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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Deutsche Bank and Fiserv are teaming up to launch Vert, a payment acceptance and processing company aimed to serve small businesses.
Unlike other tools on the market, Vert will also offer traditional banking services.
Deutsche Bank has a built-in client base of around 800,000 small-to-medium-sized businesses who will be able to access the new solutions.
Deutsche Bank and Fiservannounced a partnership this week that will change the landscape of payments competition in Germany. The two have teamed up to launch Vert, a payment acceptance and processing company that also offers traditional banking solutions.
Aimed to serve small-to-medium-sized businesses (SMBs), Vert provides a single, integrated offering that streamlines access to banking products. The new service differentiates itself by providing next-banking-day pay-outs, which enables merchants to improve their cashflow with faster access to their funds. Vert also offers acceptance of common payment types and comes with an online dashboard that helps companies analyze transaction data and view a variety of business reports.
“By combining the strength of Deutsche Bank, Germany’s largest bank, with Fiserv, the world’s largest merchant acquirer, we can provide our Vert members with a secure, fast and technologically advanced payment acceptance solution,” said Vert Managing Director of Sales & Product Thorsten Woelfel.
Vert is launching with three products:
CloverFlex is a portable payment acceptance device that offers a tip function and business management apps.
A Go by Vert app that enables merchants to accept payments on their own Android device using secure PIN entry that allows the merchant to accept payments above contactless-only limits.
The PAX A50 is a small card reader device that enables merchants to accept card payments without having to carry around a heavy device.
“With a unique combination of payment and banking capabilities, Vert is already helping small and mid-sized enterprises in Germany do business more easily, with less complexity,” said Fiserv Head of EMEA John Gibbons. “We look forward to helping thousands of merchants streamline their operations and continue to delight their customers.”
Deutsche Bank comes with a merchant client base of its own. Between the bank’s retail banking division Postbank and entrepreneur-focused digital bank Fyrst, Deutsche Bank counts around 800,000 SMBs who will be able to access the new solutions. In fact, some of these merchants are already live with Vert. The bank also expects to attract business customers from outside of its own client base.
Fiserv is leveraging a partnership with The Clearing House to help its bank clients offer real time payments.
Banks that integrate into Fiserv’s NOW Gateway will benefit from real time payments in peer-to-peer payments, interbank account transfers, billpay, and more.
The partnership comes as the U.S. Federal Reserve announced pilot participants of its own real time payments system, FedNow.
Fintech solutions provider Fiserv is in the fintech headlines today for its move to help its bank clients provide real time payments to their end users. The Wisconsin-based company is partnering with The Clearing House (TCH), which is allowing Fiserv’s bank customers to access its Real Time Payments (RTP) network via Fiserv’s NOW Gateway.
Banks can integrate into the NOW Gateway, which leverages the RTP network, to offer their clients a range of real time payments services, including peer-to-peer payments with Zelle, payouts for gig economy work and insurance claims, interbank account transfers, and real time bill payments. Ultimately, the move will allow financial institutions to send and receive real time payments on behalf of their customers over the RTP network, which connects to over 60% of bank accounts in the U.S.
“To remain competitive, financial institutions must offer real-time payment capabilities. That’s why we are committed to making real-time implementation easier for any financial institution, from regional bank to community bank, to credit union,” said Fiserv’s President of Digital Payments and Data Aggregation Matt Wilcox. “Our work with The Clearing House to integrate the RTP network with our NOW Gateway is the latest advancement towards this goal.”
Founded in 1853, TCH clears and settles more than $2 trillion a day through wire, ACH, check image, and real-time payments. The company’s RTP network facilitates real time payments by immediately clearing and settling payments. In the first quarter of this year, the network cleared almost 37 million transactions totaling almost $16 billion.
Today’s news comes as the U.S. Federal Reserve’s real time payments tool, FedNow, began onboarding pilot participants. Fiserv is among the first 120 pilot organizations, a list which also includes Finastra, Green Dot, Q2, Square, Temenos, and Visa. The purpose of the pilot is to establish connectivity and perform technical and operational tasks that will lay the groundwork for full-scale, end-to-end testing later this year.
Fiserv most recently demoed at FinovateWest 2020 where it showcased its Virtual Banking Assistant, a tool that helps banks deliver intelligent, AI-driven conversational experiences. With nearly 10,000 financial institution clients, the company facilitates 12,000 transactions each second. Frank Bisignano is president and CEO.
