One banks $40M to offer ‘all-in-one’ financial services to the middle class

One, a startup that aims to bring “all-in-one banking” to the middle class, announced today that it has raised $40 million in a Series B round of funding.

Progressive Investment Company (the insurance giant’s investment arm) led the round, which included participation from Obvious Ventures, Foundation Capital, Core Innovation Capital and others. The financing brings One’s total raised since its 2019 inception to $66 million.

Since making its product generally available in September of 2020, Northern California-based One has grown to have “hundreds of thousands” of customers, according to CEO and co-founder Brian Hamilton, who previously co-founded PushPoint (which was acquired by Capital One).

“Stretched middle-income households and working families deal with financial stress on a daily basis and are largely unsupported by current offerings,” Hamilton said. “This can be viewed as a kind of a noisy market, and so this funding has been a good validation of the vision and kind of the products, in that we have been able to stand out in that market.”

Over the past 11 months, the startup has worked to enhance its core product offering, launching overdraft protection, an auto-save feature that rewards automatic savings contributions at 3.00% APY, cash flow-based credit lines and a credit builder product to help its customers build financial health. One claims that it has helped its users automatically save over $2 million collectively since its launch, a number that grows daily, according to Hamilton.

The company is also trying to change up how people share financial goals and responsibilities with individually configurable “Pockets” that it says can be “easily” shared with others and accessed via virtual and physical cards. 

“What we’re doing really is to re-integrate and unify what is otherwise a pretty splintered financial life for middle income households and families that are attempting to manage finances on a daily, weekly and monthly basis,” Hamilton told TechCrunch.

Over the past few years, he said, there have been a number of different fintech and bank products that people use to run their life “and they’re all starting to converge.”

The company was founded on the premise that traditional banking exists “on a system of fractured accounts and billions of dollars in hidden fees that leave customers living paycheck to paycheck despite steady incomes.” One says it is built on a “proprietary” technology core that aims to deliver saving, spending, sharing, budgeting and borrowing in a single account.

“Everybody’s trying to do a piece of everything, but they all started doing one thing,” Hamilton said. “But it’s really hard to back into the others or to bolt them on afterwards if you didn’t begin with the end in mind, kind of on an integrated basis. So that is essentially what we set out to build with One, with the idea to reunify credit and debit and savings and reintegrate the sharing of money with other people so it didn’t have to be done on a one-off transactional basis through Venmo or PayPal or Zelle.”

One’s banking services are provided by Coastal Community Bank, Member FDIC. The startup emphasizes that it’s a financial technology company, and “not a bank.”

It plans to use the new funding toward “fueling” customer growth, hiring and expanding its product offerings.

Charles Moldow, Foundation Capital general partner and One investor, said that challenger banks such as Chime and Aspiration focus on a debit card offering to subprime customers who are looking for lower bank fees and access to paychecks sooner.  

“These customers are generally treated poorly by banks and charged a lot of fees because they don’t generate much revenue for banks outside of interchange fees on debit purchases with little disposable income,” he said.

The real money made by banks, according to Moldow, is against mid-prime customers for both debit and lending.  

“These customers are harder to acquire because banks hate to lose them due to their large lifetime values,” he said. “One differs from the challenger banks in the market in that they have created a superior mobile banking experience for the 80% of the market that is not super prime or subprime. They have both a debit and credit offering and a vastly better user experience.”

The fintech is able to offer a user experience that is “materially” different from standard large bank offerings in that their back end infrastructure is a “modern” core and One is able to handle core checking, lending, money transfer and savings all on the same back end.

This means One can fully integrate those experiences (the aforementioned integrated offering “Pockets”).

“This differs from traditional banks which have each of these systems on top of different tech stacks which prevents them from providing integrated offerings,” he said. 

Also, by not having brick and mortar branches, the company is able to offer lower fees, more points and rewards and higher savings rates, Moldow added.

#apps, #banking, #charles-moldow, #digital-banking, #finance, #financial-services, #fintech, #foundation-capital, #funding, #fundings-exits, #one, #progressive, #recent-funding, #startup, #startups, #venture-capital

White label fintech platform Toqio secures $9.4M Seed led by Seaya and Speedinvest

The upside of the Open Banking regulations which have swept jurisdictions like the UK and the EU is that many more challenger banks have appeared. The headache for either incumbent banks or for upstart startups is the very proliferation of these new banks and financial tech products. But as we know, in gold rushes, the people selling the picks and shovels usually win. Thus, startups have turned their attention, not to launching full-stack banks, but to full-stack platforms that other people can launch their fintech startups and products upon.

The latest to join this brigade is Toqio, a fintech platform with a white label digital finance SaaS that allows anyone to launch a new fintech product.

The London-based startup has now secured an €8M / $9.4M seed round of funding led by Seaya Ventures and Speedinvest, with SIX FinTech Ventures participating.

Founded in 2019 by Eduardo Martínez and Michael Galvin, the teams behind Toqio previously built a small business SaaS startup, Geniac, which was acquired by Grant Thornton.

Eduardo Martínez, co-Founder and CEO, of Toqio, said: “Businesses and banks are looking to innovate in the FinTech sector, but to date, they have had to create and maintain complex software solutions to do this. This has also kept smaller niche businesses out of the market. We don’t want FinTech to end up like banking just with a new set of big incumbents trying to take control of financial services. We want to level the playing field.”

Toqio says its customers get access to pre-built products to create applications that can go to market quickly. Products include digital banking, card, and financing solutions, and a marketplace, aimed at financial institutions, FinTech startups, banks, and corporate brands.

Headquartered in London and Madrid, Toqio says it already has customers across Europe, including new Spanish bank Crealsa, business banking service Wamo in Malta, and alternative business lender Just Cash Flow in the UK.

