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Building Better: A Look at Fintech’s Infrastructure Revolution

Building Better: A Look at Fintech’s Infrastructure Revolution
By David Penn Posted on
Categories: CEO Interview, Prime Trust

As the price of bitcoin returns to old highs, we see a renewed appetite for cryptocurrencies and digital assets of all kinds. Add to this a new generation of investors raised on the wealth-building possibilities of alternative assets like private securities.

The result is a range of new opportunities – as well as customer expectations and regulatory obligations – for financial services firms and fintechs alike to deal with.

We checked in with Scott Purcell, CEO and Chief Trust Officer of Prime Trust, to discuss this new landscape of digital asset investment and management, and find out what we should expect in terms of innovation in this space in 2021.

Many longer-time Finovate watchers will recall the work you did with FundAmerica, which was acquired by Prime Trust a few years ago. Tell us about what you are doing as CEO of Prime Trust today?

Scott Purcell: I am very proud of the work we did for the crowdfunding industry with FundAmerica, and in fact it continues to provide escrow, compliance, payment processing, and other services to about 75% of the market – just now under the Prime Trust umbrella. My role has evolved rapidly as Prime Trust has grown to provide services to new industries, most notably blockchain, real estate, and the next generation of alternative trading systems (ATS), which are exchanges for private securities.

We are one of the top financial institutions servicing the cryptocurrency market, and by far the leading infrastructure provider for ATS. That means a lot of growth, which has taken me away from being hands-on with sales, product development, operations, and accounting to a point where I now have an incredible team of people who are responsible for those areas, and frankly they are way better than me at doing them.

This has set me free (well, if 12-hour days are considered “free”) to focus on the vision and product roadmap, overall market strategy, and closer engagement with key investors, partners, vendors and customers. It’s fun to see the company grow and we are incredibly excited about the things on our plate for 2021.

Prime Trust recently announced a partnership with Zytara to help them launch their stablecoin. How did this relationship come about and what do you believe will come of it?

Purcell: Zytara is built on the Stably stablecoin platform which integrates into Prime Trust’s API’s for back-office infrastructure. As the online gaming industry continues to grow, so does the need for a common stablecoin that can be used across multiple platforms. Zytara will be covering this and also plans to bring a variety of other items to involving digital assets to the gaming community. We are excited to see Prime Trust infrastructure being leveraged for video gaming as a new industry sector with unlimited upside.

There’s been a resurgence in interest in cryptocurrencies of late – and the rise of stablecoins has been a part of this. What do you think are the key drivers of interest in stablecoins right now? How powerful and enduring do you believe those drivers to be?

Purcell: Prime Trust provides services for over two dozen stablecoins, so I’ve got pretty good visibility into what works and what doesn’t. The key thing is utility. People need to have a frictionless and compelling reason to use a stablecoin. Zytara is a great example of that, as it will be used for easy transactions in a gaming environment. Others are specifically built for use on crypto exchanges as a mechanism to de-risk from volatile crypto or to take a break from trading, while keeping funds in electronic form so they are easy to re-engage in the markets. The more that stablecoin issuers can add utility and ease of use, then the more enduring they will become.

Let’s talk about Prime Trust more broadly. When it comes to fintech headlines, financial infrastructure companies are among some of the most critical – and sought after – partners in financial services right now. What role are financial infrastructure companies like Prime Trust playing in helping facilitate the next generation of fintech apps and innovations?

Purcell: Every single fintech innovator needs a set of financial services in order to build their businesses, with APIs to integrate into. And surprisingly there are very few who do this. That’s why you’ve seen Robinhood, CashApp, Chime, Acorns, Betterment, and so many others scramble around cobbling together different bank, compliance, custody and other vendors. The set of services these innovators need is common across all markets and includes payment processing, compliance, custody of alternative and traditional assets, accounts for individuals, businesses and retirement programs, trusted transaction settlement, reporting, escrow, debit cards, and (especially in crypto) fiat on/offramps and liquidity.

Prime Trust is the only partner from start through growth that fintech innovators can rely on as a single API-driven source for all of these services. Thus, the next generation of fintech success stories can build and launch their businesses in record time to market, and confidently scale their back-office operations.

This fall you launched a core accounting and customer asset management platform, PrimeCore. What capabilities does this platform provide banks, exchanges, and other financial institutions? How has the solution been received?

Purcell: The traditional bank core systems – FIS, Fiserv, and Jack Henry as well as traditional trust company core systems, SunGard, Innovest and others – are expensive, slow and clumsy at handling non-traditional business models … which is what fintech innovation is all about. For instance, none of them can hold assets out to 18 decimal places of precision, which both fractionalized and digital assets require, and none provide multi-asset transaction settlement systems. And they are incredibly slow at onboarding new customers and enabling modules on-demand.

