Success Story: Stash


After a break focused on hitting a few key milestones in my role at a FinTech startup, I’m back to share thoughts on FinTech for 2017 and one exciting startup in particular.

2017 vs. 2016

As my first post in 2017, let’s first look back at what I predicted for 2016: I expected a year of consolidation, which proved the case with Lending Club and layoffs at firms like Avant and Prosper and the recent capitulation at Betterment.

But consolidation isn’t always such a bad thing. In many ways, the category is doing well with Stripe adding growth capital at double the private valuation (now $10B).

Betterment Breaks Down

But first, it’s worth reviewing some recent big news from Betterment.

Betterment built a brand and a reputation for innovation, but I grew worried as gurus such as Michael Kitces pointed out the challenges to growth, high CAC and difficult to ever get to a breakeven level of scale ($40-50B AUM).


Last week, Betterment finally “blinked” at conceded it couldn’t succeed as a so-called digital wealth management company (or roboadvisor).

Nerd’s Eye View, the best blog for independent financial advisors, has great insight worth reading about Betterment, but for this first post of 2017, I’d like to focus on Stash.

Stash Springs Forward

I’ve been following a FinTech startup, Stash, which recently announced a breathtaking $25M Series B, less than a year after raising a $9M Series A round from a group of investors including a fund co-founded by Peter Thiel.

Customers choose where to invest their money, starting with as little as $5, and receive ongoing guidance. Based in New York, Stash was started in February 2015 by Wall Street veterans Brandon Krieg and Ed Robinson.


For those who don’t know them, Stash seeks to serve a new generation of investors by providing wider access to investments to less affluent investors.

I spoke with Ed intending to write about them for Money 20/20, but I’m glad I waited given its big funding round news in Q4.

Underserved Market = Competitive White Space

Stash has hit upon an underserved market with a timely and innovative offering that’s winning customers quickly. With 150,000 clients by mid-2016 after launching in 2015, Stash is well on its way to helping the underserved to invest.

Robinson came from an institutional background but has the energy of a startup CEO. He told me, “I want to be the wave of change coming to finance and serve people who are not served and new to investing.”

He’s passionate about investor education. Although Stash seeks those “who’ve never invested before or might be intimidated by investing” to invest is starting off with ridiculously low balances for those might be earning $30K or less, its goal is to grow by educating clients and helping them succeed.


complianceRobinson told me Stash was not at all put off by becoming regulated, which is surprising since a lot of FinTech firms take pains to avoid it. Smart decision by Stash.

Stash, in fact, decided early on to become a Registered Investment Adviser (RIA).


How Did Stash Grow So Rapidly?

Simple: By targeting an underserved market who can commit only to $5 minimum to get started. Stash also makes investing intuitive by offering groups of ETF’s that are “as personal as you”, such as Clean & Green or The Techie.


From a marketing standpoint, Stash has been smart at relationship marketing and word-of-mouth. Stash uses offers, such as three months fee and referral bonuses.

They do spend a fair bit on marketing which runs the gamut from online advertising, social media (e.g. Facebook), affiliate marketing, and content marketing.

From here, Stash plans to have clients move up a ladder expanding from its core product of ETFs and low pricing of $1/month to a suite of products, coupled with higher balances.

Check out Stash’s website or download its app to learn more about its mission of serving a more diverse group of investors, bringing some fun and lack of pretense to the world, as part of their mission of serving the next generation of investors.




Finovate: What You Missed


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By Gary Zimmerman, Founder & CEO, MaxMyInterest

The annual Finovate Fall conference began on September 8th at New York City’s midtown Hilton hotel. Greg Palmer, VP at Finovate, kicked off the festivities, noting that Finovate began 10 years ago – in a basement room with poor wifi.

screen-shot-2016-09-12-at-10-28-15-pmInitial presenters in 2006 included and Andera, both of which have since been acquired.

Many presenters at Finovate were later acquired, and it’s logical for FinTech to see considerable M&A activity, given the synergies of combining the scale of banks’ customer bases with new revenue opportunities from innovation.

The Finovate 2016 presentations included multiple apps to help banks go digital, as well as other products that weren’t specific to banking or finance but could be employed by banks.

