Becoming ‘RTP ready’ – How banks can prepare the back office for instant payments

As we approach the 2023 launch of the FedNow service, banks across the U.S. must consider whether they are ready for real-time payments — both technologically and operationally. The 24/7/365 nature of instant payments will likely present new challenges for community banks, but proper preparation will go a long way toward supporting more seamless transition.

Abhishek Veeraghanta, CEO, Pidgin

For some community financial institutions, adjustments to their current treasury operations and workflows will be necessary. More specifically, many banks will need to review which back-office processes currently require manual intervention and find ways to automate them to facilitate real-time payments in 2023 and beyond.

There are a few practical steps bank leaders should take now to prepare and get ahead of the most common hurdles.

Beware of these back-end challenges

To get ahead of any roadblocks to real-time payments, financial institution leaders should start proactive discussions with appropriate internal stakeholders — as well as any third-party vendors — to ensure that all systems, especially on the back end, are prepared to process payments and the data associated with those transactions in a real-time environment.

Many banks will need to adjust their current treasury operations and IT infrastructure to support this.

Today, it’s not uncommon for community and regional financial institutions to use multiple systems for processing payments on the back end. A bank may use individual legacy systems to process transactions based on the payment type, such as ACH, wire and more. For banks that have grown through mergers or acquisitions, the web of legacy systems being used to process payments tends to expand as well. This creates additional complexities and inefficiencies that hinder a financial institution’s ability to process payments as quickly and cost-effectively as possible.

Instead, financial institutions should first focus on unifying payments and information about those transactions across the different payment types and payment rails. With this centralized approach to payment processing, banks can more quickly and easily manage and process payments in real time, regardless of which channel was used to originate the payment.

By using one system to create a more cohesive payments strategy, banks also gain access to a more robust and centralized view of transaction data. Financial institutions are quickly realizing the potential of the rich data that comes with 24/7 instant payments. The ability to consolidate transaction data from disparate sources into a central hub and view that data in real time can improve compliance, risk management, liquidity management, fraud detection, processing speed and much more.

Back-office and treasury operations: opportunities to automate

To illustrate the value of real-time transaction data, consider the following example. There are many financial institutions that still require employees to memorize hundreds, if not thousands, of codes and manually perform certain tasks, such as reconciling and settling payments. Financial institutions should take a close look at these back-office processes that often require manual intervention.

Can any of these processes be automated to help streamline workflows? Rather than spending hours reconciling payments through multiple channels, balancing accounts and compiling reports, a centralized payments platform can automate and simplify many of these processes, saving time and minimizing the risk of human error.

Therefore, financial institution leaders should consider how they will configure rules and define the parameters for these various back-office workflows, including reconciliation and exception management, to name a few. For instance, some banks may opt to assign specific reconciliation processes for payments based on certain transaction attributes.

A single, unified payment platform can also enhance compliance and risk management. By integrating an open architecture payment platform with a bank’s other systems, such as anti-money laundering and fraud detection tools, the bank can ensure all transactions are processed appropriately without sacrificing speed or being exposed to compliance or security risks.

Additionally, financial institution leaders need to understand how they will maintain suitable liquidity for around-the-clock, instant payments. With real-time views of payment transaction data, financial institutions can optimize their funding positions and improve liquidity management, resulting in fewer missed revenue opportunities.

Preparing for success

With the 2023 launch of the FedNow service quickly approaching, banks across the country are strategizing about when and how their organization will offer real-time payments for their customers.

By deeply understanding their existing payment operations, back-office systems, and the potential challenges and opportunities that real-time payments will offer, financial institutions can approach faster payments with confidence.

Abhishek Veeraghanta is CEO of Pidgin. Previously, he held positions at VSoft, Tesla, MRL Posnet, and PrimeRevenue. Veeraghanta holds a Bachelor of Science in Business Administration, Marketing and Entrepreneurship from Georgia Tech.

JPMorgan said to seal deal to buy 48.5% of Greece’s Viva Wallet

JPMorgan Chase & Co. has signed the final terms to acquire a 48.5% stake of Greece’s payment firm Viva Wallet, according to press reports in the country. The U.S. bank will buy out all the minority holders for an amount that is expected to be above €820 million ($869 million), the news website reported, […]

Movers and Shakers: Ex-SunTrust exec joins fintech Fenergo

Compliance solutions provider Fenergo has hired former Truist executive Tracy Moore as its director of strategy in the Americas. In her new role, Moore will be responsible for the development and execution of Fenergo’s business strategy and go-to-market plan, as well as client relationships and fulfilling its digital transformation objectives, according to a Fenergo release. […]

Conotoxia Launches Fresh Version of Multi-Currency Card
  • Multi-currency payment services company Conotoxia launched multi-currency card 2.0.
  • The update enables cardholders to add users to their card.
  • The multi-currency card 2.0 enables cardholders to hold accounts in 20 currencies and pay in more than 160 currencies.