While 2021 was a record year for fintech merger and acquisition (M&A) activity, 2022 is off to a great start.
According to FT Partners, there were 1,485 M&A deals in the fintech space totaling $348.5 billion in 2021. As Square’s $29 billion takeover of Afterpay demonstrated, last year’s massive volume is partially thanks to multiple large deals.
This quarter, only eight of the 21 deals initiated disclosed financial details. Of those, the deal volume added up to almost $5 billion.
While experts predict that 2022 M&A activity will likely see momentum from 2021, there are two aspects to watch out for this year. First, we will not see as many SPACs as we saw last year. This may decrease the number of companies choosing to exit this year. Second, fintech valuations are deflating after experiencing huge rises over the course of the past two years. While the loss in value won’t directly impact the number of M&A deals, it will decrease the deal volume.
Fiserv has agreed to acquire Finxact in a transaction valued at $650 million.
The acquisition will help bolster Fiserv’s position as “partner of choice” for firms looking to add to their digital banking offerings.
First Data Ventures, the corporate arm of 2019 Fiserv acquisition First Data, was an early investor in Finxact.
Leading fintech and payments company Fiserv announced today that it has agreed to acquire cloud native banking solution provider Finxact. An early investor in the company, Fiserv will purchase the remaining ownership interest in Finxact for $650 million, and will leverage the acquisition to add to Fiserv’s account processing, digital, and payments solutions.
“Through this combination, Fiserv will create a streamlined path for clients to offer digital solutions to their customers,” Fiserv President and CEO Frank Bisignano said. “Finxact also enhances our ability to support a growing number of financial institutions and business clients.”
Jacksonville, Florida-based Finxact offers a core-as-a-service platform that enables financial institutions to innovate and bring new solutions to market without requiring a complete technological overhaul of existing systems. Finxact leverages open banking APIs and the cloud to help firms future-proof and add flexibility to their businesses by abstracting the critical components of core banking from other operations and services – such as mobile banking, communications, and statements. The company’s partners range from financial institutions like Live Oak Bank ($8.2 billion in assets) and Iberiabank’s Virtual Bank to fintechs like Personetics and Anchorage Digital.
Calling the acquisition a “tremendous opportunity” for his six-year old company, Finxact Chairman and CEO Frank Sanchez said, “We recognize that Finxact’s technology can serve to level up the industry’s delivery infrastructure, and crucially at a time when banking is undergoing transformative change. We will be better positioned to serve a far greater number of institutions, of all sizes, when combined with the breadth and depth of Fiserv capabilities.”
Finxact was founded in 2016 and has raised $42 million in funding. The company ended 2021 with the introduction of its no-code visual Product Launchpad, a platform enhancement that brings a visual design experience to the creation and deployment of products on the Finxact core.
The acquisition of Finxact is only the latest fintech deal by Fiserv since its big, $22 billion purchase of First Data Corporation in 2019. Last fall, Fiserv announced the completion of its acquisition of marketing and commerce platform BentoBox. The year before, Fiserv acquired digital card services platform Ondot. Other recent acquisitions include its pick-up of Bypass Mobile in 2020 and NetPay in 2021. The company’s most recent Finovate appearance was at FinovateWest 2020, an all-digital event in which Fiserv demoed its Virtual Banking Assistant. The technology brings AI-driven, conversational experiences to call center operations, boosting customer engagement and reducing costs.
“Mastercard is committed to offering a wide range of payment solutions that deliver more choice, value, and impact every day,” Mastercard EVP of Digital Payments Sherri Haymond. “Together with Bakkt and grounded by our principled approach to innovation, we’ll not only empower our partners to offer a dynamic mix of digital assets options, but also deliver differentiated and relevant consumer experiences.”
The collaboration will enable Mastercard partners to leverage the company’s network and Bakkt’s trusted digital asset platform to enable consumers to buy, sell, and hold digital assets using custodial wallets powered by Bakkt’s platform. Additionally, consumers will benefit from streamlined issuance of branded crypto debit and credit cards.
Mastercard will also make cryptocurrencies a bigger part of its loyalty programs. Mastercard partners will be able to offer cryptocurrency as rewards and enable consumers to transfer value between loyalty points and digital assets. This will allow users to effectively use cryptocurrencies for everyday transactions and, perhaps even more significantly, marry cryptocurrencies to their preferred purchases.
