Fintech

Ocrolus Partners with Kiva to Provide Funding and Publish its Customers’ Stories

February 6, 2020
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OcrolusOcrolus has announced a partnership with Kiva, the Californian non-profit that provides loans to entrepreneurs in countries underserved by funding options. The deal comes after news of Ocrolus’s partnership with Plaid in December, a venture that helped launch the Ocrolus+ platform.

As part of Kiva’s work to help global small business owners, it publishes the stories of those entrepreneurs, charting how they set up their business and what led them to do it. Ocrolus will follow Kiva’s suit with this partnership, as it plans to publish the stories of its own fintech customers. Aiming to highlight the biographies of those businesses and entrepreneurs that have excelled in the alternative finance and fintech industries, Ocrolus will provide $5,000 for Kiva-backed loans for each story published to its site. If the published business chooses to match this funding, Ocrolus will put forward a further $5,000, bringing the total appropriation for Kiva to $15,000.

Speaking on the partnership, Ocrolus’s COO Vikas Dua told deBanked that the inspiration for the deal came after listening to a podcast that featured one of the co-founders of Toms, a company known for its ‘one for one’ policy which sees a pair of shoes being donated to children in need for every pair bought.

“The best part of Kiva is the types of folks you’re helping and the impact you can have. They do a great job of sharing stories of entrepreneurs and folks in need,” Dua said in a call. “Everyone’s incentives are tied together. Overall, we’re just very excited about the mission and very excited not only to tell our customers’ stories, but also to highlight some of the things we’re doing for the folks that Kiva interacts with and they fund. They have some wonderful stories there and we’re excited to share those as well.”

Open Banking: Canada Might Not Be Able to Make Up for Lost Time

January 22, 2020
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open banking
Over the last two years, open banking has become a matter of public conversation in Canada. Most would agree there is overwhelming support for the implementation of an open banking regime. So why has nothing concrete happened yet?

2019 turned out to be an exciting, yet painfully underwhelming year for open banking in Canada. The news media finally caught on to the movement and started publishing stories on the rise of robo-advisor apps, or how small and medium-sized businesses would be impacted, and so forth. Experts and industry leaders pitched in with a massive volume of op-eds, most of which were in support of open banking, and with many deploring Canada’s slowness. Some came to our podcast to discuss their perspective (spoiler: customer-centricity is a very big theme.)

Another telling sign of the importance of open banking is the fact that at the federal level, both the legislative and executive arms of the government have become actively engaged in the public conversation. The Senate of Canada’s committee on Banking, Trade and Commerce produced a well-researched report — perhaps the most valuable contribution to the conversation. This report calls for swift action on the part of the federal government to advance a regulatory framework for open banking. In parallel, the Department of Finance’s appointed advisory committee on open banking held a consultation with key stakeholders and should publish its own report in the near future.

Even to a casual observer, there was an obvious sense that Canada is ready to embrace open banking.

But here’s the thing: despite all this work and evidence of widespread support, Canada didn’t move the needle on open banking in any concrete way.



Who’s leading?

The UK has already implemented a comprehensive open banking regime, and continental Europe is close behind. Dozens more countries are working toward their own versions. Among the various geographies moving in this direction, some are opting for a government-led approach, the UK probably being the best example. Others, like the US, tend to be more market-driven. In Canada, the main stakeholders are still largely hesitant about where to strike the balance between the two approaches — and the result is that so far, both have failed to provide the leadership that would allow open banking to move forward.

The Department of Finance’s advisory committee was tasked to study the “merits of open banking”. This line of inquiry feels very old, and for good reason: to question whether we should have open banking or not is a false debate, and a time-wasting rabbit hole. The real question Canada should be asking itself when it comes to open banking is, “what is the objective we want to achieve here?”

Let’s take a few steps back to realize just how important this question is.

The UK had a very clear vision for their open banking regime. The Competition and Markets Authority had assessed that the oligopolistic dynamics of the banking sector were putting consumers at a disadvantage. Thus, the UK set on their open banking journey with a very precise objective in mind: make it easier for consumers to switch providers. While some take great pride in criticizing the UK’s implementation — stating that its objective was either wrong, too narrow, or poorly executed — the fact remains that they are ahead of the pack. And the UK’s leadership in this area still persists, with the Financial Conduct Authority now studying the question of extending the current open banking regime into a holistic open finance regime.