Multi-currency payment services company Conotoxia is making it easier for users to share payment cards with friends, family, and employees. The new capabilities come as part of the company’s new launch, multi-currency card 2.0.

“We have been observing very strong interest in our multi-currency cards. Customers recognize their advantages and their superiority over bank debit cards,” said Conotoxia Vice President Pitor Kicinski. “The multi-currency card 2.0 and its new functionality can mean significant savings for families and businesses, as well as, for example, an interesting gift for those traveling abroad or shopping in international shops.”

Existing cardholders can share their card with new users after they register with Conotoxia. Once the new user is registered, they can begin making transactions using both physical and virtual cards. Meanwhile, the primary cardholder can view the card balance, control expenses, and set spending limits.

With the multi-currency card 2.0, cardholders can hold accounts in 20 currencies and can pay in more than 160 currencies. The tandem Conotoxia mobile app for iOS and Android enable users to view their transaction history, manage cards, and more. At the start of 2022, Conotoxia added Apple Pay as a payment option for cardholders, and contactless payments are also available with Google Pay, Fitbit Pay, and Garmin Pay.

Launched in 2014, Conotoxia offers foreign exchange and cryptocurrency trading, online payments, and online currency exchange in addition to its multi-currency cards. The company employs more than 250 people in its offices based in Poland, Illinois, and The Republic of Cyprus.

Photo by Angela Roma

Wise to hire 250 employees in the US in 2023

Bucking a trend among technology companies, money transfer fintech Wise will add 250 employees — an increase of more than 41% — to its U.S. team in 2023. London-based Wise saw a 58% increase in revenue over the first six months of its fiscal 2023 in its North American business compared with the same period […]

RTPs, real-time data may boost banks’ capital, cash management

Banks that focus on aligning real-time payment (RTP) transactions and real-time data may be able to help their corporate clients boost working capital and improve cash management. Financial institutions must ensure that necessary processes and technologies like open APIs have been properly implemented to deliver real-time data for clients — or risk that new entrants […]

Glia Partners with Jack Henry to Bring Innovations in Digital Customer Service to Banks and Credit Unions
  • Glia and Jack Henry announced a partnership this week that will integrate Glia’s Digital Customer Service into Jack Henry’s Banno digital banking platform.
  • The integration will enable a wider number of banks and credit unions to interact with their customers via digital channels such as voice and video banking.
  • Glia and Jack Henry are both Finovate alums. Jack Henry made its Finovate debut in 2010. Glia has won Best of Show at Finovate conferences six times.

A newly announced partnership between a pair Finovate alums will bring some of the latest innovations in digital customer service to more bank and credit union customers. Digital Customer Service specialist Glia announced this week that its technology is now available via Jack Henry’s Banno Digital Platform.

The integration will give financial institutions using the platform the ability to engage customers across all digital channels – from SMS and chat to voice and video banking. Glia’s acquisition of fellow Finovate alum Finn AI in June adds innovative virtual assistance technology to Glia’s offering – technology that will now be available to banks and credit unions on Jack Henry’s platform. The integration was facilitated by the Banno Digital Toolkit, which uses the same set of APIs upon which the Banno Digital Platform is built.

“Glia is making Digital Customer Service accessible to a growing number of banks and credit unions, empowering them with powerful tools to digitalize and transform customer service,” Glia SVP of Alliances Steve Kaish said. “Our integration with Jack Henry accelerates that mission, allowing more institutions to facilitate digital-first engagements within the digital domain.”

A six-time Finovate Best of Show winner, Glia most recently demoed its Digital Customer Service technology at FinovateSpring last year. At the conference, Glia showed how its latest innovation automatically connects customer inbound calls to the customer’s associated online browsing sessions to give customer service representatives context when handling the customer query. This helps improve the quality of the session, making it easy for the representative to collaborate online with the caller via features like co-browsing, screensharing, and one- or two-way video. This, according to Kaish, will help “community institutions create competitive advantage” versus their national and international rivals.

Founded in 2012, Glia is headquartered in New York City. Daniel Michaeli is CEO and co-founder.

With more than 9,000 customers in the U.S., Jack Henry offers banks and credit unions an ecosystem of innovative financial services solutions, as well as the ability to integrate with leading fintechs. Headquartered in Monett, Missouri, and founded in 1976, the company made its Finovate debut in 2010 and has since grown into a major technology and payment services company with $1.7 billion in revenue for the fiscal year ended June 30, 2021. Jack Henry is a publicly traded entity on the Nasdaq under the ticker “JKHY,” and has a market capitalization of $13 billion.

A Finovate alum since 2010, Jack Henry & Associates was featured in Computerworld’s “Best Places to Work in IT” list for 2023. This week, the company announced that it was adding automated policy management technology to its Governance, Risk, and Compliance (GRC) Suite. David Foss is President and CEO.

