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The Top Ten Biggest Fintech News Stories of 2020

It was a tumultuous year with the pandemic impacting fintech companies in different ways but here are the stories we think were most important

December 30, 2020 By Peter Renton 1 Comment

As the sun sets on 2020 and we look back at this past year nearly everything is viewed through the lens of the pandemic. Many fintech companies did surprisingly well while others, particularly in the lending space, struggled. When we look at the year as a whole we see that it was M&A activity that consistently showed up in the news, some related to the pandemic, some not. But the biggest story 0f the year, in my opinion, was how fintech came to the aid of millions of small businesses in the PPP. Here are my top fintech news stories of 2020 (with my usual focus on lending and digital banking):

1. With the PPP Fintech Comes of Age

Rob Frohwein, CEO and Co-Founder of Kabbage, said it best on the LendIt keynote stage this year: “Kabbage was built for the PPP”. So, it was was for many fintech lenders in the small business space. Tasked with having to develop new systems for the Paycheck Protection Program in a matter of days, rather than months, the fintech industry responded and helped provide a huge number of small businesses with the loans they needed, saving millions of jobs in the process. It was not just Kabbage, we had Cross River Bank and Square as well as the loans marketplaces like Lendio leading the way.

2. Intuit to Acquire Credit Karma for $7 Billion

Credit Karma has almost singlehandedly increased the awareness of credit scores for tens of millions of Americans over the last decade. Intuit realized the value in the incredibly rich dataset that Credit Karma has created and wanted that, and the huge customer base, for themselves. And they were willing to pay to the tune of $7.1 billion. In the end this deal closed for $8.1 billion earlier this month with Credit Karma having to divest their fledgling tax preparation business, it was sold to Square for $50 million. For more on this deal read this interesting piece in Fortune.

3. Visa to Buy Plaid in $5.3 Billion Deal

[Read more…]

Open Banking Finally Takes Off as Open Finance Looms

The possible advent of open finance comes at a good time for entity steering open banking

October 5, 2020 By Peter Renton Leave a Comment

Imran Gulamhuseinwala speaking about open banking at a past LendIt Fintech event

[Editor’s note: This is a guest post from Ryan Weeks, formerly with Dow Jones and AltFi, covering fintech. This is the last in our four part series (here is part one, part two and part three) he is writing for us on the UK fintech market in the run-up to LendIt Fintech Europe on October 19-20.]

After a slow start, open banking – the regulatory framework under which the UK’s nine biggest banks must share transaction data with fintechs and other third parties – seems at last to be making a dent in financial services.

For evidence of the momentum it has established in the past nine months, look no further than the flurry of recent M&A activity.

TrueLayer, one of a group of intermediaries that sit between the big banks and consumers of transaction data, closed a $25m fundraising in September – taking the total amount it has raised to date to $72m.

Swedish open banking platform Tink bought UK-based OpenWrks’ aggregation platform in September, some six months after splashing $17.2m on Eurobits, a Spanish aggregator.

In August, card giant Visa’s $5.3bn proposed acquisition of Plaid, a US data-sharing infrastructure provider with a UK presence, was cleared by the Competition and Markets Authority (CMA).

Leon Muis, chief business officer of Yolt Technology Services (YTS), said it is encouraging to see so much activity.

“The market is so big that I strongly believe that for now at least there’s enough space for multiple parties,” he added.

YTS is currently fielding 26 million API calls every week, which it says is roughly 20% of the total volume in the UK.

[Read more…]

Webinars this Week: Roadmap Back to Growth, Every Company is a Fintech and Debt Collections

We have three great webinars on tap this week covering the most pressing issues in fintech and digital banking today.

August 24, 2020 By Todd Anderson 1 Comment

Recovery, Re-Boot, Resilience: Roadmap Back to Growth

August 25th at 2:00 PM ET: Register Today

Banks, Lenders and FinTechs have spent the last months responding to the crisis. From office closures, the CARES Act and resulting economic impact, it feels like we have been in a constant state of reaction to market events. When will the shift from reaction to proactively accepting this new normal happen? What does the path back to growth look like? In this webinar, you’ll hear from a panel of industry leaders at Mascoma Bank, BCU, Zions Bank, Upstart and Salesforce how they are prioritizing and accelerating their roadmap to grow in the next normal.

