anyone who has ever had the need for emergency funds. The unfortunate reality is that more than 6 in 10 adult Americans can’t afford $1,000 for an emergency expense. That’s over 100 million people, and oftentimes, it is our most vulnerable communities who bear this burden. Situations like this are why payday lenders have become some of the most prevalent businesses in the U.S., outnumbering the number of McDonald’s restaurants by a factor of two.
SoLo Funds was created to provide a new opportunity for cash-strapped Americans. As a first-of-its-kind, on-demand marketplace, SoLo puts borrowers in control by allowing them to access emergency funds in an average of 30 minutes. They are entirely in charge of the terms of their loan, including how much to tip lenders and how much to donate to SoLo Funds’ operations – a portion of which now gets reintegrated to communities in need through SoLo Causes.
This is the first time a financial platform has offered borrowers a completely voluntary fee structure. We aim to become the leading financial technology company for underserved communities who have been anchored down and left without options for too long.
What in your background gave you the confidence to tackle this challenge?
Williams: The inspiration for SoLo Funds grew out of my own and my cofounder Travis Holoway’s personal experiences. There were times where our parents would have an electric bill due on a Friday, but wouldn’t get paid until Monday, so we would have our electricity shut off because we weren’t granted a grace period. Other times, our parents had to decide between paying the bills or paying to fix the tire on the car. Travis and I grew up nearly 400 miles away from each other, but the older I got, the more I realized that these experiences weren’t unique to me.
Communities share a lot of similar qualities, but never has anyone tried to scale a solution for them. This was the inspiration for SoLo Funds, and what gave us the drive to bring the intimate knowledge of our communities to the world of FinTech. What has ensued is a product and solution for everyone.
SoLo Funds recently became the only African-American owned fintech to acquire B Corp certification. What does this achievement mean for SoLo going forward?
Williams: This was a huge milestone for SoLo Funds in its development. B Corp certification represents a balance of profit and values and, as a company working to achieve a more inclusive world, this not only serves as validation that we are doing that, but it also serves as a model. Fintech is not just for corporate bottom lines; it can be a tool that can truly democratize and build generational wealth for people who have been disenfranchised for so long.
Tell us about your favorite feature of SoLo Funds platform/technology.
Williams: As I mentioned, SoLo Funds was born out of lived experiences. This is decades of knowledge poured into a platform that provides a new way for people to learn and better their lives. The most remarkable thing about SoLo Funds is that it bridges the knowledge gap between what people are told about how to manage finances, and what they really should be doing to put themselves in the best financial situation possible. Because borrowers can set their own terms for their loans, they have the power to choose what and when they’ll pay. And we’ve seen tip and donation numbers go down as borrowers progress on the platform and understand what it costs to obtain capital.
SoLo provides an opportunity for people to learn and better their lives. This is a tool that changes peoples’ lives and gives them the ability to do what they want to do. Skills are transferable. SoLo is experiential. Books only get you so far, and there is always risk. Making bad financial decisions is a part of life. If we don’t start to teach the power of financial literacy, people will fail to understand why it’s so important.
You recently announced a partnership with Habitat for Humanity and United Way. How did this partnership come about and what are its goals?
Williams: We launched SoLo Causes to build on our work to serve folks in need. For our corporate philanthropy, we wanted to choose partners that would go out and do good in the communities in which our users live. Our first non-profit partners, United Way and Habitat for Humanity, match our values and impact our users’ communities. The program is dedicated to reintegrating potential profits into the communities that need it most. SoLo has committed that by 2023, 100% of our donation revenue will be distributed to non-profits. Ultimately, the goal is to reinvent how the system works for people. Once someone who lives paycheck to paycheck can stop worrying about paying for their next utility bill or fixing a leak in their home, they can start to build their lives and their wealth.
As a founder, what do you think is the most important factor when it comes to building a strong team?
