Stock trading app Invstr adds mobile classes to attract more clients

Stock trading app Invstr is rolling out a series of educational tools to make investing accessible to a wider audience.

The mobile-based training program is called Invstr Academy, which launched last week. It’s a move by the company to expand beyond its learning-by-doing model where users can invest with fake cash, and it beefs up Invstr’s subscription offering. Invstr charges subscribers $3.99 per month, and the first two learning modules will be available to free users.

Invstr Academy

“Even if brokerage is free on some of our competitors’ apps, most people can’t enjoy it because they don’t know what to do,” said Kerim Derhalli, CEO of Invstr. “If you put free champagne and caviar at the North Pole, nobody is going to enjoy it because people can’t get to the North Pole.” 

Invstr is aiming for users who want to invest but feel too intimidated by the complexity of jargon and rules. Compared to do-it-yourself models pursued by some competitors, Ivstr feels its educational aspects make it a more approachable option.

As Invstr rolls out its mobile training modules, it’s not giving up on its gamified approach. According to Derhalli, that’s because some customers prefer hands-on learning like Invstr’s Fantasy Finance option where users can invest with fake cash. 

Invstr Academy features 85 lessons spread over 10 modules, and the lessons focus on topics like financial markets, main asset classes and some of the big names in investing. At the end of each module, users take a quiz to unlock the following module. When users have completed all the modules, they are prompted through a link to start investing for real through Invstr. 

Invstr Academy’s glossary

Invstr Academy builds on the app’s Fantasy Finance option, which allows users to invest $1 million in fake money. The investments fluctuate with the real markets, so users learn how to make investment decisions without any real risk. Invstr also features a social aspect, as users can follow one another to see what stocks friends have been buying and selling.

See also: Game on: Investment app Invstr uses Fantasy Finance to build young user base

Since Invstr was founded in 2013, 500,000 users have joined. The premium option also features double the number of trades and technical analysis charts. The company markets through social media channels, and the company plans to begin a referral program that rewards both the inviter and the invitee. Derhalli himself has more than 30 years of banking experience at big names like JPMorgan Chase, Lehman Brothers, Merrill Lynch and Deutsche Bank. The London-based company has about 25 employees.

Despite the allure of the training programs, Invstr faces competition from other investing apps, including Stash, Acorns and Robinhood, which have also added educational elements to their product offerings. Vijay Raghavan, senior analyst of digital business strategy at Forrester Research, said the mixture of gamification, online lessons and social networking is Invstr’s play to reach the same younger demographic targeted by apps like Robinhood.

The real value of Invstr, he said, might show during a recession, when customers require additional support. “Investing by nature is complicated, and I expect interest in platforms like Invstr to increase during the next economic downturn after more first-time investors suffer economic losses because they didn’t really know what they were doing,” he said.

Bank Innovation Ignite, which will take place on March 2-3 in Seattle, is a must-attend industry event for professionals overseeing financial technologies, product experiences and services. This is an exclusive, invitation-only event for executives eager to learn about the latest innovations. Request your invitation.

Plaid expands to France, Ireland and Spain

This week, data aggregator Plaid confirmed its expansion to France, Ireland and Spain. Plaid will work with more than 80% of the consumer accounts in each country, a major step for the San Francisco-based company with the likes of BNP Paribas, Bank of Ireland, BBVA and Santander onboarding the technology. Keith Grose, head of Plaid’s …Read More

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Stash doles out 5 million ‘Stock-Back’ rewards

As cash back rewards become expected offerings among banks and financial platform companies, Stash is offering customers fractional shares of stocks as purchase rewards when they use the Stash debit card. The subscription-based investing, banking and financial planning platform company this week confirmed that it’s offered 5 million stock-back rewards since the program’s inception five months ago.

CEO and co-founder Brandon Krieg said Stock-Back rewards connect personal finance management, education and investing.

“We started thinking about the sense of discovery that everyday spending brings,” said Krieg. “When you go to to Chipotle, maybe you buy something there every day —  you love the brand but you’re not a shareholder.”

Customers are eligible for Stock-Back rewards every time they make a purchase, and the size of the reward varies by subscription tier. If the purchase is made at a public company, customers receive a fractional share of the brand’s stock. For other purchases, customers can select default investment options as reward currency.

According to Krieg, the company doesn’t generate revenue from the Stock-Back rewards offerings. The are funded through interchange revenue. Stash makes money monthly from subscription fees (beginner, growth and Stash+ tiers cost $1, $3 and $9 per month, respectively) along with interchange revenue.

