The Fintech Fix 31/08/2022
Welcome to The Fintech Fix, where we cover the biggest fintech stories of the working week. Whether it’s the next groundbreaking trend in cryptocurrency or Blockchain technology, or a new partnership that’s about to change the global economic landscape, this is the place to keep up with the breaking news of the future.
Investments are rolling in for the fintech world, with industry-first expansions underscoring the biggest deals of the week. Latú Seguros, an insurtech which provides commercial business insurance in LatAm, secured $6.7 million in their pre-seed round last week – the largest reported in Latin American history. The Sao Paulo firm was founded by Paola Neira, who started the company – an acronym for Latin American Tech Underwriters – because she knew how hard it was for businesses to procure insurance for the many risks they are exposed to.
On the win, Neira said: “We have an incredible opportunity to replace legacy policies with lifetime risk-mitigating partnerships, which work best to solve the needs of a fast-paced and hyper-connected world. Businesses can no longer rely on paper ledgers, instead, they want, and deserve, to leverage a mix of technological innovation, insurance experience and local knowledge which is exactly what we are using at Latú to build products.”
On the operational side of business, UK challenger Atom Bank has trialled out the four-day work week with roaring success. The scheme, which commenced in November 2021, involved Atom moving all their employees to a new timesheet, with one day off and no change in pay. The results of the six months have shown an increase in talent retention, employee satisfaction, and positive customer service feedback. With a focus on health and wellbeing, the bank decided the move to support the work/life balance of their employees with a return on business performance.
Anne-Marie Lister, Chief People Officer at Atom, said: “Over six months on from introducing our new four-day working week, it’s clear that it has been a huge success for our business and our people. We are extremely proud of how our employees have adapted and the benefit it has brought to many.
Legacy banks have also been spearheading innovation by building society Nationwide deploys real-time savings account funding through the use of open banking. The bank’s new and improved account application process, allows new and existing customers to direct funds into their savings account instantly instead of a couple of days after as it did before. The old way resulted in a monthly account closure of 8% as members would forget to credit the account with the required funds. The real-time process was developed in conjunction with the open intelligence and payments platform Moneyhub. Nationwide will utilise the fintech’s open banking payment initiation service (PIS) technology to connect customers to their current/savings accounts held elsewhere to sweep the money.
The new feature will first be available for Fixed Rate Online Bonds, and then later expanded to other saving products in Nationwide’s catalogue.
M&As and partnerships have also had a focus on accessibility in banking and payments this week. Global payroll solution Deel launched its newest payment feature last week: Instant Card Transfer. Through partnering with UK fintech Paysend, the company will offer contractors in select countries the option to get paid instantly directly into their bank accounts via their cards. The laborious week-long wait common with cross-border payments will be cut out by ICT, as contractors need only provide their full name and bank card number to receive their payment. ICT will be available in countries where such payments take the longest to reach customers, namely: Ukraine, Belarus, Georgia, Honduras, the Philippines, Kazakhstan, and the Dominican Republic. 90% of transfers arrive in 15 seconds or less.
Dan Westgarth, COO at Deel, said: “Hiring globally shouldn’t come with limitations, and that means it shouldn’t be difficult to pay contractors in certain countries. We’re excited to enhance Deel’s contractor experience by providing instant and reliable transfers, particularly in this new world of cross-border work. We are thrilled to be able to partner with Paysend. It’s an important milestone in helping businesses hire anyone, anywhere.”
In the insurtech arena, UK’s biggest unicorn Zego has partnered with global insurer QBE to further bolster their tech-forward fleet insurance offering. Zego, which has been on track for European expansion, will utilise the expertise QBE has in fleet-risk assessment, to learn more about the use of telematics data and how it can be used in the underwriting of their behaviour-led fleet product.
Jon Dye, Director of Underwriting (Motor), QBE, said: “Working with an innovative and data-driven partner such as Zego will help provide fleets with more tailored solutions while providing us with greater insight into how to best meet their needs. We are excited to be joining them on our shared vision to develop forward-thinking and sustainable customer solutions.”
Climate change and the US housing crisis have hit coastal states the hardest in the last couple of years, and insurtechs are leveraging the use of satellite data to develop more robust tools in risk assessment. New home insurance company VYRD has collaborated with data analytics provider Verisk to exact this very goal in the state of Florida. In their underwriting process, VYRD will use Verisk’s LightSpeed® for Homeowners platform and loss history information to accurately assess the risk profiles of coastal properties. The underwriting will utilise location-based peril information, reconstruction cost estimates, roof data, aerial imagery, building permit data and homeowner insights.
This scrupulous approach to risk will benefit many Floridians who have found it difficult to protect their homes because of the constant catastrophe losses and a volatile legal environment plaguing the state.
Funding and Expansion
‘Expansion’ is the dominant word of this Fix. Banks and insurers alike have spent the last quarter securing funding to strengthen operations and cross-country ties. Revolut recently announced that it now services over 5 million customers in the UK and over 20 million worldwide. With this abundant clientele, the disruptor is going all out in their next brand campaign, running several ads on linear and digital television, billboards, digital marketing channels, and podcasts.
The ‘You’re Way In’ campaign will emphasise the different money avenues people can attain that were historically exclusive to elites. Quentin Luce, Revolut Global Head of Integrated Media, said, “We’re delighted to share a campaign that speaks to the money underdog. The most rewarding opportunities in money have not been available to most of us. They’ve been too expensive, too complicated or too difficult for us all to access.”
On the line of financial empowerment, Truist Foundation has announced a $2.25 million commitment to nonprofit Community Development Financial Institution (CDFI), Community First Fund, to give minority business owners access to capital. The fund will directly support Black and Lantine SMEs in the Pennsylvania and Philadelphia region with lending options and access.
The grant is part of Truist’s bigger $120 million commitment to help SMEs across the US, with a focus on women and diverse business owners. In turn, the Community First Fund hopes to grow this fund to $50 million in the next five years.
Travis Rhodes, Delaware Valley and Lehigh Valley regional president for Truist said, “Small businesses are the bedrock of Philadelphia’s economy, and the work of Community First Fund is creating opportunities for more individuals while supporting employees, families and neighbourhoods throughout the Greater Philadelphia region.”
Our final story represents another win for UK fintech. Zopa Bank announced recently they have now crossed the £2 billion deposits mark, making them one of the fastest challenger banks to reach the milestone. Zopa offers a range of services, from mobile-only savings accounts for new users, to their fixed-term savings accounts from £1000, earning a fixed interest over 1-2 years. The goal of the bank is to support users who have idle money stored away in their accounts which would otherwise lose its value.
The banking division of Zopa launched in 2020, and since then it has attracted billions in deposits, £1.5 billion of loans on its balance sheet, issued 350,000 credit cards and tripled (3x) its revenue per customer. At this rate, Zopa, along with its fellow neobanks Revolut, Monzo, and Starling, are sure enough to become the leaders in the UK banking scene.
That concludes your weekly Fintech Fix! Stay tuned for another round of big fintech buzz, right here at FF News.
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