Williams: A strong team has to be able to complement each other through their strengths, weaknesses, backgrounds, and experiences. This is the key not only to building a strong team but, at SoLo, this also is the key to building a team that provides the best services to our users. We believe that in order to meet our users where they’re at, we have to understand their needs and how they operate. SoLo users come from diverse backgrounds – nearly 60 percent of them identify as a minority, 60 percent report being female, and 40 percent of borrowers are low-income. Too many companies have tried to put these people in a box, forcing top-down approaches that are really the same traditional financial services repackaged. If we don’t create a team that can identify with the lived experiences of these people, then we will ultimately fail as a company trying to help them.
What can we expect from SoLo Funds in 2022?
Williams: SoLo Funds will continue to build a mission-driven business. Our B Corp announcement and the launch of SoLo Causes have solidified our commitment to underserved communities, but it’s just the beginning of what we have to come. We are working on a series of new banking services which we will gradually roll-out. These are meant to offer users the ability to build and sustain credit where they were previously excluded in the traditional financial system. Additionally, we are excited to launch a global mission. The United States isn’t the only place where access to emergency funds is an issue. We plan to launch SoLo Funds in our first global market, increasing financial accessibility for millions.
Canadian fintech TickSmith is ringing in the new year with $20 million in Series A funding. The company will use the additional capital to support marketing of its Data Web Store, a B2B SaaS platform that enables organizations and institutions to generate new revenue streams based on their data.
“Data monetization is no longer limited to large enterprises,” TickSmith CEO Francis Wenzel said. “Selling data should be as simple as selling products in an e-commerce store, and data sellers of all sizes can now benefit from the same tools that power the largest, most robust data marketplaces in the world.”
The Series A was led by Investissement Québec, and featured participation from Fonds de solidarité FTQ, CME Ventures, Databricks Ventures, Anges Québec, Anges Québec Capital, and Illuminate Financial Management. The investment gives the company a total capital of $26.8 million, according to Crunchbase.
Founded in 2012, headquartered in Montreal, Québec, and making its Finovate debut two years later at FinovateFall 2014, TickSmith offers a platform that gives firms the technology they need to prepare, manage, package, and monetize data via private marketplaces. With customers in industries ranging from financial institutions and data providers to exchanges and brokerages, TickSmith helps organizations take advantage of a new world of data types – including alternative data and unstructured data.
The company’s technology also empowers them to enhance and refine existing data, enabling them to offer granular, micro-data services. This, as TickSmith Head of Product Nicolas Doyen, explained in a recent blog post, is allowing data providers to “(offer) more control to the ultimate consumers of their information services.” He added that this “modern approach to the data buying process” not only gives more control to the end-user, but also can help reduce the costs of data by “circumventing the data packaging approach used by traditional data suppliers.”
TickSmith ended 2021 with a collaboration with international cryptocurrency and digital asset technology company BlockFills. Earlier this month, TickSmith announced that IPOhub will use TickSmith’s Data Web Store platform to distribute and securely commercialize SME data from more than 3,000 companies and more than 100 different sources. A pan European investment information platform headquartered in Estonia and founded in 2017, IPOhub is also collaborating with TickSmith and market data specialist EOSE to help take IPOhub data on growth company IPOs to market.
“TickSmith’s technology is making it easy for us to offer our customers a personalized e-commerce data shopping experience with our very own data web store that showcases IPO and European SME data,” IPOhub CEO Silver Laus explained. “Their platform provides an end-to-end data monetization experience and helps us open up an entirely new channel to deliver data to our customers in just a few clicks.”
Modern banking experiences provider Amount has acquired SMB loan and account origination platform Linear Financial Technologies for $175 million.
Founded last February, Linear offers financial services organizations a set of tools to help create a smooth customer experience. The Virginia-based startup provides a digital originations and servicing platform for credit cards, loans, and deposit accounts to help companies optimize the experience for their customers. Linear’s clients include Citizens Bank, PNC Bank, Fifth Third Bank, Bank of the West, and American Express.
