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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
The 43,000+ members of Dover Federal Credit Union (DFCU) are the latest beneficiaries of the marriage between AI and customer care that has been a growing feature of the customer experience in financial services. The Delaware-based institution, with more than $600 million in assets, has teamed up with interface.aito leverage the company’s Intelligent Virtual Assistant (IVA) in its call center operations initially, before expanding the technology to DFCU’s website, online, and banking services.
“The IVA will enable us to create a seamless experience for members across all of our contact channels,” DFCU VP of Marketing & Digital Experience Tyler Kuhn said. “It will also help to continue to create efficiencies across the organization. With the ability of the technology to continuously learn and improve, we will be able to adapt to new member needs and evolve. Working with interface.ai also allows us to retain our personal touch in every conversation through their neutral voice-enabled system that makes every voice-interaction with the IVA, human-like.”
In the partnership announcement, Kuhn recalled pandemic-era call center volumes that were twice as large as usual and had a major impact on DFCU’s ability to serve its members at a time of crisis. Finding no traditional solution to the challenge, Kuhn said that interface.ai’s IVA had a number of key features that DFCU needed in order to effectively respond to its members. Focusing on these critical issues – eliminating support bottlenecks, improving operational efficiencies, and enhancing the overall member experience – according to Kuhn, is what led DFCU to interface.ai.
“In our search, we discovered that interface.ai’s IVA would enable us to instantly respond to member inquiries around the clock, while maintaining high service levels – ultimately leading to enhanced member experiences and further optimizing our operational costs by creating efficiencies across the organization,” Kuhn explained.
It’s clear that we are entering a new, substantially more digital era in finance and banking. Customer behavior has changed forever (and so have customer expectations), and it’s not going to change back. We’re a long way from a new status quo, and things are going to keep moving quickly. It’s up to all of us to decide if we’re willing to move quickly too.
Last week saw the second Finovate Halftime Review, exploring the critical trends for banks, FIs and fintechs from 2021 so far and looking ahead, and designed to open up the discussion for those in the industry on what the future of finance should look like.
“Visa is committed to doing all we can to foster innovation and empower consumers in support of Europe’s open banking goals,” Visa CEO and Chairman Al Kelly said. “By bringing together Visa’s network of networks and Tink’s open banking capabilities we will deliver increased value to European consumers and businesses with tools to make their financial lives more simple, reliable and secure.”
Tink will retain both its brand and its current leadership team, and will remain headquartered in Stockholm, Sweden. The company is integrated with more than 3,400 banks and financial institutions, enabling millions of bank customers across Europe to benefit from aggregated financial data and smart financial services.
“Joining Visa, we will be able to move faster and reach further than ever before,” Tink co-founder and CEO Daniel Kjellén said. “Visa is the perfect partner for the next stage of Tink’s journey, and we are incredibly excited about what this will bring to our employees, customers and for the future of financial services.
Another alum from Europe that made fintech headlines late in the week was Meniga. The company, which demoed its Carbon Insight solution at FinovateEurope Digital earlier this year, has teamed up with Länsförsäkringar, one of Sweden’s largest financial institutions, to help the firm launch its new personal finance management solution. Specifically, Länsförsäkringar will use Meniga’s data management platform to enable the new offering to provide customers with access to real-time spending data.
“We are extremely excited about joining forces with Länsförsäkringar,” Meniga co-founder and CEO Georg Ludviksson said. “Partnering with such a reputable bank will no doubt prove instrumental in further cementing our position as the go-to digital banking solutions provider in the Nordics. Having worked assiduously with Länsförsäkringar to create an outstanding and first-class personal finance management experience for their customers, we are also very pleased to have been able to assist them during a time when so many people are in need of support and looking to take control of their finances.”
Be sure to check out our interview with Pablo Viguera, co-founder and co-CEO of Open Finance innovator – and “Plaid of Latin America” – Belvo.
Here is our look at fintech innovation around the world.
An investment of $2.5 million from Curql Fund will help Illuma Labs further innovate in the field of voice authentication for credit union call centers. The company will use the capital to enable new anti-fraud features as well as new platform integrations to ensure its technology is accessible to a wide range of credit unions.
