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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Banking technology provider Temenos has teamed up with telecommunications equipment and consumer electronic giant Huawei this week. Through the partnership, Temenos will make its cloud-native core banking solution available on the Huawei Public Cloud.
The agreement makes Temenos the first core banking software certified with Huawei infrastructure and Huawei Public Cloud.
Specifically, banks will be able to use Huawei Public Cloud to modernize their core banking systems, an action that is critical in today’s digital-first, partnership-forward banking environment. Ultimately, modernizing their core will help banks scale, reduce cost, and gain operational efficiencies by increasing agility and opening up new business models.
“Together, we can help digital-first banks as well as large banks in need of core modernization accelerate their move to the cloud,” said Temenos President of Strategic Growth Philip Barnett. “Our API-first, cloud-native core banking solution based on Huawei Cloud will provide flexibility, agility, elasticity, and accelerate time to market for banks.”
The two will focus on marketing in China, which represents a six billion dollar addressable market. Temenos’ solution will also be available to the broader APAC region and include Africa, Europe, Latin America, and the Middle East.
Temenos serves 3,000+ banking and financial institutions worldwide representing 1.2 billion people with its cloud-native, API-first technology. Huawei counts more than 2,000 financial institution clients worldwide, including 47 of the world’s top 100 banks.
Digital trust and identity verification innovator Socure announced today that it has received a strategic investment from Capital One Ventures, Capital One Financial Corporation’s venture capital division. The amount of the investment was not disclosed, but it adds to the $196 million the company has raised to date. This sum includes a $100 million Series D round in March, which gave Socure more than a billion dollar valuation.
The company plans to use the additional financing to fuel its expansion across a range of verticals including financial services, healthcare, e-commerce, on-demand services and online gaming. Named one of America’s Best Startup Employers by Forbes for the past two years in a row, Socure will also use the funding to help add to its workforce.
“We are thrilled to add Capital One to our expanding roster of strategic investors. We were fortunate to have met the venture as well as fraud and identity teams early on in Socure’s journey,” Socure co-founder and CEO Johnny Ayers said. “We admired their focus and discipline as a data science and analytics-driven company and channeled that as we built Socure.”
A Finovate alum since 2013, Socure offers a real-time predictive analytics platform that applies artificial intelligence and machine learning techniques with trusted online/offline data intelligence from email, phone, address, IP, device, velocity, and the broader internet to verify identities in real time. Socure’s ID+ product suite offers passive identity verification and fraud detection solutions in addition to a physical document verification solution, DocV, which provides enterprises with the ability to verify the authenticity of government-issued IDs while accurately associating that ID document with other, relevant PII. The addition of DocV gave the platform the ability to provide a wider range of identity verification methods all in a single, integrated solution and API. Socure notes that it achieves fraud capture rates of 90%, increases in auto enrollment by up to 94%, and an 8x to 10x reduction in false positives.
Alternative investment platform YieldStreet announced a Series C funding round this week totaling $100 million. The investment brings the New York-based company’s total funding to $279 million.
Contributors to the round include Mitch Caplan, Alex Brown, Kingfisher Capital, Top Tier Capital Partners, Gaingels, Edison Partners, Soros Fund Management, Greenspring Associates, Raine Ventures, Greycroft, and Expansion Capital. YieldStreet will use the funds to attract new users and create new investment products. The company will also use the investment to fuel more acquisitions in addition to the two companies– WealthFlex and Athena Art Finance– it acquired in 2019.
YieldStreet connects investors with asset-based alternative investments that have traditionally been difficult for non-institutional investors to access, such as art, marine, legal, and real estate. Since it was founded in 2015, the company has paid out more than $950 million in principal and interest to its investors.
“These are investments that generate passive income. For example, we do a bunch of things in real estate such as financing warehouses, multifamily and distribution centers,” company founder and CEO Milind Mehere told TechCrunch. “We also do art, auto loans, or equipment finance. These are typically investments done by institutions and what we’re trying to do is really fractionalize them and get them to real estate investors. A lot of this stuff is asset-backed and it’s generating cash flow.”
