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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
It seems as if cryptocurrencies are starting to capture the attention of mainstream financial services providers. This week, Visa has shown to be no exception. The payments giant recently revealed plans to use cryptocurrencies into its traditional payments network.
In a blog post announcement, Visa said it has been working with Coinbase and Fold to “provide a bridge between digital currencies and [its] existing global network of 61 million merchants.” As a result of this collaboration, more than 25 digital currency wallets across the globe have linked up with Visa to enable consumers to spend their digital currency using a Visa debit or prepaid card.
“We believe that digital currencies have the potential to extend the value of digital payments to a greater number of people and places,” Visa said in a statement. “As such, we want to help shape and support the role they play in the future of money. We look forward to sharing more with you on this work in the months that follow.”
Visa is using its crypto partnerships to position itself as the preferred network for digital currency wallets. Not only this, but the company also launched a FastTrack Program that helps fintechs integrate quickly with Visa’s network. One initiative that has resulted from the program is Visa Direct, which helps consumers convert digital currency and push the funds to their Visa credentials in real-time.
This week’s announcement builds on Visa’s long-term plans for leveraging the blockchain and alternative currencies. The company has a dedicated team that has been researching uses for the blockchain for years. Currently, the team is working on facilitating offline digital currency transactions.
The investment will help the company to continue its international expansion – including the addition of new hires in the APAC region, the U.S., and in Australia. The company also plans to use the funding to fuel development of new products and functionalities, including a new payments solution.
“The prospect of transitioning to cloud native technology is now at the forefront of every major bank’s roadmap,” ThoughtMachine CEO Paul Taylor said. “Plans have been hastened in the wake of regulatory pressure, economic uncertainty, and the need to manage cost-income ratios.”
Thought Machine’s signature offering, Vault, is a modern, cloud-native core banking system designed for financial institutions burdened with legacy technology. Demonstrated at the company’s Finovate debut at FinovateEurope in 2018, Vault provides a secure, fast, and reliable end-to-end banking system that manages users, accounts, savings, loans, mortgages, smart contracts, and other financial products and services. By leveraging APIs and a microservice architecture, Vault is able to provide financial institutions with all the functionality necessary for bank operations. Currently geared toward retail and small business banking, the company plans to add both commercial banking and private wealth services “in the future.”
Named to the Tech Nation Future Fifty in March, and joining the Mastercard Start Path Programme in May, Thought Machine announced in June that its Vault platform was compatible with all major cloud infrastructure providers including Google Cloud Platform, Amazon Web Services, Microsoft Azure, and IBM Cloud. Founded in 2014 and headquartered in London, Thought Machine includes Atom Bank and Lloyds Banking Group among its partners.
To steal a line from Rob Base and DJ EZ Rock, when it comes to innovation in fintech, it takes two to make a thing go right. Whether the “thing” is an end-to-end digital transformation or creating the technology infrastructure to enable firms to build and market their own innovations, collaboration and partnership with fintechs increasingly seems to be the path that the most forward-looking banks and other financial institutions are pursuing.
With this in mind, here’s a look at some of the more interesting recent partnership announcements over the past month – with an eye toward what these collaborations might be saying about the near-term future of fintech.
DBS Bank: Headquartered in Singapore. Total assets of $420 billion (SGD 579 billion) in 2019. Largest bank in Southeast Asia. Operates in 18 markets around the world.
Objective: Faster “more cost efficient” financing for the 68,000+ SMEs on Infor’s Nexus network.
Royal Bank of Canada (RBC): Headquartered in Toronto, Ontario, Canada. Has 17 million clients in Canada, the U.S., and 34 other countries. Total assets of $1.2 trillion (1.49 trillion CAD) as of 2019.
Objective: The new build will allow the bank to develop “transformative intelligent applications” and to bring those solutions to market faster.
Orange: Telecommunications corporation headquartered in Paris, France. Fourth largest telecom in Europe and one of the ten largest in the world with 26 million customers. Total assets of $124 billion (€106 billion) and revenues of $49 billion (€42 billion) as of 2019.
Objective: Partnership will bring savings and micro credit services to underserved customers in Cote d’Ivoire, Burkina Faso, Mali, and Senegal.
Lloyds Banking Group Headquartered in London, U.K., Lloyds is the country’s largest digital bank with 16.9 million active customers online and 11.5 million on mobile. Founded in 1765, the bank currently has total assets of more than $1 billion (£833 billion).