The kick off presenter Bluescape demonstrated visual collaboration software that provides an infinite digital canvas across which employees from multiple geographies can work together in real-time to prepare a product and marketing plan.  Their platform was beautifully executed and could be used for any marketing campaign.  Like many that day, this company is more “tech” than “fin.”

Similarly impressive (but also more tech than fin) was MAPD, a big data analytics company that can crunch billions of rows of data in real-time by leveraging the power of GPU chips, historically used for processing video.  The speed at which they were able to conduct live analysis on 1.2 billion rows of NYC taxi ride data was truly impressive.


The highlight of the morning session was Sindeo, a streamlined online mortgage application experience. They claim 3x higher customer satisfaction scores than the national banks, putting them in the category of brands like Apple and Zappos.

Their demo highlighted a tech-driven, intuitive user interface with seamless back-end integrations.  The mortgage application process was quick and clean, and highly transparent.

Most impressive was its view that as a mortgage provider, they have a fiduciary responsibility to give unbiased advice, a view that resonated with me given our focus at MaxMyInterest on doing what’s best for the customer in a highly-transparent fashion.


In the afternoon session, an early stage company called Bankjoy conducted a live demo of an Amazon Alexa plugin that they built in one afternoon “last Sunday” that enabled a user to check balances, pay bills and send funds to a friend with just a few spoken commands.  Alexa was most polite and dispatched the transfers and payments with ease.

I was able to spend some time with Joe Salesky, an experienced entrepreneur who is now running CRM Next that goes beyond a typical CRM system.

screen-shot-2016-09-12-at-10-33-38-pmTheir software is designed to integrate many of the back-office functions that a teller or customer service representative might complete into a streamlined interface. This eliminates screen-hopping so that customer service reps can complete tasks from a single screen through one-click automations that orchestrate processes across multiple back-end systems.

Joe claims that this can reduce the time involved in completing common tasks by up to 90%, through bidirectional integrations into more than 100 back-end systems.

Joe made the point that in the not-too-distant future, 50% of bank employees will be Millennials, who expect an intuitive UX.  For all the focus on creating beautiful user experiences on the front end, CRM Next is tackling that worthy goal on the back end.  They  have been growing quickly internationally and just set their sights set on the U.S. market.


As always, Finovate drew a great crowd of presenting companies, investors, journalists and bank executives from around the world – with their unique, strictly enforced seven minute live demo format.

The seven minute time limit was in fact imposed after Joe’s inaugural presentation at Finovate in 2007, when his demo ran more than 10 minutes.

That’s it, my time is up.

Q&A with CEO of Klarna

The following is a Q&A between Sebastian Siemiatkowski, Co-Founder and CEO of Klarna and Michael Halloran of The FinTech Blog.

MH: How was the business started for those who don’t know Klarna’s story?

SS: Klarna was founded by three classmates including myself from Stockholm who wanted to make it safer and easier to shop online.

The checkout process at the time was so complicated, and packed with lots of frustrating steps that led to people dropping out and not completing their purchases.

There has got to be an easier way, we thought. So without any prior fintech experience, we founded the company and joined an incubator. With a little bit of seed money from an angel investor, they managed to build a first version of the product and have grown to become one of the world’s largest and fastest growing payments companies.


In 2011, Sequoia Capital invested in Klarna and the company has been on an international expansion quest since then. Today, Klarna has operations in 18 countries and launched in the US late last year. More than 65,000 merchants partner with Klarna, and close to 50 million users have used the service.

MH: Tell me about decision to come to the US

SS: Klarna has always grown together with the merchants that use our services, and the decision to expand beyond Sweden came after merchants asking us to do so.

The same is true with the US, where many European merchants asked to have the same integration in the US, and US merchants asked for help with solving payments in Europe.

The US ecommerce market is huge and presents major growth opportunities for Klarna.

MH: Any lessons learned in terms of growing in so many new markets?

We’ve made mistakes in every single new market we’ve gone to, but we learn and hopefully do not repeat the mistakes. Every market is unique in the regulatory requirements, the consumers preferences and the merchant setups.

And the key lesson is that you can’t take what works in one market and just assume it’s going to work in the next. We need to tailor our product to every new market.