Canada FinanceMeanwhile, in Canada, the government is trying to wrap its head around the big questions, such as the liability framework that should be put in place for an open banking regime to be viable. (In other words, in a system where financial services are decentralized, how do we go about making the consumer whole when something goes wrong?) However, without a decision on what end state we are looking to achieve with open banking, these conversations are doomed to keep looking exactly like they’re looking now: a bunch of market actors with conflicting interests pretending they know what’s best for consumers. Conversations happening in industry groups aren’t much more productive, with the “trench war” dynamics being the trend there as well.

The irony is that the technical aspects of open banking can be dealt with easily. From a technical standpoint, financial data-sharing APIs have proven their effectiveness, and coming up with a shared technical standard should not be too difficult. The real challenge is coming up with a framework everyone — incumbents and new entrants alike — can rally behind, something industry groups have largely been ineffective at.

Canada’s highly concentrated financial services sector is a stable one, but incumbents are not likely to open themselves up to disruption. This is the part where bold political leadership is required.



The clock is ticking

Data sharing is nevertheless picking up, as 4 million Canadians (and counting) have made fintech apps a part of their financial lives. Consumers and businesses who want the benefits of on-demand data sharing must rely on the current generation of financial aggregators, like Flinks. This system may work as a de facto connectivity layer, but the lack of standards results in a clumsy patchwork of bilateral deals between aggregators and banks. It just isn’t a viable way to achieve an open banking regime that levels the playing field when it comes to data portability.

In its report, the Senate’s Committee on Banking, Trade and Commerce states that Canada “risks falling behind” if it fails to implement open banking, and that “without swift action, Canada may become an importer of financial technology rather than an exporter.” It is true that if we keep delaying open banking, our slowness will prove to be a very stingy and lasting price to pay for the Canadian society; this is why we need bold action now. We can’t afford the comfort of waiting until we’ve figured out the 100% perfect solution.

There’s nothing like a real-world example: 2020 opened with a seismic shift when financial giant Visa acquired Plaid, one of the largest US financial aggregators, for over five billion USD. This is hinting at a new phase where markets will consolidate around a few large players; Canada can either ride the tide or get towed under.



It’s time to be bold

In the end, what needs to happen for Canada to move forward with open banking?

Our financial services sector can be compared to those of the UK and Australia, where a few powerful banks control a very large portion of the market. In those two countries, open banking was designed to stimulate competition, and government action was necessary to get things moving.

Right now, the question politicians ought to ask shouldn’t be if — or even how — but why. A why will pave the way and provide a natural direction to sort out the how. In 2019, discussions around open banking lacked this fundamental feature: political leadership centered on a bold, ambitious, consumer-centric mission statement. A why.

So here’s one for 2020: open banking will increase consumers’ choice when it comes to financial services. That would be a good start — and while good is not perfect, it still beats nothing by a landslide.

Visa Acquires Plaid in $5.3 Billion Deal

January 14, 2020
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visa plaidYesterday it was announced that Visa and Plaid, the financial services company that helps business connect with customers’ bank accounts, have penned a deal that would see Visa purchase the San Francisco-based startup for $5.3 billion. The purchase price is roughly double Plaid’s previous valuation of $2.7 billion after its 2018 Series C investment of $250 million. Pending regulatory confirmation, the acquisition is expected to be completed in 3-6 months.

Founded in 2013 by Zach Perret and William Hockey, Plaid’s API enables companies to easily link with customers bank accounts and connects to a host of apps, such as Venmo, Robinhood, Coinbase, TransferWise, and Acorns. The company claims to have connected to one quarter of Americans with bank accounts and has expanded to both the UK and Canada.

Not being Visa’s first interaction with Plaid, the startup had previously received investment from its new owner, along with other recognizable names like Mastercard, Goldman Sachs, Citi, and American Express.