So, we built PrimeCore out of frustration at trying to work with some of these vendors, who just weren’t interested in the rapid innovation and speed of service required for new and emerging markets. Not only does this give us control over our costs and our product rollouts, it also provides a much better experience for our B2B customers (and, thus, their retail and business customers).

How has the COVID-19 pandemic impacted Prime Trust’s operations – as well as those of your company’s clients and partners?

Purcell: The good news is that we’ve continued to grow like crazy during the pandemic. It’s been incredibly frustrating to not be able to hop on planes to visit customers, partners, vendors, and our investors in person. And it’s caused some havoc at times when employees or their relatives tested positive, and we had to send the whole company home until people tested negative. This may not be a huge problem for some departments, such as engineering or sales, but it is hard on compliance, the wire room, accounting and the executive team.

Also, as a financial institution, each employee is required to take at least one contiguous week a year of vacation, and at this time that’s not exactly fun telling them “okay, just stay home even more now!” Like everyone else, we can’t wait for this to be behind us so we can get back to business … and living our lives.

What trends this year in the financial services industry do you see as becoming even stronger in 2021? In what way will Prime Trust be a part of those trends?

Purcell: Payments is a $110 trillion annual market and, with the pandemic, the drive to “contactless” and remote systems has been exponential. And the fractionalization of traditional and alternative investments, which has been a proven trend by WealthFront, Acorns, and others, will drive an entirely new phase for capital markets. Prime Trust is looking forward to servicing these trends as they continue to build momentum and disrupt the status quo of financial services in 2021. It’s going to be a great year!

Photo by Joshua Woroniecki from Pexels

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Finovate Alums Raised $3.9 Billion in 2020; $472 Million in Q4

Finovate Alums Raised $3.9 Billion in 2020; $472 Million in Q4
By David Penn Posted on
Categories: Alumni News, Funding, Fundings, Quarterly Funding

Finovate alums raised more than $472 million in the fourth quarter of 2020. This sum brings the total raised by alums this year to $3.9 billion. Given the relatively sharp fall-off in Q4 funding this year, the fact that 2020’s investment total not only rivals that of last year, but also approximates our all-time, alumni investment high mark from 2018, is noteworthy.

Previous Annual Comparisons

Q4 of 2020 saw a retreat from the strong investment trends that have characterized the final quarter of the year since 2016. This year’s fourth quarter funding total was more reminiscent of the levels reached in Q4 2015, when 28 alums brought in more than $302 million in funding.

Previous Quarterly Comparisons

  • Q4 2019: More than $876 million raised by 21 alums
  • Q4 2018: More than $800 million raised by 19 alums
  • Q4 2017: More than $730 million raised by 23 alums
  • Q4 2016: More than $700 million raised by 26 alums

The top equity investment of the quarter was the $103 million raised by Tink in December, followed by the $60 million raised by both Microblink and OurCrowd. Interestingly, our top three investments were in alums with significant, non-U.S. business.

Top Quarterly Equity Investments

  • Tink: $103 million
  • Microblink: $60 million
  • OurCrowd: $60 million
  • DriveWealth: $56.7 million
  • eToro: $50 million
  • M1 Finance: $45 million
  • Five Degrees: $27 million
  • Bluefin: $25 million
  • NetGuardians: $19 million
  • Wise: $12 million

Here is our detailed alum funding report for Q4 2020.

October 2020: More than $148 million raised by seven alums

November 2020: More than $60 million raised by three alums

December 2020: More than $264 million raised by seven alums

If you are a Finovate alum that raised money in the fourth quarter of 2020, and do not see your company listed, please drop us a note at research@finovate.com. We would love to share the good news! Funding received prior to becoming an alum not included.

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Bitpanda Backs Fintech Innovation in Poland; ThetaRay Inks Deal in Spain

Bitpanda Backs Fintech Innovation in Poland; ThetaRay Inks Deal in Spain
By David Penn Posted on
Categories: Alumni News, Daily news, Finovate Global, ThetaRay

There’s no better time than the present to plan for the future. That’s the approach taken by European fintech Bitpanda, which announced earlier this week that it was investing €10 million ($12 million) to launch a technology and innovation hub in Poland. The initiative will be headquartered in Krakow and will employ 300 engineering professionals with diverse backgrounds to “develop innovative and challenging projects” to improve finance and bring “transparency” to investing. Bitpanda co-founder and CTO Christian Trummer will lead the effort.

