Published:
Sep 25, 2023
Author:
Sarah Parsons Wolter
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How many times have you gone on a shopping spree with the only concerns being your upcoming credit card bill and your strategies to rationalize the need for a replacement VanMoof (thanks to a perfectly functional e-bike but completely bankrupt company)? Now the implications of your questionable choice of bike brand – and other shopping patterns – are much further reaching.
Advancements in the algorithms being fed into credit decisioning engines have, in some cases, led to increased consumer surveillance and the inclusion of behavioral spending data. As a result, many activities that we would never imagine would affect our credit histories are now becoming the primary reason for denials of new lines or lowering existing lines of credit.
However, the CFPB is striking back. Now creditors using the aforementioned inputs must disclose specific reasons for any adverse decisioning outcomes. Even those companies using “black box” models must provide exact reasons for denying an application.
As tech unlocks access to new data, more and more personal information will be scrutinized – across all industries. Now that the floodgates are open, it’s just a matter of how fast the CFPB and other regulatory and oversight bodies can keep up. Whether these institutions can stay on their toes to apprehend mounting risks, or end up trying to keep up in an ongoing game of whack-a-mole is still TBD…!
Portfolio News
Climatetech & Fintech: Converging into the 2020s - In this article, jointly published with Picus Capital at the close of NYC Climate Week, we examine the intersection of climatetech and fintech, which we believe will undoubtedly continue to be intertwined in the near future. There exists significant opportunity in capital-light fintech solutions that can help tackle the operations of existing infrastructure to create efficiencies in payments, capital formation, asset management and insurance. Read more
Ocrolus launches new, cost-effective Instant solution for analyzing financial documents - Instant is an AI-powered service offering that empowers lenders to analyze bank statements and other financial documents more efficiently than ever before. The machine-only solution provides lenders with the data quality and analytics they have come to trust and expect from Ocrolus, enabling faster lending decisions while reducing risk. Read more
Philipp Povel on building a $3b company and now raising millions to turn payments into your growth engine - In a recent episode of the Dealmakers' Podcast, Mondu co-founder and CEO Philipp Povel, a seasoned entrepreneur, shares his incredible journey from Brazil to Germany, and his evolution from investment banking to building successful businesses. His latest venture, Mondu, has attracted millions in funding from top-tier investors like Valar Ventures, Cherry Ventures, Peter Thiel, and FinTech Collective. Read more
Real estate investment redefined: Interview with IMMO Capital’s CEO and Co-founder Gigi Zappel - With IMMO recently closing Europe’s largest-ever PropTech Series B round in 2022, totalling over €70m, and embarking on a £1b initiative to retrofit 3,000 homes in the UK, this interview explores the innovative work of IMMO in utilizing AI and Machine Learning to revolutionize the property market. Topics discussed include Gigi Zappel’s journey from Knomi to IMMO, and the cutting-edge technology that is setting a new benchmark for sustainable housing. Read more
Maker subDAO branches out beyond Ethereum - Maker passed a poll initiating the Spark Lend DeFi protocol on the Gnosis Chain. This sets the stage for the impending launch of its DeFi-focused subDAO. The move is meant as an example for how Spark Lend can proceed after the Maker “endgame” is finalized and the subDAO becomes fully autonomous. Read more
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The Secret (Controversial) Sauce
CFPB says lenders must explain AI-driven credit denials - With the growing use of advanced algorithms and personal consumer data in credit underwriting, the reasons for adverse credit actions have become more diverse. Lenders often rely on complex algorithms and AI technologies to make predictive decisions in their underwriting models - and these algorithms are fed with large datasets, sometimes including data obtained from consumer surveillance. Read more
Industry News
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Citigroup debuts token service in latest foray into digital assets - The product — known as Citi Token Services — will transform customers’ deposits into digital tokens that can be sent instantly anywhere in the world. The service is housed in the firm’s treasury and trade solutions division, which has so far focused on using it to improve cash-management and trade-finance capabilities. Read more
Apple and Goldman were planning stock-trading feature for iPhones until markets turned last year - As equities soared in 2020 and consumers flocked to trading apps like Robinhood, Apple and Goldman Sachs were working on an investing feature that would let consumers buy and sell stocks. The project, which was shelved last year as the markets turned south, would have added to Apple’s suite of financial products powered by Goldman. Read more
Visa and Swift collaborate to streamline cross-border payments - Through the partnership, both firms aim to provide their customers with “more choice” when sending money globally, as well as improve the speed and transparency of the transactions. To that end, Visa will deploy capabilities developed by Swift to help increase the “speed and certainty” of cross-border payments. Read more
WhatsApp launches in-chat payments service for businesses in India - Shoppers will be able to buy products and services from businesses using credit and debit cards, WhatsApp Pay and India’s public digital payments network UPI, the company said. Companies will not be charged for the in-app payments but Meta stands to benefit from an increase in businesses using WhatsApp, who pay to message their customers. Read more
FTX sues Sam Bankman-Fried’s parents to recover ‘misappropriated funds’ - Joseph Bankman and Barbara Fried, both Stanford Law School professors, “exploited their access and influence within the FTX enterprise to enrich themselves,” the company, operated in bankruptcy by new management, alleged. Read more
Select Financings
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Bowtie - Hong Kong based virtual insurer raised $34.9m in Series B2 funding led by Sun Life Hong Kong Limited. Read more
Curve - London based card bundling and financial super-app company raised £58m in Series C funding from investors including Britannia, IDC Ventures, Cercano Management, Cohen Circle, and Outward VC. Read more
DataBlend - Vermont based finance-focused Integration Platform-as-a-Service company raised $2.5m in Seed funding led by FreshTracks Capital and The Dudley Fund. Read more
Enigio - Stockholm based trade finance documentation company raised €3m in new funding led by Lloyds Banking Group. Read more
Flex - Miami based credit and finance management company raised $120m in Debt and Series A funding led by Florida Funders. Read more
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Hyperjar - London based personal finance platform raised $24m in Series A funding led by Susquehanna Private Equity Investments and the Healthcare of Ontario Pension Plan. Read more
Kayna - Dublin based embedded insurance company raised €1m in pre Seed funding led by Delta Partners and MiddleGame Ventures. Read more
Levelpath - San Francisco based digital procurement platform raised $44.5m in Seed and Series A funding led by Benchmark and Redpoint Ventures, respectively. Read more
Lupiya - Zambia based neobank raised $8.25m in Series A funding led by Alitheia IDF Fund. Read more
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Plan A - Berlin based carbon accounting company raised $27m in Series A funding led by Lightspeed Venture Partners. Read more
Stoïk - Paris based insurance and cybersecurity software company raised €10m in new funding led by Munich Re Ventures. Read more
TakeCommand - Dallas based employee sponsored, personalized health benefits company raised $25m in new funding led by Edison Partners. Read more
Vero Technologies - New York based wholesale financing technology and loan servicing company raised $8.5m in Series A funding led by BankTech Ventures. Read more
Wamo - UK based digital business banking account provider raised $1.5m in Seed funding led by Finberg. Read more
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