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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Have you fallen into debt and can’t get up? Fortunately, there’s a new fintech on the scene that has dedicated itself to helping Americans build credit and savings – and get out of debt.
SeedFi, launched in private beta in 2019, announced today that it has raised $15 million in new equity – along with $50 million in debt financing. The Series A round was led by Andreessen Horowitz. Flourish, Core Innovation Capital, and Quiet Capital also participated.
“Our goal is to address the root cause of the problem and leave our customers better off than we found them,” SeedFi CEO and co-founder Jim McGinley explained, “so we’ve structured all of our products to generate savings and build credit.”
SeedFi COO and co-founder Eric Burton explained the savings/debt dilemma for many Americans in a conversation with Crunchbase News. He noted that the lack of savings in the event of an emergency is often the pre-existing condition that can lead to serious debt problems, which in turn, make it more difficult to save. “The insight we’ve learned is to combine savings with credit to address the immediate need for credit in a way that will leave them better off and down the path to a better financial future,” Burton said.
The San Francisco, California-based company plans to put the new capital to use growing its customer base and – with its bank partners – bringing products to market across the country. SeedFi also plans to add to its product offerings, which currently include two solutions: Credit Builder and Borrow and Grow.
“SeedFi is creating a suite of plans to address borrowers at various financial points in their lives,” Andreessen Horowitz General Partner Angela Strange wrote on the company’s blog earlier today. “Customers can start by saving as little as $10 a paycheck through SeedFi’s Credit Builder Plan, which enables them to build credit while they save. For those in need of money, SeedFi’s Borrow and Grow Plan gives customers the cash they need now and sets them up to save for the future.”
Many financial commentators are boasting about the high savings rates many Americans are achieving due to limited spending opportunities during the COVID crisis. Our “K-shaped” economic recovery means that many people are surviving – or even thriving – financially during the pandemic. But there are a significant number of Americans for whom COVID-19 has meant major financial hardship – including loss of income and an increase in consumer debt. For those Americans, fintechs like SeedFi are increasingly part of the solution.
Opera, one of the top internet browsers, announced a suite of in-browser cashback and payment tools for ecommerce. The release of the tools coincides with the launch of Dify, Opera’s new digital wallet.
Dify is a standalone mobile app that will enable users to open a Dify checking account and make purchases using a free, virtual Mastercard debit card. The account also features a special shopping mode, which protects users’ data while they shop by disabling third party extensions.
“Every day millions of people shop online and make their payments using Opera browsers,” said Opera EVP Browsers & EEA Fintech Krystian Kolondra. “Opera has a track record of growing audiences and then improving their experiences to make them more engaging. We think this is one of the highest-potential areas: With Dify, we are making the browser and a superior wallet work better, together, to improve users’ shopping experience and also make it financially rewarding.”
At launch, the main incentive to opening a Dify account is the cashback feature. Shoppers will receive cash back for purchases made on Opera’s partner websites accessed through its browser and will receive additional cashback on purchases made using their virtual Dify Mastercard.
Opera has a larger vision for Dify’s future, however. The company plans to enable more wallet services like savings management, credit products, investment opportunities, and instant cashback.
Dify is currently available to users in Spain in beta. Opera says it plans to expand to more European markets in the future.
Today’s launch follows a recent expansion of online shopping. According to research from J.P. Morgan, last year ecommerce activity reached $863 billion (€717 billion). The bank’s reports indicate that many countries in Europe will continue to have double-digit growth this year.
Australia-based financial comparison website Mozo has agreed to be acquired by British Media company Future PLC.
Future anticipates the purchase will fuel its global growth by creating a new revenue stream, adding a new financial services content arm in Australia, and growing Mozo’s market share.
Founded in 2008, Mozo is a B2C site that helps consumers compare offers on home loans, credit cards, and personal loans, as well as compare banking and insurance products. In total, the company compares more than 1,800 products from over 200 banking, insurance, and energy providers.
