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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
The Fintech Founders series, presented by our sister publication Fintech Futures, features fintech and financial services veterans sharing their insights and experiences on a range of topics important to businesses in our industry.
Today we share five conversations on fintech funding featuring our panel our fintech experts. As part of our Funding Series of discussions, our panelists talk about issues such as: bootstrapping versus external funding, finding the right investment partners, the importance of producing significant growth, as well as tips for entrepreneurs and surprises our panelists encountered in their own journeys in fintech and financial services.
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.
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.
Digital identity verification company Mitekannounced a new partner today. The California-based company has teamed up with compliance, credit risk, and lending solutions company Abrigo to help the firm’s bank clients access technology to help protect themselves against financial crime.
Specifically, Abrigo is seeking to mitigate check fraud, which is not only prevalent among banks, but is also costly. While the technology behind paper checks seems antiquated, fraud techniques for the payment method are not. According to FinCEN, check fraud suspicious activity report (SAR) filings increased 94% over the course of 2021. Last year, the number of SAR filings exceeded 680,000. “The sophistication of fraud and synthetic checks has never been more concerning,” explained Mitek SVP and GM Michael Diamond.
Abrigo will offer its bank customers access to Mitek’s Check Fraud Defender to help them stop fraudulent activities around checks. Mitek’s Check Fraud Defender uses imaging science, machine learning, and artificial intelligence to analyze the images of the checks and verify authenticity to reduce fraud losses.
“By combining Mitek’s cutting-edge technology with Abrigo’s industry-leading platform, we can provide our 2,400 customers with a powerful solution to help protect their institutions and customers from financial crimes,” said Abrigo CEO Jay Blandford.
Mitek was founded in 1986 and offers technology for mobile check deposit, new account opening, identity verification, and more. The company’s solutions are used by more than 7,900 organizations and its mobile check deposit and account opening tools reach more than 80 million consumers. Mitek is publicly listed on the NASDAQ under the ticker MITK and has a current market capitalization of $517 million.
Earlier this fall, Mitek partnered with Equifax to advance the company’s biometric authentication and liveness detection capabilities.
Core banking platform 10x Banking has formed a strategic partnership with B2B lending technology company Trade Ledger.
The two companies will offer banks and alternative lenders solutions to help them better serve small and medium-sized businesses.
10x Banking won Best of Show in its FinovateEurope debut earlier this year.
Cloud-native core banking platform 10x Banking and B2B lending technology company Trade Ledger announced a strategic partnership this week. The two fintechs will work together to offer banks and alternative lenders a composable banking solution to help them better serve their SME customers.
Specifically, the collaboration will enable FIs to introduce a variety of new, more complex, working capital solutions to market. These include invoice, receivables, and supply chain finance products. A real-time API connection between Trade Ledger’s data platform and 10x Banking’s SuperCore platform allows credit applications to be linked to the creation of a new 10x customer account. Trade Ledger manages the loan application, risk assessment, and the risk and collateral management operations. 10x Banking handles account opening and the credit account life cycle.
“Automating integration between credit applications and account creation allows banks to deliver a superior customer experience, while also driving operational efficiency,” 10x Banking’s VP and Global Head of GTM and Partnerships, Frederico Venturieri said. “This collaboration reflects our shared vision of leveraging technology to revolutionize the business banking landscape.”
The strategic partnership seeks to close what the company called in a statement “the global working capital credit gap.” A report by Allianz estimated this liquidity gap to be $30 trillion worldwide, with SMEs impacted the most. Among the culprits are high acquisition costs, which make lenders reticent to take on small business customers. Another issue is an overly complex and lengthy application process. The partnership between 10x Banking and Trade Ledger responds to both the challenges of account opening, as well as the problem of access to working capital.
“Combining our lending automation capabilities with 10x’s core banking expertise, we can redefine how financial institutions onboard customers and manage the lending process,” Trade Ledger VP of Channels Alan Walsh said.
Founded in 2016 and headquartered in London, U.K., 10x Banking made its Finovate debut at FinovateEurope in March. The company won Best of Show for its 10x SuperCore Cards solution that enables banks to build a card proposition in minutes. More recently, 10x Banking has forged partnerships with compliant open banking API technology company Ozone API and mortgage sales and origination software provider Iress. In August, the company introduced new Chief Product Officer Okan Ozaltin, formerly of Signifyd and Fiserv.
10x Banking has raised more than $252 million in funding according to Crunchbase. Antony Jenkins is CEO.
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!
Raisin is launching in Poland today, a new geography for the Germany-based fintech.
Raisin will offer Polish users access to savings products at its network of European banks.
HoistSpar is the first bank to join Raisin’s Polish platform.
