Fintech
A Code “Quiltt” for Fintechs
July 18, 2022
It’s called Quillt, a low-code tool that allows companies to integrate with several third-party services to either pull in datasets or act on data.
Quiltt says their tool detracts the need for companies to hire costly engineers to integrate their services one at a time. In doing this it allows for data to be accessed instantly by “abstracting away” the need for any organization to integrate with services one at a time and “right the business logic” required to each individual service into a single integration.
“So, with us, regardless of who’s in your data stack, we can essentially have a backend that processes all that information so you can focus on whatever your core focus is at the end of the day, as opposed to repetitive data, plumbing, and infrastructure,” said Mark Bechhofer, Cofounder & COO.
The low code aspect of it is modules with just a couple lines of code that anyone can paste into their application and embed a frontend experience. Startup companies that are looking to build in fintech with small teams and little funding could also seek assistance through Quiltt, according to Bechhofer. It could even be a bank or a credit union that wants to focus on their core competency and not worry about adding commoditized feature sets that their competitors already have.
“We are issuing cards and processing transactions, we are really doing the data intelligence around money,” said Bechhofer.
Before Covid, Bechhofer and business partner Ruben Izmailyan were selling a white label suite of DFM apps to banks and credit unions. The two business partners were often asked how they had built this backend infrastructure to take in data from “disparate sources” and combine it, analyze it, standardize it and make sense of it.
“We realized that was actually a much larger market with potentially a much larger play. And so we kind of ripped apart our old application into what I call like a Lego box and fintech infrastructure, and pivoted the company into what it is today,” said Bechhofer.
Driven by the mission of bringing financial wellness to as many people as possible, the team at Quiltt is excited about the possibilities ahead.
“We think that providing this new abstraction layer of technology will empower many new types of fintech builders and essentially give license to folks who maybe aren’t full time data scientists or engineers without worrying about hiring expensive teams. We’re really excited about what people might build on our platform that we haven’t even envisioned,” Bechhofer said.
Fintech Lender Signals That Capital Markets Are Worried
July 11, 2022
Concern about the economy is real. Upstart, the publicly traded online consumer lending marketplace, is noticing such a shift that it felt compelled to publish a sneak peek of its Q2 earnings. And it’s not good.
“Inflation and recession fears have driven interest rates up and put banks and capital markets on cautious footing,” said Dave Girouard, co-founder and CEO of Upstart. Girouard followed that by saying that its marketplace is “funding constrained,” a challenge “largely driven by concerns about the macroeconomy among lenders and capital market participants.”
Originations in Q2 were down as a result.
Though the company is still optimistic that its risk models will perform, the economic headwinds come just as it was beginning to roll out its new small business lending product.
In May, Girouard said that their small business loan pricing model would include more than 500 variables about both the applicant and business.
“It will also feature our loan month modeling framework, which is one of the most impactful innovations added to our personal loan product a few years back,” Girouard said. “Our initial testing suggests that version 1 of our SMB model will deliver higher accuracy, as measured by Area Under the Curve, or AUC, than peer models that have been in the market for years.”
Upstart plans to publish its official Q2 earnings on August 8th. The price of its stock is down 93% since its all time high reached last October.
Senior Business Lending Exec of Square Has Moved to Coinbase
May 16, 2022
Ronak Daya, who spearheaded several of Square Capital’s lending divisions, including “head of product for business lending” and “head of product for external lending and partnerships,” announced on twitter that he had moved on from the company. He had been involved in SMB lending for 7 straight years. His new role? Head of Financing Products at Coinbase.
If you thought Coinbase was just about buying Bitcoin, you’re wrong. Daya announced that he’ll be leading a team “to build lending and financing products both for consumers and institutional clients.”
“As I explored what came after Square, my primary focus was on challenging myself to go in a fundamentally new domain/area, and build for a new customer,” Daya wrote. “The priority was learning. Learning by building in domains that I am passionate about, but know little about.”
Convinced that the world is moving towards becoming a crypto-native economy, Daya added that he wants to “play a part in using trust, ease and education to onboard the next billion customers to a new financial system.”