 “While staying true to our goal of tearing down financial barriers, innovating with speed in a more nimble and proactive manner is just as critical as looking at Bitpanda’s assets through a different and forward-looking lens as the company gains momentum,” Trummer said in a statement. “I’m confident that we will be able to attract the most skilled professionals from the whole region, running from Backend Developers, Software, Machine Learning and QA Engineers to Product Owners and Scrum Masters.”

The hub announcement comes in the wake of Bitpanda’s $52 million Series A round in September – led by Peter Thiel’s Valar Ventures – and follows the company’s successful 2020 expansions to Spain, France, and Turkey. Bitpanda’s Series A was among the largest in Europe this year.

“Placing Bitpanda’s first Technology & Innovation Hub in Krakow, with its globally-renowned developers, an exciting local tech scene and geographical proximity to Vienna, was a pretty clear choice for us,” Bitpanda co-founder and CEO Eric Demuth said. “It’s the best asset to attracting the right talent who can help Bitpanda pursue innovation of the highest standard.”

Founded in 2014 and headquartered in Vienna, Austria, Bitpanda is a leading European neobroker that specializes in digital asset investing. This fall, Bitpanda teamed up with Raiffeisen Bank International to bring blockchain-interoperability to banks in the EU. Th company also launched its Bitpanda Crypto Index (BCI), which provides an automated way for cryptocurrency investors to buy multiple cryptocurrencies at once and more readily diversify their holdings.

Big data analytics platform Thetaray, which made its Finovate debut five years ago at FinovateFall in New York, announced late this week that its Anti-Money Laundering for Correspondent Banking solution has been selected by Spain’s Cecabank. The wholesale bank will use the AI-powered technology to analyze SWIFT traffic, risk indicators, and other data to identify anomalies that can signify criminal activity.

“We were already using traditional rules-based systems, but we wanted to increase our ability to monitor cross-border transactions,” Cecabank Compliance Head Alfredo Oñoro said. “When an industry colleague recommended ThetaRay’s AML solution for correspondent banking, we immediately reached out and began discussions.  We are extremely impressed with ThetaRay’s technology and excited to share its capabilities with our bank customers and, if so requested, with our regulators.”

ThetaRay’s anomaly detecting algorithms are relied upon by corporations in financial services, industrial manufacturing, and critical infrastructure to defend against a wide variety of threats and cybercrimes, ranging from money laundering to terrorist financing. ThetaRay offers fraud detection, ATM security, and an early threat detection capability that minimizes false positives, enabling firms to modernize their legacy systems with a compliant, cost-savings solution.

“This announcement serves as notice that ThetaRay’s AML for Correspondent Banking solution is not just for global financial institutions,” ThetaRay CEO Mark Gazit said. “It is also a perfect fit for mid-sized banks aiming to improve their AML controls. Cecabank plays a crucial role in the Spanish market, and we are very pleased that they’ve chosen ThetaRay to help secure their customers’ cross-border transactions.”

ThetaRay’s partnership with Cecabank comes in the wake of a similar collaboration the company announced with Banco Santander over the summer. With offices in Israel and New York City, ThetaRay has raised more than $81 million in funding. ABN AMRO Ventures and Jerusalem Venture Partners (JVP) are among the company’s investors.

Interesting in learning more about fintech in Latin America? This week on the Finovate blog we featured an article from non-profit organization Invest Puerto Rico that makes the case for untapped opportunity on the island.

Fintech is growing fast, at a rate of 25% per year through 2022. Puerto Rico’s close proximity to the world’s financial center – New York City – gives island-based fintech firms the opportunity to remain connected while taking advantages of key local benefits such as STEM talent, local financial literacy, and attractive tax incentives. 

Read the rest.

Here is our look at fintech around the world.

Sub-Saharan Africa

  • PayCentral and Mastercard team up to launch new online payments platform for SMEs, DigiCentral.
  • Interswitch Group, a Nigerian digital payments company, partners with Kenya-based Credit Bank to launch a multi-currency prepaid card.
  • South African fintech Ukheshe acquires mobile payments startup Oltio

Central and Eastern Europe

  • Germany’s Solative, which provides indices and index solutions to the financial services industry, raises $60.4 million in growth funding.
  • Irish core banking technology provider Leveris inks partnership with Czech bank, Česká spořitelna.
  • Polish fintech SMEO, which provides online factoring services to small and micro-enterprises, locks in €4 million in funding ahead of its planned international expansion.

Middle East and Northern Africa

  • Digital open banking app sync secures license from the Qatar Financial Centre Authority.
  • Central Bank of Oman unveils fintech regulatory sandbox.
  • IBS Intelligence reviews the top four fintechs disrupting payments in the UAE.

Central and Southern Asia

  • Pakistan’s SadaPay obtains approval from the State Bank of Pakistan for pilot launch in 2021.
  • India Posts Payments Bank and the Indian Department of Posts introduce new digital payment app, DakPay.
  • Bangalore-based payments platform Cashfree raises $35.3 million in round led by Apis Partners.

