Fintech
Alchemy’s Lending Tech Has Come to the Small Business Lending Market: Here’s What You Need to Know
April 7, 2022
“We are the salesforce for embedded finance.”
Timothy Li, CEO of Alchemy, has launched a financing software for both commercial and small business lenders that can automatically approve applicants through an integrated decision engine. The service offers what he calls a “soup to nuts” digital lending platform — offering lines of credit, installment loans, and even loan servicing.
For the past six years, Li has been building a suite of products for those who want to sell financing. He compared his product to what many companies are now offering in the form of Buy Now Pay Later. As his service began to grow, Li realized there was an “extension” of potential with his service.
“[The] extension of this is that some of the small businesses also happened to be small business lenders,” he said.
According to him, he created the service not as an idea of innovation, but to meet a growing demand from his users. “I heard from all of the small business lenders in the New York area,” said Li. “They said ‘Tim, could you augment or come up with a piece of software fully automated for us to use’”?
Although it took some time, Li said this recent announcement is what the lenders that came to him years ago were looking for. “I said well, we’re almost there, give me a year or two to kind of really properly do it right. So that’s what we’ve done.”
In what he refers to as “private labeled” software, Alchemy’s Lending SaaS (or Lending-as-a-Service) allows merchants and lenders alike to operate a fully branded and operational lending platform with a full suite of financial products. Customers range from tattoo removal companies to lenders, to companies that have now grown to become publicly traded.
The ability to literally send Alchemy a JPEG of some branding and marketing and becoming on online lender is as easy as just that. “Anybody can put their label on and have [their lending platform] up and going in a matter of weeks,” said Li.
When speaking about the role ISO’s play alongside his technology, Li didn’t dismiss the value brokers play in the small business lending industry. “The good ol’ ISO model is great,” he said. “It’s great that there is a product like this that can help [merchants] grow and drive their company. But as the new generation comes in, they don’t have time. They might be on their phone for five minutes after they close their store or small business, and these kind of products are out there sitting there for them to apply for on their own time.”
Li hinted that his product is best utilized by merchants who are digitally-native and are looking to have access to data quickly, while being given the time to make a decision regarding the type of financial product best suited to their business.
“[Alchemy] lets them pick what they want to pick based on their own cash flow,” he said. “It’s no longer that there will be a sales process where things aren’t as transparent. The ‘I am not going to tell you who my lender is until I’m paid,’ [thing], you know how the ISO world works. This stuff takes all of that away, and puts it right in the hands of the consumer that needs it.”
When asked if brokers could find any use of this product, Li said that if used right, the value proposition for brokers that use this software is huge.
“Brokers can use our system just like any other lender. If they want to have another way to be able to market to these small businesses, and have them use their products more. It’s essentially HubSpot for financing.”
Canadian Fintech Continues to Soar as Open Banking Comes to Fruition
April 5, 2022
After seemingly endless deliberation, Canadian open banking is finally being implemented; a huge win for the already high-performing fintechs that call Canada home.
After overcoming laws that prevented access to the data that fintechs need to innovate, the Department of Finance in Canada named Abraham Tachjian as the open banking lead as of last week, in another legitimate step towards incorporating open banking within their legacy financial institutions.
This comes on top of Canadian fintech’s major impact both in Canada and abroad. Canadian companies in the space of lending, payments, banking, and crypto have been some of the best performing and most innovative companies around the world, despite not being able to leverage open banking in their innovation strategies within Canada until now.
In a release from the Canadian government, Randy Boissonnault, the Minister of Tourism and Associate Minister of Finance, commented broadly on open banking’s implementation of the new system.
“Canadians deserve a secure open banking system that is regulated, efficient, and protects their personal information,” said Boissonnault. “This is an important next step in the process of implementing the Advisory Committee’s recommendations, in order to convene stakeholders to design and implement the foundational elements of an open banking system that benefits both Canadians and businesses.”
As the laws are being put in place, Canadian fintech continues to soar. According to a recent LinkedIn post from Tal Schwartz, Senior Project Manager at Noomis Solutions and formerly of the Canadian Lenders Association, Canadian banking and fintech continues to lead the way globally.
