Acorns, a Fintech App, is Looking to Convert Loose Change into Big Bills

acorn_sproutAcorns, an app that’s been awarded by SXSW, Design Awards, and FastCo Innovation by Design Awards, allows users to invest spare change automatically from everyday purchases into a diverse portfolio. This is an initiative is one that supports the notion that tiny investments will determine the future of Wall Street.

The financial technology startup is piloted by CEO Noah Kerner, an ex-disc jockey turned marketing guru with no experience with wealth management. Kerner, who sold a digital marketing and product design startup in 2014, also co-wrote the book, “Chasing Cool,” a book about marketing to young consumers. Nonetheless, the company has garnered $62 million in funding, thanks to investors Rakuten FinTech Fund, PayPal Holdings Inc., and other investors.

The mobile app functions by making regular deposits from bank accounts into an Acorns account, which automatically invests money into an exchange-traded fund. Approximately $50 each month is siphoned from a user’s online bank account to the app, and it tracks activity on the account and invests excessive change into transactions.

Jeffrey Cruttenden, the 29-year-old co-founder stated, “We want to make a big decision small.”Average accounts stand at $175, which is a relatively small amount, but it has enabled these account managers to reach $150 million across 850,000 accounts. The number of accounts Acorns manages has doubled since the beginning 2016.

The manage less wealth than Betterment Inc. and Wealthfront, but Acorns has ten times as many as accounts as Wealthfront and four times as many accounts as Betterment. Approximately 75 percent of Acorns’ users are between the ages of 18 and 34, and they earn less than $100,000 in annual income. For conventional financial advisers, the average age of a client is 62-years-old.

The app will continue to build a large user base, and they’ll monetize the platform by adding new user features. They’ll also earn revenue through retailers and other marketing partners.

Initially, Acorns sought to partner with big assets managers, but those managers were interested in superfluous features and a slower signup process. That would have hindered plans to disrupt the investing industry from the ground up. Currently, Acorns provides five levels of strategies, which range from conservative to aggressive, somewhat mimicking the Tinder dating app. Annual returns for Acorns users range from 5 percent to 9 percent, depending on the strategy.

For accounts with assets under $5,000, Acorns charges $1 a month but waives the fee for accounts with fewer than $10. For accounts that hold $500, it translates to an annual fee of about 2 percent. They happen to charge more than five times as much as Wealthfront and Betterment for their most expensive accounts. Acorns also allow users to make larger regular or one-time investments.

Acorns became free to students aged 18 and 23 after Wealthfront CEO Adam Nash indicated that Acorns monthly fees were exorbitant for small accounts. Also, Acorns’ Cruttenden iterated that fees reduce as users add to their accounts. The app acts as an important vehicle for investing and savings and outbids a focus on initial returns.

In May, Acorns will offer retailers a product that will enable retailers to add to customers’ Acorns account. Additionally, Acorns and Paypal are interested in exploring a partnership.


David E. Mickey is a financial executive based in Buffalo, New York, and he’s an Enterprise Sales Executive at Docupace Technologies. Please visit his websites to learn more: http://davidemickey.comhttp://davidemickey.net/; and http://davidemickey.org/.

 

Fintech Challenges Banking Giants in Share of their Industry

VenmoThe rise of Fintech startups is giving rise to some very troubling news for many financial firms. Companies like Acorns, Mint, Square, Lending Club, Betterment and many more are encroaching on various sectors of the banking world. The most prominent apps like Square, Venmo, and Stripe, which are peer-to-peer money transferring and payment services, are moving into a vital part of the banking industry. And although it is highly unlikely for these startups to overtake the banks, they will surely take away from the banking sector’s profitability according to TIME.

Many of the world’s largest financial firms are predicted to lose a great deal of revenue for these alternative payment and money transferring services. Bloomberg reports that in 2015 alone, these firms could lose up to $150 billion, with the cost of upgrading to new IT Systems costing more than $4 billion in each bank alone. Experts report that individuals seek new alternatives to an already unpopular banking industry, and Fintech could potentially be the relief they’ve been seeking. Growing trends also highlight the demand for speedy processes and immediate engagements with their finances. “Customers now want to interact with their bank whenever they want, however they want, and wherever they want,” CNBC reports one global banking outlook study saying.

Larger financial institutions have taken note of the recent trend, which has led many of these same institutions to invest heavily in Fintech companies. In fact, investing in the sector has hit all time highs, as banks and their investors, hedge against potential disruptions in the financial services market. The decision to move into Fintech is largely strategic, evolving from a need to compete with smaller, more innovative firms in vital sectors of their own businesses, such as money-transfer and payment services. By innovating in their own mobile platforms, and taking shares in the profitability of Fintech companies, banks will still retain their hegemony in the financial services industry.

