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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Stavvy, a company that is digitizing the mortgage closing process, announced a $40+ million Series A round this week led by Morningside Technology Ventures. The Boston-based proptech startup, founded in 2019, will use the additional capital to add talent and accelerate growth in its banking and lending solutions which have seen an increase in demand as a result of the COVID-19 crisis.
“When we launched Stavvy in late 2019, we had no idea what was in store for the world in 2020,” Stavvy co-founder Josh Feinblum said. “We’re proud of the technology we’ve developed to help homeowners and buyers in this challenging time, and grateful for this opportunity to amplify our services and impact.”
Dubbed the largest Series A funding for a New England-based fintech to date, the investment was accompanied by an announcement that Stavvy had forged an alliance with Flagstar Bank, the sixth largest bank mortgage originator in the country. The partnership will enable the bank to offer remote loan modification services and help homeowners who are in need of relief in the waning days of the pandemic.
“Thanks to Stavvy, we can process more requests to help customers more quickly, reduce errors in the signature process, and even better, walk homeowners through their loss mitigation closing during this difficult time,” Flagstar CIO of Servicing Ken Creech said.
Named to HousingWire’s 2021 Tech100 Mortgage Winners roster, Stavvy leverages e-signatures and video conferencing to “bring real estate lending and servicing into the 21st century” in the words of company co-founder Kosta Ligris. Along with its remote notary capacity, Stavvy’s eClosing functionality makes it easier for businesses to safely conduct complicated, location-agnostic, legal and financial transactions.
This spring, Stavvy earned status as a MISMO Certified Remote Online Notarization Provider. The company began the year integrating with ICE Mortgage Technology’s Encompass Digital Lending Platform.
Providing services for Generation Z is increasingly on the minds of both banks and fintechs alike.
One such fintech, EarlyBird, is making it easy for a child’s community to invest in their future. We spoke with the company’s CEO Jordan Wexler on the current childhood investing environment and what it takes to compete.
Talk to us about the current state of financial literacy in the U.S.
Jordan Wexler: The numbers tell us that most American families aren’t doing a great job at teaching financial literacy. According to a recent survey, 19% of Americans reported that their household spent more than their income over the past year. Add in the fact that 43% of adults say they haven’t got a rainy day fund, and that means huge chunks of our society simply aren’t prepared to face financial hurdles. This shows that good financial habits and knowledge aren’t being effectively passed down either.
Research suggests there isn’t much time to sow the seeds of financial literacy into a kid’s headspace. Children generally have their financial habits set by the age of seven. That means to set kids up for financial independence, they have to be taught the basics of financial literacy sooner rather than later. Not only will you instill good habits early, but you’ll also be setting them up to make smart investment and financial choices throughout their lives.
Most wealthtech tools target high net worth individuals. What benefits are there to having a young client base that typically has no income?
Wexler: The benefit of helping the youth is that we’re trying to set them up for financial success in the future. We aren’t encouraging spending – we’re instilling good financial habits early on that will help kids flourish in their adult lives.
With EarlyBird, our vision is to have parents start investing in their children from day one. That way, in 18 years, they will have a solid financial foundation for their child to give them the freedom to pursue their aspirations – traveling the world, going to college, starting a business, whatever it may be.
EarlyBird was built for more than the children with their name on the custodial account. It’s for parents, family, and friends that want to give meaningful and purposeful gifts to the children in their lives to help support them financially. We’re making it accessible to all because it doesn’t matter which household income bracket a family falls under, investing just a little bit each month for your child can go a long way.
What elements do you use to cater EarlyBird to such a young audience?
Wexler: We’re catering EarlyBird to parents, their children, and also the community around them that wants to see them succeed. For parents, we’ve simplified the process to kickstart their child’s future by opening a custodial investment account. It doesn’t matter if the parent is a beginner, novice, or expert in investing in the stock market, we’re allowing families to gift meaningful and sustainable financial contributions for all life’s milestones.