Currently, Coinbase already offers a lending product, loans up to $1 million at 8% APR with monthly payments and no credit check. Though Bitcoin is used as collateral, payments are made by monthly ACH debit or through a linked USD wallet.
Register for The 4th Annual Alternative Finance Bar Association Conference
May 12, 2022
The fourth annual Alternative Finance Bar Association conference is BACK IN PERSON. This is the go-to event for and with the industry’s leading attorneys.
Mark your calendars for June 15th and June 16th in New York City and register by emailing Lindsey Rohan at lindsey@lrohanlaw.com. Registration is subject to approval and space availability.
Two-day program includes the following panels:
The State of the Industry: Industry experts discuss pending legislation, case law and market hurdles. They have both a regulatory panel ready to discuss what’s new in Virginia, Utah, NY and California as well as a Courtroom panel ready to discuss the winning and losing case law that has come out in the past year.
Bankruptcy: The aftermath of Chicago v. Fulton, In re Shoot the Moon and other pivotal bankruptcy cases that shape industry practices.
Ethics: Challenges faced by internal counsel and ways to navigate those pressures.
Collections: Trends in the post-COJ, post-COVID era.
Employment/Labor Law: The rise of labor use outside the U.S. What challenges arise from having call centers outside the U.S. Tax implications, oversight and practical benefits/detriments. Post-COVID remote work implications. What you need to be aware of to avoid creating liabilities.
The Art of Arbitration: The importance of a carefully drafted Arbitration Clause and the pro/cons of this venue.
Thinking Ahead: What technologies and market conditions will shape the future of the industry. Broad discussion of Blockchain technology, CRM systems, cannabis and what we can imagine will shape the future of Alternative finance.
WEDNESDAY KEYNOTE: David Picon, Esq. – It is with great pride that David Picon of Proskauer Rose will be the Keynote speaker. For years the AFBA has admired his work from afar. Attendees now have an opportunity to learn directly from David what makes for an unstoppable litigator.
THURSDAY SPECIAL EVENT: AFBA Game Show Mash-Up with the Industry’s Legendary Attorneys. Special Guests you will not want to miss!
Speakers:
- Andrew Smith, Covington & Burlington LLP
- Brian Simon, Hollis Public Affairs
- Jamie Polon, Mavrides Moyal Packman & Sadkin, LLP
- Patrick Siegfried, Rapid Finance
- Natalie Pappas, Rapid Finance
- Keith Ellis, Expansion Capital Group
- Kate Fisher, Hudson Cook LLP
- Cathy Brennan, Hudson Cook LLP
- Blake Sims, Hudson Cook LLP
- Steve Denis, Small Business Finance Association
- Christopher R. Murray, Murray Legal PLLC
- Mark Stout, Padfield & Stout
- Shanna Kaminski, Kaminski Law Group
- Michael W. Davis, DTO Law
- John Viskocil, Fora Financial
- Gabriel Mendelberg, Mendelberg P.C.
- Anthony F. Giuliano, Giuliano Law P.C.
- Jeffrey S. Cianciulli, Weir Greenblatt Pierce LLP
- David Picon, Proskauer Rose
- Jonathan Nelson, Dedicated Financial GBC
- Lindsey Rohan, BasePoint Capital LLC
- Christina Grigorian, Katten; Zach Miller, Burr & Foreman
- Renata Buhkman, Delta Bridge Funding
- Vanessa Petty, Settle
- Alexis Shapiro, Forward Financing
- Jan Owens, Manatt Phelps
- Scott Pearson, Manatt Phelps
- Jesse Michael Carlson, Kapitus
- Robert Zadek, Buchalter
When:
Day 1 – June 15
9:00am – 4:30pm: Offices of Proskauer Rose (includes light breakfast and lunch)
5:30pm – 7:30pm: Cocktails at Dear Irving
Day 2 – June 16
9:30am – 6:00pm: 15 W. 38th Street, 2nd Fl, Sinatra Room (includes light breakfast and lunch)
4:00pm: Wine & Cheese
Register soon, SPACE IS LIMITED!
deBanked is a sponsor of the event. Industry attorneys are highly encouraged to attend.