“This fits well, strategically,” commented Al Kelly, Visa’s CEO, in a call with investors on Monday. “We’re excited about new business and the ability for this to accelerate our revenue growth over time.”

Speaking to CNBC, Perret told CNBC that “We feel fortunate to have been there for the early days of fintech, and to have helped develop that ecosystem … This represents an important milestone, and the ability to work with Visa to make our products much bigger and better – both domestically and internationally.”

Whether such developments mean added features, further expansion to new territories, or something else entirely remains unclear. However, much like Google’s acquisition of Fitbit late last year, this merger witnesses the passing on of a treasure trove of data, with the curtain being pulled on the financial details of millions of transactions between startups and consumers; leaving Visa better positioned to understand and pre-empt what exactly is happening in industries where unpredictable disruption is valued above all else.

deBanked’s Top Ten Things of 2019

December 20, 2019
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In this video, I break down deBanked’s Top Ten Things of 2019. Happy holidays and have a Happy New Year from all of us at deBanked!

christmas lights
christmas lights

Re-read the top ten stories of 2018 HERE.

Ocrolus Announces Premium Fintech Platform, Ocrolus+ at New York City Event

December 12, 2019
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Ocrolus EventLast night Ocrolus, the New York-based fintech infrastructure company that specializes in document verification and cash-flow analytics, announced its latest product, the Ocrolus+ platform from Chelsea’s Glasshouses.

Following a series of testimonies from companies such as BlueVine, OnDeck, and Enova, Ocrolus’s CEO, Sam Bobley took to the stage to run through what the new platform means for customers before thanking everyone for coming out.

Speaking to deBanked earlier that day, Bobley explained that Ocrolus+ expands upon two of the services available to customers already, its Capture and Detect products. In their ‘+’ iterations these services will now offer the ability to upload documents and connect digital data sources to them as well as utilize advanced file tampering protection via their new partnerships with Plaid and SentiLink, respectively.

Bobley asserts that the development is partly due to Ocrolus’s customers and their evolving needs. “Our growth and our success is largely driven by our customers. We’re in the fortunate position where our customers have helped us build our product road map … They challenged us to improve our platform and provide additional services. And these were two areas that seemed absolutely critical.”

“ONE THING WE’RE WORKING ON AS A COMPANY IS TO TRANSFORM FROM A COMPANY THAT ANALYZES FINANCIAL DOCUMENTS TO A COMPANY THAT PROVIDES FINTECH INFRASTRUCTURE”

And looking forward, Ocrolus plans to continue to offer advanced services through their platform, with Bobley revealing that a third product is in the works, Analytics+, which will focus on cash flow. And as well as this, the CEO and Co-founder noted that additional digital data sources may be added in the long term.

“One thing we’re working on as a company is to transform from a company that analyzes financial documents to a company that provides fintech infrastructure, end-to-end fintech infrastructure, so by bolstering up our fraud detection capabilities and also including the ability to connect to bank accounts for confirmatory and ongoing monitoring, we’ve been able to solve additional problems that our customers are asking for.”

Hedge Fund Billionaire With Fintech Focus is Buying The New York Mets

December 4, 2019
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New York MetsSteve Cohen, the hedge fund billionaire behind Point72 Asset Management, is reportedly buying a majority stake in the New York Mets.

After a long infamous run at the helm of S.A.C. Capital Advisors, Cohen founded Point72 and with it, an early-stage venture capital fund that focuses on areas like fintech and artificial intelligence. Among the many investments the fund has already made have been in Nav and Acorns.

Nav, you may already know, has made a big name for themselves in the small business lending industry.

Point72 invested in Nav alongside Goldman Sachs in a $38M Series B round in 2017. At the time, Nav CEO Levi King told deBanked that “[Point72 is] a smart advisor for us from a data perspective – a quant hedge fund that’s best in class on data. We get free advice along the way. That’s part of the deal.”

Nav went on to raise even more money earlier this year from Point72 in a Series C round that was joined by Experian Ventures, Aries, and CreditEase Fintech Investment Fund.

Meanwhile, Acorns, another major Point72 investment, is the only micro-investing account that allows consumers to “invest” their spare change into ETFs. The company has signed up more than 4.5 million users to-date.

