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A raft of mobile payment companies are demonstrating their technology in San Jose this week, even as they acknowledge that the sector has not yet lived up to investors' initial hopes.
April 30
SAN JOSE, Calif. When it comes to innovative financial technology, all too often there's a lot more sizzle than steak. Separating the former from the latter can be tricky at Finovate, where dozens of companies use engaging seven-minute presentations to introduce themselves.
Following is a look at five firms whose demos caught our eye; time will tell whether they have staying power.
Yseop (pronounced Easy Op). This French firm uses artificial intelligence software to produce sales scripts in plain English. On Wednesday the company, which has offices in Dallas and New York, introduced a product suite that it says can automate much of the sales process inside U.S. banks.
"We are automating the entire sales force process, or semi-automating it, at least," says Elizabeth Farabee, the company's vice president of marketing.
The company's demo focused on a prospective wealth-management client who filled out a retirement planning survey. The Yseop software then produced a script for the bank sales force to use during a client call that included rebuttals to common objections.
Once the prospective client agreed to visit the bank, the software produced a list of products for the salesperson is to recommend, along with talking points about why they make sense. Once a sale was closed, the software produced a personalized email summarizing the contents of the conversation.
Many banks pride themselves on offering a highly customized experience. Yseop's sales pitch is that automation can replicate the personal touch.
LendingRobot. Peer-to-peer lending is supposed to offer small investors a chance to fund high-quality, high-margin consumer loans. Sometimes the system works fine.
But increasingly hedge funds and other big investors have taken to automating the process in ways that enable them to snap up the best loans on P2P sites like Lending Club and Prosper, according to LendingRobot, a Seattle-based P2P outfit.
"There's limited merchandise, and there's a race to get it," explains Gilad Golan, the firm's chief executive officer.
Golan expects this particular problem to fade away over time, as the supply of P2P loans begins to catch up with investor demand and the flow of loans grows.
But it's still time-consuming for individual investors to maintain P2P portfolios. Among the chores: evaluating new loans, reinvesting loan repayments and rebalancing accounts to stay diversified.
LendingRobot's software aims to do this kind of work for investors. Much like a more traditional asset manager, the company takes a small cut of each investor's profits.
Coinbase. Coinbase describes itself as the largest bitcoin platform for merchant payment processing. Based in San Francisco, it handles bitcoin payments for 28,000 merchants, and arrived at Finovate with the goal of convincing more retailers to accept the digital currency.
One big reason merchants have been reluctant to do so is reluctance to incur the risk that bitcoin's value will fluctuate between the time they accept it and exchanged it for dollars.
Initially, Coinbase set its bitcoin-greenback exchange rate daily, meaning the risk sat on the merchant's book for hours each day. Since March 2013, Coinbase has been enabling merchants to lock in an exchange rate as soon as the purchase is made.
As a further enticement the company pledged at Finovate to waive its 1% commission on each new retail client's first $1 million in bitcoin sales.
LendUp. This startup made an offer to banks looking to make small-dollar loans to consumers with less-than-stellar credit: its own technology.
LendUp has its own small-dollar lending operation, which it touts as a consumer-friendly alternative to payday loans. On Wednesday, the San Francisco-based firm said it will now share some of its technology with partner banks.
"You can help your customers avoid traditional payday lending with a better co-branded experience, and you can make money doing it," LendUp chief technology officer Jacob Rosenberg said. "We handle the underwriting, the risk management, the servicing, the collections and the compliance, and all you have to do is design your credit product and go."
Banks that want to wade into small-dollar consumer lending
True Link. This startup has found an unexpected use for the prepaid card: protecting the elderly from scam artists.
The San Francisco firm's prepaid card allows elderly people, or trusted loved ones, to block certain types of transactions, such as those involving telemarketers.
True Link chief executive officer Kai Stinchcombe told the Finovate audience that unscrupulous telemarketers often repeatedly target the same elderly people who are suffering memory loss because they know they're easy marks.
"If you have memory loss, you're not going to say, 'I don't remember asking for these magazines,' because you don't remember anything." Stinchcombe said.
He acknowledged that spending controls have often been ineffective in the past, but said True Link's product takes a different approach by building on customer wishes about the types of transactions they want to block.
For Stinchcombe, the product's inspiration is the unfortunate experience of a grandmother who's slowly losing her memory.
"For my grandmother, this problem [telemarketer scams] drained about one-third of her retirement income," he said.