Partner: Form3
Project: Along with partners Google Cloud and Microsoft, Form3 will help the U.K.-based bank “investigate and develop” a cloud-payments-as-a-service platform.
Objective: The collaboration, which also includes a minority equity stake in Form3, will simplify Lloyd’s payment capabilities and support enhanced data and new overlay services.
Banca Ifis: Specialty commercial and corporate banking firm for SMEs headquartered in Venice, Italy. The firm has more than 130,000 retail clients in the country, and online funding and deposits totaling more than $4.7 billion (€4 billion).
Objective: Raisin’s customers in Germany will gain access to deposit solutions available from Banca Ifis. The collaboration will enable German customers to take advantage of relatively higher interest rates available in Italy.
Other fintech/financial institution partnerships of note this month:
Global payments platform Paysafe announced its acquisition of online payments innovator Openbucks. Financial terms of the deal were not disclosed and the companies expect the acquisition to be finalized by the end of July.
Paysafe aims to leverage Openbucks to expand its cash alternative payment offering in the U.S. by tapping into Openbucks’ technology that allows consumers to pay online without a credit card.
“The cash alternative payment market is a thriving one and we are seeing increased demand from online merchants who want to enable gift cards as a payments solution in order to reach new consumers, particularly in sectors such as gaming, eSports and entertainment which are very much on the rise,” said CEO of Paysafe’s eCash division, Udo Mueller.
Openbucks maintains a network of partnerships with major retailers that enable consumers to purchase gift cards that can be redeemed at the company’s 500+ ecommerce merchant partners. Openbucks founder Marc Rochman expects the acquisition to offer a greater level of exposure to his company. “Now, with the full backing of a global payments provider,” he said, “we will be able to provide a world class alternative payment solution to thousands of additional online merchants.”
Openbucks was founded in 2011 and caters to underbanked shoppers, guaranteeing no fees to consumers. Since then, the company has raised $5.3 million.
Founded in 1996, Paysafe is a global payments innovator that offers both online and in-store payment solutions. Philip McHugh is CEO.
Alternative bank Revolut announced late last week that TSG Consumer Partners is the latest investor to join its Series D round. The $80 million investment from the VC firm takes the London, U.K.-based company’s total for the current round to $580 million. Revolut noted that its estimated $5.5 billion valuation in February remains the same.
Company founder and CEO Nikolay Storonsky told Silicon Republic that the additional funding was an instance of TSG Consumer Partners making an offer the company could not refuse. He said that Revolut was not seeking additional funding when the opportunity from TSG developed. “TSG approached us with an exciting proposition to work together,” Storonsky said, adding that the VC firm’s track record of working with “some of the most successful and innovative consumer companies in recent years” was a major plus for the partnership. TSG Consumer Partners has funded companies like BrewDog, Smashbox Cosmetics, and Vitamin Water.
With more than 12 million customers around the world, Revolut offers consumers a variety of banking and personal financial services including a digital bank account with PFM tools, P2P payments, and interbank exchange rate currency exchange. The accounts also come with a prepaid debit card, early payday for direct deposit customers, and stock trading tools.
A report earlier this year from PwC highlighted the “changing competitive landscape” for fintech and banking in Nigeria. For those looking to learn more about both the growing impact of technology in financial services in one of the major countries in Africa, as well as the challenge created by COVID-19, PwC’s review provides an comprehensive overview.
The report also concludes with nine recommendations the analysts believe would encourage continued growth in Nigeria’s fintech ecosystem. These recommendations range from making it easier to invest in fintech companies to encouraging partnerships and “strengthen(ing) the synergy between banks and FinTech players” in a mutually beneficial way.
Financial inclusion is a huge part of both the challenge of – and the opportunity for – fintech in Nigeria. The report notes that more than 30 million adult Nigerians do not have or use either formal or informal financial services products or solutions. This represents more than a third of the country’s adult population. And while the report points out that mobile money operators have been among the businesses to help bring more financial services to the underbanked, there are some fintechs that have taken up the cause of financial inclusion, as well. A trio of these companies are highlighted below:
Bankly is a cash digitization and savings platform that caters to Nigeria’s unbanked. The company provides a digital wallet that is secure, convenient, and accessible, and all users require in order to open an account is a phone number. Bankly leverages more than 2,000 agents across 29 of the country’s 36 states to scale the company’s offering.
In operation for just over a year, Bankly has already picked up recognition from the 2019 Innovating Justice Awards sponsored by the Hague Institute for the Innovation of Law. The company has also participated in the GreenHouse Capital accelerator program. Tomilola Adejana (CEO) and Fredrick Adams are co-founders.