Amount, a three-year-old company based in Illinois, helps financial services companies digitize their infrastructure to keep up with the rapid pace of technological change. The company’s modular approach offers firms their choice of embedded finance tools, including omni-channel account opening, credit cards, loans deposits, buy now pay later (BNPL), and more.
“In Linear, we saw an opportunity to pair Amount’s consumer banking solution and buy now, pay later technology with Linear’s small business banking solutions to help financial institutions simplify and streamline business processes to create new business opportunities and increase value for our clients,” said Amount CEO Adam Hughes. “We admire what Sam and his team have built at Linear, especially as we share many of the same values when it comes to developing technology, with a heavy focus on bringing data and insights to the forefront, to improve customer experiences, business processes, and risk management. I’m excited to welcome the Linear team to Amount and look forward to working beside them to expand Amount’s product set.”
After the deal is finalized, Linear will rebrand and operate as Amount Small Business. Linear CEO Sam Graziano will join Amount’s executive team and become Head of Amount Small Business. Combining the two companies will boost Amount’s employees to almost 600. The firm will maintain offices in New York City, New York; Reston, Virginia; Chicago, Illinois; and Los Angeles, California.
Today’s announcement comes four months after Amount partnered with Marqeta to help banks enter the BNPL space. The company, whose bank clients collectively manage just over $3.1 trillion in assets and serve more than 50 million U.S. customers, was valued at over $1 billion after a $100 million Series D funding round last May.
The BNPL space flooded with new players last year. This influx of new companies, plus the pressure from incumbent financial services firms such as Goldman Sachs offering BNPL solutions, has made competition in the credit card alternative space hotter than ever. Today’s merger will offer Amount a better competitive advantage against established BNPL players such as Klarna, AfterPay, Affirm, and Sezzle. As the BNPL market begins to mature, we can expect to see much more merger and acquisition activity in 2022.
“White Hat” hacker-based security platform HackerOne – which demonstrated its bug bounty and vulnerability disclosure platform at our developers conference FinDEVr in London in 2017 – has secured $49 million in Series E funding. The round was led by GP Bullhound, and gives the San Francisco, California-based firm nearly $160 million in total funding. Benchmark, NEA, Dragoneer Investment Group, and Valor Equity Partners also participated in the investment. HackerOne will use the capital to support research and development and expand go-to-market operations.
“As attack surfaces grow, so does the gap between what digital assets organizations own and what they can protect,” HackerOne CEO Marten Mickos said. “HackerOne is closing that gap and keeping its customers out of harm’s way in a way that no other mechanism can accomplish.”
Mickos noted that HackerOne has identified more than 17,000 high or critical vulnerabilities for its customers over the past 12 months. He underscored 2021 as an especially challenging year, with the firm’s customers announcing a 97% increase in reports for misconfigurations. Additionally, Mickos said that a growing number of institutions are choosing ethical hackers – such as those provided by HackerOne – to defend their digital attack surfaces and help reveal potential vulnerabilities. Specifically, HackerOne has experienced increased adoption of its HackerOne Assessments, Application Pentest for AWS, which was launched in August, and expanded its Internet Bug Bounty program to include vulnerability management in the open source software supply chain.
HackerOne ended 2021 with the appointment of Chris Evans as Chief Information Security Officer (CISO). Evans brings years of digital security experience from tenures at Oracle Corporation, Tesla, and Google – where he founded the Google Chrome security team and Google Project Zero security research team – as well as Dropbox, where he was Head of Security.
“All software has security vulnerabilities,” Evans said in a statement. “The only way to outpace the cybercriminals is to enlist the help of external security researchers. Across every industry, we’re seeing the most innovative companies and CISOs embrace ethnical hackers to reduce risk.”
