Daily news

Scalable Capital Raises $64.7 Million

Scalable Capital Raises $64.7 Million
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, Funding, Scalable Capital
  • Scalable Capital received $64.7 million (€60 million) in a venture round led by Balderton Capital.
  • The new funds boost Scalable Capital’s total funding to $352 million (€326 million).
  • Scalable Capital is facing new competition, with U.S.-based stock brokerage app Robinhood entering the market this fall.

Digital investment platform Scalable Capital landed some capital of its own this week. The broker and roboadvisor announced it received $64.7 million (€60 million) in a venture round led by Balderton Capital.

The round, which saw participation from HV Capital’s new growth fund and existing investors, is an extension of the company’s 2021 Series E fund. Today’s investment boosts Scalable Capital’s Series E Round to $227 million (€210 million) and brings its total funds to $352 million (€326 million).

According to TechCrunch, Scalable Capital’s valuation with the new round sits at $1.4 billion, the same valuation the company held at its 2021 Series E round.

The Germany-based company will use today’s investment to grow its investment platform and to “capitalize on its position as a leading provider of easy and cost effective investing solutions for retail clients.”

Founded in 2014, Scalable Capital has a mission to empower everyone to become an investor. The company, which is active in Germany, Austria, France, Italy, the Netherlands, Spain, and the UK., has 600,000+ users who currently hold $17.3 billion (€16 billion) in stocks, ETFs, derivatives, bonds, commodities and crypto on its platform. The fintech’s cost for brokerage range from free to $5.39 (€4.99) per month. For users who prefer an automated approach, Scalable Capital also has a roboadvisor offering that has a varied fee structure based on the client’s holdings.

Earlier this year, Scalable Capital launched Credit, a tool that offers users access to secured loans in the Scalable Brokerage product. Residents of Germany can buy additional securities or withdraw a personal loan without having to liquidate existing positions.

As part of today’s fundng announcement, Balderton Capital General Partner Rana Yared will join Scalable Capital’s board. “Scalable’s one-stop, digital-first, wealth building and generating platform brings a suite of top-class financial products to individuals across Europe, and is unparalleled in the market. We’ve been impressed by Erik, Florian, and team’s vision and execution to date and are delighted to be supporting them in this next chapter.”

Scalable Capital recently began facing new competition in the European wealthtech market, as U.S. stock brokerage app Robinhood launched operations in the U.K. Today, the California-based company unveiled it will offer crypto trading for its European Union-based users.

Photo by Monstera Production

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Brim Financial Adds Open Banking Capabilities to its Credit-Card-as-a-Service Offering

Brim Financial Adds Open Banking Capabilities to its Credit-Card-as-a-Service Offering
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, MasterCard
  • Brim Financial has partnered with Mastercard.
  • Brim Financial will embed Mastercard’s open banking capabilities into its own platform.
  • “This partnership with Mastercard will be transformational for companies seeking a sophisticated, modern credit card platform to better serve their customers,” said Brim Financial Founder and CEO Rasha Katabi.

Credit-card-as-a-service Brim Financial announced it has partnered with Mastercard this week. Under the partnership, which aims to fuel innovation in U.S. credit card platforms, Brim will embed Mastercard’s open banking capabilities into its own platform.

“There is significant momentum happening in the U.S. market when it comes to innovating credit card infrastructure across consumer, small-and-medium-sized-business, and commercial segments,” said Brim Financial Founder and CEO Rasha Katabi. “This partnership with Mastercard will be transformational for companies seeking a sophisticated, modern credit card platform to better serve their customers.”

Canada-based Brim was founded in 2015 and provides a credit-card-as-a-service offering for organizations including Air France KLM and Canadian Western Bank. With Brim’s platform, clients can deploy, run, and scale their own branded commercial and consumer credit card offering quickly.

By adding Mastercard’s open banking capabilities to its platform, Brim will provide clients with a more seamless payment experience by embedding payment solutions across its end-to-end platform. “In partnership with Brim, we’re able to help our customers and partners remain competitive, with innovative payment solutions that create seamless, secure experiences,” explained Mastercard EVP of North America Business Development Hunter Woolley.

Mastercard became more involved in the open banking scene after it acquired Finicity in 2020 in an $825 million deal. Mastercard currently partners with brands including Brex, LoanPro, and Experian to help connect their customers’ permissioned financial data to their app. Mastercard is currently connected with 95% of financial institution accounts in the U.S.