Covr Branchless offers banks, insurance companies, and government agencies a suite of applications that enable them to leverage cloud, GPS, and mobile channels to conduct a wide variety of financial processes. Account opening, instant debit card linking, cash withdrawals, fund transfer, billpay, KYC validation and loan origination are among the operations enabled by Covr’s technology.
Covr is owned by Advancio Interactive, a Nigerian technology company focused on sustainable financial access that was founded by Olufisayo Oludare (Managing Director). Covr won Advancio first place at the Startup Istanbul Challenge in the fall of 2017, only the second Africa-based startup to do so.
FairMoney is a online micro lender that provides instant loans from N1,500 to N500,000 (approximately $4 to $1,300), with average loans of about N12,000 ($33-$35). Using the company’s Android mobile app, prospective borrowers apply for financing by answering a few questions and providing some basic financial information. The app analyzes this information – as well as the borrowers geolocation and other factors – to make a loan offer in a matter of minutes.
But what makes the company especially interesting is the fact that it is working to launch a challenger bank. FairMoney raised $11 million in Series A funding last fall for this purpose and plans to expand its offerings to include current and savings accounts.
Here is our weekly look at fintech around the world.
Central and Southern Asia
Reserve Bank of India (RBI) encourages government to incentivize the use of QR code transactions and promotes the adoption of open, interoperable standards.
Amazon to offer car and motorcycle insurance in India courtesy of partnership with Acko General Insurance.
National Payments Corporation of India (NPCI) facilitates recurring payments with its new UPI AutoPay feature.
Latin America and the Caribbean
Brazil’s Central Bank reverses course to authorize payments system involving WhatsApp.
Payscout teams up with Brazilian fintech Rede Celer to grow its payments business in the country.
Partnership between FacePhi and Naranja X will help bring biometric recognition technology to digital onboarding processes for firms in Argentina.
Asia-Pacific
Finovate: Ant Group’s Double IPO Listing Shuns U.S. Exchanges.
Trulioobrings its GlobalGateway identity verification technology to customers in Vietnam.
Crowdfund Insider takes a look at the impact of COVID-19 on fintech lending platforms in Indonesia.
Sub-Saharan Africa
Telco Orange and bancassurance company NSIA team up to launch Orange Bank Africa to serve underbanked communities in Abidjan and Cote d’Ivoire.
Vodacom partners with Ant Financial Services Group to bring Alipay services to South Africa.
Uganda-based digital cross-border money transfer startup Eversend raises $1 million via an oversubscribed Seeders crowdfunding campaign.
Central and Eastern Europe
Germany’s Scalable Capitallands $460 million valuation with new $58 million funding round.
Russian bank Tinkoffunveils new functionalities for its financial and lifestyle services voice assistant Oleg.
EstateGuru, a P2P lending platform based in Estonia, launches a new payment service in partnership with Lemonway.
Middle East and Northern Africa
Oman’s BankDhofar extends partnership with Diebold Nixdorf to improve the customer experience of its ATM network. Bank Nizwa, also based in Oman, announced an extension of its digital payments partnership with Mastercard.
Turkey-based online payments platform Mobilexpress secures $2 million in Series A funding.
Spotii, an e-commerce technology provider based in the UAE, unveils new deferred payment option.
Intelligent virtual assistance company Interactions launched a new product this week that aims to help accounts receivable management companies in their collections efforts.
The new product, Virtual Collection Agent (VCA), helps organizations with their collection efforts by– as the name suggests– providing a virtual agent to interact with the customer. The virtual agent creates efficiency for organizations by replacing human agents, creating scale, and automating negotiation.
Not only this, VCA is also beneficial to consumers. One in four consumers prefer interacting with a virtual agent when it comes to discussing uncomfortable financial information.
Piloting the new launch is ERC, a business process outsourcing service provider. “Over the past few years—and particularly in this pandemic—we recognized that automation was no longer a ‘nice to have’ in our industry, it was a requirement for addressing demand,” said ERC CEO Marty Sarim. “The response we’ve seen from both our customers and live agents has been encouraging, and the efficiencies we’ve been able to build into our business has put us in an extremely competitive position.”
Interactions’ other products include an intelligent virtual agent for customer engagement and a social listening and engagement tool that taps AI to to find and prioritize meaningful social posts, suggest responses, and gather insights.
Founded in 2004, Interactions facilitates one billion customer interactions per year across six different channels for large brands including Hyatt, Humana, LifeLock, and Mountain America Credit Union.