Aristotelis Xenofontos, Principal at Seaya Ventures, said: ”We have spent many years following the Embedded Finance space and finally found the missing piece, a seamless enabler that glues everything together. Toqio is a truly end-to-end platform that provides a complete plug-and-play bank and allows any organization to offer a full suite of digital financial services in a rapid, painless, future-proof, and low-cost way.”

Stefan Klestil, General Partner at Speedinvest, added: “We’ve seen the rise of neo-banks, the change of regulations across multiple markets, and now we’re starting to see traditional businesses and big brands looking to embed financial products within their existing offerings. Financial services are going to change and expand at an unprecedented rate, and Toqio will be instrumental in enabling it.”

#articles, #bank, #banking, #digital-banking, #europe, #european-union, #finance, #financial-services, #financial-technology, #general-partner, #geniac, #london, #madrid, #malta, #money, #open-banking, #seaya-ventures, #speedinvest, #tc, #united-kingdom

TeamApt will use its new funding round to provide digital bank services for the unbanked

A great deal has changed since we last covered Nigerian fintech startup TeamApt two years ago. At the time, the company had just closed a $5.5 million Series A round from a single VC — Quantum Capital Partners, a firm owned by Zenith Bank billionaire Jim Ovia.

TeamApt has quite the story. CEO Tosin Eniolorunda started the company in 2015 after leaving Interswitch. He was going head-to-head with the billion-dollar company when TeamApt received a license to operate as a payment switch providing enterprise solutions for banks in the country.

TeamApt bootstrapped with revenue made on a per-project basis. By 2017, the company, which optimized core bank back-office operations was servicing 26 financial institutions and processing $160 million in monthly transactions without raising a dime. A year later, TeamApt began releasing direct consumer and business-facing products targeted at driving financial inclusion in the country.

Moneytor was a digital banking service for financial institutions to track transactions with web and mobile interfaces; Monnify, an enterprise software suite for small business management and AptPay, a push payment infrastructure to centralize services used on banking mobile apps. These products had varying degrees of success; however, Moniepoint, an agency banking platform launched months after the Series A, became the instant hit.

In developed markets where banking networks are sophisticated and have an extensive reach, the concept of agency banking is foreign. But in developing markets like Nigeria, it’s necessary because the bank to population ratio in Nigeria is low. According to reports, there are 4.3 branches per 100,000 people compared to the global average of 11.7 branches.

Agency banking serves as an alternative distribution strategy for traditional retail banking by using authorized personnel who acts as agents to expand the reach of the branch network. For many Nigerians, agency banking represents a financial access lifeline and one of the most viable options for accessing the financial services they need.

Moniepoint agents use mobile apps and point-of-sale terminals to offer these customers access to financial services like cash withdrawal, cash deposit, funds transfer, airtime purchase and bill payments. In less than two years, Moniepoint claims to account for 74% of agency banking transactions in Nigeria. The platform also processes about 68 million transactions worth over $3.5 billion monthly through 100,000 agents and 14 million customers. When transactions from Monnify are added, TeamApt said it processed $17.5 billion in the past 12 months.

But despite the seeming success, TeamApt is poised to add digital banking services to Moniepoint’s dominant agency banking play. “What is the reason behind this? With multiple players, was the agency banking space becoming too crowded that Moniepoint couldn’t acquire more market share?” I ask Eniolorunda.

“There’s still room for growth in the agency space. We can actually grow more and take more share as more agents continue to enter the market and consumers embracing agency networks and point-of-sale networks. So the reason we’re trying to do this is for two reasons — a mission and commercial reason,” he answered.

Most well-known digital banks in Nigeria cater to the already banked, neglecting the unbanked or underbanked consumers that banks do not serve. Eniolorunda’s “mission reason” is to provide financial services for them via launching a digital bank. The commercial reason? “We want to be the middle ground between banks and digital approaches to actually serve the next billion Africans. The reason why we can do this is that we have demonstrated our traction in Nigeria to become the largest agency network just in the period of two years,” the CEO added

Judging by the transactions made on Moniepoint and since existing digital banks capture the same customers as big commercial banks, TeamApt sits on a big opportunity if it can convert a chunk of its offline users online. Of course, this strategy isn’t new in itself. It is currently being adopted by another digital bank targeted at the unbanked, Bankly. However, the good news is that should any of these platforms show significant success, other platforms might widely adopt the approach and go a long way in providing digital banking services to the unbanked.

To test out this strategy at scale, TeamApt has secured another round of investment. Two months ago, Dutch entrepreneurial development bank FMO announced its participation in TeamApt’s Series A extension round with $2 million. But while FMO is among the grand list investors in this tranche of investment, the venture round has changed to a Series B, TeamApt confirmed. 

The $200 million Pan-African fund Novastar Ventures led the round. Dubai-based Global Ventures, CDC Group, Soma Capital, and Pan-African VC firms Kepple Africa and Oui Capital participated alongside some local angel investors.

TeamApt, while continuing its switching business for enterprise, will be looking to extend its offerings directly to customers and micro-SMEs with Moniepoint. In addition, and subject to regulatory approval, both agency and digital banking platforms will exist under Moniepoint.

Brian Waswani Odhiambo, the head of West Africa at Novastar Ventures, said the VC firm backed TeamApt after seeing the speed at which its agency network became the leading operator in Nigeria. The firm, “by providing TeamApt with sufficient capital to pursue its new phase of growth,” has no doubt the company will do the same with its digital banking platform.

In the past month, TeamApt has announced to anyone who cared to listen that it’s currently in the process of closing another round. Eniolorunda confirmed this to TechCrunch that it would be a Series C round. While that is in progress, TeamApt will be making expansion plans to other African countries with strong economies in every region — Central, East, North and South. The company is also keen on performing a few acquisitions along the way to tap significant opportunities for leveraging technology and offline distribution to provide financial services to Africa’s mass market.