Illuma Labs flagship product, demonstrated at the company’s most recent Finovate appearance at FinovateFall last year, is Illuma Shield. The solution leverages real-time voice authentication rather than traditional, knowledge-based authentication techniques to combat fraud, improve efficiency, and enhance the overall member experience.
“This technology uses state of the art Artificial Intelligence, machine learning, and voice biometrics to address three of the top concerns for credit unions,” Illuma Labs founder and CEO Milind Borkar explained. “Improving member experience by emulating the warm welcome of a brick-and-mortar visit, creating operational efficiency by shortening call times, and increasing security to prevent account takeovers.”
“The infusion of investment from Curql is very timely for expanding this solution to the entire credit union community,” Borkar added.
Earlier this year, Illuma Labs announced a partnership with TDECU (Texas Dow Employees Credit Union) which deployed Illuma Labs’ voice authentication technology in its Member Contact Center. With more than 354,000 members and more than $4 billion in assets, TDECU is a not-for-profit financial cooperative that offers a full range of deposit products as well as online and mobile banking, and lending solutions.
“Our top priority is to keep members connected to their money in a way that is not only safe and secure, but also easily accessible,” TDECU Chief Growth, Strategy & Marketing Officer Alex De La Cruz said. “We look to fintech as a solution through our partnership with Illuma Labs to provide added security and a best-in-class Member experience.”
Also this spring, Illuma Labs teamed up with Wisconsin-based Connexus Credit Union ($3.3 billion in assets; 382,000 members). Headquartered in Plano, Texas, Illuma Labs was founded in 2016.
As Finovate Global has chronicled, the boom in fintech investment in Latin America is one of the most interesting trends in global fintech right now. From challenger banks to MSME lenders, a growing number of entrepreneurs and businesses in Latin America are bringing innovative, digital solutions to problems of financial opportunity and financial inclusion.
We caught up with Pablo Viguera, co-founder and co-CEO of Belvo in the wake of the company’s $43 million Series A round announced earlier this month. Dubbed “the Plaid of Latin America” by TechCrunch, Belvo offers an open finance API platform that facilitates data connections between apps, banks and other financial institutions, gig economy companies, and more.
What does this new investment mean to Belvo?
Pablo Viguera: We are extremely proud of this milestone and believe that it’s the result of the rapid growth our company has experienced during the last year – underpinned by the continued and unprecedented expansion of fintech in Latin America in the last 18 months.
The funding demonstrates that open finance represents a truly transformational opportunity for Latin America’s financial sector in the next decade. Investors believe that Belvo is poised to continue building category-defining infrastructure and API tools to power the next generation of financial services in the region.
The newly raised funds will help us scale and enhance our product offering, continue expanding our geographic footprint, and double the size of our team.
What is the distinction between open banking and open finance?
Viguera: Open finance is the next step after open banking. If the first aimed to make banking data available to third parties through APIs, this new model extends its scope to financial data from other sources beyond banks.
This is particularly important in regions where a big percentage of the population is still unbanked or underserved, such as Latin America. In these cases, the more financial data sources you have on your platform, the better it is for companies building innovative financial services or innovative apps on top of it.
One example of how this works is the use of financial data from gig economy platforms such as Uber and Rappi in Latin America.
Thanks to open finance APIs, companies can access one-of-a-kind financial data from these alternative sources, not accessible anywhere else, to build new and more inclusive financial services. It’s the case for Minu, a startup offering financial services for gig workers in Mexico, that uses our platform to connect their app with financial data from one of the largest delivery companies in Latin America.
What is driving the embrace of open finance in Latin America?
Viguera: One of the keys to our growth lies in our nature as an infrastructure company that offers its services to the rapidly expanding fintech sector. As this sector grows, as has been the case in recent years (and even more so since the onset of the pandemic, which has accelerated the adoption of digital financial services), we grow as well.
The trend that this sector is experiencing in Latin America is a tailwind for us. If only 12 months ago we had a handful of clients, today we have over 70, and we see that demand continuing to grow.
What are some of the chief obstacles to the broader adoption of open finance?
Viguera: Probably the biggest challenge today is the fact that we operate in a market where open finance is still a young concept and relatively unknown to many. There is still a lot of work to be done to make visible the benefits it offers, both to the companies that implement it and to its end users, in order to increase adoption.