Photo by Yan Krukov

By the numbers: Company CFOs, treasurers look to bank partners for automation

Chief financial officers and treasurers are feeling squeezed in today’s market as they juggle multiple priorities, and they can look to technology and automation to relieve some of that burden. Investing in technology can help companies reduce costs, manage growth and improve operational efficiencies — but 58% of companies don’t have a formal digital transformation […]

Fieldpoint Private launches advisor banking platform

Wealth management provider Fieldpoint Private has launched Fieldpoint Private Advisor Banking Services, a platform that will enable transaction transparency for registered investment advisor (RIA) firms outside of the bank.  The new software suite at the $1.4 billion private bank runs on multiple technologies including AI, identity management and data management in a Microsoft Azure cloud […]

Bridging the Empathy Gap with Human-Centered AI: Our Conversation with Uday Akkaraju, CEO of BOND.AI

One of the more compelling presentations at FinovateFall this year was the keynote address from BOND.AI CEO Uday Akkaraju. Titled “Why the Future of Finance is Beyond Finance, And How to Get There,” Akkaraju’s discussion looked at the wave of digital transformation in financial services and asked “is there a radically smarter path to profitability while staying relevant to customer expectations?”

We pick up on this conversation in today’s extended interview with the BOND.AI CEO. Akkaraju has leveraged his background in interaction design and cognitive science to help make machine intelligence more empathetic and human-oriented. The result is the world’s first Empathy Engine for finance – a technology that helps bridge the gap between consumers struggling to meet their financial needs and banks that are eager to engage these consumers with new technologies that offer greater personalization and effectiveness.

Founded in 2016 and headquartered in Little Rock, Arkansas, BOND.AI won Best of Show in its Finovate debut at FinovateFall 2018. We talked with the company’s CEO about the how the company is helping financial institutions better serve their customers, as well as what to expect from BOND.AI in 2023.

You recently spoke at FinovateFall on Why the Future of Finance is Beyond Finance. Can you tell us a little bit about what you shared with our audience in that keynote?

Uday Akkaraju: It was my pleasure to be asked to speak again at FinovateFall this year. A lot has changed since I spoke last time in 2018! And a lot has changed for the better in terms of banking.

The pandemic spurred investments in technology and digital channels to reach customers—a benefit for the banking and fintech industry. However, we must now utilize opportunities accelerated by the pandemic to create a future of better financial health for everyone.

I wanted to use my keynote speech to highlight the “Empathy Gap” between what customers need and what banks can offer today, especially given the fast-changing economic environment. For me, it’s essential we discuss how fintech can help bridge the communication gap between banks and customers. Banks need to strategically implement discourse analysis tools with measurable KPIs to ensure they don’t return to past mistakes.

That’s where human-centered AI comes in. In this case, AI is our chatbot-powered Empathy Engine that can converse with customers via an app to get a deeper understanding of their needs. Through conversation, banks can grow their revenue using customers’ contextual information. With more customer data, individual banks can meet and even predict an individual’s needs, improving financial health as they tailor their products and services as a result. Of course, conversational data is only a part of it. You still need the bank data – otherwise, you only get half the truth.

BOND.AI won Best of Show at FinovateFall 2018 with a live demo of its Empathy Engine. You’ve also talked about something you call the “Empathy Gap.” For the uninitiated, what does the “empathy gap” mean?

Akkaraju: The Empathy Engine is our main vehicle for closing the gap between customer needs and a bank’s inability to meet those needs, which we’ve labeled the “Empathy Gap.” We quantify this gap between what banks offer and what individuals need to be worth roughly $34.2 trillion. I like to say the only thing that changes faster than technology is consumer expectations. Unfortunately, banks’ inability to keep up with those expectations leaves them with a lot of money left on the table for them and a lot of lost opportunities for consumers.

The Empathy Engine helps banks to better communicate with and service consumers to close this “Empathy Gap.” We use its ability to talk directly to customers and deliver personalized service at scale. This aids banks in seeing a holistic picture of each individual and better meeting their financial needs.

The main point of my presentation, though, was to make it clear it’s not going to be possible for one fintech or financial institution to close that gap alone. That’s why we created The BOND Network, to connect banks, employers, and fintechs and make it a true network—not just a marketplace—to balance the needs of all three stakeholders.

How does BOND.AI’s Empathy Engine flow from this?

Akkaraju: We launched the world’s first Empathy Engine for finance in 2018. It’s designed to bridge what the consumer needs against what the bank can offer to give a holistic view of customers, including their needs, strengths, weaknesses, and potential.

Right now, for customer segmentation, banks only consider financial data, and that information remains too broad. It fails to keep up with fast-changing consumer expectations or recognize an individual’s circumstantial information. Segmentation should consider both financial and non-financial data to be effective and offer a hyper-personalized approach that talks directly to the customer.