MH: Tell me about today’s big news you’re announcing. The Wall Street Journal calls you the company that wants you to get rid of your credit card – but you’re actually launching your first US credit product.

SS: Yes. Today, we are excited to announce the launch of Klarna’s real-time consumer financing solution for the US e-commerce market.

Klarna is launching our flexible solution together with leading players in ecommerce, like BigCommerce, Shopify, Magento, Cybersource, Demandware and OpenCart.

Signing up to finance a purchase over time, historically, has been optimized primarily for an offline environment. The online equivalent, however, has often been an ordeal.

For online consumers wishing to finance a purchase, redirects to other websites, lengthy forms, unclear information and unnecessary complexity are often the norm.

Klarna’s solution takes users less than a minute (all done on the merchant’s site!):

  1. Add what you’d like to buy to the cart.
  2. Choose Klarna at the checkout to pay over time.
  3. Enter basic top of mind information.
  4. Know instantly if you’re approved.
  5. Complete the purchase.

You can check out a video on this at

MH: It’s pretty exiting news. 
You seemed poised to grow and I saw you’re looking to hire a Head of Product in the U.S. Why the decision to be based in Ohio?

SS: As naive Swedes we would naturally have looked at SF or NYC to start with. But it turns out that the US is more than that, and thankfully our US team pointed us to alternatives.

Columbus was great for many reasons, but primarily because the talent pool is both deep and wide with Ohio State and lots of financial institutions having their offices there.

There are a lot of great merchants and we have a great partnership with the State and City. We’re about 100 people in the US right now and the vast majority are in Columbus.


Klarna’s HQ in Stockholm

MH: Can you say more about your people and culture, since our readers are often looking for new opportunities in FinTech?

SS: Engineering is our biggest division globally, but the majority of that team is based in Stockholm. We also have a big hub in Tel Aviv.

In the US, we’re right now more focused on the operational side of the business, although we do have a small product, engineering and UX team in Columbus. Klarna is at the core a product driven organisation and the role of UX/Design can’t be overstated. It affects everything we do, and our product team work together with all parts of the business.

MH: What was key to your growth, beyond innovation re: no login and password?

SS: We have one of the best regulatory and compliance teams in the world and that has been instrumental to our success. To give an example, Klarna will be the only company in the world to be able to do issuing globally – and that’s both a Product and compliance achievement.

MH: Will Klarna go to China?

SS: Nope. US & other parts of Asia are better opportunities for us, with their old and slow moving banking system. Alipay is too good. They haven’t yet cracked the European and Global markets.We hope to be able to work together with them to support that growth.

MH: What will impact of Brexit be on Klarna and FinTech in Europe?

SS: Brexit is a terribly sad thing in total, and it increases complexity for merchants and consumers across Europe. For Klarna, ironically, that’s actually a good thing, because we can help merchants and consumers solve that complexity.


MH: From a technical standpoint, what’s Klarna view on Erlang vs Python or Node.Js? 

SS: We started Klarna on Erlang, but are already working with the other frameworks you mentioned and believe they can co-exist.

MH: What’s Klarna’s take on blockchain?

SS: We’re following closely, and it will have fundamental implications on not just finance and payments but broader areas as well. But it’s not quite there yet.

MH: Looking ahead, what’s your point of view on psd2/xs2a?

SS: PSD2 will be as fundamentally important to payments in Europe as Apple’s decision to open up their app ecosystem to third party developers. It will herald a wave of new innovation to European consumers.

MH: Thanks for sharing an update on Klarna and its mission to transfer an industry that’s been slow-moving with some of your fans who read The FinTech Blog.

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Max: Multi-Bank Cash

Mac Air and Iphone for print

In addition to publishing The FinTech Blog, I lead Partnerships and Business Development at MaxMyInterest, an award-winning FinTech firm that provides a way for high net-worth individuals and their advisors to earn dramatically more on cash.

We offer a service called MAX that combines a multi-bank solution with higher yield than brick-and-mortar banks, brokerage accounts or money market funds – with broader FDIC insurance protection, and features to optimize your cash.

max-logo-registeredI’ve seen first-hand the huge role that cash plays in the multi-trillion dollar wealth management business from working in online banking and wealth management. Max is smart for clients with substantial cash – and a great product for financial advisors, who have lacked any form of compelling solution for clients seeking a better return on cash.