More recently, however, Point72 jumped into the small business lending market in Mexico via a collaborative $42M Series B investment with Goldman Sachs into Credijusto. Credijusto has already originated $90 million in loans and equipment leases to small businesses. The loans range in size from $20,000 to $500,000.

All of which to say is that even if the Mets do not improve anytime soon, they at least could very well find themselves at the forefont of financial technology in Major League Baseball.

Canadian Lenders Summit Recap

November 23, 2019
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canadian lenders summit 2019The Canadian Lenders Association’s largest annual event brought together hundreds of executives from the fintech and lending industries. It was hosted at MaRS, a dedicated launchpad for startups in Downtown Toronto that occupies more than 1.5 million square feet and is home to more than 120 tenants, many of which are global tech companies.

After OnDeck Canada CEO Neil Wechsler was introduced as the new chairman of the association, the day kicked off with a presentation by Craig Alexander, the Chief Economist of Deloitte Canada. Alexander explained that after some major warning signs sounded off late last year and early this year, Canadian growth and positive economic indicators have returned. He opined that politics in Canada and the United States will play a strong role in the economic outcomes of both countries going forward.

Panels on a variety of topics dominated the rest of the day with an interlude keynote from author Alex Tapscott who spoke about the financial services revolution.

The sessions concluded with an award ceremony focused around the Top 25 Company Leaders in Lending and the Top 25 Executive Leaders in Lending. The Canadian Lenders Association will make videos of the sessions available online. deBanked was in attendance.

Top Canadian Companies of the year

Google to Begin Offering Checking Accounts in 2020

November 16, 2019
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G PayThis week Google announced that it plans to offer checking accounts to customers in 2020. The news comes after the release of the Apple Card, Apple and Goldman Sach’s controversial joint project, in August; this week’s release of Facebook Pay; and the mass exodus by payments companies from Facebook’s Libra Association last month.

Titled as Google’s ‘Cache’ project, the accounts will be the result of a partnership between the tech giant and a selection of banks and credit unions. Thus far, Citigroup and a credit union based in Stanford University have been confirmed as partners, with more to be announced. Speaking on the venture, Citigroup spokesperson Liz Fogarty said the “agreement has the potential to expand the reach and breadth of our customer base.” Whereas Joan Opp, President and CEO of Stanford Federal Credit Union, remarked that the deal would be “critical to remaining relevant and meeting customer expectations.”

As of yet, not much is known beyond these partners and that the checking accounts will be in some way “smart” according to Google spokesperson Craig Ewer. Whether or not there will be fees attached to the accounts, or who will be the target audience remain unsure. The latter especially given Google Pay’s poor take up in America.

As well as all this, it is equally unclear what exactly Google will be bringing to banking that is new. In his statement, Ewer said that “we’re exploring how we can partner with banks and credit unions in the US to offer smart checking accounts through Google Pay, helping their customers benefit from useful insights and budgeting tools while keeping their money in an FDIC or NCUA-insured accounts.” Such “insights” and “tools” are yet to be expanded upon and may give cause to alarm, as the company has recently come under fire for its questionable use of data after it was revealed that Google has secretly gathered the personal medical data of 50 million Americans from healthcare providers; and has recently been accused of using both human contractors and algorithms to tweak search engine results, potentially exhibiting favoritism as well as a willingness to change results related to at least one major advertiser.

When asked by CNBC about Google’s plans to enter finance, Senator Mark Warner (D) was apprehensive, remarking that “large platform companies have not had a very good record of protecting the data or being transparent with consumers.” Warner, who was a tech entrepreneur before entering politics, believes more regulation should be in place as the number of tech companies looking to enter finances continues to increase, saying, “once they get in, the ability to extract them out is going to be virtually impossible.”

Such comments come in the wake of Facebook CEO Mark Zuckerburg’s testimony to Congress last month, in which he told the representatives: “I view the financial infrastructure in the United States as outdated.” Just how outdated Zuckerburg and his contemporaries believe it to be will become clearer as more of these Big Tech-Wall Street hybrids are released.