Photo by Ron Lach

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Napier Teams up with Customer Lifecycle Management Specialist KYC Portal

Napier Teams up with Customer Lifecycle Management Specialist KYC Portal
By David Penn Posted on
Categories: Alumni News, Daily news, KYC Portal
  • Intelligent compliance technology company Napier has teamed up with client lifecycle management platform KYC Portal.
  • The partnership wil help companies eliminate the problem of siloes in compliance operations by integrating know your customer (KYC) and compliance processes.
  • KYC Portal made its most recent Finovate appearance at FinovateEurope in 2019.

Intelligent compliance technology company Napier and client lifecycle management platform KYC Portal have announced a new partnership. The two companies will work together to help companies integrate know your customer (KYC) and compliance processes, removing the problem of siloes from compliance operations.

KYC Portal’s KYC Portal CLM is a Customer Due Diligence (CDD) and anti-money laundering (AML) orchestration platform. The solution works in real-time to automate, centralize, and simplify the due diligence process. KYC Portal CLM boosts efficiency with a dynamic workflow that reduces both risk exposure and the cost to maintain that risk. Integrating KYCP’s technology with Napier’s transaction monitoring module will provide faster, more accurate alerts to compliance professionals.

“KYC is the ability to know your customer, their activity, and whether it poses risk to your organization,” KYC Portal founder and CEO Kristoff Zammit Ciantar said. “With knowledge on the entire customer lifecycle, from onboarding and beyond, compliance teams are empowered to have a greater view on customer risk.”

Founded in 2008, KYC Portal most recently demoed its technology at FinovateEurope in London in 2019. At the conference, the company demoed its compliance solution that enables organizations to collate all data on subjects under review. This data resides in a single, centralized, secure repository with customizable parameters, rules, user rights, and collaborative functionality.

KYC Portal began the month with news that its platform had earned a spot on the RegTech 100 for 2024. Earlier this year, the Malta-based company announced an integration with global identity verification platform Shufti Pro. KYC Portal also announced this year a number of platform enhancements to make integration with third-party data sources easier.

Looking to demo your latest fintech innovation? Applications are now being accepted for demoing companies at FinovateEurope in London, February 27 and 28, 2024. Visit our FinovateEurope hub for more!

Photo by Polina Kovaleva

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AML Specialist Refine Intelligence Raises $13 Million in Seed Funding to Fuel Global Growth

AML Specialist Refine Intelligence Raises $13 Million in Seed Funding to Fuel Global Growth
By David Penn Posted on
Categories: Alumni News, Daily news, Funding, Refine Intelligence
  • Financial crime and AML specialist Refine Intelligence has raised $13 million in funding.
  • The round was led by Glilot Capital Partners and Fin Capital. The capital will be used to fuel international expansion.
  • Refine Intelligence made its Finovate debut at FinovateEurope earlier this year in London.

Financial crime solution provider Refine Intelligence has secured an investment of $13 million. The funding round was led by Glilot Capital Partners of Tel Aviv, Israel, and FinCapital of San Francisco, California. Also participating in the round were SYN Ventures and Ground Up Ventures, among others. The company, which made its Finovate debut earlier this year at FinovateEurope in London, will use the capital to help fuel international expansion.

“Banks used to have a superpower: knowing their customers’ life stories so they could provide personalized financial service,” Refine Intelligence CEO Uri Rivner said. “With banking increasingly done online and a significant drop in face-to-face interactions, banks’ understanding of customer behavior is limited.”

To this end, Rivner explained, Refine Intelligence helps banks better identify the false alarms that can be inadvertently triggered by otherwise legitimate customer activity. This strategy of helping banks “catch the good guys,” as Refine Intelligence puts it, enables financial fraud teams to focus on truly suspicious behavior.

The list of transactions that most often trigger false alarms is fairly alarming in its own right. According to Refine Intelligence, 64% of all AML alerts come from just five scenarios: payments for cash-intensive workers, gift giving or receiving, automobile purchases or sales, and payment for construction projects. Devoting resources to the false alarms that plague these transactions is a time-consuming and inefficient process that Refine Intelligence helps eliminate for banks.