#africa, #banking, #digital-banking, #finance, #financial-inclusion, #funding, #soma-capital, #tc, #teamapt

Fintech all-star Nubank raises a $750M mega round

In 2013, Colombian businessman David Velez decided to reinvent the Brazilian banking system. He didn’t speak Portuguese, nor was he an engineer or a banker, but he did have the conviction that the system was broken and that he could fix it. And as a former Sequoia VC, he also had access to capital.

His gut instinct and market analysis were right. Today, Nubank announced a $750 million extension to its Series G (which rang in at $400 million this past January), bringing the round to a total of $1.15 billion and their valuation to $30 billion — $5 billion more than when we covered them in January.

The extension funding was led by Berkshire Hathaway, which put in $500 million, and a number of other investors.

Velez and his team decided now was a good time to raise again, because, “We saw a great opportunity in terms of growth rate and we’re very tiny when compared to the incumbents,” he told TechCrunch.”

Nubank is the biggest digital bank in the world by number of customers: 40 million. The company started as a tech company in Brazil that offered only a fee-free credit card with a line of credit of R$50 (about USD$10). 

It now offers a variety of financial products, including a digital bank account, a debit card, insurance, P2P payment via Pix (the Brazilian equivalent of Zelle), loans, rewards, life insurance and an account and credit card for small business owners. 

Nubank serves unbanked or underserviced citizens in Brazil — about 30% of the population — and this approach can be extremely profitable because there are many more clients available.

The banking system in Brazil is one of the few bureaucracies in the country that is actually quite skillful, but the customer service remains unbearable, and banks charge exorbitant fees for any little transaction. 

Traditionally, the banking industry has been dominated by five major traditional banks: Itaú Unibanco, Banco do Brasil, Bradesco, Santander and Caixa Economica Federal. 

While Brazil remains Nubank’s primary market, the company also offers services in Colombia and Mexico (services launched in Mexico in 2018). The company still only offers the credit card in both countries.

“The momentum we’re seeing in Mexico is terrific. Our Mexican credit card net promoter score (NPS) is 93, which is the highest we’ve had in Nubank history. In Brazil the highest we’ve had was 88,” Velez said.

The company has been on a hiring spree in the last few months, and brought on two heavyweight executives. Matt Swann replaced Ed Wible (the original CTO and co-founder). Wible continues to be an important player in the company, but more in a software developer capacity. Swann previously served as CTO at Bookings.com and StubHub, and as CIO of the Global Consumer Bank at Citi, so he brings years of experience of scaling tech businesses, which is what Nubank is focused on now, though Velez wouldn’t confirm which countries are next.

The other major hire, Arturo Nunez, fills the new role of chief marketing officer. Nunez was head of marketing for Apple Latin America, amongst other roles with Nike and the NBA. 

It may sound a little odd for a tech company not to have had a head of marketing, but Nubank takes pride in having a $0 cost of acquisition (CAC). Instead of spending money on marketing, they spend it on customer service and then rely on word of mouth to get the word out.

Since we last spoke with Velez in January regarding the $400 million Series G, the company went from having 34 million customers to now having 40 million in a span of roughly 6 months. The funds will be used to grow the business, including hiring more people.

“We’ve seen the entire market go digital, especially people who never thought they would,” Velez said. “There is really now an avalanche of all backgrounds [of people] who are getting into digital banking.”

#banking, #berkshire-hathaway, #bradesco, #brazil, #colombia, #credit-cards, #cto, #david-velez, #digital-banking, #engineer, #finance, #financial-services, #funding, #itau-unibanco, #life-insurance, #mexico, #nubank, #p2p, #santander, #tc

Sequoia leads $5M pre-seed in Egypt’s 1-month-old digital bank Telda

Egypt has a population of over 100 million people. The country has a high mobile and internet penetration necessary for a young and tech-savvy population with 61% below 30. But despite its youthful population, two out of every three individuals are currently unbanked in Egypt. It’s the same situation in MENA, where only 40% of the population have access to a bank account.

Digital banks have enormous potential in the region. Today, a newly launched one, Telda is announcing a $5 million pre-seed round to digitize how Egyptians save, send, and spend money.

Two weeks ago, we reported that Egyptian e-commerce fulfillment startup Flextock had raised the largest pre-seed in MENA. But that has changed today with Telda’s fundraise surpassing that record with a considerable margin in both MENA and Africa (Autochek’s $3.4 million) for now.

Telda was launched last month by CEO Ahmed Sabbah and CTO Youssef Sholqamy. Before Telda, Sabbah was the co-founder and CTO of Egypt’s ride-hailing company Swvl, and Sholqamy, a former senior engineer in Uber’s infrastructure team. Sabbah said he and his co-founder had been looking at the fintech space at their former workplaces. However, after his experience using N26 while visiting a friend in Berlin in 2015, his eyes opened to the possibilities of digital banking in Egypt.

“I was fond of the idea, and it was coming from a huge pain of payments we had in Egypt and the region. And for me, I was kind of like waiting for this to happen in Egypt, or if not, I thought I’ll tap into the opportunity someday,” he told TechCrunch. “Youcef and I have been like watching out the space for a while when the first digital bank started like six years ago, and watching how they grew in markets where we think banking is more mature than this region. So imagine an opportunity in a region like Egypt where banking is even way, way less mature.”

The North African country is one of the highest consumer spending markets in Africa. Its private consumption accounts for nearly 85% of its nominal GDP, and only 4% of its overall GDP is cashless. In essence, Egypt is heavily cash reliant, and card usage in the country is very much in its infancy. Disheartened by the non-customer-centric banking experiences, Telda was launched to provide an alternative.