The funding comes at a time when the public’s interest in investing is growing, and YieldStreet is benefitting as a part of that trend. The number of investment requests the company has seen grew by 250% from January to April of this year when compared to the same time frame last year. And YieldStreet has acquired more users so far this year than it had for the entirety of 2020. Today, the company has 300,000 consumers.
As for what’s next, YieldStreet is considering going public via a SPAC merger in the next couple of years. The company said it has been approached by a few special purpose acquisition companies and that the public markets would offer more visibility to potential users.
The partnership between Quantum Metric and U.S. Bank was major part of the conversation on digital transformation in financial services at FinovateSpring in May. Quantum Metric, headquartered in Colorado Springs, Colorado, and founded in 2015, leverages its Continuous Product Design (CPD) platform to enable business, product, and technical teams to build better digital products faster. With partners ranging from Alaska Airlines to Western Union, Quantum Metric helps businesses access the customer insights that guide and inform development process.
We caught up with Michael Hanson, Regional Vice President of Banking and Financial Services at Quantum Metric, to find out what banks and fintechs can learn from Quantum Metric’s experience in collaborating with U.S. Bank. A textbook case of “two great tastes that taste great together,” Quantum Metric and U.S. Bank showed attendees what’s possible when companies with track records of innovation and a shared commitment to collaboration come together.
On the breadth of digital experience in financial services
When you think about digital experiences, it’s more than just a website. It can be a native application. It could be your tablet experience – depending on the demographic. It could be ATMs – ATMs are essentially a branch within a digital device – as well as kiosks in the traditional storefronts and branches that tend to be the bridge between the traditional banking relationship and a digital self-service relationship.
On the value of a company-wide embrace of agile operations
That means that marketing is now going to be agile. So instead of trying to craft some type of new product or new pitch and then releasing it out in the wild and seeing maybe in six months if it worked and delivered … No! We want to launch something, but we want to know immediately, in real-time, (and) understand if it’s working or not working, if there’s an opportunity to drive some type of improvement. It’s literally agile operations, which has been around for decades, but is now being deployed across the organization.
On the challenge of overcoming “technical debt”
There are long-term contracts and on-premises solutions that are baked into current workflows and current processes. And so as you’re learning new tricks, so to speak, (the question is): how do we quickly retool and empower our employees with the technologies that are going to support those new processes and support some of those new tricks that we’re teaching folks?
When it comes to trends, Asia has always been ahead of the rest of the world. Because of this, it’s worth paying attention to the fintech themes that will be popping up at FinovateAsia.
Taking place digitally June 22 and 23, FinovateAsia will highlight discussions featuring the latest thought leaders in the industry. Tickets are still available; book before June 4 to receive a discount.
Here is a highlight of some of the topics you can expect to see throughout the two day event:
Embedded finance
After last year’s transition to digital, embedded finance has more potential than ever. During the panel titled Embedded Finance and the Future of Finance, our experts will address how to harness the power of data and digitization to build new models of finance across verticals and how to empower customers through better offerings. The group will share new models for meeting customer needs, and discuss how incumbent firms fit into the new picture.
The customer experience obsession
Asia is known for its hyper-focus on the customer experience. What are some of the lessons firms can learn from super apps like Alipay that delight customers? Our customer experience panel will discuss changing customer demands in line with the current climate, as well as address how to build successful partnerships and distribution channels with customers in mind.
Empowering ESG
ESG is one of the hottest topics in fintech this year, and it’s no longer limited to investing. The ESG panel at FinovateAsia, titled Leveraging Emerging Technologies to Meet ESG Goals, will assess the activities that can be done around ESG, look at how banks can make ESG a commercially viable product and scale up ESG initiatives, examine how regulators are approaching sustainability, and discuss how sustainability goals are encouraging new ways of partnering.
Cross-border payments and real-time payments
When it comes to cross-border payments, the future is real-time and global. FinovateAsia’s panel titled Integration between cross-border payments systems – The evolution of RTP across Asia will look at what the industry needs to do to support the regulatory agenda and at the additional services and value banks can offer. The team of experts will consider current progress with the interoperability of RTP systems and what the industry needs to do to overcome obstacles.