Monzo is also known for its personal finance resources. The company offers financial calculators and creates content to help guide readers through financial decisions and build their awareness of the finance world.
“We’re delighted to be adding Mozo to the Future family,” said Future CEO Zillah Byng-Thorne. “We are seeing the increasing convergence of content and price comparison and this acquisition supports our global growth ambition in this area.”
Mozo has raised $1.4 million (£1 million) via one round of funding. The company’s team of 45 employees works out of Sydney, Australia.
With new vaccines helping stoke confidence in a post-COVID summer, if not spring, what has the pandemic – and the work-from-anywhere movement it accelerated – revealed about the security of our increasingly digital world?
What is the biggest takeaway from your report on fraud?
Christina Luttrell: As COVID-19 drove 84 million Americans online for services that were previously carried out in person, businesses faced an influx of new customers to onboard. In response, many appeared to loosen fraud controls in an effort to reduce friction and simplify onboarding, particularly for digital “newbies.”
With this loosening, combined with COVID-19 factors such as dispersed fraud teams, remote work, stimulus checks, and sophisticated phishing and synthetic identity fraud (SIF) schemes, it’s easy to understand why fraud attempts surged to a four-year high. Also not surprising is the emergence of mobile as the most targeted channel, evidenced by an astounding 89% increase in fraud attempts likely due to an increased reliance on mobile devices during the pandemic.
In the report each year, we’ve seen businesses struggle with the challenge of balancing fraud with customer friction. Businesses drive revenue by greenlighting customers, which includes removing barriers and minimizing effort during the onboarding process to avoid unnecessary “friction.” Yet they must do so while deterring fraud. This challenge is exacerbated by current events and the state of fraud and, as a result, verification of identities was cited as the top challenge to fraud deterrence among businesses. Many have come to the conclusion that, at its core, fraud is an identity problem and 86% firmly view digital identity verification is a strategic differentiator across all industries.
When it comes to the future, 79% of businesses expect fraud to increase in 2021. With the COVID-induced shift to digital, fresh collection of more Personally Identifiable Information (PII) from 2020 and potential economic conditions, this is likely to be a “bust out” year for fraud.
How quickly have fraudsters followed the migration to digital channels during the COVID-19 crisis?
Luttrell: From our study, The COVID-19 Effect on Identity, Fraud and Customer Onboarding, we know that between March and July of 2020, 37% of Americans online activated an online service that was done offline prior and 46% said they have used their smartphone more often to sign up or apply for a new service. As a result, one-third of businesses experienced a customer shift of 50% or more to digital channels. In 2020, the number of new accounts opened with a mobile phone increased 43%. Fraudsters tend to follow the masses and the money and, in 2020, as those consumers went digital, criminals were quick to follow, employing rapidly shifting tactics, which was reported as a top challenge to fraud deterrence for 40% of businesses.
Mobile fraud attempts surged 89% in 2020 with increases across all fraud types, from spoofing and cloning to porting. With more consumers relying on digital information sources and businesses sending a higher number of customer communications, 56% of businesses reported phishing attacks as one of the most prevalent forms of fraud in their industries.
The pandemic provided a prime opportunity for fraudsters to take advantage of distracted Americans, the increase in digital communication between businesses and consumers and government relief efforts. Our research shows that 84 million Americans reported experiencing a phishing attack attempt in the months following the pandemic’s start, with an average of four attempts per person between March and June.
How have cybersecurity professionals effectively responded to this shift?
Luttrell: It appears cybersecurity professionals responded rapidly to this shift as best they could, but COVID-related disruption and distraction, such as remote working and government relief checks, put a wrinkle in plans and added a new layer of complexity to fraud detection and the consumer experience. Fraud is an identity problem, making identity verification the essential “digital handshake” and element of establishing trust. We expect to see more companies rely on the orchestration of blanketed layers of identity attributes, artificial intelligence, and integrated verification methods to remove friction and deter fraud.