Large Fintech Companies Helping to Normalize Revenue Based Financing
May 6, 2022
With business increasing for wide-reaching financial technology companies like Square, Paypal, and Shopify, this has brought more attention to revenue-based financing products like the ones they offer. Henry Abenaim, Founder and CEO of Fundingo, said that it brings more businesses to the table.
“…you sometimes think it’s a small world or small group of merchants, and you really come to realize that it’s huge,” he told deBanked. “And the more they’re serviced, the more they need, the more they grow. So it just feels like there’s just more awareness of the product, and then more merchants that are going to come in demand and ask for it, as well as these bigger players are always going to service only a subset of the businesses.”
At the same time, a greater public awareness of options could tighten margins for certain funding providers. “I think it’s going to make the merchants that are way more bankable… get lower price deals, so it’s going to hurt the margins, it’s going to hurt the profits,” Abenaim commented.
John Bulnes, Vice President of Business Development at Fenix Capital Funding, expressed how it is not yet determined what kind of effect the larger mainstream companies will have on the industry. “I do think it’s something that the larger first position MCA companies may feel the effects of first, because they’re going to be competing more or so with taking away clients from those companies first, as opposed to the companies that are smaller that are doing shorter term deals.”
As these big companies operate with larger capital bases, it may indeed become more difficult for smaller companies to compete.
“… it’s going to be something that’s going to constantly adapt and fluctuate as time goes, but I do see it as an expanding industry… it’s kind of a sign that when you see more commercials and we see these bigger companies jumping into the space, that it is something that’s going to continue to grow,” said Bulnes.
And commercials and ads are definitely increasing. One of the largest online small business lenders in the country was asked about their TV and radio campaigns during their recent quarterly earnings call.
“We’ve definitely been ramping [commercials up] hopefully with a little bit more diligence than OnDeck was running ads three or four years ago,” said David Fisher, CEO of Enova. “But we’ve definitely jump back into kind of broader base advertising in that business and it’s been working really well.”
NovoPayment, Latina-founded BaaS Plans to Expand
April 21, 2022
Novopayment has raised $19 million in Series A financing, led by Fuel Venture Capital and IDC Ventures. The company, which offers digital banking, payment, and card solutions, is planning to grow and expand within current and further US markets while focusing on countries in Latin America and the Caribbean.
CEO and Co-founder Anabel Perez stated, “We define a digital payment as the simple transfer of value from one payment account to another using a digital service such as a mobile device, POS, or computer.”
With the new funding, NovoPayment plans to continue increasing capabilities, introduce new features and functionalities, heighten security, and capitalize on US market opportunities. To accelerate their expansion of current offices in Mexico, Colombia, Peru, Ecuador, and headquarters in Miami, they are adding over 100 new engineers, business development, and product experts to their team. Austin and San Francisco are the first two spots where the branching out will begin.
“Austin and San Francisco are huge hubs for tech innovation and we want to expand there to ensure we attract the best talent for our operations,” Perez discussed. “As we grow in those markets, we’ll assess if we need more boots on the ground in additional states.”
NovoPayment currently holds a strong placement in the LAC region and works with several US clients and partners. This places the company in the right position to broaden in these markets they already have successful track records in.
“Based on our ongoing discussions with clients, we have special insight into the challenges and technology gaps these markets face, and realize the potential to further connect the Americas with a common banking infrastructure. We will be growing our product offerings to enable new data and money flow solutions to account for the increasingly globalized, cloud-based world of financial services,” Perez explained.
As Miami is the “Latin America capital of the US,” NovoPayment holds an advantage as a native of South Florida with the tech scene gravitating towards this region. Miami has served as a gateway to other markets.
“Unlike other companies that are now playing catch up and rushing to the LatAm market, we have a strong foothold and reputation in 14 markets across the Americas,” said Perez. “Establishing those relationships, and understanding the nuances of each market, requires regional expertise that takes time to build.”
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.