Telda

Image Credits: Telda

Like any digital bank globally, Telda enables customers to create a free account to send and receive money. And also a card to use online, in stores, make withdrawals and pay bills. But while the service is currently live, Telda cards are yet to be distributed to existing and new customers.

Telda affirmed that it is the first company to receive a license from the Central Bank of Egypt (CBE) under its new regulations to issue cards and onboard customers digitally. And by doing so, the one-month-old company has made major progress in a relatively short time, even though obtaining that license took lengthy dialogue with regulators.

“First movers will usually have to make all the effort with the regulators and with the bank and try to pave the way. So this was one of the hardest parts — convincing regulators to trust and regulate our banking business and to provide payment financial services to our consumers,” the CEO said. But because Telda’s proposition aligns with the CBE’s vision of digitizing payments in the country, it had little choice but to grant them the license.

A different issue the company has faced was finding a partner bank to provide these services. And to do that, Telda had to convince the bank that their services were complementary and wouldn’t entirely overlap.

“That means basically trying to be as much independent as possible from the infrastructure of the bank. This was quite crucial for us to be able to move right and as fast as a startup, not as slow and pretty much tied to the pace of the bank’s technology and operations,” he continued.

Due to the founders’ experience in Swvl and Uber, the importance of building a great team cannot be overemphasized. There’s barely any blueprint to look at in launching a digital bank in Egypt, so Telda is building how it knows best: hiring exceptional talent. According to the CEO, the team comprises Egyptians who returned to the North African country to build Telda after working for corporations like Facebook, Microsoft, Uber, Noon, and McKinsey.

MENA appears to be ripe for a digital banking experience. Per GSMA Intelligence, 280 million people in the region are mobile internet users, and growth is not slowing down. The frustration with traditional banks is particularly acute with the younger generation, who crave a simple, user-friendly, and transparent experience. Telda has been able to onboard an impressive list of investors, including Sequoia Capital, for this reason.

The giant US VC firm led the pre-seed round as Berlin-based Global Founders Capital (GFC) and emerging markets-focused fund Class 5 Global participated.

Although Sequoia has made a few Sub-Saharan African investments in startups like Healthlane and OPay, Telda is its first venture into North Africa and the wider GCC region. Eight years ago, the VC giant led an infamous seed investment in Latin American digital bank Nubank before it began to go full throttle. Now with more than 38 million customers, Nubank is the world’s largest digital bank with a valuation of $25 billion. Sequoia will be looking for a similar success story in Telda.

“There are many parallels between Brazil and Egypt. Both countries boast a large, young, talented, and tech-savvy population with a strong appetite to innovate,” said Sequoia Partner George Robson of the investment. “We are delighted to partner with Telda and earmark our first investment in the region.”

Telda intends to fast-track its card production and distribution with this new funding. The company said it currently has more than 30,000 signups already, with half of that already requesting cards. It also plans to capitalize on Sequoia’s name for hiring and expansion, the CEO continued.

I think hiring is key for us. We want to scale the team into a world-class team that’s willing to tap into the opportunity. What we aspire for is basically growing in Egypt, start to deliver cards for the early adopters, and we see ourselves reaching close to a million cards in our first year.”

Investments in Egypt have been growing in leaps and bounds over the past three years, accompanied by a growing, vibrant ecosystem. Egypt recorded the largest number of investment deals last year per Partech Africa. With 86 deals completed, the country contributed 24% to the total number of deals made on the continent

GFC partner Roel Janssen referring to the budding ecosystem in his statement, said: “We are highly impressed by Sabbah and Sholqamy and love their vision for building the region’s leading digital banking app, and we are proud to be part of their journey. It is GFC’s first investment in Egypt, and we see that Egypt has the potential to become an important hub in the global tech ecosystem.”

Class 5 global managing partner Youcef Oudjane said, Money has become a medium of self-expression — a form of identity — not solely a store of value. Telda has done a remarkable job of embedding their culture and values in the product, in both functionality and design.

#africa, #banking, #digital-banking, #egypt, #finance, #funding, #global-founders-capital, #mena, #money, #north-africa, #nubank, #sequoia-capital, #startups, #swvl, #tc

Payments, lending and neobanks rule fintechs in emerging markets, report says

Tech investments in emerging markets have been in full swing over the past couple of years and their ecosystems have thrived as a result. Some of these markets like Africa, Latin America, and India, have comprehensive reports by publications and firms on trends and investments in their individual regions. But there’s hardly a report to compare and contrast trends and investments between these regions and rightfully so. Such a task is Herculean.

Well, a report released today by data research organization Briter Bridges and global inclusive tech accelerator Catalyst Fund is punching above its weight to offer a holistic representation to the darling sector of these three markets: fintech.

The report “State of Fintech in Emerging Markets Report” has three objectives — to evaluate the investment, product, and inclusivity trends across emerging markets.

The team surveyed over 177 startups and 33 investors across Africa, Latin America, and India. Though this sample size used is minuscule, the key findings are quite impressive.

Let’s dive in.

Fintechs have raised $23B across the regions since 2017

There’s no stopping emerging markets’ favorite. The sector has continued to receive the largest share of investments year-on-year for the past five years.

More than 300 million unbanked African adults account for 17% of the world’s unbanked population. So it’s not difficult to see why in 2019, the continent witnessed five mega deals in Branch, Tala, World Remit, Interswitch, and OPay that amounted to a total of over $775 million. While this dropped last year to $362 million, companies like Flutterwave, TymeBank, Kuda have raised sizeable rounds during this period.

fintech funding five years emerging markets

Image Credits: Briter Bridges & Catalyst Fund

Latin America is home to a growing base of digital users, enabling regulation and reforms, and vibrant small businesses. And just like Africa, the percentage of unbanked people is high, 70%. Fintechs in the region have taken the opportunity to cater to their needs and have been compensated with mega-rounds, including NuBank, Neon, Konfio, and Clip. Collectively, fintech startups have raised $10 billion in the past five years.