Germany-based savings and investment product marketplace Raisin announced today it is launching in Poland. The company will leverage its cross-border savings technology and online marketplace to help Polish savers benefit from its network of European banks.
“Raisin’s platform in Poland aims to enhance the competition within the savings sector of the economy by broadening choice and eliminating barriers to access good deals from across the European Economic Area, all in one place,” said Raisin CEO and Cofounder Tamaz Georgadze. “We aim to make deposits more accessible to regular people, leveraging the full value of the European deposit market and ultimately increasing their savings. We are excited to offer Polish consumers the opportunity to earn higher interest on their savings.”
Fueling today’s launch is an ongoing partnership between Raisin Bank of Frankfurt and the pan-European fintech Raisin. The partnership takes advantage of Raisin’s marketplace approach, which offers a range of deposit products to help customers save money by offering them more choices and the ability to move their money freely amongst savings products.
Poland is an ideal location for Raisin’s geographical expansion because it is plagued with inflation. Even though the total value of household savings in Poland exceeded $500 billion (2 trillion zloty) for the first time, the country’s high inflation has limited the actual value of those investments.
HoistSpar is the first bank to join Raisin’s Polish platform. Headquartered in Sweden, the bank offers deposit accounts in its home country, Germany, Poland, and the U.K. At launch, new customers can benefit from fixed-term deposit products that pay up to 5.80%.
Raisin was founded in 2012 and built Raisin DS, a group formed by a merger of fintechs companies, in 2019. Raisin Deposit Solutions was launched in 2021.
With $305 million, Raisin currently serves over one million customers with its savings, investment, and pension products. Earlier this fall, Raisin surpassed $55 billion (€50 billion) in assets under administration and announced it has generated over $1.01 billion (€1 billion) in interest for its customers worldwide.
While not as headline-grabbing as the AI craze, the speed with fintechs, banks, and financial services companies have embraced environmental sustainability may be one of the underrated stories of 2023. This is true for both “green financing” which supports the funding of climate-supporting initiatives as well as “green fintech” which involves the development of products that enable sustainable finance and eco-investing.
In 2023 alone, we have seen companies like ClimateTrade, Cloverly, Connect Earth, and GreenPortfolio demo their climate-conscious technologies on the Finovate stage. These companies shared innovations such as blockchain-based climate and carbon credit marketplaces, carbon tracking API technology, and climate impact scoring for investments. And before these companies were firms like Energy Shares in 2022 and ecolytiq in 2021 that introduced equity crowdfunding for utility-scale renewable energy projects and environmental impact data for payment transactions to Finovate audiences.
But are we making the most out of the current moment? A recent blog post by fintech observer and author Chris Skinner references a relevant column by James Vaccaro, Director of Corporate Strategy at Triodos Bank. Vaccaro took a critical look at present-day efforts by banks and other financial institutions to adopt more climate-friendly policies. His conclusion was that current efforts such as decarbonization are laudable, but often suffer from poor management.
Yes, there is some subterfuge and greenwashing going on, but many initiatives do have authentic intentions – they’re just not working optimally and need to be redesigned and upgraded.
Also, the recurrent phenomenon of there not being enough finance for green projects, but finance not having enough green projects to invest in, suggests that we’re not just dealing with a funding gap. There are systemic barriers at play and these need to be addressed with innovative solutions to unblock flows of finance.
Vaccaro notes that some solutions, such as carbon tracking calculators, have not turned out to be the killer sustainability apps that many hoped they would be. Nevertheless, he clearly sees a need for further investment in both green fintech and green-friendly finance – to use our previous taxonomy. He cites approvingly offerings like social impact bonds. He also is helping the Climate Safe Lending Network launch its Climate Finance Catalyst Contest to develop financial solutions to support the decarbonization of the financial industry.
Regulators are paying attention to the problem. In their report on environmentally sustainable finance, the International Money Fund, the World Bank, and the OECD “highlight(ed) the need for scaling up private finance to support the transition to net zero.” That aside, the report noted two, potentially related, challenges that are worth noting. These were the lack of frameworks and scoring methodologies (particularly in developing economies) and market fragmentation.
These issues are not new to financial services. And while there is much work to be done, these kinds of challenges are being effectively tackled in many areas of fintech and financial services – from payments to credit risk and lending. Often, as is the case with sustainable finance, enabling technologies such as blockchain, machine learning, and AI are driving factors enabling us to leverage data in new ways. This bodes well for the potential to make sustainable finance possible, and especially where it is needed most.
Taulia is launching a virtual payment card solution for its users.
The company is partnering with Mastercard for the new offering, which will be integrated across major ERP solutions.
Degussa Bank and HSBC are piloting the launch.