CNBC reports that banking powerhouses like Goldman Sachs, Citigroup, and JPMorgan are increasingly involved in major Fintech deals and funding. The numbers showcase Citgroup as the biggest backer of Fintech startups, funding thirteen startups from 2011 to 2015. Goldman Sachs is second on the list, backing ten, while JPMorgan has backed five in the same time period. At the same time, JPMorgan Chase bank officials are stressing the importance of internal services technology for the coming years, showcased by their new Chase Pay app. CNBC also reports that 40 percent of all of Asia’s startup funding is from corporate investors, highlighting the preoccupations of all banks globally.

If you liked this post and would like to read more on financial news and information, check out my twitter @DavidEMickey for more information. Thanks for reading!


David E. Mickey is a financial executive based in Buffalo, New York, and he’s an Enterprise Sales Executive at Docupace Technologies. Please visit his websites to learn more: http://davidemickey.comhttp://davidemickey.net/; and http://davidemickey.org/.

 

The Rise of FinTech: New Innovation & Success in Financial Technology

FinTechCurrently we are in one of the most innovative times for technology in the financial service world. With advances in the way the financial industry processes payments and lends money, the technology sector of this developing industry is moving at an accelerated rate and is having a positive effect on both the financial and personnel sides.

As the rise in Fintech occurs, conflict and successfully emerge from the ranks of established firms and the startup companies that are staking a claim in our economy.  Traditional banks are now competing with online banking. Although banks can offer customers the face to face touch, they can’t offer higher rates and lower fees of their online competitors. The same is happening with traditional lenders versus peer to peer marketplaces.

This fight between the old and the new will result in winners and unfortunately, losers. There is an intense war proceeding between the young and agile tech solutions and their tried and true predecessors. A percentage of these battles will be won by startups that provide innovation and pave the way for Fintech to be the wave of the future.

Fortunately, these startups are showcasing their successes in powerful ways and proving the impact that Fintech solutions are having on businesses.

A King of Prussia, PA Fintech firm is garnering attention after a new merger and acquisition by FinTech Acquisition Corp. Established as a developmental-stage company, FinTech Acquisition Corp focuses on several different business factors such as capital stock purchases and exchanges, small business mergers and structure changes, and acquisitions of various assists. CardConnect was obtained by the other company for $350 million dollars in cash and common stock.

As a company, Card Connect has one goal – to simplify card transitions within financial institutions and they have seen great success. The company mission statement is written as: “CardConnect is a leading provider of payment processing and technology services that helps more than 60,000 merchants across the U.S., from Fortune 500 companies to small and mid-sized businesses, accept billions of dollars in card transactions each year. The company’s patented tokenization and gateway solutions make payment acceptance simple, integrated and secure.”

Set to be finalized by June 2016, CardConnect will change it’s name to CardConnect Corp.  Currently the company is majority owned by FTV Capital. According to Reuters, FTV Capital is “a leading growth equity investor in high-growth payments and transaction processing companies.”

The acquisition of CardConnect represents the power and innovation Fintech companies have in the financial world.  Betsy Z. Cohen, Chairman of the board of FNTC, spoke in high regards about Mr.Shanahan and his team. In a press release she stated that CardConnect have “continued to leverage technology to deliver innovative, state-of-the-art payments capabilities featuring advanced transaction security and outstanding customer service.”

I’m excited to see other up and coming Fintech solutions like CardConnect surface. It’s inevitable that these companies will have a radical, long lasting effect on financial services. Thanks for reading and please check back soon for new updates about the financial world.


David E. Mickey is a financial executive based in Buffalo, New York, and he’s an Enterprise Sales Executive at Docupace Technologies. Please visit his websites to learn more: http://davidemickey.comhttp://davidemickey.net/; and http://davidemickey.org/.

 

Bitcoin Tech Picks Up Steam on Wall Street

The financial company R3 CEV is to thank for leading the biggest push for blockchain on Wall Street

The financial company R3 CEV is to thank for leading the biggest push for blockchain on Wall Street

Since it’s release in 2009, Bitcoin has alternatively been hailed as doomed and destined for greatness. Regardless of how Bitcoin pans out, it seems that the technology underlying the digital currency is anything but doomed.