A $260 million Series F funding round has given Brazilian secured lending platform Creditas a valuation of $4.8 billion. The new capital will help the company expand its operations and provide a “one-stop solution for those seeking a digital-first experience in everything related to their houses, cars, motorcycles, and salary-based benefits.”
The round was led by Fidelity Management and Research Company and featured participation from a sizable number of investors including Actyus, Greentrail Capital, QED Investors, VEF, SoftBank Vision Fund 1, SoftBank Latin America Fund, Kaszek Ventures, Lightrock, Headline, Wellington Management, and Advent International by way of its affiliate Sunley House Capital.
The Series F brings Creditas’ total capital raised to $854 million, according to Crunchbase.
Founded in 2012 and headquartered in Sao Paulo, Brazil, Creditas announced a significant boost in revenues in the third quarter of 2021 compared to Q3 of 2020 – from $46.8 million to $14 million. Creditas founder and CEO Sergio Furio projects that the company will realize annualized revenues of $200 million for the year that just ended. Creditas also saw its credit portfolio grow from $189.3 million in Q3 2020 to $532 million in Q3 2021.
“We plan to continue growing by nurturing and expanding our ecosystem, such as providing financial solutions to our marketplace customers, launching new products, extending our geographic reach (including our recent successful entry into Mexico and the expansion of our tech hub in Valencia, Spain) and selectively pursuing strategic M&A opportunities,” Furio said in a statement.
Last fall, Creditas announced a partnership with fellow Brazilian fintech – and Finovate alum – Nubank, that will enable Nubank customers to secure loans and other services from the Creditas platform. Months earlier, Creditas acquired used car buying and selling platform Volanty. The move will help buttress Creditas’ automotive division, Creditas Auto. Also last summer, Creditas acquired multi-channel insurance brokerage company Minuto Seguros, which was also part of the company’s project to enhance its auto financing business.
FinovateEurope 2022 is right around the corner. If you are an innovative fintech company with new technology to show, then there’s no better time than now and no better forum than FinovateEurope. To learn more about how to demo your latest innovation at FinovateEurope 2022 in London, March 22-23, visit our FinovateEurope hub today!
Here is our look at fintech innovation around the world.
In a blog post at the Wealthfront website, company CEO David Fortunato called the acquisition a “strategic partnership” that will enable Wealthfront to offer new services and give its customers access to “UBS’s industry-leading investing insights and research.” Fortunato praised UBS’s new CEO Ralph Hamers, who was appointed to the top spot in the fall of 2020, as a “digital native” who has put the digitization of the Swiss-based multinational firm at the top of his agenda. Fortunato noted that Wealthfront will continue to operate as a standalone business under its own brand after the acquisition.
“Rest assured that nothing will change with your account or the cost of our service,” Fortunato wrote to the company’s customers. “We will continue delivering great products and features to you, now at a much faster pace. And you’ll get access to even more research and insights that can empower you as an investor.”
Founded in 2008 – and making its Finovate debut as kaChing a year later – Wealthfront has grown into a leading online automated investing platform with $27 billion under management and more than 470,000 clients in the U.S. Earlier this month, the company announced a trio of updates to its Smart Beta service, a feature of the company’s U.S. Direct Indexing offering that helps investors optimize their allocations to individual stocks. Last fall, Wealthfront unveiled its Socially Responsible Portfolio, which leverages Modern Portfolio Theory to give investors the ability to put their money where their values are while still earning returns comparable to those available in its Classic Portfolio.
“Adding Wealthfront’s capabilities and client base to our global investment ecosystem will significantly boost our ability to grow our business in the U.S.” UBS’s Hamers said in a statement. “Wealthfront compliments our core business in the U.S. providing wealth management to high net worth and ultra high net worth investors through trusted relationships with financial advisors, and will enhance our long-term ambition to deliver a scalable, digital-led wealth management solution to affluent investors.”