Latin America and the Caribbean

  • Brazilian financial market intrastructure company B3 partners with Genesis to access its low-code application platform.
  • Mozper, a debit card for kids and their parents, goes live in Mexico following $3.5 million seed funding round.
  • BNAmericas looks at Azimo’s partnership and expansion plans for Latin America following its alliance with Uruguay’s dLocal.

Asia-Pacific

  • Singapore and Thailand announce plans to link their national payment systems in 2021.
  • Malaysia’s AFFIN Bank launches new corporate internet banking platform for SMEs, AffinMax.
  • Vietnam Briefing examines the rise of Vietnam as a startup hub.

Photo by Jade from Pexels

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Microblink Raises $60 Million for its Computer Vision Tech

Microblink Raises $60 Million for its Computer Vision Tech
By Julie Muhn (@julieschicktanz) Posted on
Categories: Funding, microblink

AI-powered computer vision software innovator Microblink landed $60 million in funding today. The investment marks the U.K.-based company’s first round of funding since it was founded in 2014.

Growth equity firm Silversmith Capital Partners led the round. Microblink plans to use the capital to accelerate product development, boost its go-to-market strategy, and expand its team.

“As enterprises increasingly move towards automation, we are excited to reinvest in our existing business and explore new ways our computer vision platform can solve pain points for companies across a variety of industries,” said Microblink CEO and Cofounder Darren Bassman. “We believe Silversmith is the perfect partner for us on the next leg of our journey.”

Microblink’s computer vision products help businesses and organizations across multiple sectors digitize documents, automate processes, and eliminate manual data entry. The company’s “hundreds of millions” of end customers use its technology to scan billions of documents each year to prove their digital identity by scanning their ID, make a payment online by scanning their credit card, and collect data about their purchases by scanning their receipts.

“Microblink’s world-class product and technology teams have unlocked real-world applications for artificial intelligence and machine learning,” said Silversmith General Partner, Sri Rao. “Customers leverage the platform to power experiences for millions of end users that require the ability to verify an ID, scan a receipt, or automate the capture of payment data from their device of choice. Microblink’s customer centricity and product leadership serve as a strong foundation from which to scale rapidly, and we are thrilled to support the company in this next phase of growth.”

As part of today’s deal, Rao will join Microblink’s board of directors, serving alongside Bassman and Microblink Cofounder Damir Sabol.

Photo by Titus Blair on Unsplash

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The Who, What, When, Where, and Why of Financial Inclusion

The Who, What, When, Where, and Why of Financial Inclusion
By David Penn Posted on
Categories: Finovate eMagazine, Finovate Fintech Fulltime Review

According to the World Bank there are 1.7 billion unbanked adults in the world. In the United States, this number is just over 14 million, representing more than 6% of all households in the country. Analysts have suggested that, in Europe, while there are some well-banked countries (Germany, the Baltics in particular), there are others, especially in Central and Eastern Europe, where large numbers of citizens lack access to basic banking services. In Romania, for example, more than 50% of the country’s adults are unbanked.

I should say at the outset that it is impossible for me to write about financial inclusion without tipping my cap in the direction of Tosin Agbabiaka. An investor with Octopus Ventures, Agbabiaka’s presentation on what he called “Financial Inclusion 3.0” at FinovateEurope in February was as fascinating a discussion on the topic as I have come across. Catch his conversation with Finovate VP and host of the Finovate podcast Greg Palmer from earlier this year.

For our purposes, let’s start with the World Bank’s definition of financial inclusion. The World Bank defines financial inclusion as providing individuals and businesses with access to useful and affordable financial products and services that meet their needs. This leads us to ask: in the current context of COVID-19, nationalism, and lingering economic inequality, how can we achieve a financial inclusion worthy of the times we live in?

What?

One important question to ask when it comes to financial inclusion is quite fundamental: what are financial services trying to provide? There is a danger in “porting” services and solutions to one community simply because they may have worked in another. At a time of rapid technological innovation and adoption – such as we are in right now – this temptation can be difficult to resist. But failure to understand the specific needs of a given community – greater access to earned wages, or the ability to pay cash for online products or services, for example – can result in not only the failure of a well-intentioned initiative, but also potential negative feelings toward the idea of trying new technologies in the future.

This is one of the ways that fintechs can play innovative roles by developing solutions that highlight needs – such as broader access to cash – that may seem niche or be overlooked entirely by traditional, even community-based, financial institutions.

Who?