Successfully onboarding new customers and building long-term loyalty in today’s rapidly shifting fraud landscape will require businesses to act quickly. On the back end, they will need to understand how identity verification attributes are performing so they can make adjustments to attributes that pinpoint fraud on an extremely granular scale while streamlining the verification process for real customers.
What kinds of fraud are increasingly prevalent – especially compared to the pre-COVID-19 period?
Luttrell: Aside from COVID-related fraud, such as vaccination schemes, the fundamental methods of remain relatively unchanged. Instead, the shift has occurred in the sophistication and amount of fraud which, as I mentioned, is rising across the board compared to pre-COVID numbers.
Credit, debit, and prepaid fraud were reported as the most prevalent by 63% of businesses, followed by phishing, account takeover, ACH/wire and first-person fraud. ACH/wire fraud spiked by 15% – presumably because of rising P2P usage due to social distancing and first-party, specifically “friendly or know fraud,” increased 28%. This may be attributable to chargeback fraud schemes as many Americans were unemployed, underemployed or suffering in shape or form financially, thereby increasing their pressure and rationalization of committing fraud.
Your report mentions the issue of synthetic fraud in the PPP lending program as specific challenge. Can you elaborate on this problem and what should be done?
Luttrell: A range of fraud schemes were used to exploit PPP in 2020, one of the most concerning being synthetic identity fraud (SIF). According to McKinsey, this is the fastest growing type of financial crime in the U.S. A recent report by Aite Group revealed that among 47 financial institutions surveyed, 25% experienced an increase of 10% or more since the start of the pandemic. Our own research also underscores the SIF problem, which hit an all-time high, with a 43% increase in SIF reported by respondents to the IDology Fraud Report.
SIF continues to trouble businesses, especially given the challenges associated with decentralized fraud teams working from home and the need to interpret and apply once-in-a-lifetime changes in consumer behavior and the swings and noise they create. There are also the problems created by the never-ending stream of data breaches, and the use of personally identifiable information gathered from phishing attempts and other scams that continue to thrive in the COVID era.
To quickly issue PPP loans and prevent fraud, lenders should reconsider the importance of Know Your Customer (KYC) measures. Placing a focus on strong KYC is not only best business practice, it also will help lenders prevent fraud and maintain integrity. To easily and securely ensure a borrower is who they claim to be and provide a smooth experience while battling fraud, such as SIF, the identity verification process supporting KYC should include multiple layers, control of the entire identity verification process and the flexibility to make and automatically deploy configuration changes and machine complimented with human intelligence.
How would you characterize the business world’s response to these new threats, especially in financial services?
Luttrell: The business world, as a whole, responded admirably. Consider the massive logistical shifts that needed to happen in months, if not weeks, from the mass migration of working from home to customer engagement and the shift toward digital. On a human scale, it’s a breathless achievement. Eighty-seven percent of businesses feel their organization is equipped to some degree to make the necessary changes to stay ahead of rapid digitization and COVID-19 fraud trends, indicating they recognize and perhaps, have a higher than expected sense of confidence.
Although two-thirds of Americans feel companies could be doing more to protect their identities, confidence in organizations being able to protect their data actually increased in comparison to pre-COVID-19 levels. Our data shows that financial services organizations are stepping up, forecasting larger anti-fraud investments and budgets for 2021, and leaning into a multi-layered approach to identity proofing as well as using diverse sources and types of data. Eighty percent of financial institutions expect to increase budgets on fraud deterrence in 2021, with 45% saying significantly, more so than any other industry. Though the investment varies by sub-sectors such as fintech, lenders and prepaid, prepaid firms appear to be most aggressive.
How do you think the post-COVID cybersecurity landscape will differ from the pre-COVID cybersecurity landscape?
Luttrell: The cat and mouse saga continues and the chase maze has become significantly more complicated. The lesson for many, in hindsight, is that strong, thoughtful and comprehensive digital identity verification is mission-critical. The digital handshake is essential in establishing trust.