Partnerships
If there’s one thing we’ve learned in the fintech industry over the past few years, it’s that partnerships are key for survival. In a panel titled, Overcoming challenges and fostering successful partnerships across new ecosystems, we’ll host a range of bank executives as they share expert advice on how banks can best cooperate with startups, make the most of their networks, work quickly without sacrificing quality, and develop an entrepreneurial mindset throughout the organization.
Synctera has raised $33 million in Series A funding to fuel its mission to make it easier for community banks and fintechs to work together. The round, which brought the company’s total funding to more than $46 million, featured new strategic investors such as Mastercard, as well as executives from Finovate alums like Marqeta, Feedzai, and Socure. These backers were joined by several of Synctera’s existing investors including Lightspeed Venture Partners, Diagram Ventures, Portage Ventures, SciFi Ventures, and Scribble Ventures.
“Since launch, Synctera has formed one of the best teams in the industry,” company CEO and co-founder Peter Hazlehurst said in a statement. “Bringing on a group of investors with deep industry expertise will help us meet rapidly increasing demand in our next stage of growth.”
Synctera helps community banks and fintechs achieve partnership banking at scale. The company’s platform streamlines day-to-day reconciliation, operations, and regulatory compliance for banks, while enabling fintechs to launch their solutions faster and with greater flexibility thanks to its one-stop-shop API. Part of the growing trend toward embedded finance and banking-as-a-service, Synctera will use the new capital to further build its software engineering team to speed the development of its product roadmap, as well as bolster sales and marketing efforts to help grow market share and expand internationally.
As part of the funding announcement, Syncetera also announced that it would endorse the diversity commitment from the Cap Table Coalition by allocating 10% of all funding rounds to traditionally marginalized investors.
“For this next chapter—and to put action behind Synctera’s values—we pledge to reserve 10% of this round and all future rounds to diverse investors, allowing for more representation and collaboration to further innovate the industry,” Hazlehurst said.
Emerging from stealth last year, Synctera has already secured customers in Coastal Community Bank and ONE Finance, as well as Tennessee-based Lineage Bank. The company has also partnered with money management and financial wellness platform for women, Ellevest. Check out our conversation with Hazlehurst on the Finovate Podcast with host Greg Palmer from last month.
Courtesy of an investment round led by Accel Partners, subscription management specialist turned personal finance company Truebill has secured $45 million in new funding. The Series D round – which featured participation from Bessemer Venture Partners, Cota Capital, and Eldridge Industries – takes the six-year old company’s total financing to $85 million.
“With this new capital, we’re transforming Truebill into an all-in-one, holistic platform that makes it easy for members to not only manage subscriptions and spending, but also optimize their savings and make informed decisions to improve their financial health,” company co-founder and CEO Haroon Mokhtarzada said. “More than 10,000 members sign up for Truebill every day seeking to better understand and improve their finances.”
Truebill’s PFM solution offers budgeting and autopilot savings tools, as well as insights into spending and credit scores. The app, available in both iOS and Android, also supports pay advance and bill negotiation, giving users further tools for managing cash flow and controlling costs.
Headquartered in Silver Spring, Maryland after being founded in San Francisco in 2011, Truebill has more than 100 employees and plans to use the new capital to help add to its workforce. The company is looking to bring on new talent in data science, machine learning, engineering, and marketing, as well as in customer service to help support Truebill’s growth.
With two million active users and revenues that have grown 3x since March 2020, Truebill is one of the companies that has been able to leverage the social discontents of the global pandemic into greater business for its services. Despite its expansion into the PFM space, Truebill has benefitted from the emergence of “power subscribers” that have 10+ recurring payments. The company currently profits from a user with an average of 17 subscriptions – down from an average of 21 during the worst of the pandemic last spring – and a monthly subscription bill of $145 a month.
Identity verification and remote deposit capture solutions provider Mitek has acquired AI-powered biometrics company ID R&D this week. Terms of the deal were undisclosed.
Under the agreement, Mitek will integrate ID R&D’s portfolio of biometric technologies into its own identity verification solution. Additionally, ID R&D will continue operating under its own brand and will still sell its biometrics products directly to the market. The company’s solutions include IDLive Face, a passive facial liveness detection tool; and IDLive Voice, a voice anti-spoofing technology.