Amazon is adding to its financial services offerings this week. The online retail giant is reportedly planning to sell insurance in India. The move marks Amazon’s first foray into insurtech.
“Our vision is to make Amazon Pay the most, trusted, convenient and rewarding way to pay for our customers, said India’s Amazon Pay Director and Head of Financial Services Vikas Bansal. “Delighted by this experience, there has been a growing demand for more services. In line with this need, we are excited to launch an auto insurance product that is affordable, convenient, and provides a seamless claims experience.”
To be clear, this won’t be just a “matchmaking” service that serves as a comparison marketplace, hosting multiple providers. Rather, Amazon will actually serve as a corporate agent– soliciting, procuring, and servicing insurance policies.
As its first move in the space, Amazon inked a partnership with Acko General Insurance to offer car and motorcycle insurance. The new offering is available via Amazon Pay and is 100% digital. Amazon Prime customers will receive additional benefits and deeper discounts.
At launch, the company will offer life, health, and general insurance.
Amazon will be competing with other BigTech companies in the region that offer insurance directly to consumers. According to BloombergQuint, SoftBank and Paytm already offer insurance, while Flipkart has already sought approval to sell life and general insurance.
Palo Alto, California-based insurtech Hippo Enterprises has locked in $150 million in new financing and earned a valuation of $1.5 billion. The Series E round featured participation from new investors Dragoneer and Ribbit Capital as well as existing investors Felicis Ventures and Iconiq Capital.
This week’s investment takes the company’s total capital to $359 million.
Hippo will use the funds to expand in the U.S., and to help cover the costs of its acquisition of Spinnaker Insurance, which the company bought last month. According to reporting in BuiltinAustin, Hippo’s expansion plans include building a “new, 310-person campus in Austin.” Company Chief Insurance Officer Rick McCathron credited both the city’s “strong insurance presence” and central time zone positioning as enhancements to Hippo’s ability to serve customers across the U.S.
The funding comes amid a flurry of activity in the insurtech space. On the acquisition front, insurtech company Assurance IO was purchased by Prudential Financial in a deal valued at $2.35 billion. We also learned this week that technology titan Amazon is entering the insurtech business in India. And earlier this month, one of the more widely known insurtechs, Lemonade, went public, earning a $3 billion market cap on its first day of trading.
Hippo, led by CEO Assaf Wand, is planning an IPO of its own as well. Wand said that the terms of the offering had been determined before Lemonade’s IPO, but the onset of the global health crisis forestalled the company’s plans.
Founded in 2015, Hippo currently offers home insurance in 29 states in the U.S. including California, Texas, Illinois, and New Jersey. The company leverages automation to enhance the process of applying for and getting an insurance quote in less than 60 seconds. Hippo also uses machine learning and smart home devices to enable customers to stay updated on liability issues. The enabling technologies also provide consumers with preventative maintenance tips that will help them resolve small issues with their homes before they become major insurance claims.
Small business cash flow solution provider Kabbageunveiled its Kabbage Checking offering today. The new business checking account is designed to give smaller businesses the “capabilities, convenience, and security” of traditional business accounts, while sparing them “monthly fees or friction.”
The accounts charge no opening or maintenance fees, and do not require minimum or daily balances. At present, Kabbage Checking offers 1.10% APY, which is paid out monthly. The company states this is among the highest interest rates available for a business checking account.
Kabbage Checking accounts come with a Kabbage Debit Mastercard, support electronic billpay, and provide access to free ATM access via a 19,000-ATM national network. Account holders also can create up to five e-wallets to help manage spending and savings. The new accounts can be used with other Kabbage solutions such as Kabbage Insights for daily cash flow analyses and forecasts, Kabbage Payments to accelerate settlements and avoid cash flow shortfalls, and Kabbage Funding, which helps account holders avoid accidental overdrafts. Additional features, including wire transfers and mobile remote deposit, are expected to be added later in the year. The accounts are issued by Green Dot Bank, and are insured up to $250,000.
“We believe in the businesses too often left out, overlooked and underestimated,” Kabbage President Kathryn Petralia said. “Kabbage Checking is a new banking service built to give those small businesses an upper hand to earn more, save more, and grow their business faster without sacrificing anything they expect from a bank.”
Kabbage has been one of the more active fintechs in terms of helping small businesses during the current COVID-19 pandemic. The company approved +209,000 small businesses for $5.8 billion as part of the Paycheck Protection Program, making Kabbage the third largest PPP lender in the U.S. by application volume. This feat, according to Kabbage CEO Rob Frohwein, was a large step for the company, and perhaps an even greater one for fintech writ large.