Fraud knows no borders and the world is small and inter-related, as is identity verification. Address verification as part of identities is not only critical for accurate verification, but also for the delivery of essential items and resources. Americans have migrated much of their lives to digital, forever.
Identity collaboration between businesses and with customers will be more sought after, and technology, such as artificial intelligence, will need to be supplemented with high-touch layers of human intuition, proactive detection, fraud expertise, and consortium intelligence from other organizations. This is especially important as COVID introduces novel fraud schemes that can fool pre-COVID identity proofing methodologies. As was the case with major events in the past, the outcomes and unintended consequences of the pandemic are unknown but we know that fraudsters are harvesting data, scheming, probing new defenses, partnering with nation states and utilizing artificial intelligence to scale fraud on a global basis.
In a round led by Warburg Pincus, data-driven personalization and customer engagement solution provider Personeticshas raised $75 million in new funding. The round brings the company’s total funding to $93 million.
“The financial services industry is reaching a tipping point in mobile adoption and setting a new standard in Smart Personalized Engagement,” Personetics CEO and co-founder Davis Sosna explained. “Personetics has set out down this path and has launched its vision of Self-Driving Finance. We are looking to quickly expand our global footprint with new partners and clients, and support our existing customers with innovative business solutions. We are very excited to be partnering with Warburg Pincus on this journey.”
Personetics teams up with banks and other financial institutions to help them better engage their customers, and to make it easier for them to understand and make the financial decisions they need to improve their lives. The company’s automated financial wellness programs help users reach long-term financial goals by leveraging technologies like AI-driven chatbots to provide personalized, relevant, and timely financial advice and recommendations.
A Finovate alum since 2016, Personetics customers include leading global banks such as U.S. Bank in the U.S., RBC in Canada, Metro Bank in the U.K., UOB in Singapore, and MUFG in Japan. More than 95 million bank customers around the world are using solutions and services enhanced by Personetics’ technology; the company claims its customers are recognizing gains of as much as 35% in their mobile app engagement and a 20% increase in customer account and balance growth.
Last fall, the company announced a partnership with Santander UK to leverage AI-driven personalized insights to boost engagement and enhance the customer digital experience. Together, the two firms launched a new digital solution called My Money Manager that offers cash flow analysis, payment reminders, and other personalized financial insights. In August, Personetics teamed up with Israel-based Discount Bank to launch its auto savings solution, Smart Save.
A new year brings a new roster of guests to the Finovate Podcast. Hosted by Finovate VP of Strategy Greg Palmer, the Finovate Podcast showcases the latest in fintech thought leadership, with innovators, analysts, bankers, and entrepreneurs sharing their insights into the future of fintech today.
From the Fintech in Extraordinary Times series documenting fintech’s response to COVID-19 to discussions on future tech and financial inclusion, the Finovate Podcast is a great way to get up to speed on the conversations in fintech that count.
Check out Greg’s guests from 2021 so far. And be sure to catch the show every week.
Raul Rodiguez, Managing Director, Innovation Accelerator, Charles Schwab – Lessons on what it takes to build and foster a culture of innovation at a large-scale financial institution. LinkedIn
Mark Goldberg, Partner, Index Ventures – Data privacy is going to be a massive concern for fintechs and banks in the next few years. Mark Goldberg of Index Ventures shares his thoughts on how privacy will evolve, and what banks and fintechs need to do now to prepare. LinkedIn
Srinivas Njay, Founder and CEO, Interface.ai – Finovate Best of Show winner Interface.ai joins us to talk through turning your call center from a cost center into a revenue generator, and how financial institutions can go about picking the right organizations to partner with. LinkedIn
Bhavin Turakhia, Co-founder and CEO, Zeta – FinovateWest Best of Show winner Zeta Technologies talks about the influence of neobanks and the future of banking. LinkedIn
Jim Van Dyke, CEO, Breach Clarity – FinovateWest Best of Show winner Breach Clarity talks about the aftermath of data breaches, creating individualized responses, and helping consumers safeguard their identities. LinkedIn
In a Series D round led by existing investor Coatue Management, Indian financial services company BharatPe has secured $108 million in new funding. The investment, which also included participation from all of the firm’s current institutional investors, boosts the company’s total to $268 million and gives BharatPe a valuation of $900 million.
