September 11, 2012 – Into the belly of the beast, New York’s Javits Convention Center, from the mean streets of Scottsdale I trekked with great anticipation to see the coolest of the New Cool hawk their wares at the 2012 Finovate Fall show. After notching countless hours this year in basement training rooms watching core vendors show how cool their escrow analysis functionality is, I had a roaring appetite for some tasty Innovation.
I’m glad to report that I saw some gems from the jeans/black jacket/ample hair gel set. Finovate has a completely badass format for showcasing new companies’ ideas LIVE – no PowerPoint or pre-recording tolerated. Finovate boasts 64 rapid-fire vendor demos over two days, broken into four digestible, hour-long sessions each day. Finovate uses two alternating stages to minimize the time between presenters to maybe 20 seconds, and each vendor gets seven minutes to present. Seven minutes to present an entire business plan. The impatient, thumb-twiddling jerk in me loved this format.
Before I get to some of the products I particularly liked, I want to mention a couple things about the show that stuck out. First, for some of these companies this is the biggest stage they will ever get – in front of financial press, potential investors, potential clients, snot-nosed consultants, etc. That said, I counted at least six presenters who read their freaking presentations. I don’t mean they glanced at the occasional notecard; no, I’m talking full-on reading every single uninspired, monotone word from a triple-spaced script held in their sweaty hands. It boggled my mind to see this, and these presenters inspired many a bathroom break from the attendees. Now, I’m an admitted Toastmasters dropout and have never been confused with Winston Churchill in the Passionate Speaking Department, but damn guys – you’re reading a script during your Big Shot?! Seriously, not all business owners are inspired speakers. Hire someone who is to make your pitch.
I noticed a decided lack of attendance from sub-$100 billion financial institutions. This could well be due to a language problem. You have to get your head around some new terminology to keep yourself above water at Finovate. A quick set of new terms I learned:
- Pre-Revenue – The product/company is so new that it has no customers/revenue. It’s eloquent and to be expected at a show of this nature, but not exactly a financial pheromone for mid-size banks.
Used in a sentence: “How many installations do you have?” “We are pre-revenue at this juncture.”
- Concierge – A concierge is a vendor rep who the consumer must call to facilitate the parts of the vendor’s automated services that really aren’t automated yet.
Used in a sentence: “Though Deluxe’s SwitchAgent product does an apparently nice job of automating the transfer of online bill payee information from your old bank to your new bank, consumers must consult a Deluxe concierge to switch direct deposit and recurring (ACH) bill payments.”
Big banks see the potential; mid-size banks see the “Yeah, buts.”
- No Integration Necessary – For years, my clients have worried about integrating software. It’s the Number 1 technology problem they face. At Finovate, integration is a bad word. If your product needs to be integrated, you are SO 2011.
To broadly categorize, Finovate Fall was about mobile wallets, slick UIs, mobile PFM and aggregation. There were maybe a few too many products that push offers on consumers or obnoxiously if not condescendingly entice consumers to save more money. But overall the show was highly interesting. I was also extremely glad to see some very cool small business ideas emerge at this fairly retail-dominated show. My three Best of Show votes went to, in no particular order:
CommunityLend – Loftily self-described as the “credit card killer,” this is a Canadian company actively working to attack the U.S. market. CommunityLend’s FinanceIt product allows businesses to offer point-of-sale consumer lending with instant decisioning. With a network of banks to finance the deals and merchants to sell great products, FinanceIt takes care of loan origination, underwriting, funding, payments, servicing and even collections.
Usually with an iPad, a consumer’s driver’s license is scanned, and that info populates the loan application. FinanceIt underwrites the loan, and then the customer signs docs on the iPad. Signed docs are then emailed to the consumer and the partner bank that won the deal. This is conceptually similar to traditional indirect auto lending, except to a potentially much broader audience with the vendor handling loan servicing. I especially like this idea for hardcore commercial banks that find themselves almost apologetically limping into consumer lending.
A couple other things I love about this idea. First, there are no merchant fees. CommunityLend VP of Business Development Casper Wong told me that they make money in a few different ways, none of which is a fee to the merchant:
- 2 percent (of assets) fee from the banks for loan origination, servicing and collections
- Small up-front fees from borrowers
- Payment insurance
Also, CommunityLend is far from a sub-prime lender prowling on the financially ill-equipped. It boasts an average borrower FICO score of 727. With an uphill task of enrolling merchants/banks and complying with U.S. banking regs, CommunityLend has a unique slant and, with no merchant fees, could definitely make some noise in delivering as the Credit Card Killer.
Bolstr – Bolstr is a start-up with a great idea for crowdsourcing investment in local small businesses by non-accredited investors, with investor payouts structured via revenue sharing over a fixed period of time.
Bolstr helps the small business make its business case to its network of potential investors and keeps a close eye on the complicated regs. Bolstr creates a platform for potential investors to review the business case, ask other investors and the business owner questions, track the business’s capital-raising progress, and collect feedback along the way.
Bolstr wants to sell this service to commercial banks. What’s the angle? Bolstr co-founder Charlie Tribbett told me banks have a number of reasons for offering this service:
- Bolstr can deal with small loan amounts that may not be attractive or profitable to banks. Rather than leaving potential long-term commercial customers with a bad taste in their mouths, banks can refer business owners to Bolstr and hopefully maintain a healthy relationship.
- Bolstr can help a small business raise the capital required to qualify for a larger commercial loan that the bank can finance.
- Bolstr believes successful small businesses lead to higher property values and, therefore, a better business environment for banks.
For a commercial banking industry that does MUCH more talking than walking when it comes to small business, Bolstr just might become a well travelled bridge between banks and business owners.
Credit Sesame – I am not really a believer in the long-term viability of most personal financial management providers. It is a niche market with about 90 more vendors than the industry can support.
Then Credit Sesame did its thang at Finovate. First of all, Credit Sesame CEO and founder Adrian Nazari gets The Brass Stones Award for recovering from the ridiculously unreliable WiFi connectivity at this venue. Adrian had to start his presentation not once, not twice, but three different times because the WiFi kept dying. He was one of many who fell victim to this wildly distracting problem, but he persevered with class and a sense of humor that would have been difficult for me to conjure under the circumstances. (We are at a financial innovation conference, and the WiFi failed ad nauseum. It was so bad that on Day 2 the CEO of the Javits Center came onstage and apologized!)
Here is what I think Credit Sesame does to separate itself from the PFM pack. First, it has a tool called the Financial Fitness Indicator that tells you where you’re spending too much damn money by comparing you to peers. Then, it will tell you what to do about it. I love the pragmatism and SPIN that this product provides. Too many PFM products show cool graphs, charts and blinking lights but offer no perspective. Not Credit Sesame. It has the Spin Factor. I will likely never find myself using a PFM tool, but Credit Sesame has some pretty unique stuff to offer PFM devotees who want to go a step beyond aggregation, bubble budgets and bar graphs.
Sure, my spleen might rupture if I hear “game changer,” “disrupter” or “augmented reality” again anytime soon. But I recommend checking out Finovate next time you get a chance.
Finovate is great for seeing what some wildly sharp minds have in store to keep the innovation ball rolling. Some will fail. Some will sell to VISA or Citi, only to have the former owners’ entrepreneurial spirit promptly stomped out of them by the behemoths. But I definitely think the industry will distill some great success stories from the optimistic, can-do attitude and boundless energy of the Finovate presenters. Catch you at Finovate Singapore in November?
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