In all the niches in finance, Canadian companies seem to have their name on the top of list. Corporate card companies like Jeeves is now with over $2B, Canadian Venture Capitalist firm Portage Ventures is one of the world’s largest with $4B in assets.
Online stock trading platform Questrade Financial Group has begun to offer mortgages. Their competitor Wealthsimple, another Canadian stock trading platform, has also said that mortgages are on the way alongside a big push into lending.
In the US, Canadian-giant TD Bank became the 6th largest bank in the states with recent acquisitions of First Horizon Bank in late February.
Apart from the success of companies themselves, a sign that the Canadian fintech space is doing well is a desire to reconnect in person. The CLA’s Leaders in Lending Summit was recently announced for mid-November, a gathering of a sector of Canadian finance whose future was doubted after pandemic-induced restrictions on their industry. deBanked reporters will be attendees of the event.
University of Delaware Fintech Building Calls for $6.5 Million to Complete
April 3, 2022
In 2020 the University of Delaware began the construction of a new Fintech Center on its Science, Technology, and Advanced Research (STAR) campus. Cinnaire, a community building company, supported the development of the new 100,000-square-foot-building with a New Markets Tax Credit investment.
The financial services technology building is expected to be completed by November of this year. The University’s President Dennis Assanis is asking the state legislature for $6.5 million to furnish and equip the establishment.
Assanis stated, “Construction of the building is only the first step. It needs about $14 million in fit-out-in partitions and cabling, in wiring and furnishings, in other work to make it suitable for occupancy and to have the labs that we need in the building.”
Three million dollars has already been provided by the state through the Higher Education Economic Development Fund along with $4.5 million from industry partners.
This new space on campus will serve as an economic driver for the state. According to Assanis, “The extensive investments that the university is making are helping to drive progress in healthcare, in engineering, in business, and many other areas that would benefit Delawareans today and for many years to come.”
The building is owned by the Delaware Technology Park (DTP) and will hold a partnership along with UD and Discover Bank. DTP will fund it with a below-market-rate loan from Discover.
Other tenants will include NIIMBL workforce development; Discover Bank; the Kendal Corporation, a senior living company; Financial Health Network, a nonprofit research organization; The Venture Center, a national Fintech incubator; Tech Impact, a nonprofit digital workforce development organization; RAAD360, a supply chain IT startup; and Grain Exchange, a new restaurant from Grain Craft Bar + Kitchen.
Empathy in Design, Data in Development; How Specialized Fintechs are Bringing Humanity and Finance Together
March 15, 2022
Ahon Sarkar, GM of Helix“I think the idea of being human has to exist at the core of your business. When you’re building a product, you have to start by asking ‘what’s the problem I am trying to solve and who is the person and what are they actually dealing with, and then how do I build it.’ You don’t build something and then bring it out to people. Empathy has to be the core of your product development.”
Ahon Sarkar is the GM of Helix, Q2’s BaaS arm, and a brand new homeowner. According to him, innovation happens when you define products based around problem solving, not creating products and then trying to force them on industries that desire innovation.
“I just finished buying a house, and it’s been a crazy process,” said Sarkar. “When I sent the wire to go buy my house, I went and asked my bank, ‘how will I know it’s been sent?’ Obviously I’m anxious about it,” he continued, “it’s the largest amount of money I have ever sent in my entire life.”
Sarkar said that his bank told him their system doesn’t give notifications that wire funds are indeed sent. The bank was like “‘oh, you won’t know.’ I was like what?”
“That day, I walked out and called our Product Owner for Wires and I said, ‘Kady, we have to build wire notifications.’ That’s empathy. That’s putting yourself in the shoes of the person and figuring out what is wrong with the system and making it better for a human being, as opposed to focusing on just the top line revenue.”
Helix’s whole mantra is about making finance human. By creating specifically tailored products for their clients, the company has developed both a brand and mindset internally and externally about their goals, values, and outlooks on what their work means to the greater good of both levels of consumer and B2B economics.