The company highlighted that the oversubscribed round in its statement was “one of the fastest round closures for any startup in India.” But the company’s co-founder and CEO Ashneer Grover was quick to underscore what part of the news deserved the most attention. “We, at BharatPe, do not celebrate fund raises – it is akin to procuring raw material. We are super excited though to have returned INR 125 crores of capital to angels and all ESOP holders, earning them one of the highest returns on investment.”
Grover added that the company has experienced 5x growth in its payments business and 10x growth in its lending business in the last 12 months. “This growth reiterates the trust that the small merchants and kirana store owners have showed in us.” He said BharatPe remains committed to the goal of building “India’s largest B2B financial services company” and a “one-stop destination for small merchants.”
Founded in 2018, BharatPe was launched to bring better financing and payments services to Indian SMEs. The company was the first to offer a UPI interoperable QR code, first to offer a ZERO MDR payment acceptance service, and first to provide a UPI payment backed merchant cash advance service. More than five million merchants rely on BharatPe’s platform, which handles an annualized total payment volume of $7 billion.
For this week’s FinovateGlobal Reports, we turn to a 2021 forecast of fintech in the Middle East published by Finextra earlier this month. The report features contributions from a number of sources, including S&P Global, Findexable and its Global Fintech Index, the WEF Global Competitive Report, as well as a 2019 analyst overview published by Clifford Chance, Fintech in the Middle East – Developments Across MENA.
“Fintech continues to transform the delivery of financial services across the region and remains high on the agenda of industry participants and governments seeking to develop and modernize and, for GCC governments, to diversity from natural resources,” the report noted. Among the key takeaways on a region that (according to Accenture) is expected to see its fintech market grow to $2.5 billion in value by 2022 are:
Public and public institutions are helping reinforce a “collaborative approach to fintech.”
Regional leadership in fintech remains seated in the UAE “both in respect of the number of participants and forward-thinking approaches.”
Wariness toward cryptocurrencies and digital assets remains even as some regions, such as Dubai, have begun to “embrace blockchain” technology.
Embedded fintech products into governmental services and banking have improved efficiencies and increased opportunities for fintech innovation.
Cryptocurrencies have dominated the fintech headlines this week- from Mastercardagreeing to allow merchants to accept payments in cryptocurrencies to BNY Mellon’s announcement that it will begin custody of cryptocurrencies.
Today, after bitcoin reached an all-time high of over $48,000, marketing services company Kasasaunveiled plans to help its bank and credit union clients provide bitcoin wallets to their consumers.
The new capabilities will be powered by a partnership with New York Digital Investment Group (NYDIG), a technology and financial services firm dedicated to Bitcoin. The collaboration will help Kasasa’s bank clients stay ahead of the rapidly growing bitcoin adoption.
“Clearly, Bitcoin is here to stay, and consumers are demanding that Bitcoin offerings be made through their trusted financial institutions,” said Kasasa CIO John Waupsh. “With this new partnership, we’re looking across the product and services that Kasasa currently offers, as well as future product and service ideas. With NYDIG we can evaluate new offerings such as a buy-sell-hold wallet while also incorporating Bitcoin into our core rewards business.”
This partnership will be a major selling point for Kasasa, especially as consumer interest in cryptocurrencies rise. According to NYDIG, more than 22% of U.S. adults over the age of 18 own Bitcoin today.
This interest, combined with the creation of formal regulation like the OCC’s recent ruling that banks may use stablecoins for payment facilitation, is bringing cyrptocurrencies into the forefront of banks’ agendas. With today’s partnership, Kasasa is better positioned to help small financial institutions compete with larger players when it comes to cryptocurrencies.