For children, we’re creating a platform that allows them to learn about finances. They can better understand investing/saving, watch their money grow, and then one day have a bank account with accumulated funds to use as they please. Our hope is that from being a lifelong EarlyBird user, they’ll know how to manage those assets responsibly.
We’ve also created a great user experience for the ‘givers.’ They are able to record a video memory with their contribution and can use it as an opportunity to pass down stories and knowledge from the world of money. Video memories are placed into an archive on the EarlyBird app for the children to look back on and learn from forever.
EarlyBird was founded in 2019. How have you seen the childhood financial services space grow since then?
Wexler: Being in the weeds in the childhood financial services space, it’s apparent that there’s been massive growth and that it’s on an upward trajectory, especially with latest funding news from services like Greenlight, Current, Step, and Till Financial.
One thing we are noticing right now is that “kids” and “children” are being somewhat generalized into one category of fintech. The reality is – there are different offerings in the space that make sense for different ages and parental comfort levels. I feel that we’re at the point where parents need to start to consider their “ideal mix” when it comes to the fintech tools and apps they use to save for their children, teach them financial literacy, and also get them started with spending when it’s time.
For example, parents can get started with EarlyBird when their child is born and then later on incorporate an app with teen-focused debit card to begin digital banking. This is similar to the “old school” trajectory of starting off with a 529 account then adding a standard savings account and later a checking account.
It’s great to see so much growth, innovation, and potential happening in childhood financial services. We’re beyond excited to be a part of this movement and to set the next generation up for financial freedom!
Millennial investing app Acorns announced plans today to go public using a merger with a special purpose acquisition company (SPAC).
The SPAC, Pioneer Merger Corp, is a blank check company founded in 2020 that aims to acquire Acorns in a deal valuing the fintech at $2.2 billion. The transaction is expected to complete in the second half of this year. Once finalized, Acorns will trade on the Nasdaq under the ticker OAKS.
Acorns’ new valuation of over $2 billion is more than double its last valuation. The company was estimated to be worth $860 million in January of 2019.
Prior to today’s announcement, Acorns was in the middle of another funding round, which would have added to the $207 million it had already raised since it was founded in 2014. Instead of closing another round of funding in the private markets, Acorns CEO Noah Kerner chose the SPAC route because he felt that Pioneer Merger Chairman John Christodoro was the right partner.
“Now was the time to go public to accelerate our growth and get the tools of responsible wealth-making in everyone’s hands as fast as possible, when they need it most,” Kerner told CNBC. “We just saw this as an accelerant on that journey.”
The timing is also right from a demand perspective. The pandemic, combined with media frenzy around meme stocks, fueled interest from new investors. Acorns clearly benefitted from this, having just completed its best quarter on record. The company doubled its number of subscribers compared to the fourth quarter of 2020 and now counts four million users.
Acorns has long been known for helping its millennial client base invest the “spare change” from their card purchases into index funds. The company has since expanded and now offers a debit card offering and more robust banking services such as mobile remote deposit check capture, direct deposit, check sending tools, and automated IRA investing for retirement.
Global payments platform Flywire began trading on the Nasdaq today under the ticker FLYW.
The Boston, Massachusetts-based company is offering 10,440,000 shares of its stock at $24 per share and expects to raise about $300 million with a market capitalization of $3 billion. These figures are at the top range of what Flywire originally expected; last week the company announced it planned to offer 8.7 million shares priced between $22 and $24 a share.
The Flywire team gathered at the exchange in person this morning for the IPO. The reunion was especially notable since this was the first time in 15 months that team members have seen each other in person due to COVID lockdowns.
Flywire originally launched as peerTransfer in 2009, when it focused on streamlining international payments to save schools and international students money on tuition and fees. The company rebranded to Flywire in 2011 and expanded from education to facilitate international payments in healthcare, travel, and select B2B payments. Flywire now counts 2,250 customers.