Founded in 2033, Refine Intelligence made its Finovate debut earlier this year at FinovateEurope in London. At the conference, the company demoed its Life Story Analytics solution. An anti-money laundering solution “designed for real life,” Life Story Analytics leverages AI to identify the “life story” behind any alert issued by the transaction monitoring system. The technology automatically explains the issue with the transaction in question to the fraud monitoring team. This enables teams to clear alerts faster, provide full explainability to regulators, lower caseload, and improve overall risk management. Refine Intelligence says the technology has produced a 90% reduction in time and resources devoted to managing alerts.

In addition to the company’s recent funding, Refine Intelligence was recognized this summer in the AI FinTech100. The roster highlights companies in financial services that are innovating in the field of AI.

Read our Finovate Global interview with Refine Intelligence CEO Uri Rivner. Long time fintech fans may recall that Uri Rivner previously founded behavioral biometrics company and Finovate alum, BioCatch.

Looking to demo your latest fintech innovation? Applications are now being accepted for demoing companies at FinovateEurope in London, February 27 and 28, 2024. Visit our FinovateEurope hub for more!

Photo by Manel and Sean

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Adyen Partners with Klarna as Acquiring Bank

Adyen Partners with Klarna as Acquiring Bank
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, Klarna
  • Adyen and Klarna are extending their partnership, with Adyen agreeing to serve as the acquiring bank for Klarna.
  • The two fintechs first partnered ten years ago, when Adyen started offering Klarna’s buy now, pay later technology to its customers.
  • Klarna has evolved from BNPL into a shopping marketplace and currently hosts 500,000 merchants on its platform marketing to 150 million shoppers who transact two million times each day.

Netherlands-based fintech platform Adyen and Sweden-based ecommerce solutions provider and shopping platform Klarna are doubling down on their partnership. The two announced this week that Klarna will leverage Adyen’s acquiring capabilities to power card payments for its 150 million consumers and 500,000 retail partners across the globe.

The fintechs’ initial partnership dates back ten years, when Adyen began offering Klarna’s buy now, pay later (BNPL) technology to its customers. The new acquiring bank agreement will begin in Europe, North America, and Asia in 2024.

“Klarna has, in many ways, revolutionized the digital shopping experience,” said Adyen Co-founder and Co-CEO Pieter van der Does. “I am proud to say we are now joining forces in a partnership set out to simplify payments and shopping in our respective areas of expertise. Adyen’s financial technology platform combined with Klarna’s various consumer offerings will raise the standard of payments and consumer experiences worldwide.”

Adyen was founded in 2006 and offers payment acceptance, embedded payments, virtual card capabilities, authentication, risk management, insights, and more. Among the company’s corporate clients are Meta, Uber, H&M, eBay, and Microsoft.

“Adyen, a world-class financial technology platform for businesses with global ambitions, aligns seamlessly with Klarna’s role as the preferred payments network and shopping assistant for consumers and retailers worldwide,” said Klarna Co-founder and CEO Sebastian Siematkowski. “In our journey towards strengthening our global commerce offerings, Adyen will play an integral role as our trusted partner.”

Originally launched as a BNPL technology provider, Klarna has evolved into a shopping marketplace similar to Amazon or Walmart. The company works with more than half a million retail partners who list goods across a range of categories. Klarna counts 150 million shoppers– 40 million of which are U.S. based– who make two million transactions on its platform each day.

Earlier this year, Klarna teamed up with Open AI to leverage ChatGPT to help enhance the shopping experience to power a product recommendation engine. Klarna was founded in 2005 and is now live in 45 countries.

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Climate Engagement Innovator ecolytiq and Visa Bring Carbon Emission Tracking to Qatar Islamic Bank

Climate Engagement Innovator ecolytiq and Visa Bring Carbon Emission Tracking to Qatar Islamic Bank
By David Penn Posted on
Categories: Alumni News, Alumni profile, Daily news, ecolytiq

Qatar’s leading digital bank, Qatar Islamic Bank (QIB) has teamed up with Visa and sustainability-as-a-service innovator ecolytiq to help customers better understand the environmental impact of their financial activity.

“This partnership marks a monumental shift in the market,” ecolytiq co-founder and Managing Director Davis Lais said. “Climate engagement in banking is coming to Qatar.”

