3 Takeaways From Finovate – Day 2

More from the financial innovation event.

It’s when the bell rings for the final Finovate Fall presenter that the fun truly begins. Over the course of the conference’s two days, 70 companies presented live demonstrations of their newest products and solutions to meet financial institution and service provider’s largest needs.

If you missed CreditUnions.com’s coverage of day one, click here. Otherwise, here are three takeaways from the second day of Finovate.

No. 1: Auto Lending Can Be Better

As covered during Callahan Associates’ second quarter Trendwatch webinar, auto loans continue to be large drivers of the credit union balance sheet growth. At second quarter, credit unions grew both new and used auto portfolios by double digits, at 15.7% and 13.4% respectively. That is to say, auto lending is going well at credit unions.

But Finovate presenter AutoGravity would argue that the auto lending process is ripe for innovation.

The mobile-first solution allows consumers to control all parts of the car buying process, from comparing different makes and models to submitting the final application.

In the app, users can surf a catalog of new and used cars available at dealerships nationwide by year or brand, and can calculate monthly payments based on down payment preference and other necessary financial inputs.

Once a car and dealer are selected, users apply. Data fields are populated through scans of user ID, LinkedIn profile, and manually entered social security number. Applications can be submitted to as many as four dealerships. AutoGravity sports electronic signature capability, but defers to dealers that may want to sign contracts in person.

Thus far, the company has raised $50 million in seed funding.

No. 2: Online Marketplaces Are All The Rage

Bitbond and MarketX were two of several companies on day two to demo online lending and investment marketplaces.

These two were of significant note because not only were their demos impressive, but both companies operate on a global scale. Bitbond is a global small business lending marketplace, while MarketX built an investment platform which will allow users to purchase shares in companies that have not yet filed for initial public offerings. MarketX’s platform is expected to debut in October.

In today’s uncertain interest rate environment, financial institutions and non-bank lenders are looking for ways to mitigate risk through diversification. Looking globally provides an avenue for this. The problems? How can an institution make accurate underwriting decisions on small businesses located in areas they know nothing about? How would payments work?

Bitbond, at least, believes it has the answers to these questions. It has created a proprietary international and scalable credit scoring mechanism founded partially in reading global commerce platforms (such as ebay, PayPal, and Amazon). As for payments, as a regulated financial institution based in Germany, Bitbond has a solution for this as well. All transactions are completed in bitcoin. According to Bitbond, its investors see an average yearly return of 13%.

No. 3: The Good Kind Of Frankenstein

As Finovate presenter Avoka postulated, the conference must be a frustrating one for financial institution attendees, comparing the struggle to a kid in a candy store: so many goodies, but you can’t have them all.

It’s true that many of the presenting companies pitched products with open application program interfaces (APIs), but banks and credit unions already have their own core and legacy systems. Some of the products and solutions pitched at Finovate may not be feasible at every institution (to say nothing of cost).

Avoka pitched a solution to fix that. What if banks and credit unions could build a service that combined the best technology from different providers, and it all played nice? That’s what Avoka’s platform provides for financial institutions.

Rather than spending months and resources engineering a Frankenstein solution, Avoka’s platform allows financial institutions to plug and play with different pieces of technology within a larger application. In its demo, the company presented a hypothetical scenario in which a bank wanted to build a solution that combined pieces of technology from Google, LexisNexis, FIS, Yodlee, QualiFile, and eSignLive.

It’s a solution that makes the kid in the candy store happy, according to Avoka’s chief experience officer, Derek Corcoran.

We want you all to have some of that sweet, sweet fintech innovation, he says.

September 9, 2016

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