“The PPP validated the criticality of FinTech,” he said in a statement earlier this month. “Most of the small businesses we reached would have been ignored had this crisis taken place just 10 years ago. These businesses can only be served in mass by an automated platform that places need in front of privilege and levels the playing field that has too long been unequal in our financial system.” He added that fintechs increasingly will be the solution provider of choice, as more small businesses migrate toward these newer companies instead traditional banks “when seeking even the most basic financial services.”
Scalable Capitallanded $58 million (€50 million) for its roboadvisory platform this week. The new funds come courtesy of BlackRock, HV Holtzbrinck Ventures, and Tengelmann Ventures.
Today’s round brings Scalable Capital’s total funding to $133 million (€116 million) and boosts the Germany-based company’s valuation to $460 million. Scalable Capital will use the investment to grow in the wealth management and brokerage spaces, and invest in the B2B side of its business.
“In times of COVID-19, our funding round is a powerful signal; it shows that our focused, digital business model is convincing the investors,” said company Co-founder and Co-CEO, Erik Podzuweit. “We will use the additional capital to expand our position as the market leader in digital wealth management and to reach new customer segments with the broker.”
With 80,000 customers across Germany, Austria, the U.K., and Switzerland, Scalable Capital has $2 billion in assets under management. The company offers personalized, fully managed investment portfolios.
Using its risk management technology, Scalable Capital’s B2C offering aims to make investing accessible for everyone by charging simple, transparent fees.
“We established Scalable Capital to make investing easier and better through technology,” said Scalable Capital Co-founder and Co-CEO Florian Prucker. “Not only has our B2C business grown strongly over the last few years, but Scalable Capital’s technology is also used by more and more B2B partners; most recently we launched our partnership with Barclays. With this funding round, we also want to expand our team of currently 130 employees in order to drive our expansion and the further development of our platform.”
The company’s flagship offering is a B2B approach that brings its roboadvisory technology to help banks offer their clients a different flavor of investing. Scalable Capital recently added three additional partners to its roster and now boasts partnerships with firms including Barclays, Gerd Kommer Capital, Raiffeisen Banking Group Austria, ING Deutschland, Siemens Private Finance, Openbank, Targobank, Oskar, and Baader Bank, and others.
It’s been five years since eBay and PayPal split into separate companies – which means the five-year operating agreement that maintained the firms’ payments relationship in the years since the breakup is about to run out.
This week eBay announced that it is now ready to expand the managed payment system that will take PayPal’s place. Developed in partnership with payments provider Adyen, the new payment system is being used by 42,000 sellers – with more than 255,000 additional merchants who the company said will be activated by the end of the year. eBay has processed more than $4.7 billion in volume in the U.S. and Germany via its managed payments offering, and the company reported that sellers using managed payments have saved $17 million in transaction fees. eBay President and CEO Jamie Iannone praised the momentum behind managed payments, and said he expects it to “deliver $2 billion in revenue and $500 million of operating income in 2022.”
eBay is currently managing payments in five countries – the U.S., Canada, Germany, Australia, and the U.K. – and plans to expand the program to all countries where it operates.
For buyers, eBay’s managed payments provides a more flexible checkout experience with more payment options. Sellers benefit from a simplified process – involving one company (eBay) rather than two (eBay + PayPal) – that provides for easier reconciliation, faster service, and more effective support when issues arise. The company quoted one 20-year veteran eBay merchant from Germany who has been using managed payments since the spring. “I don’t care how the payment goes,” she said, “the main thing is that the customer buys and pays and my account fills up.”
VP of Global Payments Alyssa Cutright added that the offering was a win for both buyers and sellers that provides a simpler, more modern managed marketplace. “By managing payments, eBay is taking control of its own destiny,” Cutright wrote. “We are investing in our buyers and sellers, creating an integrated end-to-end platform, and enhancing the eBay experience by breaking down and removing complexities for our customers.”
Adyen, eBay’s payments partner, is based in Amsterdam, The Netherlands, and was founded in 2006. Companies ranging from Facebook and Uber to Microsoft and Singapore Airlines rely on Adyen’s technology to deliver seamless, friction-free payments across mobile, online, and in-person channels. The company, which processed $278 billion (€240 billion) in volume last year, is publicly traded on the Euronext and has a market capitalization of $47 billion.