Differentiating itself from competitors, Flywire focuses on high stakes, high value transactions. That’s because once transactions exceed $10,000, the funds are subject to a different set of regulations and must be exchanged using a purpose-built network– that’s where Flywire comes in.
“We’re just getting started,” Flywire CEO Mike Massaro told CNBC in an interview. “We see this business as a cornerstone of how money moves within the industries that we serve. If you look at the four industries we’re in now it’s $12 trillion of opportunity. There’s so much room to grow here. We’ve got clients in 30 countries already… I see us going into more industries. I see us going into more countries, and really just try and digitize more payments for our clients.”
In addition to its Boston headquarters, the company has offices in Chicago, London, Manchester, Valencia, Shanghai, Singapore, Tokyo, Cluj, and Sydney. Prior to going public, Flywire had raised $323 million.
In a round led by One Peak, and featuring participation from Infravia Growth Capital, Hermès GPE, Plug and Play, and others, U.K.-based mobile payments platform Paysend has secured $125 million in Series B funding. The round takes the company’s total capital to more than $700 million according to estimates from TechCrunch, and puts the firm in a position to expand geographically, add talent, and develop new products.
“Paysend’s vision is to develop the next generation integrated global payment ecosystem for consumers and SMEs,” Paysend CEO Ronnie Millar said. “Our innovative technology is connecting 12 billion cards worldwide to pay and send instantly anywhere, anyhow and (in) any currency – we call this Money for the Future. This saves time, saves money and connects millions of people and businesses around the world.”
Paysend offers international, cross-border money transfers, and card processing, as well as banking and e-commerce services for SMEs. With 90% of its transfers arriving in 15 seconds or less, Paysend leverages its own global network of banks, international and local payment systems – as well as partnerships with the major card networks – to reduce the “significant barriers to entry” for consumers and businesses sending money internationally. “Our platform aims to democratize the service by providing a one-stop-shop to pay and send money to families, suppliers, employees and partners in any currency anywhere in the world at a significantly reduced cost,” Millar said.
A Finovate alum since 2016, Paysend now serves more than 3.7 million consumers; 17,000 small and medium-sized businesses; and 110 receiving countries with its end-to-end, vertically-integrated technology. This month, the company announced that its U.S. customers would now be able to send money to Canada. Paysend also announced the opening of a new regional headquarters in Singapore.
For many, at least in fintech, the conversation on innovation has begun to shift from an emphasis on disruption to a focus on the possibilities of collaboration.
But the title of “Technology Disruptor” is still a coveted one, especially in the popular media where talking heads talk about technology trends like celebrities mincing down the red carpet on awards night.
CNBC has been culling the ranks of Technology Disruptors for nearly a decade and, this week, introduced its ninth CNBC Disruptor 50 list. The collection of technology companies is designed to highlight private firms that have helped lead the way out of the COVID-19 era “with business models and growth rates aligned with a rapid pace of technological change.”
See the full list at CNBC.com. For now, here’s a look at the four Finovate alums who made this year’s roster.
#7 Marqeta
Like most of the Finovate alums that made this year’s CNBC Disruptor 50 list, Marqeta was first introduced to our audiences via its participation in our developer’s conference FinDEVr SiliconValley 2016.
The company leverages its open API platform to enable its clients and partners to instantly issue and process card payments. With more than $528 million in funding, the Oakland, California-based firm is reportedly readying for a $100 million initial public offering later this year.
#38 Ripple
Does anyone remember OpenCoin? That was the company that Chris Larsen brought to FinovateSpring in 2013 to introduce a new virtual currency and distributed open source protocol called Ripple.
In the years since then, Ripple has grown into enterprise blockchain company with hundreds of customers in more than 55 countries who are using its solutions. The company’s XRP Ledger and digital asset XRP, running on Ripple’s global network, improve and enhance payment services for businesses around the world.