On top of offering employees complete flexibility on where and how they work, Helix also looks for people who are outside of the ‘cookie cutter’ software guru fintech employees are labeled as. Instead, Sarkar and Helix are looking for genuine human beings with life experiences that they can bring value to both the product and company’s culture.
“It’s hiring people that are empathetic, that are curious and are driven, because that propagates this idea into customer support, into operations and how we work with our bank partners,” said Sarkar. “It goes into marketing and how we’re talking about the overall message, so if it’s not at the core of what you do, at some point it will be pushed to the side so you can do the innovation and revenue you really want to do.”
“We have realized that you can innovate and drive revenue by being empathetic, by being human, and actually entrenching those values within the genetic fabric of the company,” Sarkar said.
When asked about the state of small business lending, Sarkar spoke about the data pools some companies are sitting on that would allow them to approve individuals for financial products. However it’s regulations according to him that are holding companies like Uber back from offering financial products to their employees.
Sarkar pitched the scenario of Uber lending a driver money at a cheaper rate because the information they have on their own employee may be able to prove their creditworthiness more than the information that is accessible to a bank.
“Let’s say you have an Uber driver, who has been on the job for four years. Five star driver, five thousand rides, Uber trusts this person. When that person walks into a bank, what does the bank see? Someone they never met before who makes $35K-$45K a year and comes with a bucket of risk. So that bank is going to run it through traditional underwriting, and that person may be challenged to get a loan because they have non-traditional income.”
According to Sarkar’s analogy, it’s Uber who should be funding this driver. “Uber trusts this person, Uber has been paying them for years. They know who this person is and they’re willing to extend more credit because they don’t think they are taking as much risk,” Sarkar said.
“So if you could take that idea and give Uber the ways to conform to a [financial] product that is based on what they already know about their drivers, those people might actually qualify for funds.”
Sarkar stressed that underwriters cannot even attempt to develop these products without the government giving these companies clearance to go out and provide these types of products for employees. “Whether it be gig economy workers or solopreneurs, or medium-sized business owners, it doesn’t matter,” he continued. “At the end of the day, if regulation doesn’t allow the underwriting for these products, no company is going to put them into practice.”
Whether it’s culture, product design or staffing a team, it seems that this idea of humanity is sticking to the fundamentals of Helix’s brand. “If you take the financial products and loans being written and just make them more practical and more human, I think we would be able to solve a lot of problems.” said Sarkar.
Fintech is Bringing Data to Banking, and It’s Going to Change Everything
March 9, 2022As the rush to innovate legacy finance and its surrounding institutions continues, companies across the fintech space are rushing to build tech-infused brands while designing and marketing innovative financial products. Paul Walker, Senior Vice President of Revenue and Partnerships at Helix, spoke with deBanked about how tech’s impact in finance will not only impact how money moves in a B2B space, but how it will impact the lives of everyone who works to earn and spend money.
Walker spoke about how many banks are sitting on stockpiles of potential revenue, but just don’t have the infrastructure to leverage it. “[Fintechs] are data driven companies, and banks have not been data driven,” said Walker. “They’re sitting on some of the most valuable data you can ever imagine, but it’s the fintechs that are able to apply and anticipate areas of a consumer’s need [with this data] that not even the consumer knew they needed.”
According to Walker, fintech’s incoming impact on banking will hit both consumer and commercial banking pretty quickly. He spoke about how things like payroll information can be leveraged by banks as a harnessing tool for data on particular individuals who might be ripe for certain financial products.
“Imagine something like [banks] tracking the fact that your payroll or direct deposit changed by 20%, that might indicate that you got promoted,” said Walker.
“If you got promoted, is that a good time to go and engage you in a [financial] service that might be appropriate?”
Walker continued to speak on how smaller fintechs are bringing new ideas to traditional financial products and services on a widespread basis through approach via a problem solving lens.
“Using context is where these fintechs have done a change in things, some of the things are fundamentals like paychecks two days early,” Walker said. “I think fintechs have really tried to think about these points and new services.”
Walker spoke about how fintech has impacted every facet of the financial system and how the industry’s vast array of companies makes up a pretty large basis of his company’s clientele. With a history of banks and credit unions being their primary customers, Q2’s branch into Helix appears to be an effort to meet a rising demand of tech’s desire to incorporate themselves into legacy banking.