Courtesy of the partnership, QIB will integrate a new Carbon Emission Tracker feature into its mobile app. The tracker will help foster environmental awareness among banking customers and encourage climate-friendly spending behavior and consumption habits. The technology will also enable QIB to determine the carbon footprint created from its retail banking customers spending activity and use that data to refine both specific transactions as well as customer profiles.

Lais added, “Our innovative work with QIB and Visa is giving banking customers in Qatar more transparency and choice to live sustainably. We are proud to have been chosen to help QIB guide their customers through the complexity of the environmental crisis by making this a fundamental part of QIB’s banking experience. QIB has decided to embrace the future of banking by being a part of it.”

The new partnership follows the release of QIB’s third sustainability report. The report articulated the bank’s sustainability initiatives, noting progress in steps taken to manage climate-related risks. This includes QIB’s adoption of the Equator Principles, making ESG concerns a part of the bank’s risk management process.

This month, QIB was named “2023 Bank of the Year in Qatar” by The Banker magazine, a Financial Times publication. In accepting the award, QIB Group CEO Bassel Gamal referenced the banks efforts toward greater sustainability. “We have assumed a substantial role in championing the shift towards a more sustainable economy, incorporating ESG (Environmental, Social, and Governance) factors in our credit assessment and risk management processes, thus promoting sustainable practices among our corporate borrowers.”

Established in 1982, Doha, Qatar-based, QIB reported total assets of more than $4.6 billion (QAR 187 billion) this year. The bank has 23 branches, more than 170 ATMs, and approximately 36% of the total assets of domestic Sharia-compliant banks.

ecolytiq’s partnership with QIB is the fintech’s second big win in MENA in as many months. In November, ecolytiq – along with Visa – worked with Dubai-based Mashreq to facilitate the launch of the bank’s climate banking platform. The platform overlays carbon emissions calculations onto transaction data, and leverages advanced carbon footprint analytics to personalize climate insights.

Founded in 2020 and headquartered in Berlin, Germany, ecolytiq introduced itself to Finovate audiences at our developers conference, FinDEVR 2021. In addition to its bank partnerships, ecolytiq also has teamed up with a number of fintechs. These include partnerships with fellow Finovate alums Mambu in July and Tink in June. Mambu will make ecolytiq’s sustainability-as-a-service solution available via its marketplace that serves more than 100 million end users. The Tink partnership will embed ecolytiq’s carbon tracking services and other sustainability features into its open banking platform.

“Pairing open banking with sustainable banking is good news for financial institutions looking to make a difference,” ecolytiq co-founder and Managing Director Ulrich Pietsch said.

Photo by Abdullah Ghatasheh

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Enfuce Lands $9.2 Million Investment

Enfuce Lands $9.2 Million Investment
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news, Funding
  • Enfuce closed a $9.2 million follow-on investment, adding to the $49 million it received in 2021.
  • Vitruvian Partners led the round, which saw contributions from existing investor Maki.vc and new contributor Visa.
  • Enfuce will use the funds to prepare for growth in the enterprise segment, as well as expand into more European markets.

Card issuing and payments processing innovator Enfuce recently announced it received a $9.2 million (€8.5 million) follow-on investment. The new funds are added to the Finnish company’s $49 million (€45 million) Series C round in 2021 and bring Enfuce’s total funding to $67 million (€62 million).

Leading today’s follow-on round is Vitruvian Partners. Existing investor Maki.vc, along with new contributor Visa, also participated.

Commenting on the new investor, Enfuce Co-founder and Co-CEO Monika Liikamaa said, “Visa’s trust isn’t just a validation of  our business, it’s a testament to our significant growth during challenging economic times. With Visa’s investment, we will continue to bring our bold vision of shaping the future of embedded finance to life.” Enfuce Co-founder and Co-CEO Denise Johansson added, “This investment represents more than mere financial backing for us. It’s the continuation of an extensive and productive partnership between Visa and Enfuce.”

Enfuce was founded in 2016 with the intent to offer a cloud-based processing system that could allow any business to start issuing payment cards. In addition to payment card issuing, the company also offers digital wallets, fraud and dispute managements, card program analytics, and more. Enfuce processes $2.2 billion (nearly €2 billion) in transactions annually for clients including Pleo, OKQ8 and Memo Bank.

Enfuce will use today’s follow-on investment to prepare for its next area of growth, the enterprise segment. Additionally, the company plans to expand across European markets including Benelux, Germany, and France.