An integration between two of Intuit’s top acquisitions, consumer financial technology platform Credit Karma and TurboTax tax management software, will help put the former’s new U.S. checking account – Credit Karma Money Spend – in the hands of more consumers.
The integration will provide a seamless process for getting refunds to eligible taxpayers when they file their taxes with TurboTax – and then turn those taxpayers into Credit Karma checking accountholders. Filers on TurboTax will have the ability to open a Credit Karma Money Spend account and have their refund sent directly to that new checking account. Users then can access the full Credit Karma Money experience – for example, setting up direct deposit and adding debit cards to their digital wallets – from within TurboTax. The checking account’s Instant Karma feature also encourages users to make payments with their Credit Karma Money Spend accounts by offering monetary rewards for actions like on-time credit card bill payments and automating direct deposits.
“We believe consumers should have a checking account that helps them make financial progress, which is why we created Credit Karma Money Spend,” Credit Karma founder and CEO Kenneth Lin explained. “We’re starting 2021 off by leveraging our relationship with Intuit to bring Credit Karma Money to millions of tax filers this tax season.” Lin referred to tax refunds as “the biggest paychecks” many Americans receive, and added that getting taxpayers the refunds they are owed and helping them put that money to work “(maximizing) their day-to-day spending and billpay” is a critical role the new integration will play.
Acquired by Intuit in a deal just completed in December, Credit Karma is among Finovate’s earliest alums, demonstrating its consumer credit score monitoring platform back in 2008. Now with more than 110 million members in the United States, Canada, and the U.K., Credit Karma offers a wide range of financial wellness solutions for individuals including identity monitoring, credit cards and loan shopping, insurance, high-yield savings accounts and, most recently, its new checking accounts backed by bank partner MVB Bank.
The integration news comes in the wake of a flurry of recent criticism that Credit Karma’s credit scores varied from what users were expecting when engaging with credit card companies or prospective lenders. The differences have since been explained – Credit Karma uses a credit score model, VantageScore 3.0, that not only examines factors other than those traditionally considered for FICO scores, but also can weigh like factors differently. But the issue may reflect a growing trend of popular annoyance with some of the ways fintechs are able to provide the services they do. This “Robinhood Syndrome” is a challenge that is only likely to grow as more customers – with varied expectations and financial sophistication – continue to migrate to fintech platforms.
If you have the WiFi, we’ll bring the content. This month, we’re hosting two FinovateFocus events– Connect and Roundtable. Both events are free to attend and will take place on February 25 from 9 a.m. to 11:45 a.m. Central Standard Time.
Register for these all-digital micro events and you’ll not only have access to great content, but you’ll also have the opportunity to check out the unique format and full roster of discussions and networking.
This month’s discussions will focus on the digital user experience. Now more than ever, your digital user experience is what your customers see; it shapes how they view your organization. Our dive into digital will help inform how you can leverage your UX to increase sales, create happy customers, and increase operational efficiency.
Here’s what to expect at each event:
FinovateFocus Connect
This event maximizes your time by bringing you nine presentations and nine meetings, all within the span of an hour. The platform will alternate between three-minute presentations and three-minute meetings, which are pre-assigned based on common interests.
FinovateFocus Roundtable
This discussion-based event includes your choice of two moderated, 30-minute roundtables with 15 minutes of networking before and after each roundtable conversation. To encourage engagement, each roundtable is limited to eight participants each.
Roundtable discussions for this month’s event include:
Earning customer trust in the digital age
Future of payments –are we turning into a cashless society?
Effective customer acquisition, engagement, and retention – the Experience Age
Boosting CX in banking with AI – conversation banking: exploring back-end technologies
Authentication, biometrics, and digital identity in digitized society
Chatbots, AI, automation as a platform for revolutionizing the CX
Personalization and customization with data in the banking and payments industry
Insights into how to support financial futures for customers in a post-COVID-19 world
Customer Service NOW
Video banking as a preferred means of customer communication
What do customers want – Meeting customer needs
APIs and Open Banking – Putting the customer in the driver’s seat
FinovateFocus starts on February 25. The Connect portion will run from 9 am to 10 am Central time while the Roundtable portion will run from 10:15 am to 10:45 am Central time. Both events are free to attend, so sign up early.