Making its Finovate debut nearly seven years ago (as 3E Software), Teslar Software has become a valued strategic partner for community financial institutions across the United States. The firm’s portfolio management solutions aggregate and automate both lending and deposit operations into a single system, enabling them to scale and enhance processes throughout the institution.
Just this week, the Springdale, Arkansas-based company announced its latest partnership, teaming up with Tennessee’s Legends Bank who will use Teslar’s full suite of automated workflow and portfolio management tools to streamline and centralize its commercial lending business. Legends Bank joins The First, Jefferson Security Bank, and Bank First – community banks that have announced collaborations with Teslar over the past few weeks and months.
We caught up with Teslar Software’s Solutions Specialist, VP, Amy Berger to talk about the company’s recent progress in helping banks improve their commercial lending operations, and which trends in financial services she expects to dominate in 2022.
Tell us about yourself and your experience in financial services.
Amy Berger: My experience in financial services has been in the banking industry, with a focus on business lending. I began my career with a commercial finance company, but have spent nearly the last 20 years in community banking. I’ve worked as a commercial lender, in credit administration, SBA lending management, and have extensive M&A experience. I’ve consistently been active with the credit system side of things.
I first became acquainted with the fintech space when centralizing commercial and consumer lending functions for a bank. That was actually the first time I came in contact with Teslar Software, a provider of portfolio management tools that aggregate and automate lending and deposit operations for community financial institutions. Years later, and I have come full circle, joining Teslar Software as the VP, solutions specialist.
What are the biggest challenges and opportunities facing business lending today?
Berger: The most notable business lending challenges and opportunities fall into the same bucket: the need for community banks to understand the needs of and be responsive to their customers and businesses within their communities. This raises potentially tricky questions such as how to efficiently provide those services while still delivering speed and a high touch service approach for your customers.
Bankers were forced to really address this question head on over the last two years and many have embraced technology in meaningful ways. With modern technology, banks are discovering how to provide both convenient, digital experiences and a personal connection to customers within commercial lending. I only expect this trend to grow this year and beyond.
How does Teslar help institutions support their small businesses?
Berger: Teslar Software aggregates and automates lending and deposit operations processes into a single system, enabling institutions to improve efficiencies and seamlessly scale. With Teslar, banks are able to spend less time on tedious, paper-based processes and more time growing their portfolios and building more meaningful customer relationships.
Teslar is laser focused on helping institutions provide a fully digital experience across commercial and SBA lending. We truly believe there is a significant market gap here and, if approach correctly, such digitization can empower banks to grow and compete with greater visibility and speed.
What advice do you have for women looking to grow professionally in this male-dominated industry?
Berger: Stay true to what you’re passionate about and don’t be afraid to contribute. Ask questions. Raise your hand. Use your voice. This may sound quite simple, but it can make all the difference for women looking to grow and thrive in the industry.
What financial service trends can be expected in the new year?
Berger: Thanks to the range of options made available by fintechs, digitization is no longer just for the large national banks; it’s now within everyone’s reach. It’s prime time for community and regional banks to fully embrace digital transformation wherever they can. To effectively do so must involve integrating systems to streamline business processes and deliver products and services quickly. The community banking space has proven time and again the value they provide, and I don’t expect that momentum to slow down any time soon.
San Francisco, California-based finech Brex, which offers enterprise solutions from business accounts and credit cards to spend management tools, is partnering with password manager 1Password to streamline and better secure online payments.
Courtesy of the new integration, consumers will be able to complete online payments faster and more securely by automatically syncing customer data stored in their Brex vaults with 1Password. This will ensure users have access to the most up-do-date version of their Brex virtual cards, enable them to immediately delete their cards from both Brex and 1Password in the event of a security breach, as well as allow them to create single-use cards that mitigate against the possibility of online card theft altogether.