In 2019 alone, Indian fintech startups raised a record of $4.8 billion, per the report. Then last year, the sector brought in $3 billion. Over the past five years, they have totaled $11.6 billion with notable names like CRED, Razorpay, Groww, BharatPe, among others.

Africa’s average seed rounds stand at $1M, India and Latin America average $3M

Per the report, early-stage deals have been increasing over the past five years totaling over $1.6 billion. Their average size, especially for seed rounds, has grown from $750,000 in 2017 to $1 million in 2020. For  Latin America, the average seed deal in the last five years was around $5.7 million while India did approximately $4.6 million. The report says the data for the latter was skewed because of CRED’s $30 million seed round.

Image Credits: Briter Bridges & Catalyst Fund

Latin America is IPO-hungry, India breeds unicorns while Africa is just getting started with M&A

Last year, Stripe’s acquisition of Paystack was the highlight of Africa’s M&As because of its size and the homegrown status of the Nigerian fintech startup. Other larger rounds include the $500 million acquisition of Wave by WorldRemit (which happens to be the largest from the continent) and the DPO Group buyout by Network International for $288 million.

Unlike the African fintech market that has noticed mega acquisition deals and many undisclosed seven-figure deals, the Latin American fintech market is a sucker for IPOs. Per the report, fintechs in the region have several $100 million rounds (Nubank, PagSeguro,  Creditas, BancoInter and Neon) but have sparse M&A activity. Some of the startups to have gone public recently include Arco Educacao, Stone Pagamentos, Mosaico, and Pagseguro

On the other, India has more than 25 billion-dollar companies and keeps adding yearly. Just last month, the country recorded more than eight. These unicorns include established companies like PayTm and new ones like CRED.

Payments, credit, and neobanks lead fintech activity

The report shows that payments companies are the crème de la crème for fintech investment across the three regions. Within that subset, B2B payments reign supreme. The next two funded fintech categories are credit and digital banking.

In Africa, payments startups have seen more investments than credit and neobanks. Flutterwave, Chipper Cash, Wave, Paystack, DPO come to mind.

most funded fintech categories emerging market

Image Credits: Briter Bridges & Catalyst Fund

Latin America most funded fintechs are neobanks. And it is the only region with all three product categories closely funded at $2-3 billion. Some of these companies include NuBank, Creditas, and dLocal.

India’s top-funded fintech startups are in payments. But it has notable representation in credit and neobanks, some of which have raised nine-figure rounds like Niyo, Lendingkart, and InCred.

Investors are enthused about the future of insurance, payments, and digital banks

From the handful of investors surveyed in the report on their view on future trends in fintech products 5 years from now, most of them chose insurance, payments, and digital banking models.

Investment platforms and embedded models are also areas of interest. They were less keen on agriculture and remittances while wealth tech platforms and neobanks were also lower in priority. How is it that digital banking and neo-banking are at two ends of the spectrum of investor choice? I can’t say for sure.

investors appetite in the coming years emerging markets

Image Credits: Briter Bridges & Catalyst Fund

Parts of the report talk about underserved consumers in these regions and how fintech startups are serving them. It also discusses whether these fintech startups promote financial inclusion and what features and products would get them to that point.

In all of this, the glaring fact, which is no news, is that Africa is lagging years behind Latin America and India. Talking with Briter Bridges director Dario Giuliani, he pointed out that he’d lean on five years. He added that what makes India a better market at this stage is because it is a country rather than a continent.

“It is easier to manage one country than 54 countries in Africa and 20 in Latin America,” he said to TechCrunch. “In Africa, we use the label ‘Africa,’ but we’re very much talking about 4-6 countries. Latin America is basically Brazil, Mexico, Argentina and Colombia who are seeing massive companies rise. India is one.”

One key detail the report mentions is that most fintechs across emerging markets are crossing over to different sectors like crop insurance, credit lines for distributors and vendors, KYC, e-commerce payment gateways, medical finance, and insurance. Guiliani says he expects this to continue.

#africa, #banking, #brazil, #briter-bridges, #catalyst-fund, #chipper-cash, #digital-banking, #dlocal, #finance, #financial-inclusion, #financial-technology, #fintech, #flutterwave, #india, #latin-america, #ma, #nubank, #online-lending, #payments, #paystack, #paytm, #startups, #stripe, #tc, #tymebank, #wave, #worldremit

Alphabet’s CapitalG leads $40 million round in fintech Mantl

Community banks and credit unions aim to be the heart of the, well, communities, they serve. But without the big budgets of larger institutions, keeping up technology-wise can be a challenge. And not only are they competing with legacy players, there is also a slew of digital banks that have emerged in recent years, as well.

Enter Mantl, a startup that has developed technology to make it easier for people to open accounts digitally at community banks and credit unions so that those institutions can increase deposits and ultimately, profits. Founded in 2016, New York-based Mantl has been described by some as “the Shopify of account opening.” 

Community banks and credit unions make up a big percentage of all banking institutions, which means Mantl’s market opportunity is pretty darn large. The fintech’s revenue increased by 213% in 2020 as financial institutions clamored to meet increased demand for digital offerings from consumers in the wake of the COVID-19 pandemic. 

And today, the company is announcing it has raised $40 million in a Series B round of funding led by Alphabet’s independent growth fund, CapitalG, to help it grow even more. The financing brings Mantl’s total funding raised since inception to $60.7 million and included participation from D1 Capital Partners, BoxGroup and existing backers Point72 Ventures, Clocktower Technology Ventures and OldSlip Group. The company raised $19 million last July after growing deposit volume by 705% in April of that year.