Who should be included in mainstream financial life? While the answer “everyone who wants to” is obvious, it is also insufficient. Who is going to make the investment to provide financial services in areas where the market may be broad but thin? Even more problematic are those needs that are severe, but relatively narrow and not easily remedied by methods successful in communities where conditions are different. Countries and regions where incomes are low and inconsistent, trust in traditional institutions poor, and the stability of the currency itself at times an issue come to mind.

And in the same way that the conversation on inclusion rightly has emphasized the importance of gender and ethnic diversity, it is also important to think about other communities that have been traditionally excluded from or had severely limited access to financial services. Families and businesses in rural areas and in farming communities, many of whom it should be mentioned are women- and/or ethnic minority-led, are often the most overlooked communities in financial life. This is true both in the developed and developing world. A recent broadcast by journalist Chris Hayes on the eve of Thanksgiving highlighted the life and work of those whose job it is to put food on the tables of millions during the holiday season. It was a helpful reminder of how “essential” this work is and these workers are, and why any financial inclusion must respond to their needs as well.

Where?

Meeting underbanked populations in the communities where they live is a critical component of not only providing them with the financial products and services they need, but also of engaging with them and learning about what those needs are in the first place. Outreach into ethnic minority neighborhoods via civic and even public sector institutions is one first step financial institutions can take, as is partnering with minority-, women-, veteran-, and LGBTQ-led businesses who have firsthand knowledge of the needs of their communities.

This is also true for virtual communities. In some instances, for example, offering financial services to underbanked individuals with mobility, sensory, or cognitive challenges may mean less outreach to physical neighborhoods and more engagement with online communities and networks.

When?

One truism about planning drawn from the world of professional hockey is the idea of skating not to where the hockey puck is currently, but instead, by accurately judging its trajectory, skating to where the hockey puck is going. Similarly, those looking to provide financial services to underbanked communities should be as alert to their future needs as they are to the current needs in those communities.

Some trends are easier to anticipate than others. If we believe that Millennials in general, for example, are entering their prime family formation years, then what is the appropriate response from the financial services and fintech community? I would argue it is an excellent time to intensify outreach to young women, as well as Millennials who are members of ethnic minority groups who might not have the same access to the kind of financial planning resources that are critical when starting a family. A special effort to engage young members of underbanked communities about financing opportunities for higher education seems like a similarly worthwhile effort for banks and community-oriented financial services organizations in late winter and early spring, as well.

But no crystal ball is required. Again, engagement with underbanked communities is key. The easiest way to know which way the train is headed is to climb on board.

Why?

Whether driven by rational self-interest, an renewed altruism, or some combination of the two, the growing desire to bring financial services to those who do not have them – and want them – is one of the most important developments in fintech and financial services. There will be missteps, overreaches and embarrassing assumptions along the way. And in the eyes of some critics and skeptics, this will be evidence that the cause is hopeless or that those attempting to fulfill it are incapable.

But, to steal a phrase, ensuring that the blessings of technology and modern, wealth-building financial services are available to as many people as possible, may be as important a goal as any other in our industry. And at a time when more people are seeing banks and other financial services providers in a brighter light than they have in a decade – thanks to their recent participation in PPP financial rescue efforts, for example, and the fading memories of the Great Financial Crisis – there may be no better time than the present to pursue it.

Photo by Dani Hart from Pexels

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Puerto Rico: An Attractive Location for Startups & Established Tech Companies

Puerto Rico: An Attractive Location for Startups & Established Tech Companies
By Charlie Burgess Posted on
Categories: Finovate Global, Sponsored

The below is a sponsored post by FinovateFall Digital exhibitor, Invest Puerto Rico.

Puerto Rico is poised to become the global model for how to roll out cutting-edge tools that enable blockchain, AI, and the Internet of Things (IoT). All of these technologies are designed to transform nearly every sector, notably financial services, bioscience, and aerospace. Technology represents the changes imminent in the 4th industrial revolution. Proper implementation and growth of these tools has been a critical priority contributing to the island’s economic diversity, development, and competitiveness.

Network

Advances in these fields would not be possible without a supportive Information & Communications Technology (ICT) network. As an island, Puerto Rico depends on its ability to communicate with the world to do business. As such, companies benefit from extensive island-wide 5G, broadband access, established LoRa network capabilities, and broad satellite connections. Every element of this network ensures producers are connected to suppliers, customers, and business partners. Puerto Rico’s tech expertise and nationally unique international banking policies—along with the growing demand for effective financial solutions and resources—has led to a boom in innovative fintech and investing services that extend to every industry.

Fintech

Fintech is growing fast, at a rate of 25% per year through 2022. Puerto Rico’s close proximity to the world’s financial center – New York City – gives island-based fintech firms the opportunity to remain connected while taking advantages of key local benefits such as STEM talent, local financial literacy, and attractive tax incentives. Puerto Ricans are open to technology providing financial solutions where traditional banks do not. Here are a few facts you might have known about the island.