The Great Experiment

Earlier this month, the financial company R3 CEV announced that it completed a trial of blockchain technology with 40 banks. These banks are part of a consortium that R3 created for the express purpose of establishing standards and protocols for blockchain technology in financial services. Participants include Bank of America, Barclays, HSBC, Morgan Stanley, JP Morgan, Deutsche Bank, Goldman Sachs, and Wells Fargo among others.

At the core of Bitcoin is blockchain, a system that allows people to near-instantaneously transfer digital currency around the world. At the core of blockchain is the ledger, which functions as a record (proof) of every digital transaction on the network. Every transaction is arranged, chronologically and linearly.

The banks participating in R3’s consortium experimented with 5 different forms of distributed ledgers created by Chain, IBM, Intel, Etherium, and Eris Industries)–the idea being that the best way to develop a strong blockchain-based financial solution is by giving numerous companies a crack at it.

Soundbites

From CEO of Ethereum David Rutter:

“The transition from vision and hypothesis to application and execution signifies the next major step towards using this technology to transform how institutions interact, report and trade with each other in financial markets. This is a very exciting development, both for R3 and our member banks, as well as the global financial services industry as a whole.”

From R3 CEV Managing Editor Tim Grant:

“It’s not clear there’s a well-defined playbook in how to evaluate these technologies side by side. We want to help bring that clarity,”

From Vice President of Blockchain, James Wallace

“Blockchain is a powerful innovation that has the potential to create profound change in the way businesses interact,”

Moving Forward

The advantages of using blockchain are clear. With it, banks could conduct transactions more quickly and cheaply, and could also better centralize their records.

I have to admit that I was skeptical of Bitcoin when I first heard about it. A decentralized monetary system without any central authoritative figures? But impressions on Bitcoin set aside, it seems like blockchain is becoming a bigger player on the financial scene. It’s exciting to see financial institutions attempt to utilize the technology rather than try to ignore it.


David E. Mickey is a financial executive based in Buffalo, New York, and he’s an Enterprise Sales Executive at Docupace Technologies. Please visit his websites to learn more: http://davidemickey.comhttp://davidemickey.net/; and http://davidemickey.org/. 

Cloud ERP May Very Well be Your Accounting Department’s Dream Software

2000px-Cloud_computing_iconAccording to online sources, enterprise resource planning is a category of business management software that businesses use to collect, store, and manage data from an enterprise’s activities. These activities include product planning, manufacturing, logistics, marketing, and sales. With bigger companies, however, the management of such data can get increasingly confusing, especially within accounting departments. Financial reports, payroll, and even tax records accumulate after years and years of doing business, and snowballing disorganization can become a future nightmare for affected companies. In order to mitigate some of this stress, instituting the use of ERP’s, or enterprise resource planning solutions, can become your best bet.

Allan Smith on the Huffington Post provides us with a few reasons why cloud ERP’s can improve your company’s accounting and operational prowess. For starters, the accounting department can greatly benefit from the digital changes your company undertakes. Digitizing information allows for information to be shared easily across departments. This accessibility allows accounting departments to collect financial data from other departments, allowing them to consolidate information quickly and efficiently. If sales of any kind of products are made, the accounting department receives that information in no time. If money is spent on resources, or new machinery is bought, accounting will immediately consolidate this information. This allows for a much quicker, and more efficient manner of tracking company finances.

Company integration and uniformity is another aspect that Smith focuses on. As the company grows, more software will be needed to accommodate the increase in departments and employees. Tasks that can be automated will surely become so, in order to facilitate workplace operations. Although these systems will be fairly easy to use in specific departments, they become much more difficult to carry out for individuals of other departments. Again, accountants may sometimes need to access information from other departments in order to keep better track of finances. In these situations, these accountants may find themselves with some trouble. ERP software allows for better company-wide integration. All the different programs and practices used by different departments can be consolidated under one system, making coordination and collaboration between departments tremendously easy.

Smith also notes ERP software’s simplicity. As a company, making major changes in operational practices can be quite difficult. Often times, new hardware needs to be installed, and IT specialists need to be involved. With ERP software, little maintenance is needed. ERP software runs on vendor’s servers, which makes the technology much more feasible to use for smaller companies. Its simplicity creates one less problem for company execs and managers to worry about. Cloud ERP financial solutions will keep your company from mismanaging finances, and instead, have it aggressively organized for better operational results.


David E. Mickey is a financial executive based in Buffalo, New York, and he’s an Enterprise Sales Executive at Docupace Technologies. Please visit his websites to learn more: http://davidemickey.comhttp://davidemickey.net/; and http://davidemickey.org/.