A New Report on AI, Fintech, & Policy — API's and Financial Services — Fintech Fundings

Hey everyone, Ian  & Cokie here. 

Hope everyone’s doing ok with everything going on over the past week. Amidst this pandemic, there are still tragic incidents occurring regularly. Like the deaths of George Floyd and Breonna Taylor. And countless other black Americans that we shouldn’t forget about either. We are all grieving for Mr. Floyd and Ms. Taylor. Their families are in our thoughts.

A friend tweeted from an alt account that the overlap between fintech twitter and social justice twitter is night and day. And it is. Maybe many people in fintech don’t tweet about it, but that’s not a reason for us to be silent.

If you find yourself at a loss for what you as a non-black person should be doing to support the black community, this thread offers helpful suggestions. If you’re looking for ways to help, perhaps think about donating to the Minnesota Freedom Fund, which helps pay bail for low-income people, or donating to the official George Floyd Memorial Fund on GoFundMe. 

We’ll leave you on an uplifting note. In 1961, Dorothy B. Gilliam became the first black woman to join the newsroom at the Washington Post. Her book, Trailblazer: A Pioneering Journalist’s Fight to Make the Media Look More Like America, is available for purchase here. She details the challenges and victories of black journalists and has long been an advocate for diversity in the newsroom. 

We’re running a user survey for FTT subscribers over the next few weeks—if you fill out our survey, you’ll be automatically entered for a raffle to win a $50 Amazon Gift Card. We’re giving away two (no, you can’t win twice) so fill it out ASAP! 

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We’re raising the prices for FTT+ on June 15 (we’ve extended it based on demand!). If you sign up over the next month, you’ll get locked in to the $25/month rate for the first year. You also get a 15% discount if you sign up for the annual membership.

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Tunes of the Week

Been too busy to put together a playlist but highly recommend the next few songs. Rain On Me by Lady Gaga featuring Ariana Grande. It’s a BANGER and it’s ruining everyone’s lives because we can’t go to the club. 

The News, by Cokie Hasiotis

GreenDot in partnership with Welcome Technologies plans to launch PODERCard, a mobile banking product for immigrants. Welcome Technologies works to aid immigrants as they integrate into life in a new country. Designed to combat the upsetting truth that banking products are designed for the wealthy, PODERCard views itself as the first step for users towards financial stability. This step from GreenDot acknowledges a wider unspoken truth behind the COVID-19 pandemic - immigrants have been more broadly affected. Hopefully, this product will be socially conscious and get into the hands of those who need it most. 

Money20/20 plans to go ahead with their enormous Vegas conference this October. In order to comply with social distancing, they’ve capped the conference at 6,000 attendees (there were 10,000 attendees last year). “Our priority is to provide a space where business gets done, safely,” according to a statement on the conference website. “We know we can do this effectively if we keep numbers smaller.”

Ian tweeted out a poll asking folks if they planned to attend this years conference, 85% of 200 respondents gave a resounding no. Participants will likely be wary of the risk. I mean, who wants to get COVID from Money20/20 anyway? 

Apparently, Kylie Jenner isn’t really a billionaire based on an in-depth investigation conducted by Forbes (the same publication which originally honored her as the youngest “self-made” billionaire). The article in question takes 15 minutes to read and by the end, it is determined that Ms. Jenner is worth only $900M. Kinda feel like Kardashibank is coming soon, with built-in beauty rewards. 

Things We’re Reading, by Ian Kar

API Routing Layers in Financial Services, by Ayo Omojola

Ayo, who was previously the head of banking at Cash App, dropped another fantastic post this week, on how API routing layers are being used in finance, particularly by fintech companies. Essentially, Ayo’s thesis is that instead of integrating into multiple vendors for core operations—something that fintech companies have historically done—there’s room for entrepreneurs to bundle these services together and offer customers one seamless API with multiple vendors. Companies like Alloy have done this to a lot of success, and you’re now seeing it in the student loan space, with Payifoff, and payroll, with Pinwheel. Ayo’s post goes deeper on what other areas of financial services can benefit from this kind of structure. A must read. 

AI in Financial Services: Key Concepts, by Melissa Koide & FinRegLab

FinRegLab, a nonprofit policy innovation center focusing on the intersection of tech and financial services, put out a fantastic FAQ report on AI and financial services. CEO Melissa Koide, former Deputy Assistant Secretary at the Treasury Department and Vice Chair at the Milken Fintech Advisory Committee, joined us earlier this week for our FTT+ event to talk about regulation and US fintech and mentioned her report. Got a chance to look it over yesterday and today and it’s an impeccable overview of how financial services firms and fintech companies are leveraging AI inside their products, and the policy concerns around the use of AI in financial services. Her and I spoke a little bit about some previous work FinRegLab has done around cash flow underwriting, and making sure that the use of new technologies and systems don’t take advantage of protected classes and are used in the spirit they’re intended too. AI in fintech is something that’s becoming more tangible and figuring out the policy around it is the next step. 

Funding of the Week, by Cokie Hasiotis 

So remember a couple weeks ago when CB Insights released a report stating fundraising was down $6.1B in Q1 and I told you not to worry about it? Yeah… well we really didn’t need to worry. Investors seem to be opening up their pocketbooks to keep portfolio companies alive and investing more in solutions in solutions whose products have proved useful in the current environment. Again, I still think it’ll be tough for Seed and Series A rounds, but see below for an explosive list of funding in the last week. 

  1. Marqeta raised another $150M, which means the company is now valued at a whopping $4.3B. This round was put together exclusively by FTPartners. What a vibe.

  2. Aspiration, the fintech aimed at conscious consumerism, raised $135M, bringing total investment into the startup to $200M. Aspiration has developed a product to help consumers identify the social impact of their monthly spending. Might want to lay off the fast fashion if you have an account. 

  3. Stackin’ raises $12.6M Series B to help millennials navigate the crowded fintech space. The round, led by Octopus Ventures, included financing from Experian Ventures, Cherry Tree Investments, Dig Ventures, Techstars, and more. Stackin’ aims to be the first entry point of finance for young people and has previously raised $19.6M. Think I’ll recommend that Ian get this app, he needs all the help he can get.

  4. Fundbox, a leading B2B payment and credit network, raised a $20M round from MUFG Innovation. Offering faster B2B payments, Fundbox has continued to thrive through the COVID-19 crisis, where other fintechs have stumbled.  

  5. Not fintech but I don’t care because I’m thrilled about it: Chief, the leadership network for women, raised a cool $15M from its existing investors. 

  6. Spruce, the national platform for enabling online real estate transactions with innovative title and escrow solutions, raised $29M in Series B from Scale Venture Partners. The round was backed by Bessemer, Gramercy, and others. It’ll be interesting to see how the mortgage market performs in the coming years, especially in relation to first time buyers. 

  7. Remote work startup Deel, which offers payroll solutions for remote employees, raised $14M from Andreessen Horowitz. Obviously a useful product in light of COVID-19 and the “new normal.” 

  8. Just yesterday, Belvo, a startup delivering an API for open banking in Latin America, raised $10M from Founders Fund and Kaszek. Sound familiar? It is. Belvo is Latin America’s answer to Plaid, allowing users in Colombia and Mexico to connect their accounts with other FS providers. The combination of Founders Fund’s network and Kaszek’s in-depth knowledge of the Latin American market makes this one an interesting one to watch. Giving people access to financial services in a new way could help to bank many unbanked or underserved customers in the region.