“From a tech perspective, more-so than anything, one of the interesting things we’ve done which what appeals to a lot of folks is our long history of working with a long line of banks and credit unions,” said Walker. “Over the last few years, we have been on the forefront of working with fintechs, and I think we’ve brought some really unique partnership models to market.”
“We’ve combined the things that fintechs do really well, and the things that banks and credit unions do really well, especially in regards to oversight and understanding the regulatory environment that will keep someone out of hot water in a highly regulated space.”
When asked whether innovation is truly exponential, Walker was hesitant to identify a point in which innovation reaches limits. According to him, innovation has no limits. In Walker’s world, finance seems to be just a subset of societies’ immersion with technology.
“I don’t think innovation ever stops, and I think that’s the basis of technology,” he said. “I don’t think its specific to just finance, but when tech and finance converge, there’s an opportunity to say ‘how do we do this better’”.
Walker expanded on how innovation has changed legacy products over and over again in a short period of time, and how examples of this are just the starting point for what is to come. “Now we’re going from same-day to real-time payments. At some point, you’re not going to have a physical card, you will have a digital card.”
“I think data will continue to create innovation,” said Walker. “Ultimately, I’m confident that innovation is not a destination—it’s a journey.”
Five Takeaways from Q2’s Helix Launch Event
March 8, 2022Q2, a fintech that works to digitize large banks, hosted a launch event at the New York Stock Exchange last week for Helix, the company’s new [Banking as a Service] BaaS platform that intends to humanize fintech by tailoring products to specific user needs. Attended by Q2 clients and employees from across the fintech and crypto space, the event celebrated a legacy financial company making a push into the next dimension of finance.
Below are five initial takeaways from the event-
Finance Needs a Face- Humanizing finance is the focus of Helix’s brand. By creating a human approach in their practices both internally and externally, the company is attempting to tailor financial services and products on an individual basis. The Helix employees deBanked spoke to seemed genuinely invested in defining the line between the human touch and innovating redundancy. Even the innovators themselves believe that a personal touch needs to a part of the marketing, selling and maintaining a service-based financial product.
Big Changes to Banking are Coming- There is an underlying narrative that fintech is building the infrastructure to support different types of value propositions from large financial institutions. As banks can no longer promise interest rates to provide a benefit from holding money in their accounts, many are beginning to get into financial education, guidance, and leveraging data to create personalized budgets, analyze spending habits, and offer money-saving tips. Rather than just be a place where consumers keep their money, look for banks to leverage fintech and data to create different types of services for their customers.
Above: deBanked Reporter Adam Zaki speaks with Jonathan Price, Executive Vice President of Emerging Businesses, Corporate & Business Development at Q2If You’re not Hybrid, You’re Doomed- Fintech companies as a whole, especially those attended by this event, always speak on the idea of creating a work environment that is as innovative as their products. By allowing employees to work fully remote, hybrid or in office at their own accord, all of the companies there have drastically improved company culture and employee retention. Not only does this open up the hiring pool outside of geographic restrictions, but these fintechs are able to hire experienced employees from around the industry who are leaving jobs they enjoy solely because they work for companies that demand work in the office to be full-time. According to executives of both Helix and Q2, they have seen production, communication, engagement and revenue increase as a result of giving employees a choice on where to work.
One executive actually laughed at the idea of employers demanding employees be in person for any type of job in fintech. “CEOs and executives that make employees show face for the sake of it will never survive in this industry,” said one executive from Helix.
New York Hasn’t Lost its Reputation- As many of the people who attended the event flew in from out of state, it appears that an out-of-towners’ look on New York City hasn’t changed much despite contrary belief since the pandemic. When asked about why the event was being held in Manhattan, those there believed that it was a no-brainer to have it in what they still believed to be the ‘main hub’ of finance. Even when discussing their individual excursion plans with whatever free-time they had left in the area after the event, attendees of the event seemed pumped to be able to checkout whatever spots they could around New York City.