#39 Plaid
An alum of our developers conference FinDEVr, Plaid became a household word in the fintech community when Visa tried to acquire the company in January 2020. That plan was nixed by the U.S. Justice Department, but Plaid has continued on its innovative path to promote open finance via API.
Dedicated to helping connect people’s financial accounts to their apps, Plaid has added key insights to the data access it facilitates via a suite of analytics solutions such as its new income verification product, Plaid Income.
#40 Nubank
International fintech has always been part of the Finovate/FinDEVr beat. Back in 2016, a Brazilian financial services startup with the backing of an impressive array of venture capitalists demonstrated its unique approach to fintech development at FinDEVr New York 2016.
Today, that company, Nubank, is the biggest fintech in Latin America. The company operates as a challenger bank with more than 34 million customers and offices in Berlin and Mexico City, in addition to its São Paulo, Brazil headquarters.
Other fintechs that made this year’s CNBC Disruptor 50 are:
Global financial services company Revolutadded an invoice creation tool for its Revolut Business clients today. The added capability enables businesses to create, send, and reconcile invoices from within the Revolut app.
By using Revolut’s invoice tool, the fintech’s business banking clients are able to send their customers professional-looking invoices with customized branding. The tool also offers customers more payment options, including credit card, bank transfers, and Apple Pay. Once payment is made, the business receives the funds faster– directly into their Revolut Business account.
One of the biggest benefits of Revolut’s invoices is that it helps with heavy lifting on the administrative side of things. For example, businesses can use Revolut to monitor invoices and receive real-time tracking and notifications.
The new development comes on the heels of the company’s rollout of currency forward contracts in the U.K. that enables companies to set their fixed future FX rate online to help manage market risk. It also closely follows the launch of QR code payment capabilities for businesses. Both of these features make Revolut an increasingly robust option for companies seeking a banking option. As a result, the Revolut app is even more sticky for business users.
A collaboration between digital customer service innovator Glia and credit union membership service organization (CUSO) Members Access Processing (MAP) will help credit unions better serve their members via their channel of choice – whether it is messaging, video banking, voice, cobrowsing, or a combination of options.
“Consumers expect every business they interact with to deliver quick, seamless service and support, and their credit unions are no exception,” Glia co-founder and CEO Dan Michaeli explained. “By partnering with us and making Digital Member Service a critical part of their digital transformation, MAP will be able to help its financial institution clients boost member satisfaction and loyalty while strengthening their overall competitive positions.”
Glia combines on-screen collaboration and AII-enabled customer assistance to offer a Digital Customer Service solution that enriches web and mobile experiences and improves engagement. The company’s platform not only meets customers on their channel of choice; the solution enables the service representative and customer to transition seamlessly between chat, audio, video, messaging, and phone as needed during the course of the query to ensure that the customer’s needs are met.
“As digital usage continues to rise, it’s a strategic imperative for credit unions to be able to form strong member relationships from within digital channels,” MAP president and CEO Cyndie Martini said. “Glia’s platform allows for credit unions to engage members from where they are in their journey, eliminating the need for disjointed, clunky phone experiences. This ultimately drives efficiencies for the credit union while creating a more cohesive, enjoyable experience for members.”
Most recently demonstrating its Best of Show-winning technology at FinovateSpring earlier this month, Glia has teamed up with more than 150 banks, credit unions, insurance companies, and other financial institutions since its inception in 2012. This year, in addition to its collaboration with MAP, Glia has teamed up with Abe.ai, an AI-powered virtual assistance solution provider from fellow Finovate alum Envestnet | Yodlee, and partnered with low code digital automation platform provider Newgen Software. Glia began the year with an announcement that Illinois-based BCU, a 294,000+ member credit union with $4.2 billion in assets, has selected its platform to enhance digital engagement with its members.
“Member service has always been one of our primary differentiators, and we recognized the need to evolve our approach to keep up with changing member preferences by extending our exceptional service into digital channels,” BCU SVP of digital strategy and delivery Carey Price said. “With Glia’s platform, we will be able to provide a more modern, convenient experience for members that still allows us to form meaningful relationships digitally. We believe this will be a major competitive advantage moving forward.”