See also: The ‘Netflix of finance’: How MoneyLion is evolving its subscription offering

Ron Shevlin, research director at Cornerstone Advisors, wrote in March that Stock-Back rewards could appeal to a segment of customers, but he noted that some may prefer the tangibility of traditional cash back rewards. But Stash is also moving in that direction. The company this week rolled out a 10% cash back rewards offer for purchases made on this week, and according to Krieg, other cash back partnerships with brands are on the horizon.

Founded in 2015, Stash, which began as an investment platform, has built out its ecosystem of products. The company offers retirement savings, custodial accounts and insurance products through partners. Since 2018, it’s been offering checking accounts in partnership with Green Dot Bank.

Krieg acknowledged the comparison with other digital-only challenger banks, but stressed that banking was a means to an end rather the core value proposition of Stash. He also noted that the personal finance advisory capabilities of the platform work best when information from the various financial products come together. The objectives are for customers to get personalized advice based on their behavior and to automate as many financial management tasks as possible.

“For me, banking isn’t the most important thing — the customer outcome is,” said Krieg. “One of the reasons we got into banking is that we wanted to be the financial home [for customers]. When we see the whole picture, we can give better advice. ”

Stash, which reports that it has 4 million customers, has raised $186 million in equity funding to date.

Bank Innovation Ignite, which will take place March 2-3 in Seattle, explores emerging technologies in banking. Attendees will gain a firsthand look at new products and services from both legacy and upstart perspectives. Request your invitation

Weekly Wrap: Real-time payments expand, as big tech adds financial offerings

Welcome to the latest episode of our weekly wrap video series, for the week ending Friday, November 22, 2019. In this episode, Suman Bhattacharyya, deputy editor, and Angely Mercado, associate editor, discuss the following news developments: The expansion of The Clearing House’s RTP Network; How Facebook Pay can advance its e-commerce strategy; and How Green …Read More

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Thai bank targets $1 billion spinoff among Its fintech units

Siam Commercial Bank Pcl plans to spin off some of its fintech divisions as it tries to monetize its push into technology investment at a time of sluggish earnings from traditional lending.

The nation’s third-biggest lender by assets expects one of the fintech units has the potential to become a ‘unicorn,’ or a private company with a valuation of $1 billion or more, according to Siam Commercial Co-President Orapong Thien-Ngern. “We will spin off some of them to allow them more freedom and independence, including raising their own funds from other investors,” Orapong said in an interview on Wednesday.

He didn’t specify which divisions might be spun off, but the bank’s main technology units include Digital Ventures Co., which invests in startups, and National ITMX Co., a payments services provider, according to its 2018 annual report.

“Thai banking like most other countries is a sunsetting industry, as existing lenders and new players are competing for limited pools of customers,” said Orapong, 57. “Venture capital and technology investments will be the key survival strategies for SCB in attracting new customers and boosting earnings.”

Siam Commercial and other local banks have been investing in technology to fend off competition from fintech startups, at a time when margins from regular lending operations are under pressure. The bank’s return on equity has fallen from 20% in 2014 to about 11% in the quarter ended Sept. 30, according to data compiled by Bloomberg.

Chief Executive Officer Arthid Nanthawithaya said in August he wants to transform Siam Commercial into a technology company, and the firm has recently completed a four-year capital spending program worth $1.3 billion focused on artificial intelligence, digital platforms and other technology.

The Thai lender will require additional “major investments” in areas such as artificial intelligence, to improve its data and transaction processing, according to Orapong. The amount of those investments is still under consideration and will need to be approved by the bank’s board, he said.

Orapong is also chief executive officer of Digital Ventures, which has a $100 million budget for investing in technology and innovation businesses, according to its website. The unit has invested in startups such as Pagaya, an AI-based asset management company, and Ripple.

“SCB has a very positive development as the country’s leading player for digital technology, despite its late start,” said Sukrit Friestad, an analyst at CGS-CIMB Securities (Thailand) Co. in Bangkok. “Still, it will need further large technology investments to stay competitive. This would continue to put pressure on its earnings.”

— Anuchit Nguyen (Bloomberg)

CFPB, Federal Reserve Board: AI bias can’t be ignored

Following a recent backlash resulting from allegedly discriminatory underwriting methods for the Apple Card, lenders’ moves are facing scrutiny from regulators. In light of the increased oversight, however, industry practitioners emphasize the role of AI as a catalyst for a more inclusive process.