1Password CEO Jeff Shiner called the integration between his company and Brex “the first of its kind in financial services.” He said that the partnership would “give customers peace of mind over their business spend while promoting a culture of security within their organizations.” Cosmin Nicolaescu, Chief Technology Officer at Brex, added that the partnership was “an excellent example of how the Brex API can help customers with custom workflows to create efficient and time-saving practices.”
Other features of the integration include spending caps and card controls, auto-population of card details into online payment forms, unlimited virtual cards, and visibility into virtual card activity via a single dashboard. The integration will also enable Brex card details to be securely stored within 1Password, and allow Brex virtual credit cards to be viewed, managed, and controlled from within 1Password.
Brex’s integration announcement with 1Password comes just a few weeks after the company announced an additional $300 million raised as part of its Series D-2 round – and the appointment of new Chief Product Officer, Karandeep Anand. The investment round was led by Greenoaks Capital and Technology Crossover Ventures and takes the company’s total capital raised to $1.2 billion. Brex’s valuation currently stands at $12.3 billion.
Anand comes to Brex after tenures as Head of Business Products at Meta (formerly Facebook) and as Partner Director of Product Management at Microsoft. At Brex, he will lead the company’s product portfolio expansion. “Brex is a market disruptor, and the opportunity to create economic opportunity for millions of people and businesses globally through innovation in financial products is incredibly exciting,” Anand said in a statement.
Toronto, Ontario, Canada-based 1Password was founded in 2005. The company earned a valuation of $6.8 billion after securing $620 million in funding earlier this month. With a total capital raised of more than $920 million, 1Password has 100,000+ companies using its technology, including firms like Slack and IBM. The company has approximately 570 employees, with plans to double that number this year, CEO Shiner said.
Courtesy of a new offering from Miami, Florida-based digital banking and lending platform Milo, investors can leverage the world’s newest source of value to finance a purchase one of the world’s oldest. The company recently announced that it is offering the world’s first “crypto mortgage” – enabling digital asset holders to use their crypto to help them buy real estate in the U.S.
The program is available to both U.S. and international investors who are seeking to use their Bitcoin holdings as collateral for Milo’s 30-year mortgage loan. Milo allows customers to continue to own their bitcoin, and diversify into real estate ownership, while taking advantage of potential price appreciation of both assets. Customers can finance 100% of their real estate purchase, and no dollar downpayment is required.
“This is an exciting time for the crypto and mortgage industries,” Milo CEO and founder Josip Rupena said. “With our new crypto mortgage, we can expand our offerings to consumers that were previously denied by other banking firms just for having crypto. We have an opportunity to make sure that doesn’t happen anymore and their bitcoin wealth can now help them buy a property.”
In development since 2021, Milo’s crypto mortgage program avoids the problem that cryptocurrency holders often face when trying to use their digital assets to help fund real estate purchases. “The existing way for crypto consumers to access home credit has left them with unintended tax liabilities of selling for a down payment or worse the opportunity cost of seeing their crypto increase in value,” Rupena explained. “There are countless stories of people buying property with bitcoin proceeds only to see it increase in value and be worth millions more.”
Milo’s crypto mortgage innovation says as much about the company’s ability to embrace new asset classes as it does the firm’s commitment to helping individuals with significant assets overcome the hurdles that prevent them from deploying those assets as they choose. The company was founded in part from a need identified by Rupena when he was a financial advisor at Morgan Stanley. A private wealth client with a seven-figure net worth was unable to secure a home loan because of what Rupena called “traditional banks’ domestically focused processes.” He noted that less than a third of prospective homebuyers outside of the U.S. are successful in getting home loans and those that are approved often face high interest rates or, at minimum, a subpar customer experience. In 2020, Milo became the first company to conduct a completely remote digital closing for an international customer.
Founded in 2018, Milo has raised $6 million in funding from investors including 10X Capital, MetaProp, and QED Investors. The company has clients in 63 countries around the world, and has originated $300 million in loans from foreign nationals. The company’s crypto mortgage program has already begun granting loans via its early-access stage and plans to open the service to additional customers on its waiting list in the months to come.