The BOND.AI Empathy Engine was developed in response to this insight. Instead of considering massive amounts of data with lots of noise, the engine moves to a small-data approach, where segmentation happens based on actual and observed behavior rather than traditional correlations and predictors.

Who is BOND.AI’s primary market and how do those customers use your technology?

Akkaraju: Our primary market is currently made up of financial institutions to whom we provide a white-label solution for insights, analytics, and customer communication. These are our core customers, and they are also members and contributors to The BOND Network.

We also have employers on the network who provide our mobile app to their employees as a financial benefit. At this point, we have 28 employers bringing about 300,000 employees into the network, which is set to grow next year.

What makes BOND.AI’s technology unique in the way it solves problems for your customers?

Akkaraju: Our Empathy Engine is the first-of-our-kind, human-centered technology focused on increasing the financial health of institutions and individual consumers. It also powers The BOND Network, which nurtures an ecosystem of financial institutions, fintechs, employers, and employees that all benefit. The engine identifies stakeholder needs and connects the dots to fulfill those needs, thus making this a network rather than a marketplace.

This is how our efforts move ‘beyond finance’. We believe to bridge the Empathy Gap it will take collaborative action to understand people as more than just transactional data and talk to them instead to establish their needs and situational context. With AI tools, we can speak directly to customers from the comfort of their own home or on the go with our mobile app. This intimacy builds trust and strengthens the customer’s relationship with their bank, so people feel able to share their problems.

The best part? Insights are there for everyone across the network to see how they can further close the Empathy Gap.

I think some would be surprised to learn that BOND.AI has headquarters in Little Rock, Arkansas. What does Little Rock offer a company like BOND.AI?

Akkaraju: There’s a lot we feel Little Rock can offer us, which is why we moved here! We were previously based in New York but chose Little Rock strategically for both the company and our employees. The work-life balance is good here. There’s also barely any commute considering most places can be reached in 20 minutes. That’s ideal for a fast-growing start-up where time is money.

There has been a move away from the coast, but tier-two cities are also getting a little cramped. People are happy to explore other options at this point, and Little Rock is an interesting place where both company and employee dollars stretch further.

There are also a lot of possibilities here for us as a start-up looking to connect with employers and their workers. Walmart’s headquarters is here, and many of its vendors are nearby. You don’t need to move to the city to find talent and opportunity. The next thing we’d like to do is start consciously investing in the local talent we think is out there to really prove that to people.

What can we expect from BOND.AI in 2023?

Akkaraju: In 2023 we’re excited for our app to be going direct-to-consumer via employers and expanding our partnerships for The BOND Network. We’ll be using these acquisitions to grow the company organically. These developments will also aid us in our mission to give the power of data back to the consumer and show banks what types of data they can leverage more effectively.

We want to focus on alternative wealth building, giving more people the tools they need to take control of their finances confidently. Budgeting is good, but it doesn’t fix the bottom line and, in many cases, more support is needed. We want to extend the possibilities of financial inclusion by giving everyone access to the tools used by high-net-worth individuals and sharing guidance on how to use them.

Photo by Tara Winstead

What These 10 Holiday Movies Teach Us about Fintech

If you plan on binge watching holiday movies in the next few weeks (or if you have been since October), here’s something to think about. Did you know that many of these films come with lessons for the fintech industry?

Here are some films you may want to watch over your winter break, along with some of the wisdom they hold.

Home Alone (1990)

In this movie, Kevin McCallister finds himself left at home without any adults to help him carry out daily tasks and defend himself against burglars. In the same way, many customers are conducting their banking activities from home on their own devices. The only tools they have to successfully conduct banking activities are a strong password and your bank’s user-friendly design.

Lesson: Don’t make your customers feel at home alone. Provide them with tools they need to successfully conduct everyday banking tasks from your app.

It’s a Wonderful Life (1946)

After George Bailey contemplates suicide during a time of financial instability, his guardian angel comes to show him all the ways in which he has made a difference in the lives of others. In the end, he begs his angel to give him his life back. After he does, his community rallies around him to help him regain financial stability. The current economy is impacting firms across banking and fintech differently. Every organization has a storm to weather.

Lesson: Pay attention to what’s truly important in life and maintain a focus on community, especially in the midst of economic turmoil.

Family Stone (2005)

When a woman from the big city, Meredith, accompanies Everett, her boyfriend, to his childhood home for Christmas, they both discover that they aren’t right for one another. As the story progresses, it becomes apparent that Everett and Meredith’s sister Julie are falling for each other. Keep your bank or fintech partners in mind while watching this one.

Lesson: Finding the right bank or fintech partners can be a struggle. However, it is worth conducting proper due diligence to find the right partner before committing.

The Santa Clause (1994)

Toy salesman Scott Calvin is unexpectedly forced to become Santa Clause after the original Santa Clause falls off his roof. After spending much of the movie in denial and resisting his new role as Saint Nick, Scott Calvin ultimately accepts his new role, and everyone is better off because of it. Has your organization ever had to make a similarly drastic pivot?