The rise in banking-as-a-service (BaaS) tools, such as the ones provided by Enfuce, offers businesses across a range of industries access to financial infrastructure. Integrating financial services into non-financial platforms not only enhances the customer experience but it also offers businesses new revenue streams. As we enter into 2024, BaaS and embedded finance solutions are set to rise. However, as regulators begin to take notice and find new risk factors, adoption of this trend will likely be cautious.

Photo by Anna Shvets

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Treasury Prime and Risk Management Platform Effectiv Bring Transaction Monitoring to Banks

Treasury Prime and Risk Management Platform Effectiv Bring Transaction Monitoring to Banks
By David Penn Posted on
Categories: Alumni News, Daily news, Effectiv
  • Treasury Prime, an embedded banking software platform, has signed a strategic partnership with fraud and risk management platform Effectiv.
  • Companies and FIs on Treasury Prime’s network will leverage Effectiv’s platform for transaction monitoring.
  • Effectiv made its Finovate debut in September at FinovateFall. The company is headquartered in San Francisco.

Embedded banking software platform Treasury Prime has forged a strategic partnership with fraud and risk management platform Effectiv. The new relationship will enable companies and FIs on Treasury Prime’s network to access transaction monitoring technology from Effectiv to reduce fraud and improve risk management.

Effectiv offers a no-code, fraud, risk, and compliance platform that helps FIs fight fraud at every point in the customer journey, from onboarding to real-time transaction monitoring. The platform identifies and monitors high-risk and high-value transactions for potentially anomalous or fraudulent behavior. This lowers the risk of financial loss for customers and the potential for reputational damage to institutions. Effectiv’s technology automates compliance and risk management, providing more than 80% reduction in manual review, and 58% reduction in fraud and risk management costs. Since inception, Effectiv has processed more than $41 billion in automated risk and fraud decisions.

“Over the past year, we’ve seen a rise in fraud with real-time payments,” Effectiv co-founder and CEO Ravi Sandepudi said. “As banks get ready to adopt FedNow and AI fraudsters increasingly get more sophisticated, it’s critical that fintechs and banks invest in technology that can improve their security posture.”

Effectiv made its Finovate debut earlier this year at FinovateFall. At the conference, the company demoed how its unified fraud, risk, and automated compliance platform helps institutions safely facilitate high-risk and high-value transactions.

Headquartered in San Francisco, California, Effectiv has raised more than $9 million in funding. This sum includes a $4.5 million seed round in July led by Better Tomorrow Ventures. Effectiv also used the funding announcement to preview its new biometric solution, DeviceIntel. The telemetrics and intelligence solution analyzes and identifies suspicious activity on user devices. Effectiv COO and co-founder Ritesh Arora referred to DeviceIntel as part of the company’s “holistic evaluation approach” to fighting fraud.

Interestingly, the team that founded Effectiv in 2021 previously launched fraud detection company Simility. Acquired by PayPal in 2018. Simility introduced itself to Finovate audiences as part of our developers conference series FinDEVr in 2017.

Founded in 2017, Treasury Prime offers a range of core banking solutions including accounts, payments infrastructure, and enhanced FDIC insurance. The San Francisco, California-based company also leverages its embedded banking software to facilitate connections between banks and enterprise partners, as well as offer a partnership marketplace. Chris Dean is co-founder and CEO.

Photo by Mitchell Luo

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Robinhood Launches in the U.K.

Robinhood Launches in the U.K.
By Julie Muhn (@julieschicktanz) Posted on
Categories: Daily news
  • Robinhood is launching in the U.K., marking the company’s first international launch.
  • General availability for U.K. users will roll out in early 2024.
  • Company CEO and Co-founder Vlad Tenev called the U.K. an ideal place to launch its first international brokerage product because the region is a hub for innovation, global finance, and top tech talent.

Stock brokerage app Robinhood is making its first geographical move– 10 years after first entering the market in 2013. The California-based company announced today it has launched its brokerage services in the U.K.

The move means that Robinhood’s U.K. customers will be able to use the platform to trade more than 6,000 U.S.-listed stocks and American Depositary Receipts, including TSLA, AMZN, and AAPL. Launching today, Robinhood’s U.K. platform will offer trading with no account minimums, no foreign exchange fees, and will allow customers to trade outside market hours via Robinhood 24 Hour Market. Additionally, investors who pay $5 per month for Robinhood Gold will earn 5% AER on uninvested cash that they hold on the platform.

