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Social Distancing has given a boost to contactless solutions, making digital payments the holy grail of the transactions arena and the fintech world.

Enova, the financial technology services company has announced that it is going to acquire OnDeck, the SME lender, in a transaction that is approximately valued at $ 90 million.

The fintech firm based out of Chicago, Enova owns several lending, credit, and analytics brands that specialize in non-prime customers as well as a small business, and has gotten into a definitive agreement of acquiring all the shares of NYSE-listed OnDeck, that are outstanding. The SME lender is a 55% shareholder of OnDeck Australia.

In what way this agreement will have an impact on the business in Australia, is yet to be known. However, both the firms will continue functioning independently until the transaction is closed.

As soon as the transaction is completed, the US fintech solution provider, Enova will be seen adding the brand OnDeck, along with its products and services to the existing portfolio of the company, in order to build a firm that is combined, scales significantly, and offers diverse products to small businesses as well as consumer market segments that are underserved because credit unions and banks find it difficult to serve them.

David Fisher, the CEO at Enova will be continuing leading the combined firm, whereas Noah Breslow, the CEO, and chairman at OnDeck will be seen joining the firm as its Vice Chairman and serving on the management team of Enova.

Both CEOs have stated that this agreement will aid in adding on the respective strengths of the companies and developing a financial services firm online that offers revenues that are more diversified, has meaningful synergies, the stronger potential of cash flows, and heightened flexibility for driving profitability, shareholder value, and growth.

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Well, it seems like forever, but it’s only been a couple months since we became trapped inside our home. Though things have started to open up now, the pandemic situation is still not under control. When the lockdown restrictions were imposed in various parts of the world, a lot of foreigners living in the U.S. decided to go back to their homeland. In a hurry and a hassle. Nobody knew how long the lockdown was going to last. And honestly, not a lot of us expected it to last for 6 whole months. So, it is understandable that people must have unintentionally left behind some of the important stuff. An acquaintance left the U.S. and went to the U.K, leaving behind her debit card and credit, received recently with the opening of a new corporate account. She was working remotely, which meant she would still be receiving her salary. With traditional modernizing a bit and offering net banking services, it wasn’t a problem to make any transactions. Until this lady’s phone burnt, which logged her out of the net banking account and the only way back in was to put in the grid details from the back of the debit card.

Not having access to funds at times like the pandemic can only mean disaster. So, this woman then decided to open a new account before the credit of her next payment. That with a traditional would mean going to the bank and getting things done. But, opting for a virtual bank meant having a new account without having to visit the bank and in much lesser time. She was ultimately able to get paid to her new account, and make several online transactions whenever there was a need by availing services offered by Varo Money.

Virtual Banks are the need of the current times and not only are they crucial but also a disruption in the banking arena.

What is Virtual Banking? 

Our generation was one of the generations who went out to play and have fun in their childhood. We played games like UNO and Truth and Dare physically and, but today it is all played online. Similarly, traditional banks have a brick and mortar infrastructure and offer services that can be availed at the bank. But that is not the case with virtual banks. These banks offer several banking services in a non-physical, online infrastructure. These services are the same as traditional banking services, the only difference being, utilization of online channels, and reduction in hassles involved with visiting a physical bank and getting things done. The speed of the processes is also more than those of traditional banks. According to Live Bank, The speed and convenience of virtual banking positively influences overall customer satisfaction, which regularly exceeds 90%, improving the image of the whole brand.

Now some may wonder, why is that not all traditional banks transform to virtual banks?

Ron Shevlin, the Director of Research at Cornerstone Advisors, Senior Contributor at Forbes, Fintech Snark Tank explains “The challenge for banks isn’t becoming ‘digital’ – it’s providing value that is perceived to be in line with the cost – or better yet, providing value that consumers are comfortable paying for.”

Evolution of Banking 

The concept of banking services can be traced long back when there were lending transactions between merchants who provided loans to the traders and farmers. If we think about it from another perspective, the emergence of currencies formed the establishment of the banking processes. 

In the 300 B.C. era, there was transfer of loans and credits to people who were in need and that was also the time when the letter of transfer also came into existence. Some advancements were made thereafter.

Between the 1500s to 1700s, banking institutions were established and services were being provided to the customers as well as the economy in the developed nations.