Lesson: When the needs of the customer evolve, so should your business. Being able to pivot to meet customer expectation not only benefits end users, it will also be good for your bottom line.

Die Hard (1988)

When New York City Policeman John McClane visits his ex-wife at a holiday party on Christmas Eve, terrorists attempt to take over the building and John realizes that he is the only one who can save everyone. Whether you can see the fraudsters or not, everyone deals with them on a daily basis.

Lesson: You are responsible for creating the first line of defense between your customers and cybercriminals.

Jingle All the Way (1996)

In this holiday movie, Howard Langston tries to impress his son by giving him the season’s hottest toy, the Turbo-Man, for Christmas. The toy is almost sold out, however, and Howard goes to great lengths to compete with another father to get the toy. Ultimately– and only after proving himself a hero– Howard gets the Turbo-Man toy to give to his son in time for Christmas. While the customer acquisition race isn’t as competitive as a war over the Turbo-Man toy, it may seem like a battle at times.

Lesson: There will always be competition between and among banks and fintechs. And just like Howard’s fight for Turbo-Man, fighting to gain customers takes sacrifices and ultimately may require your organization to prove itself a hero to the customer before winning them over.

How the Grinch Stole Christmas (1966)

The Grinch, who hates Christmas, tries to take the joy away from the townspeople of Whoville by stealing their presents and other Christmas paraphernalia. Even after he does so, however, he hears the townsfolk joyfully celebrating Christmas, despite the lack of presents, food, and decorations. In the end, the Grinch realizes that Christmas is more than presents, tinsel, and bows. Just as the Grinch discovered there is more to Christmas than the money-making aspects of it, perhaps we can all look beyond our bottom lines this season to discover how we can better serve our target market.

Lesson: Perhaps there is more to fintech than just pandering to populations that seem the most profitable. Look for ways to benefit to others, even if they may be a net-zero opportunity.

Any Hallmark Christmas special

Many Hallmark holiday movies seem to share a similar premise. A big-city girl inherits a vineyard or a bed and breakfast in a small town. During her visit to the country, she meets a charming man and falls in love with both him and the small town lifestyle. You don’t have to watch a Hallmark movie to realize that expanding your horizons can be beneficial.

Lesson: It may profitable to serve the underserved populations found in rural locations. They could have more in common with your existing target audience than you think.

National Lampoon’s Christmas Vacation (1989)

Clark Griswold tries to create the perfect Christmas for his family, but when the Christmas bonus he expected for the year fails to come through, Clark’s cousin Eddie takes the issue up with Clark’s boss. Though Clark ends up receiving his bonus after all, the movie serves as a reminder not to financially overcommit before funds are guaranteed.

Lesson: Even when times are good, don’t count on extra cash to get your company through. Watch your burn rate.

Frozen (2013)

The main characters, sisters Anna and Elsa, illustrate the ups and downs of the crypto market. After Elsa freezes the town, the damage seems permanent, and residents wonder if they will have to live in wintertime conditions forever. At the end of the film, Elsa figures out how to control her magic and returns the town to its regular climate.

Lesson: Crypto will one day exit the crypto winter and will once again level out. The key to achieving this stasis may be the arrival of regulation in the cryptocurrency space, which is already be on its way. Today, U.S. Senator Elizabeth Warren unveiled a bill to enforce against crypto money laundering.

ING Selects Paysafe for Cash Deposits and Withdrawals
  • ING Germany has tapped Paysafe’s cash arm, viafintech, to offer its users cash deposit and withdrawal services.
  • Using ING Germany’s Banking to Go app, customers can deposit and withdrawal cash at more than 12,500 participating brick-and-mortar stores.
  • Withdrawals are free, but customers will be charged a 1.5% fee on the total amount they deposit.

Global payments platform Paysafe announced today that its cash arm, viafintech, has partnered with ING Germany. Under the agreement, ING Germany will leverage viafintech for its cash deposit and withdrawal features.

viafintech’s technology will enable ING Germany to offer its nine-plus million customers to access a new feature, ING Cash, in its Banking to Go app. The tool will empower users to make cash deposits or withdrawals from their current account at participating brick-and-mortar retailers.

Here’s how it works: a customer decides how much they want to withdraw or deposit, and the app generates a barcode that they can scan at a participating brick-and-mortar store. Currently, ING Germany has more than 12,500 participating stores in Germany, including Rewe, Penny, Rossmann, and dm drogerie Markt.

Users are not required to make a minimum purchase at the retail locations. And while it is free for them to withdrawal funds, ING Germany charges a 1.5% fee on the total amount they deposit.

viafintech was founded in 2011 and was acquired by Paysafe in 2021. The company’s API offers organizations access to its payment infrastructure that enables cash withdrawals and deposits, bill payments, credit payouts, cashless payment methods, prepaid solutions, and gift cards.