After the one-time setup, Max continuously monitors interest rates to make sure you’re always earning a competitive yield. It operates much like how family offices manage cash for ultra high net worth families, but is available to a broader demographic.

Max helps you manage a portfolio of online bank accounts, linked to your own existing checking/brokerage account so you don’t need to visit multiple websites to both see and manage a combined balance across multiple banks.

Max Dashboard w GS 4-26-2016

With Max, funds are “waterfalled” across your accounts, so cash is always earning the highest rates.

Since Max is not a bank – and never takes custody of your funds – your money is always kept safe in your own bank accounts, held in your own name, to which you have direct access at all times.

As part of the service, Max includes a “rate following” feature, whereby if a bank were to either raise or lower its rates, your funds automatically move to the higher payer bank, while keeping you under the FDIC insurance limit.

Another benefit is the automatic cash sweep. To help prevent inadvertent build up of cash in accounts paying very little interest, Max includes an automatic cash sweep that sends cash above a target account balance to higher-interest accounts (and topping up your checking account, if your account falls below a threshold you set).

Some banks and brokerage firms offer a sweep, but sweep from one account to another at the same financial institution, and often to money market funds that don’t pay much.

Higher Yields with Lower Risk

How is Max able to deliver yield that is 10x greater than most bank accounts, and 50-100x greater than most brokerage accounts? By leveraging the costs savings associated with online banking. Yet the risk is actually lower, since the funds are FDIC insured and often spread across multiple banks vs. concentrated at a single institution.

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The yield benefit is substantial, and Max provides reporting tools to see how well you’re doing including what you’re earning versus what you might have earned at your bank.

Max also has Consolidated Tax Reporting, so you don’t need to worry about looking for your 1099-INT statements, despite having multiple banks.

Max includes time-saving features such as Intelligent Fund Transfers, so you can specify an amount to move out of your Max account, without having to know which bank:  Max is smart. It draws from your lowest earning bank account first, and does the reverse as any  funds are deposited, filling up to the FDIC limit.

Do you need a multi-bank account?

For those with little cash, Max offers features that may not make sense for its fees. Max is a smart answer for advisors to give to their clients with substantial cash. Some advisors, especially those who are not fiduciaries (or don’t focus on client’s best interest) may be tempted to leave clients in money market funds or not ask about held away cash.

Whether held away or in the brokerage account, the research shows that HNWI’s in the U.S. prefer to hold cash at significant levels, since cash drag is less of a concern given their overall financial picture, or a preference for cash as ‘dry powder’, hedging or for other reasons, such as capital calls.

Percent Cash and Yield Advantage

Max members are typically business owners, doctors or dentists, technologists, lawyers, startup founders or early employees, investment bankers, engineers and others with significant cash. While Max is open to everyone and there is no minimum balance requirement, Max members tend to hold between $50,000 and $5,000,000 in cash.

The individual FDIC insurance limit is $250,000, so Max helps people obtain broader FDIC insurance coverage by opening accounts at multiple banks and spreading funds across these accounts. Max also supports individual, joint as well as revocable trust accounts.

Max is “set it and forget it” service that makes money for you while you sleep.

Helping Advisors in a Low Yield World

One reason I joined Max was its focus on financial advisors. Many FinTech startups focus on competing for eyeballs in highly fragmented markets by giving away B2C services for free and then finding other ways to ‘monetize’ their customers, or chase business in the crowded marketplace lending or alternative lending category.

In wealth management, it’s not always about cost, and investors value their privacy and don’t want to be ‘monetized.’ I also think advisors play a key and growing role for clients with substantial investments.

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Since Max is capable of delivering an extra 0.90% of yield on cash, that’s equivalent to helping investors earn an extra 0.21% across their entire portfolios.

We’re glad to bring Max to forward-thinking advisors looking for creative solutions for their clients. Many clients are looking for smarter ways to get a better yield on their cash, and Max is a compelling solution that can boost a client’s returns on all their holdings – inclusive of cash – while enabling an advisor to provide more holistic advice.