However, we believe that this is the direction in which the market is heading. As has happened in other regions such as Europe and the United Kingdom, this aspect will improve as regulations progress.
Where do you see the greatest untapped opportunities right now?
Viguera: Latin America is possibly the most exciting and dynamic place to be in right now, given the exponential growth that the fintech sector is experiencing. It is also a great place to build infrastructure for the next generation of financial products for a huge market.
We believe it’s only going to get more exciting over the next decade as open banking and open finance will continue to be a key transformational driver for the entire region.
What can we expect to see from Belvo over the balance of 2021?
Viguera: This year we will focus on continuing to scale our product development efforts to meet rapidly increasing market demand and support its exponential customer growth. Our focus will be on expanding our offering of data enrichment solutions (beyond our income verification product) across markets and launch our bank-to-bank payment initiation offering in Mexico and Brazil.
In addition, this year will continue to explore opportunities to expand our open finance platform to new countries within the Latin American market. We expect to double our existing financial data providers’ connection coverage, reaching over 80 integrations by the end of the year.
The new funds will also be used to strengthen our team across functions and locations. We currently employ 70 people and we plan to double our headcount by the end of the year. As part of this plan, we will be hiring more than 50 engineers in Mexico and Brazil in the upcoming months.
Data Tools and Technologies is the theme of this month’s FinovateFocus event, which takes place less than a week from today on June 30. This two-hour, targeted networking and collaboration experience leverages smart algorithms to help attendees find like minds and make the best matches. In between networking sessions, FinovateFocus will feature short presentations on harnessing the power of data from fintech analysts, business leaders, and industry experts.
Book your ticket at our FinovateFocus hub today. Free registration for eligible director/head/SVP/C-level professionals from financial institutions is available. Visit our FinovateFocus hub for more information.
Here’s a look at what FinovateFocus has in store for next week’s presentations:
Transforming Relationship Managers into Trusted Advisors with Yamini Bhat, CEO and Co-Founder of Vymo.
Six Steps to Accelerate Your Progress on the Road to AI with Steven Ramirez, CEO, Beyond the Arc
Balancing Humans and Machines to Unlock Real-Time Finance Insights with Snehal Shinde, Chief Product Officer and Co-Founder of Zeni Inc.
After the networking sessions and presentations, FinovateFocus will feature a set of fintech roundtables led by our experts. Themes and hosts for the June FinovateFocus roundtables next week are:
Maximizing sales effectiveness: The art of working with “small data” with Yamini Bhat, CEO and Co-Founder of Vymo
The power of data to enhance your services – from Open Banking through Open Finance to Open Data with Dr. Louise Beaumont, Chair of the Open Finance & Payments Working Group of TechUK
Strategies for developing and deploying AI more quickly with Steven Ramirez, CEO of Beyond the Arc
Leveraging data to provide a better borrowing experience for businesses with Sean Hunter, CIO of OakNorth
SmartAsset, a fintech that helps individuals connect with qualified financial advisors and improve their overall financial health, announced a major fundraising this week. The company secured a $110 million investment in a Series D round led by TTV Capital that takes SmartAsset’s valuation to more than $1 billion.
“Our mission is to help people get better financial advice,” SmartAsset founder and CEO Michael Carvin said. “With this additional capital we are going to make further investments in building the web’s best personal finance resource and enhancing our ability to connect consumers to financial advisors across the U.S.” Specifically, SmartAsset noted in its funding announcement that it will invest in new product offerings, technology infrastructure, and data partnerships. The company also pointed to the growth it has experienced since its last major funding in 2018 – growing revenues by 10x and nearing $100 million in annual recurring revenue – to support its goal of “aggressively” adding to its workforce. With 202 full-time employees currently on board, SmartAsset is seeking to expand its workforce by more than 75% this year.
“SmartAsset is quickly expanding its lead in one of the largest markets in the U.S. by providing an incredibly valuable resource for both consumers and financial advisors alike,” TTV Capital Partner Mark Johnson said. “The company helps millions of people make better financial decisions while simultaneously enabling advisors to grow their business.”
Also participating in the round were Javelin Venture Partners, Contour, Citi Ventures, New York Life Ventures, North Bridge Venture Partners, and CMFG Ventures.