Minister for Investment Lord Johnson said that he is “delighted” that Robinhood selected the U.K. as its first international brokerage market.

Robinhood’s expansion overseas is an important step forward for the company, which states that its mission is to democratize finance for all– including those in other geographies. “Since we launched Robinhood a decade ago, it’s always been our vision to expand internationally,” explained Robinhood CEO and Co-founder Vlad Tenev. “As a hub for innovation, global finance and top tech talent, the United Kingdom is an ideal place for us to launch our first international brokerage product.”

Starting today, U.K. residents can sign up on the waitlist for early access to Robinhood. The company plans to roll out general availability in early 2024.

With 23 million U.S. users, Robinhood offers stocks, ETFs, options trading, crypto trading, and a debit card that helps users invest as they spend. Earlier this year, the company acquired credit card company X1, stating that the purchase will one day help the company offer its customers access to credit. Offering credit will also help Robinhood compete with its closest U.S. competitor, Acorns, which currently does not offer any credit products.

Photo by Andrew Neel

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Cable Unveils New Automated Testing Solution Transaction Assurance

Cable Unveils New Automated Testing Solution Transaction Assurance
By David Penn Posted on
Categories: Alumni News, Cable, Daily news
  • Financial crime prevention effectiveness testing platform Cable unveiled Transaction Assurance this week.
  • Transaction Assurance automates effectiveness testing. This ensures that all transactions are both monitored and tested.
  • Cable made its Finovate debut last year at FinovateFall 2023. Co-founder Natasha Vernier is CEO.

Effectiveness testing platform Cable has launched its financial crime compliance and transacting testing solution, Transaction Assurance. The new offering automates effectiveness testing to ensure that all transactions are both monitored and tested for potential regulatory breaches or control failures. This helps banks, fintechs, and payment platforms avoid the limitations of manual dip sampling.

Cable founder and CEO Natasha Vernier explained that the recent spate of compliance lapses – and the billions in fines paid by major institutions for these lapses – have revealed specific problems in financial crime prevention methods, including the way these processes are tested.

“These cases have brought to light gaps in existing protocols, including systemic failures in manual testing,” Vernier said. “These industry shortcomings are why we developed Transaction Assurance. It helps illuminate the vast, often untested expanse of transactional data, bringing that previously unseen 99% into sharp focus.”

Transaction Assurance acts as a sophisticated translation layer. The solution amplifies the effectiveness of first-line control systems by synthesizing and testing data in real-time. This ensures continuous adherence to an institution’s policies and controls. Transaction Assurance delivers actionable insights and alerts, as well as detailed reporting and analytics. This gives managers maximum transparency with regards to the institution’s compliance status.

“It is either Cable or four more people,” Steven Eisenhauer, Chief Risk and Compliance Officer for Ramp Network, a Cable client, explained. “No one questions the expense for that reason. For our size and volume, you would expect a larger team, but we have literally tested more transactions than all of our competitors.” Ramp Network and Cable announced their partnership in February.

Cable made its Finovate debut last year at FinovateFall. At the conference, the company demoed its Automated Assurance solution that enables banks and fintechs to automate their compliance assurance and effectiveness testing. The company’s technology also streamlines a number of manual compliance processes including stakeholder reporting and record management.

This year, Cable has forged partnerships with credit card company Yonder, digital bank Grasshopper and, in October, with unsecured business and personal loan specialist BHG Financial.

Founded in 2020, Cable introduced new Chief Revenue Officer Candace Sjogren in August. Sjogren most recently served as SVP, Global Head of Sales at crypto-as-a-service company Zero Hash. Cable has raised more than $16 million in funding, according to Crunchbase. This includes $11 million in a Series A investment from CRV, Jump Capital, and Stage 2 Capital announced in May.

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eToro Seeks to Retain Investor Funds by Paying Interest on Idle Cash

eToro Seeks to Retain Investor Funds by Paying Interest on Idle Cash
By Julie Muhn (@julieschicktanz) Posted on
Categories: Alumni News, Daily news, eToro
  • eToro announced it will pay investors 4.9% interest on idle cash held in their options account.
  • Users must have at least $5,000 in idle cash to benefit from the interest rate, but investors with less than that can pay a fee to receive the 4.9% interest.
  • The move not only indicates that eToro wants to keep hold of investors’ funds as they move their money out of risky investments, but it also signals that eToro likely won’t launch its own suite of banking tools any time soon.

