FinTech’s Zeitgeist




Recent conversations have led me to think that some of the zeitgeist of fintech is changing.

I think the focus on the hype and funding levels is shifting as both startups and mid-stage firms are pivoting from aspirational, even naive plans, to more strategic conversations.

For me, the decision of FutureAdvisor and its investors to fold its cards is but one data point. It’s arguably been both a case of capitulation on both sides, recognizing the challenges to achieve scale, and the difficulty of innovation at incumbents.

honest dollar

More than ever, it’s a card game, and playing your cards right can mean holding them close to your vest. The CEO of Honest Dollar, for example, spoke candidly on the gap between what people think they’re building versus what they’re actually building.

There’s smart and right out of Steve Jobs playbook. There’s a time and place for putting it all on the table – and it’s best not to do so too early.


I wasn’t able to attend the recent Finovate event in New York due to a last-minute conflict, but was able to see themes from afar and through conversations with those in New York.


Mobile continues to be the key driver of the conversation. As Karen Webster, one of the most compelling voices on payments today, says: “More than any other, mobile is the ecosystem that has given rise to the sea change taking place in payments today.”

As she wrote on the @PYMNTS blog: “You can’t talk FinTech without talking payments, and you can’t talk payments without talking FinTech. They’re an inseparable marriage.”

I thought it was interesting that we both had seen Sprint Money’s partnership with Urban FT was one piece of news from the event.


As mobile gurus like Benedict Evans point out, although we in the US don’t often grok it, outside the US, telco companies operate more like banks or have a closer relationship with them.

In developing markets, phones can serve as the de facto means of payment. It will be interesting to see if the model will come to the US.

I think it will be a challenge given the Sprint brand and other options in the US, but demographic changes and aversion to banks might make it work in certain segments.


Payments News

Outside the marketplace lending space, other big news was the huge growth in payments processed by PayPal‘s Braintree unit. Just two years after its acquisition by PayPay this week it announced its authorized payment volume will be $50B this year.


Impressive, but with that growth factored in, the stock is still trading broadly flat to down from its IPO in July. The open question is whether the Dan Schulman can get PayPal to a place where it can compete with Stripe.

It’s interesting that Dan’s professional career includes little time in financial services (with time at AT&T, Sprint and Virgin Mobile vastly exceeding his time at American Express). I wonder what Dan thinks of  Sprint Money? I suspect his attention is elsewhere.

Only about 1.6% of retail purchases are made online, though a majority research prices online or with our phones before making a purchase decision. That behavior may be changing….

Recently Stripe announced Stripe Relay, which reduces friction for in-app purchases. It’s big news, and could usher in more online and in-app purchases over time.

stripe relay

The New Zeitgeist

Today’s zeitgeist is shifting from how big the opportunities are to being smart and strategic. (For that reason, there was a wariness about many startups at Finovate this week.)

Honest Dollar’s whurley going beyond what many think are its modest plans is one example. Being ambitious and holding your cards close is the mark of a company you want to work for – and a startup that the best  venture firms want to back.

I like the story he tells of an employee at Honest Dollar being asked what he’d done to achieve a big win for the startup, replying: “My job,” and walking away.

So here’s my advice to startups: don’t get caught up in the hype; focus on the job; and don’t show your hand too early.

It’s a smart strategy that will work better than raising too much, too soon and tilting at windmills. Remember, it’s business – you’ll need to think a few moves ahead.

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My Take on Finovate

As I wrote recently in TheStreet, it’s been a big week for FinTech, with a number of funding deals – Affirm, Vouch, Credit Sesame and NerdWallet – announced to coincide with the industry’s big Finovate conference in San Jose.

While you can read about who won the audience’s vote for best of show awards in lots of articles, I didn’t really agree with the list (which is more about popularity than impact), so I’ll share what I thought stood out as most compelling.

Unlike presentations at Finovate, where founders had no more than seven minutes to present their ideas, I had the benefit of being able to select some of most compelling startups, and then spent between 30-60 minutes in a 1:1 with founder/CEO.