Fast forward to the 1900s when the technology began to evolve and impact a number of sectors, including the banking sector. With technology came the internet, and the banking institutions began seeking ways to offer their services online. In the late 1900s, the banking sector witnessed the development and introduction of internet banks. 

Now, such banks would offer some of the banking services, but the offerings were limited. Institutions were working towards the development of certain internet banking and were able to roll out complete virtual banks.

Now coming to the 2000s, traditional brick and mortar banks realized the importance of offering banking services over the internet, which led to these banks offering their services online and offline.

Today, the virtual banks offer a wide range of services without the user having to go to the bank. These services are much advanced and also cost-effective along with being time-savvy. Consumer experience is given utmost priority and offerings are becoming more and more user-centric. These banks are working round the clock, 365 days a year, all thanks to fintech. Looking at these banks, the traditional banks are also investing heavy sums to evolve and establish their digital presence. According to Data Prot, The total value of payments made using mobile devices will have reached $503 billion in 2020 in the U.S.

Services provided by Virtual Banks

• Savings Account 

Traditionally, opening a savings account for customers meant going to the bank, filling a form, submitting identity proofs, waiting for them to be verified by the staff, waiting for them to create a customer ID, and then ultimately get a hold of your savings account. This process would generally take 3-4 hours, and god forbid if they had limited staff, you would be sitting at the bank for longer than that. Today, with virtual banks you can easily download the application of the bank or visit their website, register yourself, upload your identity proofs, and get things done within minutes. According to emarketer, China has 87% of fintech services adoption among internet users in 2019.

• Budgeting 

This is an additional service which generally is not within the purview of traditional banks. Virtual Banks are going the extra mile to make it easier for their customers to maintain their spending and expenses. Simple offers its users with budgeting services along with banking services. The budgeting tool of this virtual bank takes care of all your money management activities along with setting aside your bills and other expenses and informs users about the amount of money that is safe to spend. This helps the customers in achieving their personal monetary goals and milestones as well as find ways to save additional funds.

• Money Transfers

Nowadays, most of the banks are partnering up with several digital payment providers to let their customers transfer money from one account to another, from one person to another. Virtual banks offer money transfer services along with digital depositing of cheques. Users can receive a physical cheque from someone and still encash that cheque via virtual banks by uploading a picture of the cheque and making transactions quicker and easier. Money transfers can also be done via different methods across different nations quite easily due to the ability of such banks to convert currencies.

Bradley Leimer, the Co-Founder, Unconventional Ventures quotes “If banks can’t offer something more valuable thanAmazon Prime, then they are probably in the wrong business.”

• Personal and other Loans

Anybody can be in the need of funds when there is an arrival of unprecedented times or even during other times. These incidences call for loans. Virtual banks now are offering different kinds of loans as per the need of the user. The most common times of loans provided are home improvement loans, personal loans, streamwise student loans, mortgage/home loans, among many others. Virtual banks have been successful in offering no fees personal loans and at very low rates. They do not even charge prepayment fees or origination fees. You can get qualified for loans within minutes and have access to them quite soon.

• Investment services 

Investing has become a great part of banking services in present times. Virtual banks are offering investment opportunities to customers who wish to invest in crypto, stocks, or EFTs. The bank then builds a portfolio for the customer while automating their investments. Customers can basically start with basically close to no money and start developing their portfolio from the ground up. These banks also make things simpler for the investors in terms of diversifying their portfolio and putting their eggs in different baskets. The famous fintech firm SoFi offers investment services along with many other banking offerings.

• Card Locking 

With an increase in virtual offerings and money, there has also been an increase witnessed in monetary theft by stealing debit or credit cards, or also by mistaken disclosure of personal details to hackers and thieves. In such situations, when customers realize their account is at risk, they can instantly get their cards blocked within seconds when availing services of virtual banking.

Scope of performance 

From all the services involved in virtual banking, quite a lot of them operate in real-time. The payments can be done in real-time; accounts can be opened in real-time, and even the monitoring of those accounts is done in real-time. But there are still some processes such as identity management and verification, loan processing, and refinancing that though take quite less time when compared to traditional banks, but are a little far from operating in real-time.

March 2019 data by EY, shows that 64% of digitally active consumers across 27 markets used fintech.