Paysafe is a legacy player in the fintech space, having launched in 1996. The U.K.-based company offers payment processing, digital wallet, and online cash solutions connecting businesses and consumers across 100 payment types in over 40 currencies around the world. Last year, Paysafe processed $120 billion in transactions. The company is publicly listed on the New York Stock Exchange under the ticker PSFE and has a market capitalization of $824 million.

Photo by Dom J

HSBC, Extend to offer virtual card solutions to commercial customers

HSBC announced today that it is partnering with digital card fintech Extend to offer virtual card solutions and embedded payments to its business clients. Commercial card customers of HSBC USA, owned by $2.9 trillion, London-based HSBC Holdings, are now able to create, send and manage virtual cards throughout their organizations via the latest Extend partnership, […]

Transactions: Finastra, Veem partner for SMB digital payments

London-based core provider Finastra is partnering with payment service fintech Veem to provide payment services to small and medium-sized businesses (SMBs).  San Francisco-based Veem’s payment service will be integrated into Finastra’s Fusion Digital Banking Platform and will give users a centralized platform for SMBs, Peter Longo, senior director of product management at Finastra, told Bank […]

How to Enhance the Small Business Banking Experience with Automation and Augmentation

Small business (SMB) customers are rethinking their banking relationships and looking for a personalized and emotional connection. If you need proof, look no further than these compelling stats:

  • Only 18% of small businesses believe their financial institution (FI) meets their needs
  • 62% of small businesses don’t see their business account providing more benefit than a personal account
  • 90% wish their FI understood their banking and business needs better

As small business customers begin to reconsider how and with whom they’re banking, FIs must also rethink their strategies. How can they provide greater value to their small business customers and take advantage of the $370B banking opportunity small businesses represent?

A $370B Dollar Question

At a recent conference focused on Small Business Banking, held early October in Nashville, TN, small business banking leaders shared their thoughts, experiences and research on current state of small business banking in the US.

Irv Henderson, EVP and Chief Digital Officer of Small Business at US Bank, asked, “How can we use technology and integrated experiences to get small business owners home to their families earlier?”

Today’s customers, he explained, are looking for convenience, integrated experiences, and opportunities to simplify every aspect of their lives- including their financial lives. “Whatever we can do to make their lives easier will be key to our success,” Henderson added.

For many institutions, this means looking beyond transactional relationships and working toward a future where bankers can serve as trusted advisors. Amy Doll, Chief Lending Officer at PeoplesBank, said it best: “When it comes to small business banking, financial institutions should make their clients feel like they’re big enough to help, but small enough to care.”

To bridge this gap and effectively serve the unique needs of small businesses no matter their size, FIs must invest in ways to augment and automate processes and experiences. Automation enables fast and seamless workflows and low-touch interactions, replacing time consuming, manual processes and allowing bankers more time to better serve their customers.

Augmentation, which goes hand-in-hand with automation, provides FIs with true differentiation and value creation through enhanced, personalized interactions in an increasingly digital world. The result: bankers have access to the powerful tools and insights necessary to meet all their clients’ needs, while offering them an augmented and supercharged customer experience.

While bankers will certainly benefit from these technologies, the real value comes from what the customer experiences. Amy Doll drove this point home at American Banker’s Small Biz Banking conference when she shared how automation and augmentation gives her team more opportunities to focus on meaningful work and build positive, profitable relationships: “Great Small Business Banking is about personalization and making it tangible to your clients that your organization is capable and cares.”

Stablecoin News for the week ending Wednesday 14th December.

Here is our pick of the 3 most important stablecoin stories during the week.

CBDC’s are coming but what type? 

This week we saw more announcements on CBDC’s research and experiments, but it is unclear if we will get a Retail (direct account with the Central Bank) or Wholesale (direct account with a Bank and regulated by the Central Bank) or both.

First, the ECB is running a digital euro prototyping exercise. The goal of this exercise is to allow market participants to develop front-end prototypes that can be integrated with the back-end infrastructure developed by the Eurosystem.

Not clear and not decided if this will be retail or wholesale.

Documents for the digital euro prototyping exercise

Then, the BIS came out with a major study on wholesale CBDC’s and how regulations would function in a multi jurisdictional cross border context.

Traditionally cross-border payments have relied on a mutually trusted central entity. Distributed ledgers, blockchain and smart contracts (together dubbed “distributed ledger technologies” or DLT) could provide an alternative to that approach. However, different DLT applications in the cross-border payments context come with legal challenges. Hence, it is necessary to analyse the extent to what financial law and regulation is fit to deal with DLT-based payments.