“We’re incredibly excited to partner with Mastercard to bring crypto loyalty services to millions of consumers,” Bakkt EVP for Loyalty, Rewards, & Payments Nancy Gordon said. “As brands and merchants look to appeal to younger consumers and their transaction preferences, these new offerings represent a unique opportunity to satisfy increasing demand for crypto, payment, and rewards flexibility.”
In addition to its partnership with Mastercard, Bakkt also announced that it had entered a strategic relationship with Fiserv that will also help support mainstream adoption and use of cryptocurrencies. A major feature of the collaboration will be the integration of Bakkt into Fiserv’s Carat omnichannel ecosystem. This will enable businesses to offer both B2B and B2C cryptocurrency payouts, loyalty programs, and transactions. Fiserv and Bakkt also announced plans to introduce Bakkt technology that enables customers to store and transact with digital assets to Fiserv’s financial institution clients.
Founded in 2018 and based in Alpharetta, Georgia, Bakkt became a publicly traded company only a few days ago, launching on the New York Stock Exchange under the ticker symbol BKKT. The listing came courtesy of a SPAC sponsored by Chicago investment firm Victory Park Capital. In the weeks leading up to the company’s debut as a public company, Bakkt had announced partnerships with other Finovate alums including Finastra, Google, and, earlier this year, Blackhawk Network.
This is a sponsored post in collaboration with Amanda Glincher, Director of Marketing, Fiserv
It’s no surprise that a digitally issued card shortens the time frame between when a consumer receives a new card and when they begin using it for spend. Yet, digital issuance is just one step on a digital-first journey and without a full strategy, that newly issued card might not bring with it the added spend issuers are expecting.
Yes, consumers want digital-first cards, but they are also in search of digital-first options when it comes to all of their other banking activities. From the first engagement someone has with a new financial institution, each traditional activity should have a digital counterpart.
Applications that win
The beginning of a banking relationship often begins with a consumer applying for an account. Creating an application process that is seamless and reduces barriers is the best way to start the cardholder’s digital experience. As noted in The Financial Brand, when an application takes more than five minutes to complete, abandonment rates increase to as high as 60%. To reduce abandonment and improve the customer experience, applications can be limited to the necessary data.
Add to the convenience by allowing applicants to switch between devices to complete an application without losing their place in the application flow, especially in situations where any documentation or uploads are being requested.
Immediate access
Once you’ve approved a new account, increase usage rates by providing immediate access to a new card. In a world where our groceries are delivered within the hour and the world’s library of movies and music is available to stream in seconds, time really is of the essence with today’s consumer.
70% of digitally issued cards are used within five days, compared to a physical card that won’t even be delivered for 7-10 business days.
Make usage a breeze
“Manually entering my card details and verifying my identity is so fun” is a statement that has never been uttered. Once a card has been digitally issued, make using the card simple by enabling push-to-wallet. There are many benefits to giving cardholders this ability and it is among the most essential parts of a successful digital-first strategy. In addition to the seamless experience for the cardholder, push-to-wallet provides more opportunity for you to capture top-of-wallet for both the physical and digital wallet, as well as bypassing the marketing of competing cards.
In addition to the availability of the card, the ease-of-use enables consumers to go about their regular spending and utilize your card without missing a beat.
Bypassing the competition
While push-to-wallet is the more convenient way to add a card for a consumer, it’s also the simplest way for an issuer to avoid competition. A customer who chooses to manually add a card to Apple Wallet will be greeted by an offer to apply for an Apple Card. When a card is directly provisioned to a digital wallet, the cardholder bypasses the manual entry point at which they would be offered another product.
Sweetening the deal with offers and rewards
A list of retail discounts, benefits pamphlets, and APR offer checks are among the many mailings we receive from financial institutions. These offers are more accessible and beneficial to digitally savvy cardholders when they are offered, visible, and available in-app.
Not only is this a preferred way for customers to access offers, but a digital-first model allows financial institutions to make personalized offers in the moment – special financing opportunities and location-based discounts – enhancing the cardholder experience and capturing even more spend.
Give insight into all the places a card is stored
For existing cardholders, instant issuance of a replacement card can be made even more valuable by providing information on all the places the old card was stored. A list of existing retailers where their card is on file or is being used for recurring purchases allows cardholders to make sure the card is updated everywhere it needs to be – providing a smoother journey with uninterrupted spend.
Control in the palm of their hands
While card controls and alerts are a standard today, they are also an essential part of a digital journey. Allowing individuals to set limits on transaction types, locations, and amounts – and receive alerts – reduces fraud, minimizes inbound call center activity, and gives cardholders the security of managing their cards 24 hours a day. Controls can include the ability to turn cards on and off, set spending limits, create location boundaries, and report a missing card. Alerts allow cardholders to create notifications for a variety of scenarios, and to keep a close eye on the transactions charged to their account.