  • In 2017, Puerto Rican firm Evertec was the #1 provider of payment processing services in Latin America, exporting financial services to 25 countries around the world
  • After just four years, Evertec’s money transfer platform, ATH Movil, reached over 1 million users, 6,000 businesses, and 80% of banks and credit unions
  • Banco Popular’s digital platform also leads the industry in the implementation of fintech solutions
  • Abexus Analytics identifies commercial lending solutions to SMEs as one of the key areas of opportunities in Puerto Rico’s fintech landscape
  • Among others, Act 60 applies to financial activities and export services. IFEs are eligible for 6% income tax rate on distributions to resident shareholders or members and are 100% exempt on distributions to nonresident shareholders and members

Innovation

Puerto Rico also leads the region in fintech innovation, and this is evident in the wide use of digital banking tools, mobile financial applications, and globally recognized payment processing technology. Banking with digital assets is quickly becoming a reality and the blockchain community is pushing innovations for tax credit trading and how to sell utility tokens within tax incentive regulations. The island is leading the way in helping fintech, insurtech, and blockchain become more ubiquitous. The local financial services industry is perfect for global companies and start-ups looking for a cost-effective domicile or fertile ground to develop ideas, scale, and expand into neighboring markets.

The Only Place

Combine U.S. federal regulations and exemptions with local tax benefits and operating incentives, and you get the only place for international financial entities and insurers on U.S. soil: Puerto Rico. The island offers companies experienced banking and insurance markets, with a broad base of financial experts in U.S. and international laws and regulations. Puerto Rico stands to be an international leader in the finance and insurance industries by providing banks and insurers, companies, and individuals unparalleled access to the U.S. market with global regulations.

Puerto Rico is the nexus of opportunity. Contact a member of the Invest Puerto Rico Business Development team to learn how you can locate your startup or established business to the island.

Leading the way in strengthening the island as a world-class business destination is the newly formed Invest Puerto Rico (InvestPR), a non-profit investment promotion organization created by law, via Act 13 – 2017. InvestPR’s mission is clear: promote the island as a competitive investment jurisdiction that attracts new business and capital investment to the island. Our vision is to be a transformational and results-oriented accelerator of economic development in Puerto Rico.

Photo by Tatiana Rodriguez on Unsplash

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Why 2021 Will Be the Year for Sila

Why 2021 Will Be the Year for Sila
By Julie Muhn (@julieschicktanz) Posted on
Categories: Innovation Series

If you’re unfamiliar with blockchain-based payments company Sila, it’s worth checking out. The Oregon-based company has an API that offers what it calls Infrastructure-as-a-Service. Overall, Sila helps companies authenticate consumers via a partnership with Alloy, connect with consumer bank accounts via a partnership with Plaid, and move money via the blockchain.

So why is 2021 the breakout year for Sila? The answer can be found in two words: digital wallets.

The pandemic has changed how we think about in-person payments. Germ-riddled cash has fallen out of favor and consumers have adjusted their habits to seek out contactless transactions where possible. One side effect of this has been the uptick in digital wallet usage, both among consumers and merchants. According to Fast Company, mobile payments are expected to surpass both cash and credit card payments (based on transaction number) in 2020.

This has prompted even more investment in digital wallets, which used to be looked at as fintech’s tried-and-failed experiment of 2012. However, not only have PayPal and Google lined their digital wallet offerings with new tools, partnerships, and redesigns; individual retailers are getting in on the game, also. Convenience store 7-Eleven, for example, launched an in-app wallet earlier this month.

Here’s where Sila comes in. All three of its capabilities– authentication, bank account integration, and payments– come together to enable companies to create their own in-app, white-labeled digital wallet. While many food service chains have already launched digital wallets of their own, there is still much room for growth in the digital wallet space in 2021.

Sila was co-founded in 2018 by Shamir Karkal, one of the entrepreneurs who co-founded Simple in 2009. There, he was responsible for integrating the challenger bank’s system into BBVA after it was acquired by the mega bank in 2014 for $117 million. Karkal now serves as Sila CEO.

Sila raised $7.7 million earlier this year. The company’s clients range from startups to established businesses working in finance, insurance, real estate, and blockchain.

Photo by Ryan Quintal on Unsplash

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Social Investing App Public Secures $65 Million in Series C

Social Investing App Public Secures $65 Million in Series C
By David Penn Posted on
Categories: Daily news, Funding

The Avengers may have a Hulk. But social investing app Public, which offers Millennial and older GenZ investors the ability to make commission-free fractional share investments in U.S. stocks and ETFs, has a Hawk.