By integrating ID R&D’s technology into its own, Mitek will offer consumers and businesses a more holistic identity verification and fraud prevention product that protects a transaction from start to finish. The new solution will offer banks and other organizations with a single authentication tool that offers a simple approach to fighting fraud throughout each step of a transaction.
“With additional resources now available to the ID R&D team, we expect to bring exciting breakthroughs to the market at an even faster pace,” said ID R&D President Alexey Khitrov in a blog post. “Mitek’s financial strength, global reach, and scale will only enhance our ability to expand our core biometric product portfolio.”
ID R&D was founded in 2016 and is headquartered in New York City. The company has raised a total of $5.7 million across two rounds of funding, the most recent investment taking place in May of 2019.
Founded in 1986, Mitek went public in 2011 and now trades on the Nasdaq under the ticker MITK. The company has a market capitalization of $739 million.
The increase in consumers going digital has been beneficial to Mitek. Last year, Mitek saw a year-over-year growth increase of 20%. This growth is likely to increase. In fact, Juniper Research estimates that by 2025, 1.4 billion consumers will be using facial recognition to facilitate secure transactions.
How are banks and fintechs leveraging the lessons learned during the global health crisis to provide consumers and businesses with financial products that do an even better job than before of addressing their needs? And when it comes to innovation in technology and financial services, is disruption or collaboration dictating the pace of change?
To talk about these and other issues, we caught up with Andrea Zand, co-founder and Chief Operating Officer of FISPAN. Headquartered in Vancouver, British Columbia, Canada, FISPAN made its Finovate debut in 2017, demonstrating its cloud-based platform that leverages APIs to enable banks to deliver new business banking solutions to their corporate customers.
How are the banks you work with doing now – a little over one year after the onset of the pandemic?
Andrea Zand: Open-banking infrastructure and data sharing are helping banks and governments around the world better respond to the recovery post-pandemic. We are starting to see evidence that governments are beginning to use open banking data to help inform their pandemic responses and help small businesses. The banks we work with are feeling positive about the recovery going into 2021.
In what ways should banks expect customer behavior to change and how should they respond?
Zand: We’ve already seen that the pandemic has sped up innovation in financial services. Customers are getting more and more comfortable doing their personal banking online, and business banking customers are also turning to digital banking platforms as an alternative to in-person branch visits. Banks are struggling to keep up with this rapid shift in the types of online service offerings their clients are demanding.
Because of this, banks are looking to deploy innovations that will have an immediate impact on the client experience. This is where we see a huge opportunity with embedded banking. By embedding the banking experience inside the platforms that business customers use to run their businesses (such as ERPs or accounting software), banks are able to easily provide their business clients with a more automated and streamlined treasury management process. The banks that are ahead of the curve and partnering with fintechs like us are beginning to better understand how their customers use their products in context, allowing them to innovate smarter and faster.
Technology has moved too fast for the banks to build those capabilities themselves. The best way for B2B banks to manage the impact of rapidly evolving customer expectations is to partner with agile, innovative fintech services.
Connecting with their clients as much as possible and understanding their needs will be essential in driving the agenda for the new capabilities the banks should be focusing on. Leveraging tech and automation will manage and rise to customer expectations while still allowing for more face time during this transition period to explore and understand customers’ needs and wants.
What are some of the other challenges that banks will encounter as the recovery picks up steam – and how will FISPAN help them?
Zand: Banks will continue to be challenged by continually changing customer expectations. They will also be challenged by the need to adapt to an open exchange of data that will happen as a result of the many new fintech upstarts that are creating new business models and finding ways to better meet these changing client demands.
FISPAN helps by collaborating with FIs to understand what will make their customers happier by joining forces across all levels of the product discovery and implementation phases. Getting in front of the customers and understanding their day-to-day ERP and accounting struggles is a large part of how we meet and overcome the challenges that have risen due to the digital shift during our global pandemic. More specifically, we enable banks to extend their service offering to their business clients by embedding commercial banking applications within the organization’s ERP or accounting software.
For those institutions that engaged in digital transformations, how do they make sure those efforts truly pay off?