The Future

Max is now compatible with accounts at 15 of the nation’s largest banks and brokerage firms, integrates with advisor CRM systems and, soon, portfolio accounting systems.

In the future, investors will insist on making the most of their cash in the bank. According to the RBC/Capgemini World Wealth Report, high net worth households currently keep 23.7% of their holdings in cash.

Max California


Advisors who already use Max to help their clients earn higher yield are doing their clients a great service. It won’t be long before all advisors realize that cash, the most-often-overlooked asset class, is worthy of greater attention.


Max is a new and exiting player plus an emerging aspirational brand within the upper end of financial services landscape, and offers a glimpse of future of financial services as a multi-bank world.

While only growing by word-of-mouth and referrals from advisors, individuals can sign up for Max by speaking to their advisor or via Max website at







It’s what the character of Mark Baum says in The Big Short during a scene of a debate over whether subprime mortgages will cause Wall St. to melt down.

Screen Shot 2016-05-17 at 10.26.50 PMKaboom is what I thought when I read Prosper would let go 28% of its staff a week ago, followed by news of the ouster of Lending Club’s CEO.

What’s going on? As I wrote at outset of the year, 2016 looks to be a year of consolidation. The last few years have been high growth years with startups in financial services looking to seeking to outwit banks and other traditional financial companies.

But the need for corporate governance, strong internal controls and the need to find your place within a complex and fragmented ecosystem is now more apparent than ever.

Until recently it seemed entrepreneurs and venture capital firms saw almost any revenue stream at a financial service provider as potential white space for a “disruptor” or more innovative startup.

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Today many – especially those in the public markets – are seeing the market space as more crowded vs. wide open. You can’t just be a “me too” player in these markets, so the whole category is going to be given more scrutiny in terms of business models.

Screen Shot 2016-05-17 at 10.07.23 PMLendingClub news last week was, to be fair, less a macro story and about weak controls, disclosure as well as self-dealing by LendingClub’s CEO that didn’t sit well with its Board. The coverage by the Wall Street Journal  tells the facts of the case well. Other articles have raised question of the sustainability of the business model or the marketplace lenders.

I think the Board acted quickly to show it saw a problem, and wanted to take swift action that was both necessary, but shows that they were not asleep at the wheel.

I hope LendingClub bounces back. Everyone loves a come back story, but for all startups out there, there is a cautionary tale here, just as in the case of Theranos. It takes more than just vision. You have to sweat the details, especially in financial services.

Marketplace Lenders – Will They Need To Become Banks?


2016 is far from the end of FinTech. But with so many “me too” players in alternative lending space, we’ll see needed consolidation in sectors like lending and investing.

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To me, investing in the notes (or slices of loans) from marketplace lenders is similar to the causes of the last financial crisis,: loans sliced and diced; questionable assurances on the underlying risk.

Some have said that marketplace lenders will ultimately  need to become banks, or regulated as carefully as them, which strikes me as wise given the recent headlines.

Focusing on origination (vs. recurring revenues) and/or market is a dangerous game to play.


What happened to Prosper? I was offered the opportunity to invest in them by buying out employees shares at a valuation of $1.8B, which I declined a few months ago since while at a discount to the private value of SoFi at over $4B, it seemed expensive.

I admire Ron Suber and Aaron Vermut for taking the early action to right size Prosper; for those keeping track, Morgan Stanley has now reduced the total market share these new alternative lenders might take from 20% to 10% of market by 2020 in its latest research.

prosperLooking ahead, I expect that Prosper will prosper again after consolidation in the sector.

Like SoFi pivoting from a focus on student loans, Suber’s deal with BillGuard made sense for its plan to not just be a loan originator. But it’s tough going, with 28% of staff let go , including head of business development, as evidence of the headwinds.


Others are finding it hard to prosper in 2016. I learned last week the once high-flying UK marketplace lender, Funding Circle, has scaled back its U.S. ambitions.

A year ago, Funding Circle USA was planning to make acquisitions, expand its reach via partnerships and do a more internationally. Now its corporate development plans in the U.S are largely on hold. Growth in the U.S. has also hit a wall.

Sorry for all the bad news in this post.  I’m still  bullish on the opportunities in FinTech for those with a sound strategy and a partnership plan with incumbents, but it’s time to focus on serving your clients and not thinking about your “next round.”