Every Company is a Fintech Company

August 26th at 3:00 PM ET: Register Today

There has never been a more important time to build financial products that are fair and have the customers interests in mind. Fintech has come a long way in the last decade and it is now delivering on its promise.

This panel will examine opportunities for companies and lenders to create new products that utilize financial data to help underbanked people in the U.S.

How to build resiliency against credit losses – Intelligent strategies for Debt Collection in the new normal

August 27th at 11:00 AM ET: Register Today

With the ongoing crisis affecting delinquency rates, banks and financial institutions cannot rely on conventional methods to improve collections without affecting customer experience. Can banks make existing debt collection processes more intelligent with AI?

This webinar will discuss how collections teams can be empowered with AI enabled risk segmentation, early prediction of delinquent accounts; and suggested treatment plans based on risk segment, which helps them improve efficiency and customer experience.

Digital Banks Focusing More Than Ever on Serving New and Existing Customers

LendIt Fintech recently hosted a webinar called How Increased Engagement Will Impact Fintechs and Digital Banks

April 29, 2020 By Ryan Lichtenwald Leave a Comment

Now more than ever it is important for fintechs to be on the top of their game when it comes to serving customers. Customers from around the US now have no choice but to go all in on digital and the offerings they are discovering are quite compelling. It is a trend we first saw with the digital banks in Europe but it is now happening in the US.

This webinar brought together two big names in digital banking, Colin Walsh from Varo Money and Brandon Krieg from Stash. Both Varo and Stash are tapping into the estimated 180 million that are underserved here in the US. Niko Karvounis from Plaid connected the dots as they are the undisputed leader in providing the plumbing between fintechs and traditional banks. As more people are looking to digital banking, they have never had to deal with such an influx of new and existing customers engaging with their company, using their services at such high rates. So how are they handling it all?

Niko has been working on connectivity for quite some time, having first started Quovo back in 2013, a company which was acquired by Plaid in early 2019. At a time when the world is in chaos, customers rely on the interface that Plaid provides. It is something that folks in the fintech industry often take for granted, but is a core part of financial services transactions happening around the globe. It is apparent that the days of a standalone branch where a customer leverages every service from one bank are numbered. Today, customers can have many bank accounts and the companies that have realized this was inevitable are benefiting.

Both Stash and Varo Money leverage Plaid for connectivity which they both agree puts the customer first and reduces friction. Varo Money was one of the early adopters of Plaid’s service, realizing that the movement of money matters the most, allowing customers to access money conveniently and affordably. Keeping this flow of money moving reduces the anxiety felt by customers during these stressful times.

Varo Money is unique in that they are likely to become America’s first digital only national bank as they continue the final stages of the regulatory approval process. Their goal is to help Americans who need a better banking experience and help them become more financially resilient. Stash is based in NYC and has teams in South Carolina as well as London. Currently they have 4.5 million customers, and serve as an all-in-one financial home for 4.5 million Americans though Krieg shared that they want to help customers with whatever solutions they need.

During the coronavirus crisis all three companies have adapted to the changing times. Plaid took it upon themselves to roll out a solution for payroll data to help small businesses access Paycheck Protection Program loans. This ability to connect in this way is just another use case for the interface Plaid provides. Both Krieg and Walsh shared how they are ramping up their support teams to be able to continue to help the many new and existing customers who are increasingly engaging with the company. Stash has seen lots of new customers come in via referral, with a 100% increase in weekly deposits. On the investment side they have crossed $1 billion, which is an amazing feat given the average deposit is $28. Varo Money has adjusted their marketing to ensure that the messaging is both empathetic and informative. One of the changes they were able to make was the ability to accept treasury checks. They have also increased cash withdrawal limits and continue to share ways that customers can earn additional streams of income.