More than 100 million consumers access SmartAsset’s personal finance content, tools, and other resources each month. Named one of America’s Best Startup Employers in 2020 by Forbes, the company announced recently that LPL Financial had selected SmartAsset for its Vendor Affinity Program, giving 18,000+ independent financial advisors access to SmartAsset’s SmartAdvisor platform.
“SmartAsset gives (advisors) a new way to connect with investors across the country digitally, while also freeing up time to spend with their existing clientele,” Rob Pettman, LPL Financial EVP for Wealth Management Solutions, said. “It also provides advisors more choice in solutions they can leverage to grow their business.”
SmartAsset began the year by announcing Firoze Lafeer as its new Chief Technology Officer. The company made another addition to its C-suite in April when it hired James Kennedy as its Chief Compliance Officer and Director of Legal. SmartAsset made its Finovate debut in 2014 at FinovateSpring.
FinovateAsia Digital is in the books! A big thank you to our sponsors – DreamQuark, InterSystems, and CleverTap – our demoing companies – Amber, Crayon Data, Dreams, FinBit.io, QuickFi, and Strands – our speakers and, of course, our attendees. Your innovations and insights helped make our second, all-digital FinovateAsia conference a great success.
What did we learn over the two days of our Asia-focused fintech event? Everyone’s experience is different. But here are four things we heard and saw this week at FinovateAsia that we will be thinking about in the days and weeks to come.
Regulators who get it
It may not be any surprise that entrepreneurs and companies tend to thrive in regions where regulators and governments are constructively engaged in their success. But it is a point worth underscoring. When looking at those places in the APAC region where fintech is emergent – countries like Indonesia and Vietnam – often a progressively-minded regulatory authority or a determined government or government agency is involved. This engagement may be in the form of legislation or licensing that makes it easier for individuals to launch businesses or forge cross-industry partnerships. Constructive engagement can also take the form of creating the necessary infrastructure that companies and entrepreneurs need to create and test their technologies, deploy their solutions, and grow their businesses.
Keep an eye on the southeast
Given the high degree of fintech innovation in China, Hong Kong, Japan, South Korea, and Singapore, it is understandable that companies and entrepreneurs in these areas are receiving the lion’s share of the attention. But, as this year’s FinovateAsia reminded us, some of the countries that are only a few steps behind the leaders in terms of economic development are nonetheless the scene of major demographic and social trends. These forces – such as a digitally-oriented Millennial generation entering family formation years and an even more tech-savvy Gen Z right behind them – are also driving innovation in financial technology. Where to look? We’ve got our eyes on Vietnam, the Philippines, and Indonesia.
India is Asia
In the same way that we should keep southeast Asia in mind when thinking about fintech innovation in the APAC region, it is also worthwhile to remember India’s role in the overall Asian fintech ecosystem. India, which shares a border with China and the Bay of Bengal with Myanmar, Bangladesh, Malaysia, and Thailand, is a major fintech player in its own right, with both Indian companies and Indian-born entrepreneurs bringing new innovations to market around the world. The impressive number of companies from India that have demoed their technologies at FinovateAsia over the years – to which we add FinBit.io from this year’s event – is a reminder of India’s importance to the Asian fintech scene writ large.
Everyone wants to do business in Asia
It has been a cliche for decades that every company would love to do business in the rapidly growing markets of Asia. But the COVID pandemic may have been the biggest challenge to this trend since the Great Financial Crisis. Hopefully, the arrival of both COVID vaccines and a new, more globally oriented administration in the U.S. will bring a resumption of the trend toward greater international economic activity, partnership, and integration that existed before the once-in-a-generation pandemic.
The following is a guest post from Mohammed Kafil, Senior Product Manager, Kissflow.
The banking and financial services industry is severely affected by the global financial crises. They are in a state of flux due to regulatory confinements and the market’s increasing demands. For the past few years, the banking and financial services sector has been under intense pressure to meet market expectations while complying with strict regulations. This pressure is expected to increase in the foreseeable future. Banks and financial institutions must adopt new strategies to sustain and compete in this environment. Automation is an inevitable change that banks and financial institutions must adapt to sustain.
Leading banks and financial institutions are growing sustainably even in this environment by reducing costs, managing risk, and achieving transparency through procurement automation. Read on to understand why procurement automation is necessary for banks and financial institutions.