At its most basic, a metaverse is a three-dimensional virtual universe that combines augmented and virtual reality with social media technology to create a simulated digital environment.
For some in the digital space, especially video gamers, the idea of the metaverse is easy to understand. Whether it is the (often) mild-mannered virtual spaces of the simulation-based games or the action-packed digital worlds of RPGs and shooters, the idea of adopting a persona and entering a universe radically different from the real one is something gamers have appreciated for years.
What makes the metaverse different is the level and types of technology being applied – enabling a greater sense of participation, autonomy, and boundlessness. What’s also different is the growing interest from non-game oriented businesses in finding out whether or not virtual environments like the metaverse offer a way to engage customers beyond both the brick and mortar storefront and the smartphone-based app.
The metaverse and financial services
Believe it or not, Finovate audiences already have had the opportunity to see how financial services companies might take advantage of many of the tools that make the metaverse possible. Back in 2015 eBankIT demonstrated how it was deploying augmented reality technology to make printed materials come to life on their smartphone screens. In 2017, we took a look at how proptech firms in particular were leveraging virtual reality to offer virtual walkthroughs in both existing and to-be-developed properties.
More recently, in 2020, Mastercard unveiled an augmented reality app that offered cardholders a virtual tour of three reward categories. “At Mastercard, we’re using our technology and solutions to deliver multi-sensory experiences for consumers every day,” Mastercard Chief Marketing and Communications Officer Raja Rajamannar explained, “whether they’re shopping, taking transit, or exploring the card benefits they care about.”
Fintechs and financial services companies have become increasingly sensitive to the opportunities of the metaverse. Brokerage firm eTorounveiled its MetaverseLife offering earlier this month. MetaverseLife is a new smart portfolio that gives investors exposure to the enabling platforms – such as Meta Platforms and Roblox – as well as cryptocurreny and blockchain-based platforms like Decentraland and Enjin.
And while there are many who are quick to point out differences between online gaming worlds and the metaverse, there’s no doubt that Microsoft’s $68+ billion acquisition of gaming company Activision earlier this month was a major shot across the bow for those who question the high priority tech companies are giving the metaverse.
What is the metaverse made of?
While there are elements of the metaverse in both the virtual worlds and the technologies offered in the past, there are a few key differences between those spaces and the metaverse currently being envisioned by contemporary technologists. Coinbase, in a blog post explaining its ambitions for the metaverse, highlights three aspects in particular that serve as a dividing line between the virtual worlds that existed before the metaverse – including the world of online gaming, and virtual social platforms – and what they expect afterwards.
A fully-functioning economy: This is one of the big differentiators between traditional virtual worlds and simulations and the metaverse. It is also an example of how central blockchain technology will be to the metaverse. Within the metaverse, individuals and organizations will be able to engage in a wide variety of value-generating activities and have a means of transferring that value to others in the metaverse.
Open and decentralized: Another gift from the world of blockchain – and the pre-platform Internet, for that matter, is the reality that the metaverse will not be a singular platform but will instead be a space in which no one entity (not even Meta) will have complete control when it comes to a metaverse participant’s data or experience. In this way, the metaverse will more resemble the Internet of the early Google years than the increasingly platformed Internet of the social media age.
Interoperability: One of the goals of the metaverse is create a space in which the content of experiences in the metaverse are readily transferable from one experience to another. Currently, what happens in one digital world tends to stay in that digital world. With the metaverse, participants can take their data and experiences with them from one simulated environment to another.
The future of the financial services in the metaverse
With these caveats in place, what can we expect from fintechs and financial services companies when it comes to embracing the opportunities of the metaverse?