Albert Chang, counsel at the Consumer Financial Protection Bureau‘s innovation office, said discrimination allegations shouldn’t be taken lightly. While regulations should enable innovation, he argued that companies need to be mindful of the impact of biases in underwriting models.

“If you’re facing those allegations, the first step is to understand why the algorithm in the decision-making process led to two different outcomes for apparently similarly situated applicants,” he said, speaking at The Clearing House annual conference in New York on Thursday.

Meanwhile, Carol Evans, associate director of the division of consumer affairs at the Federal Reserve Board, said the fact that AI algorithms were developed by men creates opportunities for bias to creep into the process. As a result, she noted that diverse teams are crucial to combating bias.

“Diversity and inclusion matters in this discussion,” she said. “Who was at the table when the model was discussed?”

See also: Apple Card’s gender-bias claims look familiar to old-school banks

Lenders, however, expressed optimism about AI’s prospects as an enabler for change. Meredith Fucs, chief counsel of regulatory advisory at Capital One emphasized that institutions should consider AI-based underwriting as one component of a larger effort to align products with customer needs. To ensure the effectiveness and quality control of AI-based underwriting methods, humans need to be involved, she noted.

“You don’t just sort of unleash the machine to make a decision — humans are always involved in the decision making,” she said. “The machines allow humans to set criteria, to gather more data, to identify correlation [that people] couldn’t identify before, but we still set the outcome criteria,” she explained.

Annie Delgado, chief compliance officer at Upstart, expressed confidence that the technology will evolve. To Upstart, greater consistency of underwriting processes across the industry could help root out discrimination. 

“If you’re talking about a machine learning model and you have a more limited group of people that can control the inputs and monitor the outputs of that system, you can teach a machine to not have biases,” she said.

Bank Innovation Ignite, which will take place March 2-3 in Seattle, explores emerging technologies in banking. Attendees will gain a firsthand look at new products and services from both legacy and upstart perspectives. Request your invitation

Fundera partners with UPS subsidiary to attract small business clients

Fundera, a New York-based small business lending marketplace, is partnering with UPS to offer loans to UPS clients. The tie-up, announced this week, puts Fundera’s lending platform on UPS’ warehouse logistics platform Ware2Go, letting businesses access loans while they’re building supply chain solutions. “As you’re using the Ware2Go solution, it will enable you to grow …Read More

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With Honey, PayPal focuses on the path to purchase

On Wednesday, PayPal agreed to acquire digital coupon platform Honey for $4 billion. Despite the hefty price tag, Honey offers PayPal data on customer intent, deepening the company’s foray into e-commerce and arming it with a new lever to drive transactions.

Image via PayPal

In a statement, Dan Schulman, PayPal CEO, called the acquisition among the most transformative in the company’s history, helping the company drive engagement and consumer loyalty to merchants on its platform.

Honey offers PayPal two strategic benefits: It offers access to a trove of customer data, and it could help PayPal increase activity on its payment systems.

According to PayPal, Honey’s capabilities will now become available to the company’s 300 million active accounts, along with 24 million merchant accounts. It moves PayPal’s focus beyond checkout, reaching customers at the beginning of their shopping journeys. In turn, Honey will allow PayPal to deliver personalized offers to consumers as they search for products.

Founded in 2012, Honey acts as a desktop browser extension and app which finds discounts during a customer’s purchase process. The company also offers rewards points for purchases at partner brands, along with a tool that monitors price fluctuations of goods. It has 17 million monthly active users, according to PayPal, and generated $100 million in revenue in 2018.

Andrew Lipsman, e-commerce and retail analyst at eMarketer, told Bank Innovation PayPal’s Honey acquisition is part of a bigger trend among e-commerce players that are trying to get a holistic view of consumer purchase patterns. With data on customer intent and the factors that drive conversions, PayPal improves its value proposition to brands as well as consumers.

See also: PayPal: 15m Venmo users engaged in ‘monetizable transactions’

“The context here with all the big players in digital [commerce], the ones that are playing at the top of the funnel are trying to move to the bottom of the funnel, and the ones at the bottom are trying to move to the top,” said Lipsman. “[PayPal] is seeing transactions, but they have little visibility into what’s leading up to that. [With Honey,] there’s a ton of information of value that PayPal can use to understand how and why people are transacting.”