Zand: Continue to be open to new ways of thinking and working with new partners. In partnering, serving, or investing in innovation by way of technology upstarts, financial institutions are able to position themselves for future growth and adaptation through real-time, easy access to products, services, data, and channels. Delivering a product or service that truly resonates with their customers and meets them where they are with the current challenges they face in a rapidly growing digital market.
What does collaboration between banks and fintechs look like in a post-COVID world?
Zand: Collaboration between banks, fintech, and other providers is becoming more important as the payments landscape is becoming more complex. Banks that are open to partnering have a competitive advantage because they can provide better services at scale. Not to mention that some banks are at risk of getting disintermediated by nonbank providers for some of these types of solutions. The time that bank partners spend helping integrate their banking services into different platforms is markedly less than the time it would take for the bank to develop it themselves. That same time investment from the bank also leads to countless saved hours for their business clients, increasing their value as a business bank.
What has been your biggest professional takeaway from 2020?
Zand: If 2020 taught me anything, it was to always remain flexible and open-minded. One of the big plans we had was to go to some in-person events and start to talk face to face with end-users and really understand what kinds of pain points they were experiencing with their treasury management process. All of our events were either canceled or transferred to digital. We were still able to get the information we needed from customer interviews and case studies, but it just goes to show that sometimes your best-laid plans aren’t going to be in the cards and you need to pivot quickly.
What are you looking forward to most in 2021? Where do you see the greatest opportunities?
Zand: Besides being able to see our bank clients and end-users face to face, in 2021 I am looking forward to watching banks, payments providers, and fintech companies launching services and solutions that can help small businesses across the country emerge from 2020. I think the greatest opportunity for economic recovery and success post-pandemic lies in banks being better able to serve their small business clients.
Vehicle refinance startup MotoRefipulled in a $45 million Series B round of funding this week. The Virginia-based company received the funds from investors including Goldman Sachs, which led the round, along with IA Capital, Moderne Ventures, Accomplice, Link Ventures, Motley Fool Ventures and CMFG Ventures.
“In 2020, we proved we are the go-to platform for auto refinance. In 2021, we’re scaling that offering to make auto refinance accessible to everyone- helping more people save money on their car payments,” said MotoRefi CEO Kevin Bennett. “Goldman is the best in the business when it comes to financial services, and we’re thrilled to partner with Jade Mandell and the Goldman Sachs team on our next phase of growth.”
MotoRefi will use the investment to boost growth by investing in its platform and build out its team.
The funds come just months after the company raised a $10 million Series A round in January. MotoRefi’s funding now totals $60 million.
Today’s news also comes during a time of major growth for MotoRefi. The company, which works directly with lenders to help them facilitate refinances on auto loans, has seen an increase in demand during the low interest rate environment. From the first quarter of 2020 to the first quarter of this year, MotoRefi has seen:
7x revenue growth
5x loan volume growth
2.5x team growth
Founded in 2016, MotoRefi has been in the fintech headlines a handful of times this year, having recently announced senior hires, a new headquarters location, and a new partnership with SoFi.
This is a guest post by John Minor, SVP of Product and Support at PayNearMe.
Pay by check? Yes, that’s still a thing. In fact, nearly a quarter of consumers (22%) pay their monthly utility bill and 9% make monthly mortgage payments by mailing a check or money order to the biller, according to a recent bill payment study by PayNearMe.
Traditional, non-digital forms of bill payment can be expensive. The labor cost to have employees available to accept cash or check payments and then manually count, sort, reconcile, and deposit these payments throughout the day is reason enough for businesses to encourage customers to adopt digital bill payments.
However, eliminating these familiar payment types and transitioning customers to electronic payments can be challenging. Here are three strategies to try:
Put electronic bill pay options front and center
At every opportunity, put digital pay options in front of your customers — on billing statements, through customer service representatives, via emails, on your website, and through push notifications.
For example, savvy billers are now generating personalized QR codes for customers that can be printed on paper billing statements. Customers then can pay their bill by scanning the code and choosing their preferred method of payment without having to log into their account. It’s frictionless, fast, and encourages your customers to pay their bills electronically.