The importance of a fully digital journey
While all of these features are beneficial on their own, it is when they come together as part of a full digital strategy that they provide the most value to both the cardholder and the financial institution. Digital issuance is a key part of going digital-first, but it is the combination of this suite of digital-first tools that provide the best cardholder experience.
Today brings yet another indication that QR codes are back in style. Fiservannounced it is partnering with PayPal to enable businesses to use QR codes to offer touch-free payments at the point of sale.
Through the partnership, small and mid-sized businesses using Fiserv’s Clover point of sale and large enterprises leveraging the company’s Carat commerce ecosystem will be able to accept payment via PayPal and Venmo through QR codes at the point of sale.
“With consumer preference shifting towards touch-free interactions, it’s critical that businesses are able to connect physical and digital commerce,” said Fiserv’s Head of Global Business Solutions Devin McGranahan. “By enabling consumers to pay digitally via a QR code and popular digital wallets like PayPal and Venmo, businesses are providing added convenience and choice as in-person shopping, dining and entertainment experiences resume.”
As shown in the video above, the QR codes make the touch-free payment process relatively frictionless. Nonetheless, there is one catch– users must have a PayPal or Venmo account and mobile app.
Consumers may be willing to endure the extra friction, however, as people have become more likely to try out new digital technologies in the wake of the pandemic.
Fiserv’s announcement comes about a month after the company agreed to acquire payment processing and payment acceptance startup Pineapple Payments.
Founded in 1984 and headquartered in Wisconsin, Fiserv’s technologies serve nearly six million merchants across the globe. Frank Bisignano is president and CEO.
Financial services technology provider Fiserv made its latest acquisition this week. The Wisconsin-based company has agreed to purchase payment processing and payment acceptance startup Pineapple Payments.
Financial terms of the deal, which is expected to close next quarter, were not disclosed.
Under the agreement, Fiserv will continue to provide processing services to Pineapple’s 25,000 merchants. Fiserv anticipates the purchase will expand the reach of its own payment solutions, including the CoPilot partner platform, Clover, and Clover Connect.
“With Pineapple Payments already operating as a key distribution partner of Fiserv, we expect to accelerate the delivery of new and innovative capabilities to a host of new merchant clients,” said Fiserv President and CEO Frank Bisignano. “Together, we will provide omni-channel payments technology and services to enable merchants to maximize the potential of electronic payment processing. We look forward to welcoming Pineapple Payments to the Fiserv family and continuing to provide the best-in-class solutions and service that merchants and their customers expect.”
Headquartered in Wisconsin and founded in 2016, Pineapple Payments provides payment processing and omni-channel payment acceptance solutions for integrated software vendors and SMBs.
Today’s deal is Fiserv’s 35th acquisition. Prior to today, the company most recently bought up digital card services platform Ondot in a deal announced last December.
More than two years in the making, the FedNow payments initiative – launched by the U.S. Federal Reserve to accelerate payments and transfers – is picking up speed. The project currently has more than 110 banks, financial services providers, and other organizations slated to participate, and among them are ten Finovate alums.
“We’re gratified by the industry’s tremendous interest and willingness to devote time and energy to help us develop the FedNow Service,” Esther George, executive sponsor of the Federal Reserve’s payments improvement initiatives, said. George, who is also President and CEO of the Federal Reserve Bank of Kansas City, added that the pilot has had to “adjust” to accommodate greater than expected interest.
The idea behind the service is to expand the reach of instant payment services offered by financial institutions and enable businesses and individuals to send and receive instant payments, with full access to their funds within seconds. The FedNow Service will leverage the Federal Reserve’s FedLine network, which connects to more than 10,000 financial institutions directly or via their agents.
The pilot program is designed to review the technology’s features and functionality, assess the user experience, and greenlight the product for further testing and eventual general availability. Participating institutions will be retained, post-launch, to provide additional review and advice with regard to issues like adoption roadmap, industry readiness, and overall payments strategy.
“The FedNow Service marks a turning point in the industry’s move to making real-time payments a reality,” Booshan Rengachari, founder and CEO of Finzly, explained. Finzly is one of Finovate’s newest alums – most recently demoing its technology at FinovateWest Digital last fall – and is one of the participants in FedNow’s pilot program.