Virtual Interactions: Using the metaverse as a way of interacting with customers is probably the most likely way that financial services companies initially will engage with the metaverse. As noted above, many fintechs and financial services companies have already made tentative steps in this direction via deployment of AR/VR technology. However, few have taken the concept as far as Korea’s Kookmin Bank, which created a “virtual town” consisting of a business center, a telecommunications center, and a recreation area – on a metaverse platform.
Virtual Training: In addition to customer-facing functionality, this kind of metaverse deployment can also be used as a training environment for financial services professionals. In the same way the CIA has relied on “The Farm” as a key component of agent training, it is easy to imagine financial institutions building and offering virtual environments to enable them and their clients to further develop the skills of their wealth management teams, financial crime and regulatory staffs, and others.
Virtual Business: To the extent that the metaverse will have its own economy, we should expect to see a proliferation of businesses catering to the financial needs of denizens of the metaverse. Digital identity and authentication providers – to say nothing of innovators like Soul Machines – will have a significant role in such a world, as will financial data management companies and financial infrastructure companies whose job it will be to help facilitate value-exchange in the virtual environment. Blockchain and digital asset companies obviously will be critical in the metaverse, but companies that develop virtual assistants and other AI-powered agents for financial services should also likely have plenty of work to do in building out the metaverse.
Lynx CEO Mike Penner, whose company announced a pair of metaverse-friendly initiatives earlier this month, spoke for many fintechs that are looking for ways to take advantage of the new opportunities hinted at by the metaverse.
“While (the) metaverse is widely discussed across all industries right now, for Lynx, we have always focused on building an inclusive digital economy. The ability to integrate the virtual economy to our legacy financial system is further opportunity to give access of everyday financial transactions to people, regardless of income level or where they live; for them to expand their own local economy,” Penner said.
Two use cases announced by Lynx include a cryptocurrency-based game that enables players to create and earn digital items that can be sold to generate income, and an “enhanced remittance experience” featuring a digital meeting space that enables those sending money to loved ones to visit with and communicate with them in a “streamlined, entertaining, economical, and secure way.”
Penner added “I believe that this is potentially the most exciting time to be an entrepreneur in our financial history, the Metaverse, Blockchain, and Cryptocurrency technologies that we are poised to develop and deploy will change the financial landscape forever.”
These days, who doesn’t want to be a bank? In recent months and years, we’ve seen industries from Big Tech to Big Retail offer a broader array of banking services. And now the trend has come to “Big Tax.”
“Spruce is a financial technology platform that combines the best features of leading neo-banks with H&R Block’s trusted brand, our 66-year history, and the insights we’ve gained from helping millions of customers every year,” H&R Block President and CEO Jeff Jones said. “Our front row seat on American life provides a unique understanding of how to help people get better with money, and we’ve applied those learnings to Spruce.”
In addition to helping users set and meet personalized savings goals, Spruce offers cash back rewards when customers use their Spruce debit cards to shop at qualifying merchants, and a fee-free environment with no monthly fees, no sign-up fees, and no minimum balance requirements. Spruce customers also have access to more than 55,000 ATMs around the country – also fee-free. Additional features include an early paycheck service, credit score monitoring, and overdraft protection. And, unsurprisingly given the business of its parent company, Spruce will also make it easy for users to apply part of their tax refund toward their savings goals.
Spruce’s savings and spending accounts are established at MetaBank, which also issues the Spruce debit card. The new banking services platform joins H&R Block’s other non-tax financial services solutions including its Emerald Prepaid Mastercard program, and its business bank account, payments, and bookkeeping solution Wave Money. Wave Money is a product of software solution provider Wave Financial, which was acquired by H&R Block in 2019.
“We believe in a future with equitable access to easy and affordable banking,” H&R Block Chief Financial Services Officer Les Whiting said. “Our customers already trust us with their most personal financial details when we help them file their taxes, and we created the Spruce solution to help address their unmet banking needs, too.”
The Spruce mobile app can be downloaded from the Apple Store and at Google Play. Users can open accounts via the app or at sprucemoney.com.