While you’re signing up, check out the deals for FinovateFocus sessions in March, April, May, and June available on the registration page. Sign up for a single event or purchase a bundle package to save.
Here are the topics we have planned for the months ahead:
Data analytics firm Moody’s announced plans to acquire data insights company Cortera this week. Terms of the deal, which is expected to close in the first quarter of this year, are undisclosed.
Moody’s anticipates the purchase will enhance its risk assessment capabilities. The move will also significantly extend Moody’s coverage in the SME market– the segment that serves as Cortera’s focus.
“Cortera plays an important role in helping businesses understand each other,” said President of Moody’s Analytics Stephen Tulenko. “Our customers will be able to leverage Cortera’s extensive information on small businesses with Moody’s proprietary analytic tools to make better decisions.”
Cortera was founded in 1993 and provides credit data and workflow solutions on North America-based public and private organizations. The Florida-based company maintains a database of credit information on more than 36 million businesses across the continent.
Cortera sources this data from thousands of resources and scrubs it using AI. As a result, the company is able to provide analytics, reports, and monitoring services to help inform businesses’ decisions.
Specifically, the acquisition will augment Moody’s Orbis database of private company information and enhance its KYC, commercial lending, and supply chain solutions.
Moody’s was founded in 1900 and provides data, analytical solutions, and insights to help businesses identify opportunities and manage risk. The company employs more than 11,000 people across 40+ countries. Headquartered in New York City, Moody’s is publicly traded on the NYSE under the ticker MCO. The company has a market capitalization of $52 billion.
It may not be the return of Black Wall Street. But from veteran bankers leading their institutions into the digital future to celebrities and athletes, who are leveraging their fame to encourage African Americans to take advantage of digital financial tools, the challenger banking revolution that is sweeping the globe is also creating new opportunities for banking in African American communities.
As part of our Black History Month commemoration, we’re taking a look at three, digital-first neobanks – and another that was a digital pioneer ahead of its peers – that were founded and are run by African Americans. It is especially interesting to see how all of these financial institutions both respond to the financial wellness needs of the individual while also working support African American small businesses.
It should be noted that digital banking customers who want to support black-owned banks also have the option of signing up for the online offerings of the more than 40 brick and mortar black-owned banks in the U.S. that provide digital banking services.
First Boulevard – Headquartered in Overland Park, Kansas, First Boulevard offers “Unapologetic Banking Built for Black America.” In addition to a contactless Visa debit card and P2P payments, First Boulevard also includes programs such as Early Payday, which enables account holders to get paid up to two days early, and rewards program called “Cash Back for Buying Black.” This program gives First Boulevard accountholders up to 5% cash back at participating African-American businesses.
First Boulevard charges no overdraft or monthly fees, and has no minimum balance requirements. The bank’s app features PFM tools that enable users to round up purchases to store away extra savings, as well as provie spending recommendations and real-time insights based on the user’s purchases.
“(First Boulevard’s) mission is to help Black America build wealth,” said CEO Donald Hawkins. Hawkins co-founded First Boulevard along with COO Asya Bradley, who was recently recognized as an “Inspiring FinTech Female” by NYC FinTech Women. “We are thrilled to partner with the leader in digital payments, Visa, and leverage their crypto APIs to provide another channel for the Black community to access crypto as a new asset class that can help build Black wealth,” he said.
Greenwood Financial – Founded by a host of African American notables including Civil Rights leader Andrew J. Young, rapper and activist Michael “Killer Mike” Render, and Bounce TV Network founder Ryan Glover, Greenwood Financial blends “best-in-class” online banking services with innovative strategies to support black and Latino-oriented causes and SMEs.