The startup declined to reveal hard revenue figures.

Mantl originally set out to build its own challenger bank, but in doing so realized there are 10,000 banks and credit unions in the U.S., and that 96% of them outsourced their technology to third-party legacy vendors such as Fiserv and Jack Henry, many of which have technology that is in some cases “decades old,” according to Nathaniel Harley, co-founder and CEO at Mantl.

Such outdated technology has kept many financial institutions such as community banks and credit unions from competing online, and also limits the digital banking options available to consumers, the company said.

So the company pivoted, based on the premise that most community banks and credit unions are critical to maintaining competition and equity in the United States’ financial system. 

“At a high level, Mantl is an enterprise software company that is really focused on helping traditional financial institutions modernize and grow,” Harley told TechCrunch. “Our mission at the end of the day is to really expand the access to financial services by taking on the legacy infrastructure, which has really hindered access to digital banking.”

The company claims that its white-labeled account opening software allows banks and customers “to open an account from anywhere at any time, on any device in less than three minutes.” 

Through its flagship account opening software, Mantl claims to have helped community institutions — many of which are competing online for the first time — establish efficient and profitable digital operations. Among the community banks it works with are Cross River Bank, Quontic and Midwest BankCentre

“Banks are naturally very risk averse, and we need to build in order to fully take on that full infrastructure that they’re working in,” Harley said. “Account opening is low risk, but it’s also extremely high value considering that less than 50% of banks actually have online account opening today.”

Mantl integrates directly into the legacy infrastructure, also known as a core banking system, in order to enhance that system and help institutions launch digital products quickly. 

The company says its software also automates application decisioning for over 90% of cases while also reducing fraud by more than 60%. This results in deposit growth that’s “typically 4x faster than other solutions on the market and up to 10x more cost-effective than building a new branch,” the company said. 

Combined, the institutions it works with have onboarded hundreds of thousands of new customers and raised billions of dollars in core deposits, the company claims. 

“We’re challenging the legacy infrastructure that is holding community institutions back,” Harley said,” and we see account opening as just the beginning.”

The startup plans to use its new capital to do some hiring and expand its product offerings, including software that it says would be able to improve and digitize the onboarding experience for not just financial institutions but businesses of all sizes, from sole proprietors to complex commercial enterprises.

CapitalG partner Jesse Wedler shares Mantl’s belief that banks form the backbone of this nation’s economy, both on a local and national level. 

While digitization has long been a priority for banks, it has become an urgent imperative as branches close and digital disruptors grow,” he said.

As CapitalG reviewed the landscape of companies helping banks with digital transformation, Mantl stood out, Wedler said, due to its “user experience, resulting deposit growth and time-to-value for banks of all sizes.”

But what has his firm most excited, he added, is the team’s vision for “transforming adjacent core banking applications.”

Since its founding in 2013, CapitalG has invested in a number of fintechs, including MX, Stripe, Robinhood, Credit Karma, Albert, Aye Finance and LendingClub. 

#alphabet, #aye-finance, #bank, #banking, #capitalg, #cross-river-bank, #d1-capital-partners, #digital-banking, #enterprise-software, #finance, #financial-services, #fintech, #mantl, #new-york, #point72-ventures, #recent-funding, #startups, #tc

Avant doubles down on digital banking with Zero Financial acquisition

Avant, an online lender that has raised over $600 million in equity, announced today that it has acquired Zero Financial and its neobank brand, Level, to further its mission of becoming a digital bank for the masses.

Founded in 2012, Chicago-based Avant started out primarily as an online lender targeting “underserved consumers,” but is evolving into digital banking with this acquisition. The company notched gross revenue of $265 million in 2020 and has raised capital over the years from backers such as General Atlantic and Tiger Global Management.

“Our path has always been to become the premier digital bank for the everyday American,” Avant CEO James Paris told TechCrunch. “The massive transition to digital over the last 12 months made the timing right to expand our offerings.” 

The acquisition of Zero Financial and its neobank, Level (plus its banking app assets), will give Avant the ability to offer “a full ecosystem of banking and credit product offerings” through one fully digital platform, according to Paris. Those offerings include deposits, personal loans, credit cards and auto loans.

Financial terms of the deal weren’t disclosed other than the fact that the acquisition was completed with a combination of cash and stock.

Founded in 2016, San Francisco-based Zero Financial has raised $147 million in debt and equity, according to Crunchbase. New Enterprise Associates (NEA) led its $20 million Series A in May of 2019.

Level was unveiled to the public in February of 2020, created by the same California-based team that founded the “debit-style” credit card offering Zero, according to this FintechFutures piece. The challenger bank was created to target millennials dissatisfied with the incumbent banking options.

Zero Financial co-founder and CEO Bryce Galen said that Avant shared his company’s mission “to challenge the status quo by bringing innovative financial services products to consumers who might otherwise be unable to access them.”

Avant, notes Paris, uses thousands of AI-driven data points to determine credit risk. With this acquisition, that lens will be expanded with data, such as a deposit customer’s cash flow, how they manage their finances and whether they pay their bills on time. 

“This will allow us to make credit decisions faster and deliver personalized options to help underbanked consumers gain financial freedom, at any and every stage of their financial journey,” Paris told TechCrunch. “It will also build long-term engagement and loyalty and help grow our reach beyond the 1.5 million customers we’ve served to date.”  

Like a growing number of fintechs, Avant operates under the premise that a person’s ability to get credit shouldn’t be dictated by a credit score alone.

“A significant amount of Americans have poor, bad or no credit at all. For these people, accessing credit isn’t exactly easy and often comes with extra fees,” Paris said. That’s why, he added, Avant has focused on providing options for such consumers with “transparent, rewards-driven products.”