PayPal also noted that it intends to embed some of Honey’s capabilities into PayPal and Venmo apps. Adding discounts to its digital payment vehicles through Honey could act as incentives to increase usage of its digital wallets.

“What we’ve seen in mature payments markets like the U.S. is that humans are creatures of habit and are conditioned to pay with plastic,” said Dayna Ford, a research director at Gartner. “If there is the possibility of getting additional rewards through Honey [via digital wallets], that could be the incentive that gets consumers over the hump and start to change their behavior.”

PayPal to acquire online coupon site Honey for $4 Billion

PayPal Holdings Inc. will acquire Honey Science Corp. for about $4 billion, its largest-ever acquisition, adding a startup that amasses valuable data on consumer buying habits and doles out coupons for online bargains.

About 17 million people use Honey apps or web browser extensions to find discounts at online shopping sites. The startup was profitable in 2018, PayPal said in a statement. Shares of the payments giant were little changed in extended trading.

Honey is valued at almost twice what PayPal paid for its next-largest deal, iZettle, the Swedish provider of small-business services it purchased in 2018, and marks the first major acquisition this year. Chief Executive Officer Dan Schulman has signaled that PayPal, with more than $10 billion in cash, is on the hunt for more deals after a string of takeovers last year that included Hyperwallet and Simility.

“You can expect us to be acquisitive going forward,” Schulman said on a conference call with analysts this summer. PayPal looks at hundreds of potential deals every quarter and sees them as a way to expand globally and accelerate development of new products, he said. Schulman described acquisitions as “a part of who we are on an ongoing basis.”

Honey, which was founded in 2012, will keep its base in Los Angeles, and the founders will continue to run the business. The company’s services include a browser extension that automatically applies coupons at e-commerce sites. In a statement, PayPal said that Honey’s capabilities will give its customers a better shopping experience, and help merchants drive sales, partly with more timely and personalized offers.

Mark Palmer, an analyst at BTIG, said the acquisition would help PayPal make “significant advances” toward becoming more relevant to users. It could also give customers and merchants a reason to choose PayPal “in the face of increasing competition from tech companies, such as Facebook Pay.”

As a shopping-focused browser extension, Honey has access to large amounts of customer data. Lisa Ellis, an analyst at MoffettNathanson, said that PayPal typically uses that information for purposes like fraud prevention. She added that if there were to be a privacy issue over data at the combined company that limited its use, some abilities, like targeted offers, could be curtailed.

— Julie Verhage (Bloomberg)

Envestnet Yodlee, Fintech Sandbox: Underserved customers still face obstacles

As the number of digital finance platforms grow, the pool of consumers underserved by the financial system is cause for concern, industry practitioners said at a financial services conference in New York this week. “There’s a whole host of reasons why we have 50 million Americans who still remain underserved or underbanked,” said Dara Tarkowski, …Read More

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CIMB Bank Philippines is using smartphone data for underwriting

CIMB Bank Philippines, a digital-only bank, is using data points from customers’ mobile phones, including the number of apps installed, calendar invites and the percentage of unread emails, to underwrite customers for personal loans. In a country where 77% of the population is underbanked, the personal loans are a move by the bank to cater to customers outside of the financial system.

“The hurdle to get a bank account is quite high,” said Vijay Manoharan, CEO of CIMB Bank Philippines, noting that customers are saddled with burdensome documentation requirements. “The fees that banks charge here are prohibitive.”

The bank is an arm of CIMB Group, a Malaysia-based bank with $134 billion in assets and 14 million customers internationally. Through its work with the Singapore-based underwriting tech company CredoLab, CIMB Bank Philippines is aiming to reach customers who lack documentation or financial history to work with most banks.  According to Manoharan, the loans offer these customers a way into the financial system.

CredoLab CEO Peter Barcak said the company uses about 50,000 data points from customers’ smartphones to underwrite them. CredoLab only uses anonymized data, meaning it would never read customer emails or texts. Instead, the bank analyzes the number of texts and emails. The company then takes these data points and looks for correlations with responsible lending habits.

Customers also must provide a picture of their identity documents and match them with a selfie to apply for a loan, while some customers are asked to upload income information.

The loans offered by CIMB Bank range from $600 to $50,000, and they last between one and five years. The interest rates range from 1.5% per month to 3% per month depending on the customer risk, which translates to APRs of 18% to 36%. CIMB Bank Philippines said it acquired 1 million customers since the bank launched about 10 months ago. 