Who really stands out in terms of innovation and having the potential for long term impact and relevance?  I was most impressed by LendKey and Credit Sesame – and will say why here – but several others (Trizic, Wealth Forge, Hedgeable, NAMU & CUneXus) showed a lot of promise.

LendKey: Loan Search Engine Riding on Existing Bank Brands

lendkey logoLendKey’s vision is “lending as a service” – a white label solution for community banks and credit unions to provide online lending. It’s got a killer UX, and the product offers a “Kayak”-like shopping experience for loans.

Unlike LendingTree, where you get redirected (and “offers” can easily turn into declines or result in price changes), LendKey is more like Uber for loans.

One key difference is that you work with a brand you know – your bank or credit union (with one less login and your finances are in one place).

You start at your bank’s site. But like using a travel search engine, you use sliders to adjust the amount you want to borrow (and other features). By using its dynamic pricing engine, you are shown a range products across the LendKey loan network (i.e. not just from your bank).

The network matters, since sometimes banks will hit regulatory limits for certain products, so you may find a better deal at another institution.

Smart play. I like its positioning – and working with incumbents (i.e. brands you may trust). It business can also scale (the US is fragmented with thousands of banks, so lots of partners).

Backers like DFJ are wise, I think, to be invested in LendKey, which has around 100 staff mainly in New York, but also in Ohio, with plans to come to California. I would keep definitely an eye on LendKey.

Credit Sesame: Helping Consumers with Liability Management

credit sesame

I’ll admit it. When I first saw Credit Sesame on stage making its  7 minute presentation, I didn’t get it. The aha moment just didn’t come that quickly. I thought they were like Credit Karma, with fewer customers – but I was completely wrong.

After a sit down with Adrian Nazari, CEO of Credit Sesame, I left feeling they should have won Best of Show at Finovate. Having worked at Morgan Stanley within Global Wealth Management, I understood right away when he spoke of the difficulty of finding advice for the “liabilities” (credit) side of your balance sheet.

People go to their FA for various reasons, but for nearly all segments, their advisors fail to help them with useful tools or ways to think about managing credit (or credit/investments in holistic way), since they generally focus on investments.

“Should I take out a 15 yr mortgage or 30 yr and invest the rest?” or “What kind of mix of debt should I have now – and in 5, 10 and 15 years?” are questions people should have good answers for (and not just think of when they buy a house).


Credit Sesame has shown it can attract customers (6m today) with its free credit reports, and mobile solutions. But it is differentiated by its focus on product vs. traffic. The company has a compelling vision of what it can do for consumers, and wants to be a Product company, not just a traffic and referral business.

Given Credit Sesame has found traction in the market, won numerous mobile and app design awards (and a Webby award), and has such a compelling vision for a gap in the market, it is no surprise to me that they announced new funding this week.

While there will be innovation in credit from the likes of Affirm and Behalf, I think giving better information and helping us all to really manage the liability side is a huge opportunity – and I’m excited to think that Credit Sesame could actually deliver it.

Other Standout Companies

I also wanted to give a shout out to a few other companies I think had interesting solutions, and a strong management team.

stratos card

Look for more later, but standouts at Finovate this year were Stratos (multiple cards-on-one card with a strong software angle), CUneXus ( “digital direct mail” software to enable loan offers within an online banking site), Avoka (omni-channel solution enabling banks to reduce drop-off rates for transactions) and NAMU (mobile banking).

I’ll also later talk more about MX and WealthForge (CapLinked plus workflow with an ability transact in a single platform, used by innovators like EquityZen and RealtyMogul).hedgeable_logo

I thought I’d written enough on robo advisors, but want to say more after speaking with founders of Trizic (white label robo advisor that can be offered by banks) and Hedgeable (digital wealth platform with complex strategies, e.g. downside risk protection).

OK, that’s it. My seven minutes are now up…. But take just one more minute to watch this short video on Credit Sesame:

Cue Video!