The fintech space is developing and advancing at a great speed and as a result, account management, in general, can be carried out in real-time. These virtual banks undergo stringent regulatory compliance and only then enter the banking ecosystem. This means they are very efficient in detecting fraud almost instantly and they protect the system as well as the consumer from cyber-attacks. This all is happening in real-time. For example, previously when someone would try to get access to your account, there were not a lot of firewalls or obstructions, but today the minute there is someone unauthorized or unrecognized trying to enter your account, you immediately get a message and an email informing you about the said activity.

Similarly, fund transfers, investments, and fetching details are all being done in real-time.

It is expected that along with such services, other offerings will also be optimized in the near future.

The fintech industry has opened up the idea of virtual banking and digital-friendly banking solutions to be delivered and adopted by a vast number of audiences including common customers, corporate customers, and industry-specific customers. The nations are now realizing the convenience and ease of use provided by virtual banking that are overpowering traditional banking, which is leading to ease of the grip of operating allowance to the new and upcoming virtual banking systems. According to emarketer, North America is expected to become the largest market for AI in banking by 2023, reaching $79 billion. Many such enhancements in the banking sector are anticipated in the coming years.

Like Bill Gates would like to say, “The world needs banking, but it does not need banks.”

A new money management solution, Flex has entered the fintech ecosystem with the goal of making use of technology for delivering solutions to the problems of every person. The new app is apparently an advanced financial technology solution.

The money management financial solution makes promises of giving customers the ability to open an account within minutes. It also offers two types of services, free, and subscription.

The subscription model, FlexPRO is costing £5 per month and delivers customers with access to the use of Apple as well as Google Pay with a virtual card. These are the features that the customers who are non-fee-paying can’t get.

One the website of the fintech is a note, just under the options of pricing that says that the pricing and the details are representative but not an offer that is legally binding and is different from the ones that were offered at the launch of the money management platform, Flex. This means that if the customers want to avail the £5 per month only for FlexPRO, they might have to make quick decisions and grab it quickly.

The fintech money management app was founded by Neil Harris who is the creator of b.yond, the banking launchpad and Paul Smith, Matt Burdis, and Jos Henson Grič, who are the former employees of Pockit.

Burdis is still listed as the one working for the fintech.

Jos Henson, the co-founder of Flex stated that the app is not about something that is new, in fact, it is about doing something that should’ve been done long back and about doing it extremely well.

Flex is set for its imminent launch when customers will be able to sign up.

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The financial technology firm Equifax has bought a commercial credit data company, Ansonia Credit Data. The monetary figures of the deal have not been disclosed yet.

Under the terms of the deal, the commercial credit firm will be seen integrating into a division of Equifax that delivers credits as well as for analytics for small and medium-sized businesses (SMBs), PayNet, as a part of the USIS (US Information Solutions) business unit.

Ansonia holds a specialty in invoice receivables, logistics, and transportation and stated that the firm has over $1.3 trillion in data of accounts receivable from sectors and industries in North America.

Some of the top contenders of Ansonia are Cortera based out of Florida, Advantage Credit from Colorado, and Pennsylvania’s Universal Credit Services.

The fintech solutions provider, Equifax, stated that adding the data from Ansonia will complement the commercial database of small and medium-sized business loans, credit lines, and leases, inclusive of the Equifax Commercial Financial Network (CFN) as well as the database of PayNet.

Sid Singh, the president of Equifax USIS stated that integrating Ansonia into the USIS business of Equifax will provide the company with a rich source and channel of tailored intelligence that will meet the requirements of just capital providers that offer credit to logistics and transportation firms.

Anthony Kinninger, the president and founder of Ansonia stated that the firms’ integration into Equifax will give it the extra resources as well as abilities that the firm needs to further innovate and scale finances teams that are focused on the logistics and the transformation industry.

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The award-winning financial technology and marketing provider Kasasa has entered into a partnership with the lending enablement as well as risk analytics solutions for financial institutions, Open Lending. The firms have come together with the aim of bringing a greater level of assurance along with reduced risk to the processes of lending. Open Lending and Kasasa together will be seen delivering community financial institutions the enablement to approve a higher volume of auto loans automatically.

Open Lending as a lending solutions provider exclusively works with automotive lenders by delivering risk-based pricing, automated decision technology, risk modeling, and loan analytics. The Lenders Protection program of the firm is a special platform for auto lending enablement that makes use of proprietary data as well as advanced decision analytics for delivering a safe and powerful way to the lenders of increasing near as well as non-prime auto loan volumes.