See also: 5 Signs Financial Innovation Is Better in Asia

CIMB Bank Philippines developed the personal loan product in about three months, and according to Manoharan, 50,000 customers applied for loans since the product was launched. 

Despite the potential to offer loans to a large group of customers, CIMB Bank faces competition from both legacy providers as well as e-commerce platforms like Grab and Gojek. While multi-service e-commerce apps are branching out into financial services, Manoharan said he doesn’t see them going too deep into lending in the near future. “They don’t want to take on risk,” he said.

Bank Innovation Ignite, March 2-3 in Seattle, is a must-attend industry event for fintech professionals looking to discover what’s new in banking technology, products, services and development.  This is an exclusive, invitation-only event for fintech executives eager to learn about the latest emerging technologies. Request your invitation.

WorldRemit opens Toronto office to help grow Canadian customer base

U.K.-based digital money transfer company WorldRemit opened its Canadian headquarters in Toronto this week, a move that puts it in the midst of a growing market for cross-border payments solutions among immigrant populations.

The company’s Canadian operations were based in Montreal since 2011, but Corey Myckan, Canada country director at WorldRemit, said the company decided to locate its Canadian headquarters in Toronto because of the large communities of potential customers in the area and the city’s enabling environment for tech companies.

“Toronto is one of the largest tech hubs in North America,” said Corey Myckan, Canada country director at WorldRemit. “The other piece of the puzzle in terms of why we located here is its proximity to our customer base.”

After the U.S., the U.K. and Australia, Canada is the fourth largest market for the nine-year-old company. WorldRemit operates in 150 countries. Beyond its U.K. global headquarters, it has offices in the U.S, Poland, the U.K., the Philippines, Australia, New Zealand and Japan. According to Myckan, the Toronto office will include such areas as compliance, marketing and business development.

See also: Western Union is mapping customer journeys to reduce abandoned transactions

WorldRemit would not comment on transaction volumes from Canadian customers, but Myckan said the company is reporting 50% growth each month among Canadian market segment. The company, however, declined to specify whether this figure represents user growth or transaction increases.

WorldRemit faces competition from other digital money transfer companies, including TransferWise and PayPal, as well as legacy providers like Western Union. Despite these pressures, the company said the ongoing digitization of money transfer services — from retail stores to apps and other online platforms —  still represents a major opportunity.

“Most of the money transfer business is still in retail stores,” he said. “There are emerging digital players.” In addition, the company’s global footprint helps it compete against other companies operating in the field. The platform has strength among Canadian customers who send money to African countries, including NigeriaKenya, and Cameroon, noted Myckan. The Philippines is also a major destination country for funds transferred from Canada via WorldRemit.

In June, WorldRemit closed a $175 million Series D funding round; it’s raised $386 million to date. The company is reportedly valued at $900 million. The Canadian remittance market represents a $24.5 billion market opportunity, noted WorldRemit. Meanwhile, annual remittance flows to low- and middle-income countries reached $529 billion in 2018, an increase of 9.6 percent over the previous record high of $483 billion in 2017, according to the World Bank.

Robinhood plans free U.K. stock-trading launch in first quarter

Robinhood Markets Inc. plans to offer its stock-trading service outside the U.S. for the first time, launching in the U.K. in the first quarter of 2020.

The startup, valued at $7.6 billion in its most recent fundraising, received authorization from the Financial Conduct Authority to operate in the U.K. in August, has gained a following among U.S. millennials by allowing them to trade stocks for free on its mobile app. U.K. customers won’t be charged a commission for investing in U.S. and global stocks, nor will there be foreign-exchange fees or minimum account balance, according to a statement by the Menlo Park, California-based company.

U.K. customers already have plenty of choice of fintechs offering them savings and payments, yet there are fewer options for investing, Wander Rutgers, president of Robinhood U.K., said in an interview. For example, the finance startup Revolut is expanding into stock trading.

“U.K. fintechs have trained the U.K. population to try new financial products but most people don’t engage with investing and when they do they pay too much,” said Rutgers.

Robinhood was founded in 2013 by Baiju Bhatt and Vlad Tenev and counts DST Global and Sequoia Capital among its investors. The company says it makes most of its money from subscriptions to its Robinhood Gold service, as well as from rebates from market makers and stock loan income.

“At first we started with commission-free trading for the iPhone and now we are thinking how can we serve all financial needs for people at the lowest costs?” Tenev said in an interview.