The Need for Procurement Automation
Procurement is the process of sourcing or buying goods or services for a business. Procurement automation is the process of automating the periodic steps involved in the procurement process. It automates significant procurement stages such as digital purchase and requisition forms, routing to suppliers and approvers, record-keeping of purchases, and the labor-intensive tasks of procurement, saving valuable time for the procurement team.
Benefits of procurement automation in banking and financial services
Improved visibility
Since the financial crisis, the banking industry has been scrutinized more closely by the public. The corporate spending habits of banks have piqued the curiosity of the media. As a result, the need for transparency, traceability, and compliance in a bank’s procurement operations has never been more critical. Increased regulatory pressure from governments and administrative agencies has also prompted the sector to adapt. Many banks are now taking concrete steps to better integrate risk management, compliance, and purchasing ethics into their culture.
Using procurement systems that support this process is the most effective way to assure visibility and compliance in purchasing activities. Banks can limit the approval levels of purchase managers by implementing end-to-end procurement technology solutions, ensuring that spend commitments closely reflect their procurement strategy. From managing approvals to reporting and spend tracking, procurement automation solves all these challenges and acts as a single source of truth to the organization.
Reduced costs
Banks are primarily service-based corporations. The great majority of their spend (approximately 40%) goes to management consultants and temporary workers in the professional services category. The next two largest spend areas, information technology and facilities management, each contribute to nearly 20% of the overall spending. For a service-based industry like banking, spending on services has historically been more difficult to assess, comprehend, and manage than spending on products. Leading banks, on the other hand, are successfully tackling these issues by automating their procurement processes.
Through automation, buyers can acquire a granular grasp of exactly what they are getting and what degree of service they can expect from the purchase by producing more detailed, automated rate cards. Further, the cost spent on employee expenditures can be significantly saved, as it accounts for 64 percent of a bank’s total costs, according to the banking sector spend report.
Risk mitigation & enhanced supplier collaboration
Implementing the appropriate technologies is critical not just for centralizing procurement policies and processes, but also for risk management. Due to the necessity to assure regulatory compliance, supplier performance, and risk mitigation have become significantly more important. Because of the high level of regulation in the financial services industry, procurement is under pressure to reduce risk from executive teams and other business stakeholders, who are more involved in supplier management than in other industries.
Even for companies with fully dedicated risk-management teams, gaining insight and control over supplier and third-party risk can be difficult. Financial services firms can use procurement technology to gain visibility into supplier operations and risk, allowing them to develop a complete picture of what’s going on in the supply chain. These technologies have collaborative data management features that allow internal stakeholders to gather and centralize supplier data from around the organization and share insights with senior management.
It also gives vendors access to a platform where they may post and update data. This contains certification information, financial disclosures, remittance and contract details, products, services, and other data required for risk factor calculations. With all of this data in one location, financial services companies can track and manage risk more effectively throughout the supply chain.
Banks and the financial services industry benefit greatly from procurement automation. Despite an increasingly turbulent and competitive sector, it guarantees that organizations remain competitive by managing compliance, addressing risk, and maximizing profit.
Mohammed Kafil is a certified procurement consultant who has been coaching companies to establish resilient digital procurement operating models for over a decade now. With Kissflow Procurement Cloud, a flexible procurement software that streamlines end-to-end procure-to-pay, and also eventually the vendor management process, Kafil helps medium and large enterprises with their digital transformation projects.
Another day, another big bank joins the Akoya Data Access Network to bring greater financial data aggregation to banking customers.
“The addition of Wells Fargo to the Akoya Data Access Network is yet another signal marking the industry’s shift toward safer and more secure API-based data aggregation, especially as new fintechs offer consumers a wide range of innovative services,” Akoya CEO Stuart Rubinstein said.
Wells Fargo’s move means that fintechs and data aggregators will be able to request API-based access to Wells Fargo customer data for mutual customers through the Akoya Data Access Network. The Network was spun off from Fidelity Investments in February 2020, and has since secured support from a dozen financial institutions, including Wells Fargo. Akoya implements Financial Data Exchange API specifications, which enable bank customers to provide third-party financial apps with access to their financial data without having to share their login credentials. Akoya’s API-based approach compares favorably to screen-scraping or “credential-based data aggregation,” especially in terms of data access reliability and security.