Rengachari further suggested that this “turning point” was a moment his company had anticipated. “We created our Payment Hub specifically to help FIs prepare and go to market faster with newer RTP networks,” he said. Finzly’s CEO added that this helps “address the challenges of offering single payment API for multiple payment networks without having to run disparate payment systems from multiple vendors.”
The 10 Finovate alums participating in the FedNow project are listed below.
Fiserv made a key acquisition this week, snapping up digital card services platform Ondot Systems. Financial terms of the deal were not disclosed but the agreement is set to be finalized in the first quarter of next year.
Fiserv is picking up Ondot to enhance its suite of tools that help banks offer digital-first, personalized offerings to their consumers.
“By combining Ondot and Fiserv capabilities at scale, we plan to provide our clients with a unified digital experience, spanning card-based payments, digital banking platforms, core banking, and merchant solutions, enabling them to deliver best-in-class solutions that continue to reduce friction for their customers,” said Fiserv President and CEO Frank Bisignano.
More specifically, Fiserv will use Ondot to help bank clients accelerate digital customer acquisition, drive digital commerce, increase card activation and usage, reduce service costs, and engage contextually.
The deal enhances Fiserv’s standing in the card payment space specifically. The Wisconsin-based company will now be able to help banks offer cardholders instant card issuance and usage, visibility into purchases through enriched transaction information, and actionable insights to help them make more informed spending decisions.
Fiserv’s bank clients will benefit from Ondot’s data enrichment that organizes and identifies transaction and merchant data to minimize chargebacks.
For Ondot, joining forces with Fiserv will offer the company a more global reach and will help it scale up faster. As Ondot President and CEO Vaduvur Bharghavan explained, “Joining with Fiserv will provide Ondot the opportunity to innovate and impact the industry on a global scale. We look forward to expanding the scope of our offerings as we integrate with Fiserv’s vast array of capabilities to continue providing high-quality digital solutions to consumers, merchants, acquirers, networks and card issuers.”
California-based Ondot was founded in 2011 and has raised $51 million. The company processes more than 1 billion transactions per month and provides digital capabilities for over 30 million cards. The company made news earlier this year when it partnered with CU Solutions Group, which agreed to become a reseller of Ondot’s CardApp.
One of the more fascinating stories in the history of black America is the rise of black-run banking institutions in the final decades of the 19th century. And while the early days of black banking and finance had their fair share of tragedy – the massacre at “Black Wall Street” in Tulsa, Oklahoma in 1921 among the more horrific – the industry persisted nevertheless, enabling black SMEs and families to access basic banking services and credit at a time when mainstream financial institutions refused to serve them.
It’s hard not to recall this history when reading the news that Fiserv has become a corporate partner of the non-profit African-American Credit Union Coalition (AACUC). As a new corporate partner, Fiserv will support the Coalition’s internship and mentorship programs, as well as make a financial contribution and back Coalition efforts such as its I’ve Got Five on It Giving Tuesday campaign.
AACUC President and Executive Officer Renée Sattiewhite acknowledged that Fiserv’s participation comes at a time of heightened awareness of and renewed determination to fight forms of systemic racism in particular. “As a year that has galvanized support for African-American community comes to a close,” Sattiewhite said, “we are looking forward to the future along with organizations like Fiserv.”
Fiserv General Manager of Credit Union Solutions and executive sponsor of the partnership Derek Everett put the collaboration in the context of Fiserv’s goal of better engaging underbanked communities. In addition to its partnership with AACUC, Fiserv is also investing $10 million in black- and minority-owned businesses via its Back2Business initiative. “As we begin our work with AACUC, our team is looking forward to strengthening existing relationships and forging new ones with the diverse communities and professionals AACUC strives to empower,” Everett said.
Headquartered in Duluth, Georgia, the Coalition promotes racial equality and fairness in the credit union industry, and supports black-led credit unions and credit unions serving black communities. Larry Sewell, who recently took over as chairman of the AACUC, discussed the challenge of diversity in an interview this fall. Currently Vice President of Corporate Partnerships and Advocacy for Together Credit Union, Sewell noted that of the more than 5,000 credit unions in the U.S., there are “approximately 170 African-American CEOs.” The number of women among those 170 CEOs, it should be noted, is impressive at more than 58%. But the industry clearly has room to improve in terms of ethnic diversity at its most senior, leadership ranks.
A look at the companies demoing at FinovateSpring Digital on May 10 through 13, 2021. Register today and save your spot.
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