The announcement of the U.K. expansion follows a public-relations setback in the U.S., when a glitch in its system allowed users to trade stocks with excess borrowed funds, giving them access to what amounts to free money. That came less than a year after a planned Robinhood checking account product was torpedoed by regulatory and insurance questions.

— Alastair Marsh (Bloomberg)

‘Partners in the driver’s seat’: How Green Dot is differentiating its platform offerings

As large tech and retail brands like Uber, Stash and Walmart roll out banking products, Green Dot is the bank partner, quietly operating in the background.

To Green Dot, its platform business is a major growth driver, allowing partners to add banking as a form of transactional glue that engenders loyalty and continued customer acquisition. A crowded field of challenger banks means brands needs to differentiate, and Green Dot’s mission is to work with product developers to help them realize their ambitions.

“One analogy you might use is if you want to go and build a fancy car, you can do it on your own and it might look beautiful, but it might not work so well,” said Dov Marmor, head of banking-as-a-service at Green Dot, at the Tearsheet Embedded Conference in New York on Tuesday. “If you’re an enterprise brand [like Green Dot], there’s a level of trust, and having our own bank is huge.”

With Green Dot acting as a trusted adviser, it aims to put the client’s vision at the forefront. “Our partners are in the driver’s seat — they design the vision,” noted Marmor. “We have to take that and make it safe for the consumer and approved by the regulators, and you can scale from zero to 100 in a very short period of time.”

The process, according to Green Dot, involves each brand outlining all requirements that underline the product vision. In turn, Green Dot reps act as “professors,” offering a challenge function for brands to ensure all product design elements integrate properly to serve consumers’ interests.

See also: Green Dot seeks to stem the bleeding caused by new digital-only banks with Unlimited

As part of the product development path, Green Dot takes apart each step of the user experience and onboarding journey to ensure all possible scenarios are considered.

“Where is the registration process going to live within the rest of your ecosystem? What is the messaging going to be [like]? How are you going to make sure that when [customers] get that card in the mail, they’re going to know what it is?” said Marmor. Large retailers and upstart tech brands obsess about every element of the product experience and onboarding process, positioning them well to push forward new innovations in financial services.

While Green Dot has been working with brands for decades, the company faces competition from other platform providers — both banks as well as tech companies. Asked what sets Green Dot apart, the company emphasized that multiple layers of expertise at a brand’s fingertips allow it to offer a compelling brand proposition.

“It’s the most vertically integrated offering under one roof,” said Marmor. “Different players out there and have different components in that ecosystem. You might have the API layer, others are sponsor banks and lending their license, [some do] a credit card which is your brand on everything, but you have to look at all different components under one roof.”

Founded in 1999, Green Dot provides a wide range of financial services products, including deposit account programs, network-branded reloadable prepaid debit cards, consumer and small business checking accounts, and network-branded gift cards. It has a market capitalization of about $1.27 billion.

Bank Innovation Ignite, which will take place March 2-3 in Seattle, explores emerging technologies in banking. Attendees gain a firsthand look at new products and services from both legacy and upstart perspectives. Request your invitation

How Gulf Coast Bank and Trust cut loan underwriting times in half

Gulf Coast Bank and Trust, a New Orleans-based bank with $1.7 billion in assets, is using automation technology to speed up loan approval times. The bank is tapping cloud banking vendor nCino to automatically pull information from tax returns when underwriting commercial loans.

According to Jason Shields, vice president and loan operations manager at Gulf Coast, reducing human involvement saves Gulf Coast time and money, and yields a better experience for clients. In turn, underwriters can focus on complex cases, such as high-dollar commercial deals.

“Underwriters are the most expensive part of a commercial loan origination process,” Shields said. “Having them spend less time doing simple things like punching in numbers from a tax return has been really good for us.” 

Through nCino’s technology, which is called nIQ, loan applicants can send tax returns as PDFs or pictures. It allows Gulf Coast to automatically extract relevant information, such as cash flow and revenue, to underwrite commercial loans. 

Gulf Coast identifies potential customers through CRM platform Salesforce, and customers submit documentation through a secure portal. Underwriters can extract all relevant customer qualification information for a loan with one click. The efficiency of the new workflow has cut processing time in half, according to the bank. Shields estimates small loans, or loans of $250,000 or less, now take about two hours compared to four from start to finish. Larger loans, or loans of up to about $5 million, now take half a workday compared to a full workday. Loan officers, in turn, don’t have to worry about a bottleneck at the underwriting stage.