Via this Kasasa partnership, the customer of Open Lending will be given access to the Kasasa Loan®, the only loan with Take-Backs, which lets the borrower pay beforehand in order to reduce their debt, but if they need it, they can take the extra funds back.

John Flynn, President, and CEO of Open Lending stated that the mission of the firm is to serve those who are underserved, and hence, it is imperative to ensure that the borrowers that have a lower credit score have the ability to access loans with rates that are manageable. And with Kasasa Loan they will be able to provide these customers to be debt-free sooner.

Chris Cohen, EVP, Product Management at Kasasa stated that the company is looking forward to working with Open Lending to support community financial institutions in achieving higher yields.

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The largest InsurTech community in the New York metro area, InsurTech NY has announced that it will now be open to accepting applications for the community’s growth-stage Insurtech accelerator.

The fintech news arena notes that the application window will be live till August 17th which opened on July 21st. The community will be accepting the applications via the InsurTech NY website. This program will be seen focusing on the growth-stage startups that already have customers and whose funding stages range between Seed and Series B. This program will not be limited to NY and will be open to Insurance Technology solution providers and firms from across the world.

David Gritz, the Managing Director at InsurTech Ny stated that this program, that is the InsurTech NY accelerator will be seen focusing on the critical moments in time for these firms and startups when they are in the phase of crossing the chasm. A lot of InsurTech firms gain the ability to construct a solution or a product and get their first, initial customers; however, scaling the business of these firms is the real test. The InsurTech NY accelerator is all about aiding these InsurTech firms in scaling.

This accelerator will be focusing on 3 areas that are significant for InsurTechs to scale. These areas are raising funds, talent acquisition, and market traction. The accelerator will be delivering access to insurance brokers and carriers that are seeking deployment of new technologies as well as providing financial support to digital MGAs (Managing General Agencies).

Erik Matson, the CEO of Transverse Insurance stated the ecosystem if NYC has all the infrastructure that is necessary for leading the next wave of insurance digital transformation.

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The digital asset infrastructure provider for financial institutions, Metaco has secured $17 million in its Series A funding round. The fintech firm based out of Switzerland stated that this round was oversubscribed, with the demand that was more than double the initial target. The fintech solutions provider further stated that Metaco’s captured continued backing from its pre-existing investors combined with relative interest from some of the new strategic partners in Swiss as well as global banks, central bank infrastructure, security technology, and venture companies that have their focus on financial technology.

The German-based security technology firm as well as one of the main partners of central bank infrastructure, Giesecke+Devrient led this Series A funding round.

Venture capital company Investiere and Standard Chartered Bank Zürcher Kantonalbank participated in this round. It also witnessed the participation of all the existing strategic shareholders of the firm, SICPA, Swiss Post, Swisscom, and Avaloq, who also increased their commitments.

Metaco was launched in 2018 with its institutional OS for digital assets known as SILO, which enables the big financial institutions to integrate tokens, cryptocurrencies as well as distributed ledger use cases, securely, into their core infrastructure. The framework of this fintech solutions provider for the custody of digital assets, its trading, tokenization, and transaction management is a leading choice for exchanges and banks, stated the company. The firm also claims that notable Tier 1 and Tier 2 banks have implemented these and these institutions are BaFin, ECB, FINMA, Banco de España as well as MAS regulated exchanges and banks.

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The leading provider of electronic payments solutions and banking solutions, ACI Worldwide has announced that the firm has added new services of digital overlay that according to the firm will aid in speeding up the real-time payments.

The fintech news space notes that the firm will be seen working alongside Mindgate Solutions for helping add an array of real-time services of digital overlay for the purpose of backing a data-rich, high-volume digital payments environment. This will be made possible via a variety of services such as web portals and new applications, advanced programming interfaces (APIs), software development kits (SDKs), and plug-ins along with social and digital media channels on top of the infrastructure of real-time payments.

The company further stated that there are now going to be new end-to-end payment services for the purpose of contactless as well as QR code methods along with payments initiated by members by making use of dynamic QR codes. There are also going to be portals for self-service for end-to-end payments as well as easy to use apps for payments through mobile devices that will also include RtP (Request to Pay) services. In addition to these, there are also going to be P2P (person-to-person) services with added security authorization layers.

Craig Ramsey, the Head of Real-time Payments at ACI Worldwide stated that the whole purpose of this newly formed partnership and these new innovations is to be able to keep up with the advancements and innovations in the sphere of payments worldwide.

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