Greenwood borrows its name from the Greenwood District of Tulsa, Oklahoma, which featured what was called “Black Wall Street” of early 20th century black-owned financial institutions established in the wake of the Reconstruction Era.
The firm’s C-suite includes Aparicio Giddins, President and Chief Technology Officer, a former executive at both Bank of America and TD with years of work in mobile product and emerging platform management – experience that will prove critical in helping Greenwood grow.
“I wanted to start a bank out of college,” Giddens told ABC News in an interview earlier this year, adding that he was motivated in part by the fact that he observed so few African Americans in banking. In Greenwood, he recognizes the opportunity not just to increase African American representation in the industry, but to bolster the community by using black-owned banks to “recirculate dollars” back into the community.
Greenwood Financial raised $3 million in seed funding back in October. Last month, the platform announced that it has topped 500,000 sign-ups for its virtual banking solutions in its first 100 days. Greenwood’s offering includes savings and spending accounts, virtual debit cards, P2P transfers, mobile check deposit, and no-hidden-fee ATMs in more than 30,000 locations.
OneUnited Bank – In addition to being the largest African-American owned, FDIC-insured bank, OneUnited Bank also has the distinction of being a pioneer in Internet banking among black-owned banks. Founded in 1968 as Unity Bank and Trust Company with $1.2 million in capital, OneUnited Bank has grown into a multi-branch bank and community development financial institution (CDFI) with more than $680 million in total assets. And with offices in Los Angeles, Boston, and Miami, OneUnited Bank has financed more than $100 million in loans over the past two years.
This month, the institution announced its OneTransaction Campaign. In partnership with Visa, and including a free virtual financial conference on Junetheenth of this year (June 19), the initiative is geared toward convincing African Americans to choose one transaction in 2021 to improve their financial net worth. Ideas range from getting life insurance to starting an automatic savings plan to get rid of high-interest debt.
“The reality is the racial wealth gap for each family can be closed by one strategic transaction,” OneUnited Bank Chairman and CEO Kevin Cohee explained. “By encouraging our community to accomplish One Transaction in 2021, we can make financial literacy a core value of the Black community and create generational wealth.”
Last fall, OneUnited Bank announced a $10 million deposit from international biotech company Biogen. “This deposit is one of many ways we are delivering on our enhanced Diversity, Equity, and Inclusion strategy,” Biogen EVP for Global Product Strategy and Commercialization Chirfi Guindo said. “But for OneUnited’s customers, this deposit could mean allowing them to pursue their dreams or strengthening underrepresented minority businesses.”
MoCaFi – Headquartered in New York, MoCaFi (which stands for Mobility Capital Finance) is a black-owned mobile banking platform that specializes in helping members of underserved communities benefit from digital financial services. Founded in 2015 by CEO Wole Coaxum, MoCaFi combines 21st century financial wellness solutions with an equally contemporary awareness that – in many communities – both physical money and physical banking locations are a major part of the financial ecosystem. The company partners with retail stores to enable MoCaFi account holders to deposit and withdraw money from their accounts without fee.
Last fall, MoCaFi announced a partnership with Finovate alum InComm that will give members of the black-owned neobank the ability to load their MoCaFi Mobility Debit Mastercard cash at physical retail locations around the country. InComm Payments SVP of Sales Tim Richardson praised MoCaFi as “one of the fastest growing mobile banking platforms in the country” and highlighted the company’s ability to close the “cashless” payments gap for many underbanked consumers that do not have a traditional credit or debit card.
“We already know that Blacks and Hispanics spend at least 50% more on banking services than their white counterparts,” Coaxum said last summer as the company launched its upgraded banking platform. “This is not acceptable. MoCaFi is addressing structural failures in our financial system by reimagining services that ensure that all Americans have access to safe, secure, affordable, and convenient products and services.”
MoCaFi has raised $5.3 million in funding. The firm’s investors include Radicle Impact and Partnership Fund for New York City.