While the automation technology usually extracts customer information from documents successfully, it occasionally prompts humans to verify if the tasks have been done correctly. According to Shields, the tool requires human verification in less than 10% of cases.

See also: TD Bank Updates Its Commercial Lending Division with NCino Partnership

Gulf Coast tested the system for about six months prior to launching it one month ago. During that time, Shields estimates the bank extracted data from roughly 2,500 tax returns. The tool is only available for commercial loans for now, but Gulf Coast is considering how it can be applied to retail customer use cases.

Despite the upgrade in technology, banks like Gulf Coast still face pressure from non-bank lenders like Kabbage and BlueVine, which announced a $102.5 million Series F funding round Tuesday. Both companies offer small business loans that can be approved in minutes. Juozas Kaziukėnas, CEO of e-commerce research firm Marketplace Pulse, recently told Bank Innovation these lenders are often in a better position to serve small businesses, especially small-scale sellers that would be ignored by a large bank. “[Alternative lenders] have better data than a bank would have and can offer loans to sellers who would have no access to funding,” he said.

Bank Innovation Ignite, which will take place March 2-3 in Seattle, explores emerging technologies in banking. Attendees will gain a firsthand look at new products and services from both legacy and upstart perspectives. Request your invitation.

The Clearing House adds HSBC and Wells Fargo to its real-time payments network

The Clearing House‘s real-time payments network is quickly picking up new bank partners, with Wells Fargo and HSBC joining it to support business transactions this week. Both banks’ corporate and business clients can now send and receive real-time payments through the network. Steve Ledford, senior vice president of products and strategy at The Clearing House …Read More

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Ant may join race for Singapore virtual bank licenses

Billionaire Jack Ma’s Ant Financial Services Group said it may apply for a virtual banking license in Singapore, a move that would add a heavyweight contender to the race.

“We are actively looking into this opportunity,“ Hangzhou, China-based Ant Financial said in an emailed response to questions from Bloomberg News.

The Monetary Authority of Singapore is offering as many as five digital banking permits to non-banks in a bid to open up the industry to new competitors. A successful entry by Ant Financial would pit China’s largest online financial company against traditional incumbents DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp. in the growing market for digital banking in Southeast Asia.

While Ant didn’t disclose whether it will seek a retail or wholesale license, it will be easier for the Chinese firm to meet the conditions for the latter.

Singapore’s efforts to open up the banking industry to technology companies comes on the heels of a similar move in Hong Kong, where Ant and Chinese competitors including Tencent Holdings Ltd. obtained licenses earlier this year.

“The recent licensing of several China ‘Big Tech’ banks in Hong Kong represents the formal entry of such players into the international financial system,” said James Lloyd, the Asia-Pacific financial-technology lead for consulting firm EY. “It seems probable that Singapore will follow in this regard,” he said, while pointing out that foreign applicants have more room to maneuver with a digital wholesale bank rather than a full-services one.

There are up to two licenses on offer for full digital banks, which can serve all kinds of customers and require S$1.5 billion ($1.1 billion) in capital as well as local control. Another three would be for wholesale banks, which foreign firms can run and have a capital threshold of S$100 million.

OCBC, Southeast Asia’s second-largest lender, has agreed to join peer-to-peer lender Validus Capital Pte. and Temasek Holdings Pte’s venture capital arm to seek a wholesale license before the year-end application deadline. DBS, which operates a digital bank in India and Indonesia, hasn’t expressed any intention to seek a license.

Southeast Asia’s digital lending market is expected to more than quadruple to $110 billion by 2025, according to a report by Bain & Co., Google and Temasek Holdings Pte.

Ant SME Services (Hong Kong) Ltd. unit received a permit from the Hong Kong Monetary Authority in May to operate a virtual bank in the Chinese territory.

Ant’s payments app Alipay and its local e-wallet partners had about 900 million annual active users in China and 1.2 billion globally as of June, according to Bloomberg Intelligence.

– Chanyaporn Chanjaroen and Lulu Yilun Chen (Bloomberg)

BMO rolls out photo-based autopay feature

Bank of Montreal is rolling out a new feature that allows customers to pay bills without having to log into their online bank accounts.