Offer mobile payments
Mobile payments are nearly ubiquitous. The majority of Americans (74%) use their phone to order and pay for food and merchandise at least once a week, and nearly 1 in 3 Americans (29%) would like to pay with their smartphones all the time.
This same consumer behavior translates to the way they expect to pay their bills. In fact, according to this bill payment study, Americans are likely to pay their bills using one of the following forms of mobile payment, if they have the option:
26% — likely to pay bills via text message on their mobile phone
32% — likely to pay bills by scanning a QR code on their bill and paying using their mobile phone
37% — likely to pay bills using their mobile wallet (Apple Pay / Google Pay)
The data is clear: your customers want to pay with their mobile devices. To accommodate them, look for a payment platform that enables your business to accept multiple forms of payment, including Apple Pay and Google Pay.
Enlist your customer service staff
Every time traditional bill payers pick up the phone to make a payment or drop by the office to pay in person, the customer service agent has an opportunity to promote digital bill payment options. The agent can ask questions like:
“Have you considered paying your loan through our electronic payment system? Let me tell you why it is such a convenient option!”
“Can I email or text you a link so you can enter your payment information directly?”
“Would you like me to assist you in signing up for autopay to make your monthly payment easier?”
These one-on-one conversations can help get customers over the initial learning curve and help those who are hesitant feel more confident in making the switch from traditional to digital payments.
The majority of consumers (69%) prefer digital payment channels to paying bills by mail, phone, or in-person. But, getting set up on electronic payments has to be easy. Your customers don’t want to deal with lengthy forms, frustrating sign up processes, or having to provide payment details every month. Instead, use techniques like embedding personalized payment links or QR codes in billing statements and reminder messages so your customers can simply click a link or scan a code to go directly to their payment screen.
Transitioning your customers to digital bill payment will save your company time and money while affording your customers greater freedom and flexibility. It’s worth the effort.
John Minor is SVP of Product and Support for PayNearMe, leading the product, merchant services and support teams. By combining industry research with client and partner feedback, he ensures that PayNearMe’s solutions continue to lead the market in terms of mobile readiness, ease of use, and advanced bill pay and collection techniques.
“China-backed and Africa-focused” is a way to describe much of the investment that has poured into sub-Saharan Africa in recent years. This week’s news that African-based fintech platform OPay is in the process of raising $400 million in new funding – giving the firm a valuation of $1.5 billion – is the latest example of this trend.
OPay is a mobile money platform launched in Nigeria by popular internet search engine Opera back in 2018. The funding report, which was published in The Information, noted that the capital would be used to fuel the company’s geographic expansion, having gone live in Egypt earlier this year. With Chinese investors maintaining a majority stake in the company, OPay had raised more than $170 million to date from investors including Sequoia Capital, IDG Capital, Source Code, GSR Ventures, Meituan-Dianping, and parent company Opera.
The company said that it processed $1.4 billion in payments in October alone, a sum that increased to $2 billion by December. Much of this can likely be attributed to COVID-19. In a country where cash is still king, the onset of the global pandemic made in-person, cash-based transactions problematic. Digital payment options like those provided by OPay have soared in popularity; Forbes took a look at the boom in Africa’s mobile money business back in December, noting investments in sub-Saharan payment innovators like Paystack (also of Nigeria) and Chipper Cash, a San Francisco based P2P payments company that serves customers in seven African countries.
That said, OPay is looking to leverage its pedigree as a payments solution to offer additional products including debit and credit cards. Earlier this month, OPay launched its USSD withdrawal service to make it easier for Nigerians to access cash at OPay merchant stores – without needing a debit card. Also this month, the company introduced version 4.0 of its super app. OPay 4.0 now makes it easier for users to connect with friends and family, add contacts, make quick payments for frequently used services, and more.
Interestingly, OPay is the most successful of the ventures Opera has tried to spin off. These efforts include ORide, a bicycle-sharing service that was shut down after the Nigerian government banned the business; a similarly shuttered bus-booking solution, OBus; a logistics delivery service OExpress; a B2B e-commerce platform OTrade; and a food delivery service called OFood.
Here is our look at fintech innovation around the world.