Level’s branchless, all-digital platform offers things such as cashback rewards on debit card purchases, a “competitive APY” on deposits, early access to paychecks and no hidden fees, all of which are especially beneficial for consumers on the path to financial freedom, according to Paris.

Since its inception in 2012, Avant has connected more than 1.5 million consumers to $7.5 billion in loans and 400,000 credit cards. The company launched its credit card in 2017 and over the past two years alone, it has grown its number of credit card users by 170%.

#apps, #artificial-intelligence, #avant, #bank, #banking, #california, #challenger-bank, #chicago, #credit-card, #debit-card, #digital-banking, #economy, #exit, #finance, #funding, #general-atlantic, #level, #ma, #money, #premier, #san-francisco, #startups, #tc, #tiger-global-management, #zero-financial

Ribbit Capital leads $26.7M round for Brazilian fintech Cora

Cora, a São Paulo-based technology-enabled lender to small-and-medium-sized businesses, has raised $26.7 million in a Series A round led by Silicon Valley VC firm Ribbit Capital.

Kaszek Ventures, QED Investors and Greenoaks Capital also participated in the financing, which brings the startup’s total raised to $36.7 million since its 2019 inception. Kaszek led Cora’s $10 million seed round (believed at that time to be one of the largest seed investments in LatAm) in December 2019 with Ribbit then following.

Last year, Cora got its license approved from the Central Bank of Brazil, making it a 403 bank. The fintech then launched its product in October 2020 and has since grown to have about 60,000 customers and 110 employees.

Cora offers a variety of solutions, ranging from a digital checking account, Visa debit card and management tools such as an invoice manager and cashflow dashboard. With the checking account, customers have the ability to sending and receive money as well as pay bills digitally.

This isn’t the first venture for Cora co-founders Igor Senra and Leo Mendes. The paid had worked together before — founding their first online payments company, MOIP, in 2005. That company sold to Germany’s WireCard in 2016 (with a 3 million customer base) and after three years the founders were able to strike out again.

Cora co-founders Léo Mendes and Igor Senra; Image courtesy of Cora

With Cora, the pair’s long-term goals is to “provide everything that a SMB will need in a bank.”

Looking ahead, the pair has the ambitious goal of being “the fastest growing neobank focused on SMBs in the world.” It plans to use the new capital to add new features and improve existing ones; on operations and launching a portfolio of credit products.

In particular, Cora wants to go even deeper in certain segments such as B2B professional services such as law and accounting firms; real estate brokerage and education.

Ribbit Capital Partner Nikolay Kostov believes that Cora has embarked on “an ambitious mission” to change how small businesses in Brazil are able to access and experience banking.

“While the consumer banking experience has undergone a massive transformation thanks to new digital experiences over the last decade, this is, sadly, still not the case on the small business side,” he said.

For example, Kostov points out, opening a traditional small business bank account in Brazil takes weeks, “reels of paper, and often comes with low limits, poor service, and antiquated digital interfaces.”

Meanwhile, the number of new small businesses in the country continues to grow.

“The combination of these factors makes Brazil an especially attractive market for Cora to launch in and disrupt,” Kostov told TechCrunch. “The Cora founding team is uniquely qualified and deeply attuned to the challenges of small businesses in the country, having spent their entire careers building digital products to serve their needs.”

Since Ribbit’s start in 2012, he added, LatAm has been a core focus geography for the firm “given the magnitude of challenges, and opportunities, in the region to reinvent financial services and serve customers better.”

Ribbit has invested in 15 companies in the region and continues to look for more to back.

“We fully expect that several fintech companies born in the region will become global champions that serve to inspire other entrepreneurs across the globe,” Kostov said.

#brazil, #cora, #digital-banking, #finance, #fintech, #funding, #fundings-exits, #greenoaks-capital, #kaszek-ventures, #latin-america, #qed-investors, #recent-funding, #ribbit-capital, #smbs, #startups, #venture-capital

Digital banking solutions provider Meniga closes additional €10M investment

Meniga, the London fintech that provides digital banking technology to leading banks, has closed €10 million in additional funding.

The round is led by Velocity Capital and Frumtak Ventures. Also participating are Industrifonden, the U.K. Government’s Future Fund and existing customers UniCredit, Swedbank, Groupe BPCE and Íslandsbanki.

Meniga says the funding will be used for continued investment in R&D, and in particular further development of green banking products — building on its carbon spending insights product. In addition, the fintech will bolster its sales and service teams.

Headquartered in London but with additional offices in Reykjavik, Stockholm, Warsaw, Singapore and Barcelona, Meniga’s digital banking solutions help banks (and other fintechs) use personal finance data to innovate in their online and mobile offerings.

Its various products include a software layer that bridges the gap between a bank’s legacy tech infrastructure and a modern API, making it easier to build consumer-friendly digital banking experiences. The product suite spans data aggregation technologies, personal and business finance management solutions, cash-back rewards and transaction-based carbon insights.

Meniga tells TechCrunch it has experienced a significant increase in the demand for its digital banking products and services over the past year. This has seen the fintech launch a total of 18 digital banking solutions across 17 countries.

Image Credits: Meniga

Helping fuel that demand is the need for banks to attract and retain a generation of customers that increasingly care about sustainability and the need to tackle climate change. Enter Meniga’s green banking solution: Dubbed “Carbon Insight,” it leverages personal finance data so that mobile banking customers can track and, in theory, reduce their carbon footprint.

Specifically, it lets users track their estimated carbon footprint for a given time period (which can be broken down into specific spending categories); track the estimated carbon footprint of individual transactions; and compare their overall carbon footprint and the carbon footprint of spending categories with that of other users.