The New York City-based company announced this week that it has closed a $65 million Series C round that featured participation from skateboarding legend Tony Hawk, as well as a host of VCs and angel investors.

“As technology continues to disrupt barriers, Public.com is creating a platform that makes investing accessible to everyone, while providing a place where they can share ideas and build their confidence as they build their portfolios,” Hawk said in a statement.

Public is not the only investment the famous skateboarder has made in his retirement. Hawk was an early investor in Nest, backed DocuSign, and put money into a San Diego brewery named Black Plague. Five years ago, Hawk participated in the Series C round for Blue Bottle Coffee, a roaster and retailer that offers coffee subscriptions. The company was purchased by Nestle two years later for $500 million. “I like startups because I like being on the ground floor of stuff,” Hawk told Reuters in 2017.

Public’s round was led by Accel. Joining in the Series C along with Hawk and Accel were Lakestar, Greycroft, and Advancit Capital – as well as former chairman and CEO of Time Warner Dick Parsons. The investment comes less than a year after the company’s successful Series B funding, and takes the firm’s total capital to $90 million.

Public is among a growing number of fintechs looking to capitalize on three of the most powerful trends in retail investing these days: commission-free trading, fractional share investing, and a rising demand for investment opportunities from Millennials entering their prime family formation years. In addition to enabling its members to make fractional share purchases of U.S. stocks and ETFs – investing as little as $5 – Public offers a transparent community of both subject-matter experts and fellow traders and investors to help newer members learn how to wisely participate in the markets.

“Our mission to change the culture of investing is resonating with a new generation of investors who value collaboration over competition,” Public.com co-CEO Leif Abraham said. “By building the social network for investing, we’re giving people a place to share ideas and discover new ways of thinking in the same place they invest.”

Hawk is not the only celebrity investor in Public. Also participating in the round was Mantis VC, a venture capital outfit founded by electronic music duo, The Chainsmokers. Launched in September with $35 million in commitments from investors like Mark Cuban and Keith Rabois, Mantis VC has also invested in startups like fitness app Fiton and mortgage-lending startup LoanSnap.

“We couldn’t be more thrilled about our investment in Public.com and the potential this company has,” MANTIS VC partner and member of The Chainsmokers, Alex Pall said. “We’re all about community and Public’s social focus makes the stock market a more inclusive space where everyone can get educated and excited about investing.”

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Fiserv Acquires Ondot

Fiserv Acquires Ondot
By Julie Muhn (@julieschicktanz) Posted on
Categories: Fiserv, Mergers & Acquisitions

Fiserv made a key acquisition this week, snapping up digital card services platform Ondot Systems. Financial terms of the deal were not disclosed but the agreement is set to be finalized in the first quarter of next year.

Fiserv is picking up Ondot to enhance its suite of tools that help banks offer digital-first, personalized offerings to their consumers.

“By combining Ondot and Fiserv capabilities at scale, we plan to provide our clients with a unified digital experience, spanning card-based payments, digital banking platforms, core banking, and merchant solutions, enabling them to deliver best-in-class solutions that continue to reduce friction for their customers,” said Fiserv President and CEO Frank Bisignano.

More specifically, Fiserv will use Ondot to help bank clients accelerate digital customer acquisition, drive digital commerce, increase card activation and usage, reduce service costs, and engage contextually.

The deal enhances Fiserv’s standing in the card payment space specifically. The Wisconsin-based company will now be able to help banks offer cardholders instant card issuance and usage, visibility into purchases through enriched transaction information, and actionable insights to help them make more informed spending decisions.

Fiserv’s bank clients will benefit from Ondot’s data enrichment that organizes and identifies transaction and merchant data to minimize chargebacks.

For Ondot, joining forces with Fiserv will offer the company a more global reach and will help it scale up faster. As Ondot President and CEO Vaduvur Bharghavan explained, “Joining with Fiserv will provide Ondot the opportunity to innovate and impact the industry on a global scale. We look forward to expanding the scope of our offerings as we integrate with Fiserv’s vast array of capabilities to continue providing high-quality digital solutions to consumers, merchants, acquirers, networks and card issuers.”

California-based Ondot was founded in 2011 and has raised $51 million. The company processes more than 1 billion transactions per month and provides digital capabilities for over 30 million cards. The company made news earlier this year when it partnered with CU Solutions Group, which agreed to become a reseller of Ondot’s CardApp.

Photo by Alejandro Martin on Unsplash

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How Plaid Expanded its Network

How Plaid Expanded its Network
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni profile, Banno, Jack Henry, Plaid

Earlier this year banking technology company Plaid launched Plaid Exchange, a new tool to facilitate open banking.