Look for a some success stories to come in upcoming editions of The FinTech Blog.

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Looking at LendIt 2016


One of the must-attend FinTech events is LendIt USA, which took place April 11-12 here in San Francisco. LendIt is a key conference where a cadre of investors, executives and startups get together to learn, network and do deals in the non-bank lending space.

I caught up with three pioneers coming to LendIt: Ron Suber, President of Prosper; AdaPia d’Errico, CMO of Patch of Land, and Brendan Ross, CEO of Direct Lending Investments to talk about LendIt and talk about their involvement.

“Lendit is an annual event by which many measure time, progress or growth. I expect to see venture investors, funds and others looking for high quality, alternative finance and lending companies to evaluate for investment and partnership,” d’Errico says.

At Prosper’s offices in San Francisco, CEO Ron Suber comes across as highly confident in the prospects of the industry he represents, as one of the leading marketplace lenders.

“How have you been?” I learned is Ron’s general greeting, even when meeting someone for the first time; he introduced me to Aaron Vermut, a friend of Andy Bond, a NYC-based former colleague of mine at Scient, but focused our conversation on MaxMyInterest.

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Since the New York Times was waiting for him after we spoke, we did speak about P2P, but mostly chatted about his angel investments, including Patch of Land and Apple Pie Capital (watch its 2015 LendIt Presentation), a rival to fintech company Funding Wonder I was an advisor to prior to joining MaxMyInterest.

Prosper is one of the Platinum sponsor of LendIt USA 2016 and announced its ending its relationship with Citi, which was a big partnership announcement last year.

While companies such as Prosper garner attention (given their position as one of the largest FinTech firms, with a private valuation of $1.8B), I found a lot of insight speaking to smaller, innovative firms that were able to say more about where alt lending is headed.

Direct Lending Investments CEO Ross says: “I’ve been at LendIt from the beginning, when few people were attending. Going now is like a reunion, where you see people you’ve known for a long time.”

In 2016, Ross says alternative lending faces the challenges of having too many lenders vs. borrowers, and finding customers without direct mail or paying for brokers. That will be one of the key conversations to follow at LendIt 2016.

DLIHow is Direct Lending Investments succeeding?  Ross says “we add  value by focusing on profitable niche markets. Being a fund vs. a web site trying to do everything has been critical,” Ross says, adding that DLI “adds value for our investors by sourcing unique dealflow – being focused on areas of lending that are not served well by banks.”

Ross brings a range set of experience across wealth management, as a turnaround CEO, along with expertise in private credit having purchased over $1 billion in loans and receivables from non-bank lenders (more than any other investor worldwide).

But he credits success to his team, including Dr. Bryce Mason, DLI’s Chief Investment Officer, with deep experience in independent loan scoring models and loan portfolios. James Alexander – a former banker from Goldman –  rounds out the management team.


Patch of Land’s CMO d’Errico told me LendIt has “been a pivotal event for me and Patch of Land since our first appearance in 2014.”

This year, she was a mentor for PitchIt, where she work with startups in alternative lending space. “I can already tell by working with the finalists that the level at which these startups are operating is world-class,” she says.

D’Errico also shared that Patch of Land hit two milestones: having  originated over $100 million in short-term loans for real estate professionals who purchase, rehabilitate and refinance undervalued residential and commercial properties; and returned over $25 million in principal and interest to its investors.

What’s remarkable about this news is that Patch of Land is still 85% crowdfunded, unlike a lot of firms like Prosper  that receive most of their funding from institutional investors.

One big piece of news this year is the decision by SoFi to stay away from LendIt. They are #notabank and also #notatlendit, causing some to speculate why. A common theory is SoFi is looking to separate itself from the category of lender, as it works to promote itself as a broader provider of services with a more unique positioning.

Overall, the reaction from many at LendIt USA 2016 was that the event was quite different from 2015, when the euphoria over the Lending Club IPO was still dominant, and many providers were trumpeting their recent funding rounds.

This year’s LendIt was still a great event, but as one noted, it’s more like an asset-backed lending conference (just without the banks, and with a hefty dose of startups that you might otherwise see at Money 20/20 or Finovate).

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