Supply chain finance company Taulia is creating another payment option for its users this month. The California-based company is launching a virtual payment card in partnership with Mastercard and has integrated the new tool across major ERP solutions.
Taulia clients will be able to generate virtual cards through Mastercard upon request, which will save time and enable businesses to offer a better customer experience to their employees. In turn, the business itself will have more options to pay suppliers and control employee spending. Even suppliers will benefit, as they will see improved cash flow and better payments visibility.
The virtual payment card solution offers a unique, “bring your own bank” feature that allows Taulia clients to deploy virtual cards and extend the benefits already offered by their existing banks. This convenience comes thanks to Mastercard’s virtual card platform, which connects to more than 80 banks across the globe. Degussa Bank and HSBC are piloting Taulia’s launch.
“We’re pleased to be embracing innovation through our partnerships with Taulia and Mastercard, which will now provide our clients with an integrated virtual card payment solution within the Taulia platform,” said HSBC Global Head of Commercial Cards Product Management Arati Kurien. “Embedding HSBC’s financial services into the systems that our clients use day to day is a key focus for us.”
Taulia was founded in 2009 to help companies make use of cash tied up in their payables, receivables, and inventory. Taulia maintains a network of 3+ million businesses to fuel its clients with more working capital, support their suppliers with early payment, and help them build sustainable supply chains. Taulia processes more than $500 billion each year for its clients, which include Airbus, AstraZeneca, and Nissan.
In the coming years, we’re likely to see more of this embedded approach to supply chain financing. Fintechs will likely explore integrating supply chain financing tools into existing business solutions, as Taulia is doing within ERP solutions. We can also expect the inverse, as well, as fintechs embed other financial services, such as insurance, directly into existing supply chain platforms.
Taulia was acquired by SAP in 2022 for an undisclosed amount. Cedric Bru is CEO.
Peloton did not disclose the names of the investors. The company did say that members of the investing team have joined Peloton Technologies’ advisory board. The seed funding comes four months after the company secured $1.5 million (CAD $2 million) from the Pacific Economic Development Agency of Canada (PacifiCan). The funding from PacifiCan was the second investment Peloton received from the agency. The company picked up CAD $500,000 in funding from PacifiCan’s Business Scale Up and Productivity (BSP) program in 2022 ($367k in today’s dollars).
“We’re thrilled with the response from the Private Investor community,” Peloton Technologies Executive Chair of the Board John MacKinlay said. “We have a world-class group of investors with deep background in payments, banking, risk management, compliance, accounting, IT architecture, and securities law.” MacKinlay added that the funding will also help Peloton Technologies execute its acquisition strategy; last month, Peloton announced the acquisition of KIS Payments, an ISO (Independent Sales Organization). MacKinlay also noted that this week’s fundraising was a “precursor” to a “larger capital raise” slated for the first half of 2024.
“We’ve spent a lot of time creating the most comprehensive solution for businesses and now it’s time to scale,” CEO Craig Attiwill said when the company acquired KIS Payments in October.
Founded in 2011, Peloton Technologies helps small and medium-sized businesses in Canada process payments, execute fund transfers, exchange currencies, and store payment data. Its platform also supports the integration of multiple payment methods across multiple financial institutions. Peloton’s proprietary technology ensures the secure storage of payment data, document management, email/SMS notifications, and scheduling, as well as providing a sophisticated rules engine.
How will disruptive technologies like Generative AI change the financial services landscape. How will these technologies impact our ability to expand financial wellness and promote financial inclusion?
The rise of disruptive technologies has created new opportunities for banks and financial services companies to bring new and better services to consumers and businesses. Here’s a look at what our fintech experts told us this year at FinovateFall about how disruptive technology will shape the future of finance.
This year at FinovateFall we heard from fintech analysts and financial services professionals on what financial institutions can and should do in order to bring better financial services to more individuals, families, communities, and businesses. Here’s a brief Streamly Snaphot sharing what our experts had to say.
Join Finovate VP and host of the Finovate Podcast Greg Palmer as he talks with the entrepreneurs whose innovative companies took home top honors at FinovateFall 2023 in New York this year.
From new tools for credit unions members to embedded micro life insurance solutions to strategies to help FIs better engage mortgage-holders, the Finovate Podcast is a great way to keep up with the trends driving fintech today.
Podcast host Greg Palmer catches up with Rachel Lauren of Debbie (demo video) to talk about consumer debt reduction and the credit union ecosystem. EP 193.
Greg Palmer chats with Alex Matjanec of Wysh(demo video) about micro life insurance, customer retention, and financial inclusion. EP 192.
Greg Palmer sits down with Chase Neinken of Chimney (demo video) to discuss strategies for productively engaging your mortgage-holding customers. EP 190.