The new open finance platform offers banks a way to provide open banking connectivity to their clients while keeping their end customers’ data safe and giving them control of their data.

Plaid Exchange helps banks establish token-based API connectivity with the 2,600 third party apps in Plaid’s network. This single connection simplifies integration for banks, helping their clients connect with more third party providers securely. Plaid Exchange can help banks bring an API solution to market in 12 weeks. 

A couple of weeks back, Plaid formed a key partnership to help it reach more banks to access the Plaid network. The company is working with Jack Henry & Associates to enable Plaid Exchange for banks on the Banno Digital Platform.

The deal helps Plaid reach more than 350 institutions currently using Jack Henry’s Banno Digital Platform. These financial institutions can benefit by offering their accountholders access to Plaid-powered fintech apps. Plaid has designed the integration process to be simple and Banno clients will be able to access the technology for free.

The deal with Jack Henry comes as an extension of the Plaid Exchange Partner Program, which is aimed to get banking platform providers, API management platforms, and software development companies on board to offer Plaid Exchange to their bank clients.

The network effects of the Plaid Exchange Partner Program will be a boon to the San Francisco-based company. That’s because the more banks Plaid partners with, the more attractive Plaid is to fintechs.

Plaid works with thousands of third-party fintech apps such as Transferwise, Betterment, and Venmo to connect with their users’ financial institutions. The company made headlines at the beginning of 2020 after it announced it had been acquired by Visa for $5.3 billion and made the news again after the U.S. Department of Justice filed a suit to block the acquisition last month.

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NetGuardians Raises $19 Million

NetGuardians Raises $19 Million
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Funding, NetGuardians

Enterprise risk and banking fraud protection NetGuardians landed $19 million (chf 17 million) in funding this week.

The round, which is more than double each of the company’s previous rounds, brings the company’s total funding to $34.5 million (chf 30.6 million). Investors include NetGuardians client the Pictet Group, as well as private investment group ACE & Company.

NetGuardians will use the investment to help it meet rising demand for its fraud-mitigation software. Specifically, the company will strengthen its position in existing markets and further develop its SaaS subscription model.

“Since our first round of funding, we have been able to grow and strengthen our fraud-mitigation platform worldwide, serving institutions in more than 30 countries,” said NetGuardians Chief Strategy Officer Raffael Maio. “This latest round of funding will help us to reach more clients and explore new markets with our Collective AI technology provided as software-as-a-service.”

Founded in 2007 and headquartered in Switzerland, NetGuardians employs 90 people in its offices across Singapore, Kenya, and Poland.

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HooYu’s Investigate Platform Acquired in $5 Million Deal

HooYu’s Investigate Platform Acquired in $5 Million Deal
By David Penn Posted on
Categories: Alumni News, Daily news, HooYu

HooYu announced on Monday that GB Group (GBG), an identification verification specialist based in the U.K., has agreed to acquire its Investigate subsidiary in an all-share deal valued at approximately $5.34 million (£4 million).

“The acquisition of HooYu Investigate by an outstanding company like GBG is a testament to the technological achievement of the HooYu development team,” HooYu CEO Keith Marsden said. “We are now very excited to focus all our energy on taking the award-winning HooYu Identity platform forward.”

HooYu launched HooYu Investigate in 2017. The platform automates the fraud investigation process, leveraging data visualization to enhance the ability of users in compliance, anti-fraud, and law enforcement to identify and prevent cybercrime. GBG will add the technology to its portfolio of anti-fraud solutions, and both Investigate client contracts and the platform’s developers will join GBG as part of the transaction. HooYu will continue to run its digital customer onboarding and KYC solution, HooYu Identify, which includes NatWest and Vanquis Bank among its customers.

GBG CEO Chris Clark praised HooYu Investigate as an “exceptional product” that will complement GBG’s current business. He also looked forward to a future in which both the GBG and HooYu development teams are working together to build new solutions. “By joining forces with HooYu Investigate, GBG will create a scalable platform for growth, providing customers with a critical service to fight ever more sophisticated financial crime and reduce organizational risk in the U.K.” Clark said.

Founded in 2015 – and making its Finovate debut two years later at FinovateEurope – HooYu offers businesses configurable tools to make the customer boarding process easy for customers while ensuring maximum KYC compliance. With just a selfie taken by a smartphone or webcam, HooYu applies both traditional verification methods such as database checks with ID document validation, digital footprint analysis, and facial biometrics to provide an identity confidence score that reveals how many of the customer’s identity attributes (name, address, birthdate, etc.) can be confirmed. This gives businesses the insight they need not just for customer onboarding and KYC, but for age verification, customer due diligence remediation, and fraud prevention, as well.

Photo by Maurício Mascaro from Pexels

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