Earlier this month the bank launched BMO QuickPay, through which customers can take a picture of their bill and email it to BMO. Upon receipt of the bill and a confirmation of the details with the customer through a text message, the bank automatically pays the biller. It’s a move that’s intended to remove customer anxiety around bill payments, Peter Poon, head of digital product management at BMO, told Bank Innovation.

Customers can email BMO a picture of their bill.

“Banks have done a great job focusing on their websites and app experiences,” Poon said. “But the overall journey actually begins with the bill statement.” According to the bank, 87% of customers pay at least one late bill each year, highlighting the ongoing friction around bill payments.

BMO QuickPay was designed for customers to pay high-volume billers such as wireless providers and utilities companies. If customers want to add a biller not currently on the BMO network, they can send a paper bill to BMO, which the bank will use to onboard it. The feature is only available in Canada for now, but the bank plans to roll QuickPay out to American customers through its U.S. subsidiary, BMO Harris, in the future. 

The bank only accepts bills from the email address associated with customers’ profiles, a move to combat fraud. The bank reimburses customers for losses from unauthorized transactions. Poon said the text confirmation ensures customers have control over which payments are being debited out of their bank accounts.

BMO customers confirm the payment through a text.

BMO is launching QuickPay as other companies are working to make bill payments more convenient. Paytm Canada, for example, allows users to pay billers from its platform, and it rewards users with points for making bill payments. In the United States, Doxo allows users to set up automatic payments for a variety of bills, and users can choose between different payment methods.

See also: Schack: Expanded BMO Harris Innovation Program Casts Wider Net for Ideas

The launch of BMO QuickPay comes as the bank is trying to overhaul its mobile offerings. In July, BMO launched a mobile loan application tool. The bank also introduced a virtual assistant for Facebook Messenger last year called BMO Bolt, which answers common banking questions. 

Tony DeSanctis, senior director at Cornerstone Advisors, said that while BMO’s tool wouldn’t likely revolutionize how consumers pay bills, it could make the experience more convenient for customers in some cases. As for security risks, he noted that the text verification method is not necessarily more or less risky than other fraud mitigation measures.

Bank Innovation Ignite, which will take place March 2-3 in Seattle, explores emerging technologies in banking. Attendees will gain a firsthand look at new products and services from both legacy and upstart perspectives. Request your invitation.

The future of banking is about data-driven experiences and not products: HSBC

The bank of the future will cease to be about specific products and services. Instead, it will offer embedded “experiences” based on data the institution has on its customers, according to a report released by HSBC this month. Entitled “Banking of the Future: Finance in the Digital Age,” the study was developed for HSBC by …Read More

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Facebook beefs up e-commerce capabilities with digital payment wallet

Facebook is adding a digital payment method to its platform, a move which will facilitate retail transactions, and ultimately encourage customers to stay within its ecosystem.

Facebook Pay

Facebook Pay, which was announced last week, will link to most credit cards and debit cards, much like Amazon Pay and Venmo. Users will have the option of donating to online fundraisers, in-game purchases, purchasing event tickets, and completing person-to-person payments on Facebook Messenger and purchase from “Select Pages and Businesses” on the Facebook Marketplace. The capability will be added to Instagram and WhatsApp, though Facebook did not comment the timing of these launches.

The move will help Facebook learn more about its users, which could help the company in its efforts to target marketing and advertising efforts, said David True, partner at Paygility Advisors. “Facebook makes money from information, so [it] can keep people doing more and more things without leaving the Facebook universe,” he explained.

See also: Three key takeaways from Facebook’s payments efforts

According to True, payments are an important data play. The platform knows when a user clicked on a link or spent a specific amount of time looking at an item on the market, intelligence that will offer insights on which posts will more likely lead to transactions, he noted. Indeed, the success of Alipay and WeChat Pay in their home markets offer compelling use cases for the co-mingling of social media platforms and payments.

Facebook Pay marks the third recent financial services move on the part of the social media giant, beyond digital currency Libra and a charitable donations tool. Despite the potential for wide adoption, security concerns may deter some users from paying with Facebook Pay, Gartner senior analyst Charles Golvin said in a recent interview.

“Consumers are concerned about Facebook’s [treatment] of their private data,” he said, noting that consumers’ openness to turning over their private financial data to the social media giant is still a “big question mark.”

Bank Innovation Ignite, which will take place March 2-3 in Seattle, explores emerging technologies in banking. Attendees will gain a firsthand look at new products and services from both legacy and upstart perspectives. Request your invitation.