We find that financial law traditionally assumes that functions are concentrated in a single entity. Hence, the distribution of functions in DLT comes with the need for additional agreements, ongoing coordination across, and governance arrangements among each participant. Further, in a cross-border context, multiple regulators and courts of various countries will be involved. All of these must decide whether for compliance with the law and regulations they look at DLT as a whole (‘ledger perspective’) or each individual DLT participant (‘node perspective’). On that basis we analyse the extent to which the ledger or the node perspective should prevail, resulting in policy recommendations for regulators.

DLT-based enhancement of cross-border payment efficiency – a legal and regulatory perspective

And finally, Spain’s central bank, the Bank of Spain (BDE), said it intends to launch an experimental program to begin testing wholesale central bank digital currencies (CDBCs) and is seeking collaboration proposals from local finance and technology institutions.

The bank will focus on three main areas with the program that seeks to simulate the movement of funds, experiment with the liquidation of financial assets, and analyze the benefits and drawbacks of introducing a wholesale CBDC to its current processes and infrastructure, according to a translated Dec. 5 statement.

Spain’s central bank to experiment with wholesale CBDCs (

So in summary, this week we saw more evidence of work being done on CBDC’s with the wind seemingly blowing in the direction of wholesale and not retail implementations.


Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.  

Twitter @Alan_SmartMoney

We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.

For context on stablecoins please read this introductory interview with Alan “How stablecoins will change our world” and read articles tagged stablecoin in our archives.

FinovateEurope’s Alumni Alley: Innovations in SaaS Accounting, the Evolution of eDoc Delivery, and the Challenge of Digital Identity

Alumni Alley is the latest addition to our upcoming FinovateEurope conference in March. This new feature is exclusively for FinovateEurope alums, and will give these companies a unique opportunity to share their latest innovations in a special showcase at the event. Learn more about FinovateEurope’s Alumni Alley and see if it’s a fit for you!

This week we continue our commemoration of FinovateEurope’s earliest alums with a look at SaaS accounting platform innovator Xero, digital communications provider Striata, and digital identity pioneer miiCard – now DirectID.

Your Cloud Accounting Platform Hero, Xero

Believe it or not, there was once a debate about whether or not accounting technology truly qualified as fintech. Helping make the case were companies like Xero, a Wellington, New Zealand-based startup, founded in 2006, that was bringing its SaaS accounting solution to small businesses and their accountants around the world. When the company made its Finovate debut at FinovateEurope in 2011, the five-year old firm had raised $35 million and had 27,000 customers in 50 countries. Today, Xero is a cloud-based accounting powerhouse with more than $680 million in equity capital raised, and more than 3.5 million subscribers to its technology around the world.

Xero’s new CEO Sukhinder Singh Cassidy

Founded by Rod Drury, who was CEO of Xero until 2018, Xero offers small businesses the tools they need to manage many critical financial operations including accepting payments, billpay, inventory and project tracking, expense claim and invoice management, and more. A partnership with fellow Finovate alum Gusto enables Xero users to calculate pay and deductions, as well as make payroll payments to employees.

Earlier this month, Xero announced that Sukhinder Singh Cassidy had been appointed as the company’s new CEO. Cassidy will take the reins from Steve Vamos, who has served in the position for almost five years. Xero Chair David Thodey praised his new CEO as a “purpose-driven and human-centered leader who is passionate about supporting our customers and is committed to growing and nurturing Xero’s unique and vibrant culture.”

Striata Becomes Tilte: Beyond the Business of eDoc Delivery

The business of edocument delivery has changed significantly over the decade-plus since FinovateEurope 2011. But New York-based customer communications specialist Striata, which made its Finovate debut at our European event that year, has continued to innovate in this space, transforming complex customer communications systems and leveraging multi-factor authentication and encryption key management to ensure both security and compliance.

This helps explain why the company caught the eye of customer communications management (CCM) software and services company Doxim who, in 2020, acquired Striata for an undisclosed sum. The acquisition integrated Striata’s technology into Doxim’s CCM Platform, helping move the solution closer to Doxim’s goal of offering an “integrated SaaS CCM platform” that supports the entire omni-channel customer communications lifecycle.

Striata CEO Michael Wright introducing his company to audiences at FinovateEurope 2011.

“For over 20 years, Striata has been innovating in the CCM space by delivering digital-first solutions across multiple industries, channels, and devices,” Striata CEO Michael Wright said when the acquisition was announced. “As the world evolves into a digital community, a platform approach to scalable and secure yet personalized communications will be critical.”

In October, Striata underwent another transition as the firm’s South Africa team, under the leadership of Wright, launched The new venture is an IT services and consulting company that helps businesses enhance customer engagement via solutions ranging from digital communications and chat commerce to customer journey orchestration and data analysis.

Innovations in Digital Identity: from miiCard to DirectID

The FinovateEurope 2011 demo from Edinburgh-based miiCard (now DirectID) helped introduce many fintech observers to the challenges – and opportunities – in the field of trusted online identity.