Bank of America, Chase, Fidelity, and U.S. Bank already have joined the Akoya Data Access Network. This means that, according to Rubinstein, “nearly half of all U.S. retail banking accounts (are) available through our authorized API connections.”
Wells Fargo will make its data available on the network later this year, giving customers time to authorize Akoya-connected fintech apps and service to access their Wells Fargo account data. The bank said it will maintain its direct API connections with third-party fintech partners who have signed data exchange agreements with the company.
“We believe that using APIs as a means of data transfer is a model the industry can use to create more reliable and more secure data sharing,” Ben Soccorsy, SVP of Wells Fargo’s Strategy, Digital and Innovation group, said. “As we continue to move toward what we see as a more secure, transparent and convenient method of data exchange, our agreement with Akoya offers another implementation option for connecting with fintechs.”
With $1.9 trillion in assets, Wells Fargo serves one in three households in the U.S., and more than 10% of all middle market companies and small businesses in the U.S. The company is ranked #30 on Fortune’s 2020 roster of America’s largest corporations.
A pair of Finovate alums have announced plans to “tie the knot” this week. Intelligent Identity solution provider Ping Identity has agreed to acquire fraud and bot detection and mitigation specialist SecuredTouch. Terms of the transaction were not immediately available.
By leveraging a variety of enabling technologies – including machine learning, AI, behavioral biometrics, and deep learning – SecuredTouch’s technology empowers fraud and risk teams to identify suspicious and potentially malicious behavior across all digital entities. The acquisition will integrate SecuredTouch with Ping Identity’s PingOne Cloud Platform, giving business customers the ability to better understand and prevent malicious activity. Customers will have the option of using SecuredTouch as a standalone solution or as part of the PingOne platform.
Ping Identity founder and CEO Andre Durand said that the acquisition “accelerates” the company’s mission to provide cloud-based identity and anti-fraud solutions to businesses to help them fight a wide range of cyberthreats ranging from emulators to account takeover.
“Identity isn’t just about knowing who your customers are, it’s about knowing when someone is pretending to be a customer,” Durand explained. “As companies undergo massive digital transformation initiatives, the need for seamless, frictionless, and secure identity solutions to confidently understand both those situations is imperative.”
Ping Identity made its Finovate debut at our first European fintech conference in 2012. In the years since, the Denver, Colorado-based company has become the identity management solution provider of choice for 60% of the Fortune 100 and forged partnerships with technology companies like Microsoft and Amazon. Most recently, Ping Identity collaborated with ProofID to enhance identity security for Tesco Bank, the banking division of Tesco, the largest supermarket retail chain in the U.K.
Headquartered in Ramat Gan, Israel, SecuredTouch demonstrated its behavioral biometrics technology at FinovateFall 2018. The company’s solution analyzes more than 100 different behavioral behaviors – from scroll velocity to touch pressure – to create a unique user profile that benefits from continuous verification. Winner of Best Product at the Loyalty Security Association Lion’s Den event this spring, SecuredTouch earned a patent for its continuous use authentication in 2019.
“This is a defining moment for our industry as identity security and fraud come together,” SecuredTouch CEO Alasdair Rambaud said of this week’s acquisition news. “Ping Identity’s enterprise proven and robust platform provides the perfect foundation for SecuredTouch’s advanced fraud detection capabilities.”
While cryptocurrencies and IPOs often grab the biggest headlines in fintech, much of the critical work of forging partnerships and innovating collaboratively between fintechs and financial institutions often goes, if not unnoticed, then at least a little underrecognized and underappreciated.
With this in mind, we’re starting off each week with a reminder that, when it comes to getting technology from idea to implementation, partnerships and collaborations are often the primary vehicle to getting it done. No man – or woman – is an island. And the same is true for any technology company or financial institution interested in making a meaningful impact in the lives of their customers and members.
Here’s a look at some of the more recent partnerships and collaborations between banks, credit unions, fintechs, and other players in the financial services space. Boldface indicates the company has demoed its technology at a Finovate and/or FinDEVr conference.
Cloud payments and financial messaging specialist Volante Technologies announced an instant payments partnership with European payment services company SIA.