After starting the year with a fresh $250 million in funding, social investment network eToro has experience with cash. Perhaps that’s why today the company is launching a feature that pays users interest on cash in their accounts.

The new option is meant to serve as another form of diversification for its investor clients. Currently eToro offers users the opportunity to invest in crypto, stocks, ETFs, and options trading. And while holding cash is usually considered a negative quality for investors, a high interest rate, combined with no risk of loss may make higher cash balances more palatable.

“Retail investors are constantly told to diversify their portfolio and ensure they’re maximizing their investments – our new high interest on cash offering helps investors make their money work even when it is at rest,” said eToro U.S. CEO Lule Demmissie. “Our high rate offering is accessible to real investors unlike other brokers who have high minimum balance requirements to earn their rates.”

The new interest on cash program is free for eligible users with an at-rest cash balance of $5,000 or more and the 4.9% interest is paid on cash reserves that are not actively invested. Users with a cash balance lower than $5,000 can still receive the 4.9% interest rate, but eToro will charge them a monthly fee.

Users can access the new interest on cash feature via eToro Options. At launch, accountholders will receive 4.9% APR on cash balances within their eToro Options account. This comes at a time when, in the U.S., the average yield for savings accounts is 0.61% APR.

As new and existing challenger banks bolster their offerings with high-yield interest rate accounts, it is becoming increasingly difficult (and more expensive) for banks to win over consumer deposits. Today’s move by eToro indicates two things. First, the company is seeking to stem the outflow of investor funds as they move their money from risky market opportunities into high-yield savings account safe havens. Secondly, it indicates that, unlike many other fintechs in the investing space, eToro is not planning to become a challenger bank by launching its own savings account and debit card any time soon.

A wealthtech pioneer, eToro was founded in 2007 and has received nearly $693 million in funding. The Israel-based company currently has over 32 million registered users from more than 100 countries on its platform. Yesterday, eToro announced it received approval from the Abu Dhabi Financial Markets Authority to operate in the UAE.

Photo by Karolina Grabowska

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International Money Transfer Company Paysend Raises $65 Million in Funding

International Money Transfer Company Paysend Raises $65 Million in Funding
By David Penn Posted on
Categories: Alumni News, Daily news, Funding, PaySend
  • Money transfer company Paysend has raised $65 million in funding. The round featured a strategic investment from partner Mastercard.
  • The investment adds to Paysend’s $125 million Series B round, which closed in 2021.
  • Paysend made its Finovate debut at FinovateEurope in London in 2016.

International money transfer company Paysend has secured $65 million in funding. The round included a strategic investment from Mastercard, which announced a partnership with Paysend earlier this year. That alliance helped enhance cross-border payments for SMEs by way of its Open Payments Network (OPN).

Existing investors Infravia Growth Capital, One Peak, and Hermes GPE Innovation Fund also participated in the round. This week’s investment follows the company’s $125 million Series B round, which closed in 2021.

A Finovate alum since its debut at FinovateEurope in London in 2016, Paysend provides fund transfers to more than 170 countries. The company’s platform ensures transparency by displaying currency rates, transfer fees, and the receivable amount before each transfer. Paysend users can make transfers via bank cards, accounts, and even mobile numbers. Money transfers are certified by Visa, Mastercard, China UnionPay, and are PCI DSS certified, as well.

“This significant investment is a testament to the strength of Paysend’s vision,” Paysend CEO and co-founder Ronnie Millar said, “to build the best-in-class cross border solutions for businesses and consumers, making money transfer simple for everyone.”

Paysend’s funding news comes just days after the company announced a partnership with CalQRisk. The company offers a governance, risk management, and compliance (GRC) solution that Paysend will use to enhance its current risk management processes. In October, Paysend teamed up with fellow Finovate alum Western Union. This partnership provided Western Union customers with a new direct to card payout option.

Paysend is headquartered in London, U.K. The company entered the Israeli market this summer after partnering with Israel-based fintech Okoora.

Photo by Luis Quintero

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