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

Apple launched its newest iPhone, iPhone 12, earlier this month. While many of the new features were expected, such as 5G and a refreshed design, there was one aspect on the iPhone 12 Pro that caught my eye– LiDAR.

LiDAR stands for light detection and ranging and has been around since 1961. So while the technology in and of itself isn’t new, many of the applications it’s used for are cutting edge. Take self-driving cars, for example. Self-driving cars rely on LiDAR to map the surrounding area by measuring distances of nearby objects using light rays.

So with such a powerful technology now placed into the hands of everyday consumers, how can fintechs put their developers to work to leverage the technology? Here are a handful of applications the fintech sector might be able to use iPhone 12 Pro’s LiDAR for.

Mortgagetech

With COVID keeping us socially distant, many lenders are waiving home appraisals for real estate transactions. While this may benefit the homeowner by saving them $500 or more on the appraisal, the lender, which must rely on third party data from Zillow or Trulia, may be at a disadvantage when it comes to estimating collateral values.

The LiDAR on the iPhone 12 Pro may be able to bridge the gap with its room-mapping technology. Combined with AI and machine learning technologies, computers may be able to estimate a home value more efficiently based on a home’s 3D mock-up created by LiDAR.

San Francisco-based Cape Analytics already offers a service like this. The company provides intelligence on the risk of a property for remote buyers and lenders. However, the service is limited to property exteriors.

Insurtech

When it comes to underwriting home insurance policies, the process relies heavily on input from the homeowner. This honor system offers plenty of room for error. Not only may the homeowner incorrectly enter the square footage, they also may not know the difference between flooring types and other important details.

Once again, this is an opportunity for iPhone 12 Pro’s LiDAR room-scanning capabilities. The map may not only help insurers underwrite the home itself, but may also be able to help renters determine the appropriate amount of insurance on their belongings.

Canvas app by Occipital already offers this technology for LiDAR-enabled iPads (11-inch iPad Pro 2nd Generation and 12.9-inch iPad Pro 4th Generation). The company plans to launch room-scanning for iPhone 12 Pro soon.

Security

Using facial recognition for authentication is so commonplace these days that most consumers– even those of older generations– are familiar with how it works. Unfortunately, some consumers who have tried to use facial recognition to log into their account may also be familiar with the technology’s shortcomings. For example, I was originally excited to enroll in my bank’s facial recognition login process when it came out a few years ago, but became frustrated when the technology stopped recognizing my face just weeks later.

With the LiDAR in iPhone 12 Pro promising enhanced photos, false negative issues like this could be less common. This is especially true in low-light photos, where the LiDAR captures more detail. Per Apple’s website, “Night mode comes to both the wide and ultra wide cameras, and it’s better than ever at capturing incredible low-light shots. LiDAR makes night mode portraits possible. And the wide camera lets in 27 percent more light, for greater detail and sharper focus day or night.”

The enhanced facial detail in selfie photos can not only reduce consumer frustration with false negatives, but also has the potential to augment security by reducing false positives, as well.

Across sectors

One of the most versatile capabilities the addition of LiDAR brings is upgraded augmented reality (AR). LiDAR technology allows for better object occlusion, meaning that virtual objects can now appear more real by disappearing behind real objects.

While versatile, however, AR brings little value to banks and fintechs beyond entertainment and novelty. The best use cases for AR seem to be for gaming and interior design. While the fintech sector showed a bit of hype around AR and mixed reality in 2015, there still hasn’t been much value-added development in the area.

However, augmented reality is still worth keeping on the fintech radar. This is especially true as social distancing measures remain in place and people try to find entertainment online and in the virtual realm.

After a a deluge of new announcements during its hardware event last week, Amazon is coming to us with something new again this week.

The company revealed Amazon One, a contactless palm reading device to help users make a transaction in-store, present a loyalty card, or authenticate themselves for entry into a secure location.

Amazon is piloting the new devices in select Amazon Go stores, concept stores that offer consumers a checkout-free shopping experience by using AI to track what they place in their cart. The Amazon One terminals will be offered as an option for consumers to authenticate themselves upon entering the store.

There is a slight bit of friction involved. Upon arriving at the store, the shopper enters their credit card into the Amazon One terminal, hovers their palm over the device, and follows prompts on the screen that associate their card with their unique palm print. Shoppers can enroll with one palm or both.

After enrolling, shoppers can use their palm print to enter Amazon Go stores. In the coming months, Amazon One will be available at additional Amazon stores, as well.

“[W]e believe Amazon One has broad applicability beyond our retail stores, so we also plan to offer the service to third parties like retailers, stadiums, and office buildings so that more people can benefit from this ease and convenience in more places,” said Dilip Kumar, Vice President of Physical Retail and Technology at Amazon.

The tech giant cited a handful of reasons for using a palm print over other biometrics. First, unlike many facial recognition solutions, humans can’t identify a person by simply looking at the palm of their hand. Also, unlike facial recognition, Amazon One requires users to make an intentional gesture by holding their hand up in front of the device. And, of course, the palm reader is contactless, easing fears about virus transmission.