Our New Startup Highlight, launched this spring, gives us an opportunity to showcase lesser known fintech innovators that might otherwise fly under the radar.
This week, we feature five such companies — all of whom are both recent Finovate alums as well as being founded within the past year or so. Special congratulations to Dbilia and Proptee, two startups barely a year old that nevertheless wowed our Finovate audiences this year, earning Best of Show trophies in their Finovate debuts.
FinovateEurope’s Youngest Startups
Founded last year and headquartered in Vancouver, British Columbia, Dbilia leverages blockchain technology and non-fungible tokens (NFTs) to provide a digital marketplace for collectables and memorabilia. The company won Best of Show at FinovateEurope for its demo of its marketplace, as well as its demonstration of NFT creation, automatic NFT collection storage, and NFT shop setup. Dbilia was founded by Everett Kohl, who is the company’s CEO.
Less than one year old, Proptee made its Finovate debut at FinovateEurope in March, demonstrating its commission, property stock exchange. Proptee enables investors to buy and sell shares in real estate that is listed by property owners on its platform. The technology, which helped the company earn Best of Show honors at FinovateEurope in March, combines the liquidity and transparency of the stock market with the stability of real estate investment. Proptee was co-founded by Benedek Toth (CEO) and Alexandru Rosianu (CTO) and is based in London, U.K.
Three Startups from FinovateSpring
An insights platform that helps financial services companies and other organizations optimize for financial health, Attunedemoed its technology at FinovateSpring earlier this month. The company, founded in January 2020 and headquartered in Chicago, Illinois, offers firms a robust assessment tool that measures the financial health of both individuals and populations over time. The solution then leverages nationally-representative, longitudinal benchmarks to help clients understand and operationalize the results. John Thompson is President.
Giving community financial institutions the kind of real-time visibility into client data that larger institutions have is the mission of San Mateo, California-based Finalytics.AI. Launched in January of 2020, Finalytics.AI made its Finovate debut at FinovateSpring. At the conference, the company showed how its platform leverages machine learning dynamic segmentation, and dynamic content creation to help community-based FIs better understand and serve their customers. The technology also helps them compete with the digital prowess of the big banks and digital-only institutions. Craig McLaughlin is CEO.
Headquartered in Kirkland, SecureSavedemonstrated its workplace savings program at FinovateSpring earlier this month. The company offers a savings app that is designed to help employees build an emergency fund easily and automatically. By partnering with employers, SecureSave makes emergency savings a “high impact new benefit” that companies can use to support the financial wellness of their workers. CEO Devin Miller and CTO Bassam Saliba co-founded the company in the fall of 2020.
Online payments technology provider Zip has agreed to fully acquire remaining shares of BNPL players Twisto and Spotii. The acquisitions are expected to close for $109 million and $16.3 million, respectively.
By purchasing Czech Republic-based Twisto and United Arab Emirates-based Spotii, Australia-based Zip will grow its global presence. Specifically, the deal enables Zip to extend its BNPL services into the Czech Republic and United Arab Emirates.
This follows Zip’s recent expansion into the U.S. and the U.K. that was made possible after it acquired QuadPay in September of last year for $269 million.
Founded in 2013, Twisto is more than just a BNPL technology provider. The company offers its accountholders one-click payment convenience for online purchases, a unique billpay experience by enabling users to pay by taking a photo of the paper bill, and a touchless in-person payments experience with a special payment bracelet. Additionally, Twisto provides a payment card that charges no interest until the following month and an app that makes it easy for users to track their monthly expenses.
“With Twisto’s existing operations in Central Europe, we are uniquely positioned to tackle the $1.1 trillion European eCommerce market,” said Twisto Founder and Chief Executive Officer Michal Smida. “Being part of Zip’s global platform will allow us to accelerate growth, expand to new markets, win global merchants operating in Europe, leverage global partnerships already in place and broaden our product offering. We share the same ethos – striving relentlessly to deliver the best omnichannel payments experience to both customers and merchants.”