Crypto Needs Regulation before Implementation- The biggest pushback attendees of the event expressed when it came to the crypto space was a lack direction when it comes to regulation. Banks and large financial institutions are aware, educated, and eager to begin widespread implementation of digital assets and financial products that use them, but are waiting for the government to show signs of life when it comes to regulation of the space. Until the government says how crypto will operate, no large scale financial institution will invest both time and money into creating new products around it.
With Latest Merger, Walmart is Set for its Launch into Financial Services
February 2, 2022
Walmart-backed fintech startup Hazel announced that it plans to acquire the fintechs Even and ONE, setting the stage for Walmart to open up financial services and products to its 1.6 million U.S. associates and 100 million plus customers. The company plans to bring on Omer Ismali as CEO of the merger under the ONE brand.
Ismali climbed the ladder at Goldman Sachs in both investment and consumer banking prior to becoming the CEO of a NewCo backed by Ribbit Capital, the leading investor in Hazel.
“Consumers everywhere are being left behind by the world of financial services,” said Ismail. “Our vision is clear, build on Even and ONE’s success to offer a product that offers consumers the best way to spend, the best way to access their wages, and helps millions save and grow their money. I’m looking forward to partnering with two stellar leaders in Brian and David to improve the financial lives of tens of millions of consumers.”
David Baga and Brian Hamilton are the former CEO and Co-founder of Even and ONE respectively. The two will remain in leadership roles at ONE according to a press release from Walmart.
The merger will form a company of over 200 employees whose CEOs and upper management will also remain in lateral positions. The release also says that ONE will get their balance sheet stuffed with $250M to “fund future growth.”
“Walmart is constantly looking for new ways to deliver on our core mission of helping our customers save money and live better,” said John Furner, President and CEO of Walmart U.S. and board member of the reemerged ONE. “Customers have made it clear that they want more from us in the financial services arena.”
“Creating a simple, personalized app that allows users to manage their money in ONE place is the natural next step toward fulfilling that,” Furner continued.
Judging by the release, it looks as if Walmart is planning to market this both internally and externally. As America’s largest employer, they could easily become a player in financial services if they hosted the technology to manage the accounts of their employees alone.
Furner spoke further on the intentions of Walmart to offer up financial services to the seemingly underbanked. “We couldn’t be more excited about what this will mean for Walmart customers, associates and consumers everywhere as we try to help empower millions to improve their financial lives.”
Codat’s Partnership with Moody’s Brings Real-Time Merchant Accounting Data to Lenders
January 10, 2022
Codat and Moody’s Analytics are partnering to bring the fintech’s API software into Moody’s CreditLens solution. The move will enable Moody users looking to fund small businesses the ability to access and manage all of the accounting data for the respective merchant looked to be funded.
Along with an effort to increase efficiency in the approval and funding processes, both companies seem to hope that the partnership will also improve access to capital for small businesses across the US.
“We find ourselves in a time of rapid change, where new approaches to financing and technology are becoming increasingly important to small businesses,” said Peter Lord, CEO & Co-Founder of Codat . “Moody’s Analytics has impressive global scale and reach, so this partnership holds the potential to meaningfully reverse the credit crunch facing SMEs while opening up new profitable lines of business for financial institutions.”
“Together we will be able to extend the benefits of Codat’s two-way flow of financial data to more lenders and financial institutions, allowing them easier access to a wider data set to make high-quality, data-driven credit decisions,” said Lord.
CreditLens is a “credit lifecycle management solution” with access to large amounts of data from across the lending space. Codat’s software will enhance data transferring in the CreditLens platform by offering real-time accounting data on merchants that is instantly accessible by Moody users.
“We are excited to welcome Codat as a new accounting data aggregation technology partner to boost the value of Moody’s Analytics lending solutions,” said Eric Grandeo, Product Head for Moody’s Analytics Lending Solutions.”Codat provides a seamless interchange of real-time data to enable valuable credit insights and predictive capabilities.”
“We are both dedicated to helping financial service businesses gain [a] deep understanding of their client’s risk and behavior, and make better decisions based on real-time accounting, banking, and commerce data,” Grandeo continued. “Ultimately, the partnership will afford small businesses across the U.K and U.S. access to more credit options, opportunity and growth.”