If you’ve been following fintech for any length of time you’re likely aware that Amazon isn’t the first company using contactless palm print biometrics. Both iProov and Redrock Biometrics have been working in the space since 2011 and 2015, respectively.

As biometric authentication methods rise in popularity, we’ll likely see palm prints being the body part of choice for authentication. That’s because, in addition to Amazon’s point regarding the ability to recognize others’ palm prints, it is also much more difficult to spoof someone else’s palm than it is to spoof their fingerprint of face.

I was pretty excited for my first ride in my nephew’s brand new Tesla. The car was a major upgrade from his previous vehicle: a Jeep with “character” that had both broken down and been broken into a few times too many. His visit – and the Tesla’s – also marked the first time my wife and I would have company over for dinner since the COVID-19 pandemic struck, so there was more than a little to look forward to.

And while the Greek burgers were good and the tzatziki and baklava even better, my ride in the brand new Tesla was … kinda underwhelming.

Admittedly the experience as a rider in a Tesla is not identical to the experience as a driver. But as I slowly emerged from my initial shock at the lack of ornamentation, the absence of anything even resembling a full service dashboard and began to appreciate the machine’s unnaturally silent acceleration, its “It’s-All-on-the-Tablet” functionality, and “front trunk,” it dawned on me just how dramatically Tesla had reduced the driving experience to its most essential features and then turned them up to eleven.

What does this have to do with banking?

My Tesla experience reminded me of the challenge of distilling customer experience into its most necessary aspects. This is what drives innovation in everything from PFM apps that provide account balances without requiring login to mobile brokerages that cut out the stock market’s most hated middle man – commissions. Yet what is a trifle to one customer can be a can’t-do-without attraction to another. In the same way that I found myself in my nephew’s Tesla actually missing the dials, buttons, and other dashboard gizmos that had once defined automotive technological sophistication, so will many consumers find the leanness of new digital banks, for example, and perhaps even the trend away from what might be called “the human touch” in financial services to be a less appealing customer experience rather than a more fulfilling one.

In this way, I wonder if it is helpful to think of two innovation tracks for banks and financial services. One track is the one we spend most of our time reading and thinking about in fintech circles: the digital-first if not digital-only mobile bank that caters to the young, the mobile and, ironically, to both the hyper social connected individual and the asocial consumer who believes that automated checkouts at the grocery store are the best thing since sliced bread. Here the innovations are mostly technological, leveraging AI, machine learning, Big Data, and other leading technologies to provide more data, more services, faster, with a premium on seamless, frictionless, no frills interactivity.

But there is – or at least could be – another bank. And while it is digital, as well, and provides many if not most of the same basic financial services as any other bank, this bank focuses more on responding to the personal and social worlds of its customers. This bank puts financial inclusion and wellness at the center of its mission, sponsoring and providing educational opportunities for members of the local community – including their children who are likely getting precious little financial education in school. In-person credit counseling and financial planning would also be a good fit for an institution like this, which would play a role in the private sphere of a community that is similar to the role a local library or post office plays in the public sphere. At more advanced levels, coursework and training for individuals looking for careers in financial services could be offered, as well.

Not necessarily 100% or exclusively brick and mortar, this truly community-based financial institution would provide a customer experience that would be very different from its all-digital cousin, but one that could be just as innovative by using technology to make finance and financial services easier to understand and easier to incorporate constructively in the average working and middle class person’s life.

Photo by Chad Russell from Pexels

A couple weeks back I had a conversation with Andrew Besheer, Head of North America for Appway, about the rise of challenger banks. Our discussion centered around some of the data points in Ron Shevlin’s piece, The Online Banking Insurgency of 2020, published in Forbes last month.

One of the questions that came up was if this surge in new challenger bank accounts is an accident of digital transformation? In other words, are Millennials and Gen Z consumers gravitating towards challenger banks because their websites appear more digitally savvy?

At its core, this is a chicken-and-egg question. Are challenger banks successful because their tech-first approach satisfies consumers? Or are underserved consumers driving challenger banks to create new products and services that banks are unable (or unwilling) to offer?

First, its important to recognize that both challenger banks and incumbents know their target market. That is, the challenger banks are catering to an audience looking for a different bank experience than the one that appeals to their parents.

To answer this question, first, take a look at the outward appearance. Traditional banks’ websites are text-heavy, with long-winded fine print, and are intimidating enough to drive away less experienced consumers. Conversely, challenger banks use colloquial language and present websites that look simple and transparent. As an example, take a look at Charles Schwab’s website:

And now look at Dave’s:

Both are relatively technologically and digitally advanced banks, but they are appealing to two entirely different demographics.

Taking a look under the surface, the products and services each bank offers are also different. Schwab’s are heavily geared toward investing and trading, while what Dave offers– paycheck advances and credit building tools– seems to center around keeping its users afloat.

