HEAD OF INNOVATION, RESEARCH AND DEVELOPMENT
WELLS FARGO WHOLESALE SERVICES GROUP
What he does: Wells Fargo prides itself on being among the more technologically agile of the large financial institutions: The company launched its internet banking services 20 years ago. In keeping with that history, the 163-year-old bank has founded the Wells Fargo Startup Accelerator.
Bipin Sahni, who has implemented new technology at the bank for 20 years, is in charge. Sahni had been advising startups on the side for years before approaching his employer with the recommendation that the bank start investing in a few. That idea grew into the Startup Accelerator, a group that puts money into new companies in the financial and enterprise spaces. So far, the Accelerator has invested in six companies, several of which are developing technologies, such as biometric authentication for bank accounts, that Wells Fargo may soon bring to its own customers. One such technology, developed by Kansas City, Mo., based startup EyeVerify, identifies account holders by scanning their eyes as they log in to their accounts on a mobile app.
How it affects you: Though the Startup Accelerator helps Wells Fargo by giving the bank early access to potential vendors and partners, as well as by being potentially very profitable, Sahni says that the startups will benefit from the bank’s mentorship. Through the program, founders gain experience working with a “business sponsor” who walks them through the ins and outs of cooperating with a large financial institution. “We help the company to get better in terms of working within the bank, which adds a lot more value for them,” Sahni says.
What he says: “Disruption is an opportunity. New technologies mean better experiences for our customers.” —Bipin Sahni
What he does: In 2007, French-born Renaud Laplanche founded a startup that is now revolutionizing the way Americans finance their projects and purchases. Lending Club simply links people who need funding with people who have capital to lend. It’s a timely idea. Since the financial crisis, Americans are increasingly turning to alternative forms of lending: Some $5.5 billion in peer-to-peer loans were originated in 2014, up from $2.4 billion the year prior. Lending Club has become one of the biggest players in the space. The company’s 2014 IPO, which raised $870 million, was among the largest for a tech company in the U.S. that year.
How it affects you: One of the key appeals of Lending Club is that the company operates more inexpensively than traditional banks, which, for the customer, means lower interest rates.
What he says: “We attract people by showing them they can do something meaningful with their life and help transform the industry,” Laplanche told Quartz in June.
What he does: After selling his startup, AfterMail, an email archiving provider, in 2006, New Zealander Rod Drury began work on a new initiative: Powerful cloud-based accounting software that allows customers to work collaboratively on their finances from anywhere. Drury didn’t want to be pressured to sell his new startup, Xero, once it found success, so instead of taking money from investors, he listed it on the New Zealand stock exchange. The plan worked, and Xero raised $15 million in initial funding. Five years later, in 2012, Xero launched in the U.S., where it competes with Intuit’s QuickBooks.
With over half a million subscribers, the company has raised $355 million from investors. In June, it announced a partnership with Apple to educate small businesses about the benefits of using Apple devices to do accounting in the cloud. In most countries Xero “works anywhere, anytime,” Drury says, allowing traveling business people to monitor their finances on their mobile devices.
How it affects you: The most exciting work is still to come. Drury hopes to apply machine learning to the data his customers have already stored in the cloud; the resulting information has the power to deliver “real innovation and magic,” he says. “The accounting software should be able to use the power of computing to massively reduce the time people spend doing their books. It can do a whole lot of work for you while you’re sleeping.”
What he says: “We’re interested in really changing the game. That’s our focus for the next year or two.”—Rod Drury
What she does: Citi Ventures is hoping to infuse its parent bank with some of the dynamism of a startup. But it’s also seeking to make some good bets, and so far, it has. Citi Venture’s portfolio companies include Square, the very successful payment processing startup, and DocuSign, a technology that allows users to sign documents electronically.
Making these investments, and managing collaborative relationships, is Vanessa Colella’s job. “We might work with one of our portfolio companies to understand whether that could be an offering for Citi customers as well, or do they have a technology or an approach that we might want to pilot for a particular geography or market?” Colella says. “The best partnerships are where the startup can benefit, Citi can benefit and, most important, our customers can benefit.”
How it affects you: Colella says that Citi Ventures tries to support fintech that helps not just the bank and its retail customers, but players throughout the financial ecosystem.
What she says: “What’s most exciting about my job is being able to identify these new technologies and new approaches and look at how they can impact not just one part of the system but all parts of the system.” —Vanessa Colella
HEAD OF PRODUCT
What he does: IEX achieved widespread attention when Michael Lewis cast one of its founders, Brad Katsuyama, as a hero in Flash Boys, his exposé of high-frequency trading. Katsuyama had set out to design a new, fairer exchange, and Matthew Trudeau was the innovative mind he hired to do it. Before joining IEX, Trudeau had launched several alternative stock exchanges for exchange operator Chi-X.
How it affects you: Investors lose small amounts of money when other traders game the market. Over time, those small losses add up. Trudeau’s goal is to design a fairer exchange.
What he says: “Investors should want the market to be fair and transparent. They should want it to operate in a way that encourages more participation.”—Matthew Trudeau
What he does: Apart from the venture capitalists with the money and the startup founders with the tech skills, there’s a whole class of people you’ll find at fintech conferences who are simply trying to figure out what the industry will become. Brett King, who calls himself a futurist, is one of those thinkers. “A futurist means never being wrong today,” he jokes.
King has written several books about fintech, and hosts a weekly fintech radio show, Breaking Banks. He’s also become an innovator himself. His app, Moven, helps users simplify personal finance management and budgeting. It’s like “a Fitbit for your wallet,” says King. “Most of our day-to-day spending is unconscious. Moven reveals how we spend, and from that we can learn a lot about ourselves.”