As customers have been coming to Varo and Stash in droves, their cost of acquisition has decreased significantly as many people reevaluate their banking relationships. Varo estimates that they are able to serve their customers at about half the cost compared to a traditional bank. Walsh expects this to halve again as they become a national bank. He believes Varo will be operating on the most modern tech stack in the country. This helps them eliminate fees and provide higher interest on savings accounts.

Panelists also discussed the current lending environment, how their demographics are changing, how they themselves are handling a remote workforce and how this crisis compares to 2008.

View the full recording

Upcoming Webinar: How Increased Engagement Will Impact Fintechs and Digital Banks

Our next webinar will dive into how fintechs are handling the rapidly changing environment related to customer engagement

April 23, 2020 By Ryan Lichtenwald Leave a Comment

LendIt Fintech continues to connect the fintech community during these challenging times. In partnership with Plaid, our next webinar will focus on how increased engagement will impact fintechs and digital banks.

This webinar is free to attend and will feature:

Niko Karvounis, Product Lead, Plaid
Colin Walsh, CEO & Founder, Varo Money
Brandon Krieg, Co-founder & CEO, Stash
Moderated by Bo Brustkern, Co-founder & CEO, LendIt Fintech

With customers unable to go to bank branches, they are left with only one option but to interact digitally with their bank. This means it’s game time for the digital banks as customers look for the best products in the market. Some companies are facing an unprecedented amount of signups and it is paramount that they be able to deliver services.

Some topics that will be covered include:

How is customer behavior changing?
Do startups have the infrastructure to handle the increased load? Is your company making technology changes?
Will they be able to offer the same type of service if they needed to cut staff themselves?
Can they perform at a higher level than banks and keep customers they acquire through the bad times?
Deposits at traditional banks jumped significantly since January. Why is this happening and how does this news fit in with increased demand for your products?
What do the next 12 months look like? Are digital offerings going to be seen as heroes?
How is Varo Money handling the Moven transition?

Time: Tuesday, April 28 at 2 PM ET

Visa to Buy Plaid in $5.3 Billion Deal

This groundbreaking deal values Plaid at double the valuation of their last round.

January 14, 2020 By Ryan Lichtenwald 1 Comment

Fintech companies continue to attract interest from traditional financial institutions and now we have a significant acquisition to start off 2020. Yesterday, we learned that Visa is planning to buy Plaid for $5.3 billion. Plaid is unique in the fintech market today, providing the rails for connections between financial institutions. Many consumers in the US have leveraged their service, but they wouldn’t know it because it all happens behind the scenes. Because Plaid has been successful in making these connections possible, they are the defacto choice for many financial institutions. As of now it seems like this large niche that Plaid has carved out is a winner take all proposition.

Chief Executive of Visa Al Kelly noted on an investor call that the acquisition will help Visa expand access to other fintech firms and also accelerate their movement outside of cards. While Plaid has already become a successful fintech company on their own, the credibility of the Visa name is likely to help them reach even more customers. Plaid last raised a round in 2018 at a $2.65 billion valuation. It may sound like a lot to pay for a company, but Visa’s market cap currently stands at around $420 billion. Interestingly, both Visa and Mastercard had participated in a $250 million round. Other investors in previous rounds included Andreessen Horowitz, Kleiner Perkins, Index Ventures, Norwest Venture Partners, Coatue Management, Goldman Sachs, NEA, American Express, Citigroup and Spark Capital.

Writing on the Plaid blog yesterday, CEO Zach Perret said that Visa was the one to approach them and he also explains how the acquisition will work:

We were very impressed by the Visa team from the minute they approached us. They share our vision for the future of financial services and have deep respect for the developer community we support. They want us to operate as an independent business unit so we can keep doing what we do best. We’ll be able to lean on their brand, resources, and international footprint if doing so can benefit our customers, our partners, and the markets we serve.

This deal is welcome news for the fintech community and it is going to be fascinating to watch where Visa takes Plaid from here. And what does this mean for broader fintech? Will this be the year that traditional finance makes fintech acquisitions a priority? The answers will be forthcoming as we see how the rest of 2020 shapes up.