Last month, Íslandsbanki became the first Nordic bank to implement Meniga’s Carbon Insight solution into its own digital banking offering.

#digital-banking, #europe, #frumtak-ventures, #fundings-exits, #meniga, #recent-funding, #startups, #tc, #velocity-capital

New challenger Ikigai combines digital banking and wealth management

Ikigai, a London fintech founded by former McKinsey partners, thinks there’s room in the crowded challenger market for a new premium offering that combines digital banking with wealth management.

Targeting future and present high-net-worth individuals, Ikigai is iOS-only for now and consists of a current account and savings account, with adjacent wealth management features, all combined in a single app and card. The thesis, says the founding team, is that currently there is very little on the market that provides a modern digital-first banking experience and the kind of premium banking services typically offered by legacy banks to their more affluent customers.

“Our typical client is young — usually in their late twenties or thirties,” explains Ikigai co-founder Edgar de Picciotto. “They’re entering their prime spending and earning years, and are looking to secure their financial future. Although they’re not high-net-worths yet, they have aspirations and goals — and they want to do more with their money”.

Rather than a freemium model, Ikigai charges a flat subscription fee from the get-go, and new users gain access to a relationship manager, which differentiates it from most digital-first banking. Features include an “everyday” spending account, and a saving section of the app, dubbed “nest”. The latter is separate from the spending account, including having its own account number, but can be easily topped up from the everyday account.

So far, quite me-too, you might conclude. However, where some more differentiation arguably comes into play is that Ikigai also offers “fully managed, globally diversified investment portfolios” under the wealth section of the app. Portfolios are built and managed by Ikigai in collaboration with asset manager BlackRock, and take into account both risk appetite and the nature of what users want to achieve.

“We say it a lot but Ikigai was very much born from personal frustration,” says de Picciotto. “Everything on the market seemed to be slow, impersonal, full of attempts to sell lending and debt products. It felt like either the tech was there or the humanity, never both. That was the first thing we knew we wanted to solve”.

“Banking can also be way too time-consuming, investing even more so,” adds Maurizio Kaiser, Ikigai’s other co-founder. “There is so much for people to do when they have to do it themselves. It can basically become a second job if you’re constantly looking at different stocks and shares working out if the value is under this or over that. No one really has time for that — I certainly didn’t”.

Once the pair dug deeper, as management consultants are wont to do, they say they also discovered “interesting behavioural trends,” particularly when it comes to young and affluent people.

“This group are entering their prime earning and spending years, and they expect so much more from their banks than previous generations,” says de Picciotto. “Not only do they expect faster, fairer and better experiences, they have specific expectations and demands that current financial providers just don’t meet. This includes things like approaching personal finance as an act of self-care, like lifestyle banking over lifestage banking, and aligning their money with their goals and sense of purpose”.

Notably, unlike many of the first wave of challenger banks that made a virtue out of claims to be building their own core banking technology, Ikigai is primarily partnering with technology providers, including Railsbank and WealthKernel.

“Going with banking-as-a-service providers actually makes it easier to execute on our vision,” claims de Picciotto. “It allows us to focus on what we are good at and really matters to our customers: the user experience”.

On banking competitors, Ikigai’s founders argue that existing incumbents and challengers both have “significant” failings.

Incumbents are too dependent on branches or telephone services, and are premised on cross-selling and up-selling services, particularly lending products, in order to make money on loss-making current accounts.

Challengers, on the other hand, are “faster and more accessible”. However, in a bid to keep their cost-base low, they are increasingly automating their chat support and, in some cases, hiding live chat features.

“Delivering a high-quality service is obviously at odds with their aim of offering banking for free,” concludes Kaiser.

#challenger-banks, #digital-banking, #europe, #fundings-exits, #ikigai, #startups, #tc

Sweden-based digital bank Northmill raises $30M

Northmill Bank, the Sweden-based challenger that has around 200,000 customers across three European countries, has raised around $30 million in new funding.

Leading the round is M2 Asset Management, the Swedish investment company controlled by Rutger Arnhult, and asset management firm Coeli. The injection of cash will be used for continued geographical expansion and to accelerate the development of new products. Notably, this will include plans to launch in 10 new markets as Northmill aims to step on the gas. Next stop, Norway.

As it stands, 2006-founded Northmill is available in Sweden, Norway and Finland, where it competes with incumbent banks with physical branches and the likes of Lunar, Revolut and Klarna (which operates as a bank in its home country of Sweden, and Germany).

More adjacent, another competitor is Anyfin, which is similar to Northmill’s “Reduce” product, which promises to help customers consolidate their existing loans/credit and lower their interest payments. “Our fastest-growing product and main driver today is Reduce, which lowers people’s interest on existing credits, part-payments and credit cards,” explains a Northmill spokesperson.

Founded nearly 15 years ago and originally operating as a credit provider, in 2019 Northmill secured a full banking license, regulated by the Swedish Financial Supervisory Authority. The bank employs 150 people and offers savings, credits, payments and insurances. More generally, it has taken a different and slower path than most of the newer crop of challengers in Europe, relying less on investment to fuel its growth and claims to have been profitable from nearly the get-go.

Cue statement from Rutger Arnhult, chairman of the board of M2 Assets Management: “Northmill Bank is already a profitable company with a proven and sustainable business model, which stands out among today’s tech investments. We have been following their journey for a while and have been impressed by the founders, as well as the company. The banking market is well on its way to change and the winners will be those who best can adapt to the new digital reality. For me, this is an investment in a tech company with long-term owners, who are just at the beginning of their journey. I see great growth potential in the bank.”

#coeli, #digital-banking, #europe, #finance, #fundings-exits, #m2-asset-management, #northmill, #northmill-bank, #recent-funding, #startups, #tc