Founded in 2010, miiCard appeared on the FinovateEurope stage with an identity-as-a-service solution that enabled users to prove that they “were who they said they were” online in minutes. The verification was as authentic as a physical passport or photo ID, establishing identity to level of assurance 3+, as well as meeting both KYC and AML compliance requirements.

Company founder and CEO James Varga introducing miiCard – now DirectID – at FinovateEurope 2011.

Founded by James Varga, who continues to serve as the company’s CEO, miiCard rebranded to The ID Co. in 2016. The move reflected the growth of the company’s B2B DirectID service, which, launched in 2014, provided an “all-in-one” embedded, integrated verification solution that was especially valuable for financial institutions processing high value transactions online.

“Our mission is to create a layer of trust online, a digital world where you can trust that people really are who they say they are,” Varga said when the rebrand was announced. “Our new company name represents who we are, and better reflects our mission to help solve one of the greatest challenges of our time.”

Four years later and the impact of DirectID on the company’s business was so profound that another rebrand was launched, this time naming the company after what had clearly been demonstrated to be the firm’s most accomplished solution. “The market has changed so much, and data has become such an important part of our offering, that this change in focus was required,” Vargas explained in a blog post.

Since the latest rebrand, DirectID has forged partnerships with a wide range of companies including authentication company Trust Stamp and credit hire organization AX. More recently, DirectID teamed up with U.K. payments company ShieldPay and secured $3 million in new funding.

Photo by Alex Pham

Insurtech Oyster Raises $3.6 Million
  • Insurtech company Oyster received $3.6 million in seed funding.
  • The round was led by New Stack Ventures.
  • Oyster was founded in 2021 by Blend, Stripe, and Strategy& alumni Vic Yeh, Jon Patel, and Nikhil Kansal.

Insurtech company Oyster received $3.6 million in funding this week. The Seed Round was led by New Stack Ventures with contributions from Global Founders Capital, Conversion Capital, Cambrian Ventures, SNR VC, Kearny Jackson, Valia Ventures, Interlace Ventures, V1 VC, and a group of angel investors.

Oyster is a new take on insurance. It provides merchants an embedded insurance tool to integrate into their point-of-sale that offers customers insurance for a good or service they are about to purchase. Oyster will use today’s investment to fuel its point-of-sale insurance platform and add more merchant partners. The company’s list of merchant partners currently includes Bulls Bikes, Jewels by Grace, Zooz Bikes, Bario Neal, Area 13 Ebikes, and The New Wheel.

“You can buy a $5,000 ebike or engagement ring online in just a few clicks and get it delivered the next day. Want to get insurance for that purchase? Good luck! It’s an offline process that can take many days and lots of paperwork,” said Cambrian Ventures Founding Partner Rex Salisbury. “Oyster is offering embedded insurance for high growth ecommerce categories to allow consumers to seamlessly insure some of their most important possessions at point of sale in a few minutes. It’s a huge opportunity to move personal insurance into the digital age.”

Oyster differentiates itself by offering affordable insurance rates for products including bikes, ebikes, jewelry, phones, collectibles, and electronics. The company provides full coverage from theft, loss, and accidental damage– and many policies offer a zero dollar deductible.

The company was founded in 2021 by Blend, Stripe, and Strategy& alumni Vic Yeh, Jon Patel, and Nikhil Kansal. The team recognized the insurance market as one of the last financial sectors to be disrupted by the technological innovations of the past two decades. “The insurance industry is still in the early innings of digital transformation,” the company said in a blog post announcement. “As such, we’re accelerating the speed of innovation in order to provide the best-in-class products and services to our customers and partners.”

Photo by Mandy Henry on Unsplash

Fifth Third CIO Jude Schramm joins Bank Automation Summit US 2023
Jude Schramm, CIO, Fifth Third Bank

Jude Schramm, chief information officer at Fifth Third Bank, will join the panel discussion “Solving data expandability issues through cloud” at the Bank Automation Summit U.S. 2023 on Thursday, March 2, at 9:15 a.m. ET.

The Summit will take place March 2-3, 2023, at the Westin Charlotte, N.C., and brings together U.S.-based industry experts to discuss banking automation and technology topics, including ideation in banking and automation operations.

Schramm joins Truist Chief Information Officer Bryce Elliot and Wells Fargo Chief Technology Officer Steve Hagerman on the panel to discuss the latest in cloud modernization.

Fifth Third recently migrated its mobile app to the cloud and plans to relaunch the app before the end of the year.

Learn more about Bank Automation Summit U.S. 2023 and register here.

Banks employ bots to fight rising fraud, compliance risks

Financial fraud is big business for cybercriminals, with the Federal Trade Commission (FTC) estimating that $5.8 billion was lost to scams in 2021, a 70% increase from 2020.   To fight the threat and help maintain compliance, several banks have turned to bots and robotic process automation (RPA).  Ally Financial, for example, has partnered with […]