Spotii is relatively new to the BNPL game, having been founded last year by Anuscha Iqbal and Ziyaad Ahmed. Despite this short tenure, the company has already seen impressive traction. Not only has Spotii integrated 650 merchants into its platform, it has also grown its total transaction volume at an average of 90%+ month-on-month since it was founded.
The Twisto and Spotii acquisitions are expected to be finalized in the fourth and third quarters of this year, respectively.
Irish regtech Fenergo has agreed to be acquired by a pair of private equity firms, Astorg of Paris and Bridgepoint of London. The deal, which involved selling a majority take worth $600 million, values Fenergo at $1.1 billion (€900m), and will give the company additional capacity to “make strategic acquisitions and stay ahead of the competition.”
“We are delighted that Astorg and Bridgepoint have chosen to invest in our company, providing us with the financial strength required to pursue our ambitious high-growth strategy,” Fenergo founder and CEO Marc Murphy said. “Both Astorg and Bridgepoint have enormous experience and credibility in our sector, something I am keen to leverage over the coming years. Ultimately, we only exist to serve the needs of our customers. We are looking forward to partnering with them in the next phase of our development.”
Founded in 2009 and headquartered in Dublin, Fenergo made its Finovate debut three years later, demonstrating its innovative client onboarding and account opening management solution. Since then, Fenergo has established itself as a major player in the space, partnering with 32 of the world’s top 50 financial institutions, as well as technology companies like IBM, PwC, and Luxoft. The company says its technology has provided clients with 82% reduction in onboarding times, 34% savings in audit costs, and 7x ROI in four years or less.
Fenergo began the year with the launch of its KYC & Onboarding for Salesforce solution, connecting its client lifecycle management (CLM) technology and regulatory intelligence with Salesforce’s CRM. The integration makes it easier for banks and other financial institutions to enhance the customer experience by providing a more seamless onboarding process.
“In today’s highly challenging business environment, there is no margin for error in delivering exceptional, digital, and joined-up customer experiences,” Murphy explained when the new offering was launched. “Automation is key so that customers can be onboarded without unnecessary manual intervention in the back-end processes. Salesforce is the launchpad for automated onboarding while Fenergo ensures compliance by design through API-powered multi-channel orchestration.”
Fenergo was awarded top honors in the Client Lifecycle Management Solution category at the Ninth Annual WealthBriefing European Awards this month, echoing the recognition the company received at the beginning of the year from Asian Private Banker. So far in 2021, Fenergo has forged partnerships with Anglo-Gulf Trade Bank and Mizuho Americas.
Two fintech megaliths, financial data and infrastructure platform Plaid and merchant services company Square formed a partnership this week that will offer merchants a smoother experience when it comes to ACH payments.
Through the deal, U.S. merchants can process ACH payments without storing clients’ bank account information. Square is leveraging a tokenized check system that uses Plaid to help customers connect their bank accounts. Plaid enables customers to enter their bank login credentials to connect their account and enable the payment.
This system works especially well for businesses that take payments for high-value orders. That’s because it increases the certainty that they payment will go through. Making acceptance even easier, Square offers fee-free refunds on ACH payments processed.
“Payment flexibility, security, and transparency are core to Square’s Payment Platform,” said the Head of Square’s Payment Platform Dennis Jarosch. “By offering ACH payments, we can help businesses process large transactions online at a low cost without worrying about bank authentication, compliance, or any managed payment complexities. We’re excited to offer ACH as one of many ways that businesses get paid fast and securely with Square.”
For Plaid, this news comes shortly after the company closed a $425 million round of funding. Plaid was founded in 2012 to build APIs to connect consumers, financial institutions, and developers. Today, the company also offers a suite of analytics products that provides further insights into transactions.