How it affects you: Data from emerging markets indicates that technologies such as Moven are ahead of the curve, according to King. “By 2020 you’ll have more people in Africa who will have a mobile money account—or a bank account on their phone—than will have a bank account issued from a bank. That’s important because, in Africa, what people will call a ‘bank account’ is their phone. And, by 2025, that same shift will occur in developed markets.”
What he says: “Artificial intelligence is much, much better at giving financial advice than humans. If you want to know where to invest, and who to work with as an investor, look to those using AI to provide advice.”—Brett King
What she does: Fintech startups depend on data—lots and lots of data—to operate. But access to that data, provided by companies such as Thomson Reuters and Yodlee, is expensive, which results in a Catch-22 for many fintech startups: To make money, they need the data, but to access the data, they need money. That’s where Jean Donnelly’s nonprofit, FinTech Sandbox, comes in. The brainchild of investors who noticed startups were spending 40 to 50 percent of their monthly funding on data, Donnelly and her team provide selected companies free access to data for six months as the innovators prepare to seek investment.
How it affects you: The Sandbox fosters both collaboration and competition among fintech startups, Donnelly says, ultimately leading to better ideas, better products and better investment opportunities.
What she says: “Whenever you have developer-led startups, there is competition, but there’s a lot more collaboration than there typically is in the industry as a whole.”—Jean Donnelly
What he does: Stripe was founded in 2011 to create a new, alternative model of payment processing. “On almost every front, it was becoming easier to build and launch an online business,” says Billy Alvarado via email. “Payments, however, remained dominated by clunky legacy players. It seemed clear that there should be a developer-focused, instant-setup payment platform that would scale to any size.”
Before coming to Stripe, Alvarado cofounded Lala Media, an online music store that Apple bought in 2009 and integrated into iTunes. His job now is to forge partnerships between Stripe and leaders in the tech and financial services industries. Stripe has grown rapidly: Its application programming interfaces process billions of dollars in payments for thousands of businesses annually, from startups to major players such as Facebook and Salesforce.
How it affects you: Stripe and its competitors are companies that investors may want to keep an eye on. Stripe has made itself integral by figuring out payment processing for a host of other disruptive services investors are clearly paying attention to: Lyft, for example, and Kickstarter. “No matter what industry someone works in, it’s likely that their customers have had seamless purchase experiences on services using Stripe,” Alvarado says.
What he says: “While more than 2.5 billion people were online last year, less than 5 percent of consumer spending happened on the internet. We can debate whether that number will wind up being 20 percent, 40 percent or 70 percent, but it will definitely be orders of magnitude bigger.” —Billy Alvarado
COFOUNDER AND HEAD OF OPERATIONS
What she does: For small businesses, access to credit evaporated during the financial crisis; Kathryn Petralia cofounded Kabbage to help provide the lending that banks weren’t offering. Initially, Kabbage targeted people who were running online retail businesses through websites like Etsy. Close to seven years later, Kabbage is loaning money to any type of small business, including brick-and-mortar operations. Its customers range from construction businesses to marketing firms to restaurants. “It’s a really interesting horizontal flight of American businesses,” Petralia says.
The truly innovative thing about Kabbage and other services like it is the way they look beyond credit scores to assess the risk of a loan. The company uses algorithms that analyze a business’ operations and its customers’ satisfaction. The analysis includes shipping and billing data, customer feedback on websites and even Facebook posts. Kabbage has raised $357 million in debt, which is used to make loans, and $106 million in equity.
How it affects you: Kabbage and competitors such as OnDeck are offering loans to a growing segment of the American economy using mechanisms that are more thorough and relevant than credit scores. Kabbage in particular offers its backers a new way of investing in debt. The company doesn’t release its charge-off rate, but says it is in the single digits and better than that of bank lenders.
What she says: “We have been able to build a Facebook-only model that is more predictive than using only credit bureau information. Our customers who give us access to an active Facebook business account are 20 percent less likely to be delinquent than those who don’t.” —Kathryn Petralia
COFOUNDER AND CEO
What he does: Fintech startups have done a huge amount to improve the experience of banking, but most of it has been focused on what developers refer to as the front-end experience. The back end hasn’t changed nearly as much. Core banking software is a patchwork of systems, some of which have gone unchanged for nearly four decades—that’s why when you make a deposit or a payment, it takes hours or days to process. The zeros and ones that signify your money are working their way through an old system. Replacing these systems has been slow and costly; some banks have tried to do so and failed.
Hong Kong-born Tom Blomfield plans to change that by building a UK bank from the ground up. He calls his project, Mondo, a “full stack” retail bank. “Full stack is a technological term that means you’re not just doing the fancy website at the top. You actually own the databases, you own the service, you own all of the connections. From a customer’s perspective, it means we are able to really solve their problems.”
Mondo’s name comes from the Italian word for world, and reflects the company’s ethos of connecting customers to their financial information in the same way that customers are connected to Facebook or Instagram. Mondo is applying for a full UK banking license, which can be used across the European Union. Blomfield hopes to have it by next year.
How it affects you: “Even if Mondo’s founders don’t succeed as a retail bank, the fact that they’re rewriting all the modules that a bank needs means they’re recreating and modernizing,” says Eileen Burbidge, a software engineer and venture capitalist with Passion Capital, which has invested £2 million in Mondo. “I think this is going to be transformational.”
What he says: “Banking is just moving information around the globe. It should be as simple as an email account.” —Tom Blomfield