In the end, the two approaches are perfectly suited for users on opposite sides of the generational spectrum. My father and grandfather would never bank somewhere that had a cartoon as a mascot. And younger, Generation Z users don’t trust incumbent banks’ language and apparent lack of transparency.

Now, to answer the question, “are Millennials and Gen Z consumers gravitating towards challenger banks because their websites appear more digitally savvy?” The answer is no. Challenger banks are built from the ground up to entice this generation of users. And while the banks’ advanced digital capabilities help to draw users in, they are not the sole reason younger, tech-savvy users choose them.

You can check out the full interview, where Besheer and I delve further into the challenger banking conversation, on Appway’s website.

Photo by Mario Dobelmann on Unsplash

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.

Photo by Kaboompics .com from Pexels

With a growing consciousness worldwide on the topic of systemic racism, corporations are doing everything from pro-diversity affirmations (arguably not enough) to mass board resignations (arguably far too much) in order to stay (or get) on the right side of public opinion on a key issue for many of their customers.

We took a look at some of the ways those fighting in favor of a more inclusive financial services and fintech sector can learn from the successes of the women’s movement a few days ago. Here, we offer a few more specific examples of not just what financial institutions can do to help promote ethnic diversity in their companies, but also what financial institutions and fintechs are actually doing.

Celebrate Diversity

With Juneteenth taking place this Friday, some financial institutions have decided to treat the date – which marks the moment African slaves in Texas in 1865 learned of the Emancipation Proclamation – as the official occasion many African Americans have always believed it to be. Fifth Third Bancorp and Truist Financial are among a number of companies that have elected to recognize Juneteenth as a holiday for their employees and customers.

“As we consider the tremendous significance of this day and what it represents, it also reminds us of how far we still must go to have equality and inclusion for all,” Greg D. Carmichael, chairman, president and CEO of Fifth Third Bancorp said earlier this week. “As we observe Juneteeth, each of us should pause, reflect, and contemplate its significance and what it meant 155 years ago, what it means today, and how we might take action to make tomorrow better for everyone.”

Fifth Third will close its offices early on Friday, shutting down at 2pm local time. And while a number of other major financial institutions have made similar commemorations, Fifth Third is believed to be the first FI to offer its employees Juneteenth as a paid holiday.

Show the Money

The $40 million Netflix CEO Reed Hastings and his wife Patty Quillin have announced they will donate to the United Negro College Fund, and a pair of historically black colleges Spelman and Morehouse, is an example of the kind of “put your money where your mouth is” act that many pro-diversity advocates have called for.

Some of the biggest financial services companies and banks in the United States have unveiled similar initiatives. Citi, for example, announced that it will direct $8 million to the NAACP Legal Defense Fund, the Lawyers’ Committee for Civil Rights, the National Urban League, and the National Fair Housing Alliance.

Also pulling out the checkbook in the name of diversity are firms like Bank of America, which announced a $1 billion/four year commitment to help local communities of color at a time when the COVID-19 crisis is making a disproportionate impact on black and brown Americans.

“Underlying economic and social disparities that exist have accelerated and intensified during the global pandemic,” Bank of America CEO Brian Moynihan said earlier this month when the initiative was announced. “The events of the past week have created a sense of true urgency that has arisen across our nation, particularly in view of the racial injustices we have seen in the communities where we work and live. We all need to do more.”

People Who Need People

Honoring the past is important. And putting real resources to work to make opportunities possible for historically excluded groups is a critical component in achieving a more inclusive world. But, without putting too fine a point to it, the best way to promote diversity is to hire more diverse people.

Analysts looking at the barriers to increasing diversity have cited three chief hurdles: (1) finding diverse candidates to interview, (2) retaining diverse employees, and (3) getting diverse candidates past interview stage. And while the second two issues have a lot to do with the culture of a company, something that may not substantially improve until after diversity and inclusivity gains are made, the first challenge – finding good candidates – is one all companies and organizations should pledge to overcome.

For many companies, this may mean looking in typically overlooked places for otherwise untapped talent. Student organizations, including a very active African American collegiate and post-collegiate fraternity and sorority system, can be a an excellent way to reach today many of the people who will be leaders in their communities tomorrow. Diversity-oriented venture capital firms – such as Harlem Capital Partners, the Black Angel Tech Fund, and Base Ventures – are excellent sources for insight into black and brown entrepreneurship in the technology sector.

As Chamath Palihaptiya, venture capitalist and founder of Social Capital, wrote almost five years ago:

We need to recapture our potential and open the doors. Invite more people into the decision making: young people, Blacks, Latinos, females, LGBT and others who aren’t necessarily part of the obvious majority.  Surround ourselves with a more diverse set of experiences and maybe we will prioritize a more diverse set of things. Maybe we will find more courage to do the hard things.

Half a decade later, many of us in the technology community in general and the fintech world in specific are still waiting. But it appears increasingly the case that, for now, our communities are ready to act.

Photo by Mike from Pexels