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Kafene raises $14M to offer buy now, pay later to the subprime consumer

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The buy now, pay later frenzy isn’t going anywhere as more consumers seek alternatives to credit cards to fund purchases.

And those purchases aren’t exclusive to luxuries such as Pelotons (ahem, Affirm) or jewelry someone might be treating themselves to online. A new fintech company is out to help consumers finance big-ticket items that are considered more “must have” than “nice to have.” And it’s just raised $14 million in Series A funding to help it advance on that goal.

Neal Desai (former CFO of Octane Lending) and James Schuler (who participated in Y Combinator’s accelerator program as a high schooler) founded New York City-based Kafene in July 2019. The pair’s goal is to promote financial inclusion by meeting the needs of what it describes as the “consumers that are left behind by traditional lenders.”

More specifically, Kafene is focused on helping consumers with credit scores below 650 purchase retail items such as furniture, appliances and electronics with its buy now, pay later (BNPL) model. Consider it an “Affirm for the subprime,” says Desai.

Global Founders Capital and Third Prime Ventures co-led the round, which also included participation from Valar, Company.co, Hermann Capital, Gaingels, Republic Labs, Uncorrelated Ventures and FJ labs.

“Historically, if you could access credit, you could go to the bank or use a credit card,” Third Prime’s Wes Barton told TechCrunch. “But if you had some unexpected expense, and had to miss a payment with the bank, there would be repercussions and you could fall into a debt trap.”

Kafene’s “flexible ownership” model is designed to not let that happen to a consumer. If for some reason, someone has to forfeit on a payment, Kafene comes to pick up the item and the customer is no longer under obligation to pay for it moving forward.

The way it works is that Kafene buys the product from a merchant on a consumers’ behalf and rents it back to them over 12 months. If they make all payments, they own the item. If they make them earlier, they get a “significant” discount, and if they can’t, Kafene reclaims the item and takes the loan loss.

Image Credits: Kafene

It’s a modern take on Rent-A-Center, which charges more money for inferior products, Desai believes.

“This is also a superior product to credit cards, and the size of that market is massive,” Barton said. “We want to take a huge chunk of credit card business in time, and give consumers the flexibility to quit at any point in time, and fly free, if you will.”

Such flexibility, Kafene claims, helps promote financial inclusion by giving a wider range of consumers options to alternative forms of credit at the point of sale.

It also helps people boost their credit scores, according to Desai, because if they buy out of the loan earlier than the 12-month term, their credit score goes up because Kafene reports them as a positive payer.

“In any situation where they don’t steal the item, their credit score improves,” he said. “Even if they end up returning it because they can’t afford it. In the long run, they can have a better credit score to qualify for a traditional loan product.”

Kafene rolled out a beta of its financing product in December of 2019 and then had to pause in March due to the COVID-19 pandemic. The company essentially “hibernated” from March to June 2020 and re-launched out of beta last July.

By October, Kafene stopped all enrollment with merchants because it had more demand that it could handle — largely fueled by more people being financially strained due to the COVID-19 pandemic. In March 2021, the company was handling about $2 million a month in merchandise volume.

With its new capital, Kafene plans to significantly scale its existing lease-to-own financing business nationally, as well as to launch a direct-to-consumer virtual lease card.

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Source: https://techcrunch.com/2021/06/08/kafene-raises-14m-to-offer-buy-now-pay-later-to-the-subprime-consumer/

Fintech

Wealthtech Firm Endowus Hires Veteran Banker as Its Chief Advisory Officer

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Singapore-based digital wealth advisor Endowus has announced the appointment of Wei Mei Tan as Chief Advisory Officer.

In her new role, Wei Mei will drive strategic initiatives to accelerate Endowus’ growth trajectory and provide leadership in curating the advisory and investment solutions delivered to clients across all segments.

As a member of Endowus’ Investment Committee, Wei Mei will also be responsible for building portfolio strategies and fund selection.

Endowus_Wei Mei Tan

Wei Mei Tan

With over 20 years of financial markets experience, Wei Mei brings to Endowus an extensive background in building digital advisory platforms and investment strategies, having held senior leadership roles at top-tier private banks.

She was most recently a Managing Director at Deutsche Bank as the Global Co-Head of Advisory & Investment Solutions, where she was responsible for building the bank’s dbXpert wealth advisory platform.

At Credit Suisse, Wei Mei was the APAC Head of Portfolio Solutions and successfully launched CS Invest. Wei Mei also spent 6 years at UBS Wealth Management where she was the APAC Head of Mandate Specialists, advising ultra-high net worth clients on asset allocation and portfolio construction.

Wei Mei is a graduate of Harvard Business School and Nanyang Technological University. She is a Temasek scholar and holds Chartered Financial Analyst (CFA), Chartered Accountant (CA), and Chartered Alternative Investment Analyst (CAIA) designations.

She is also an adjunct lecturer at Nanyang Technological University.

This news comes on the heels of their recent S$23 million fundraise by Lightspeed Venture Partners and Softbank Ventures Asia.

Samuel Rhee

Samuel Rhee, Chairman and Chief Investment Officer at Endowus said,

“As an industry veteran, I believe her wealth of experience in client advisory and investment solutions will be essential in our next stage of growth and in meeting the needs of our clients.

Endowus is expanding its range of client solutions and bringing onboard new best-in-class fund products across various asset classes, and Wei Mei’s expertise will contribute to our clients finding more solutions suitable to their investment needs.”

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Source: https://fintechnews.sg/51780/wealthtech/wealthtech-firm-endowus-hires-veteran-banker-as-its-chief-advisory-officer/

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Crowdfunding

London’s DNA Payments Group Enters £100M Deal with Alchemy Partners

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London-based DNA Payments Group, the fast-growing “vertically integrated” payments firm, has entered a £100 million deal with Alchemy Partners (Alchemy).

With an operations based hub in Kent, DNA presently serves more than 45,000 merchants including established online and offline retailers to SMEs, offering them with  70,000+ terminals which make “over 20 million transactions worth over £600m a month.”

As mentioned in a release, DNA is one of just a few players in the United Kingdom and Europe with fully Cloud enabled omni-channel payment processing capabilities, and also “provides a variety of SaaS and PaaS solutions to major global acquirers and payment schemes.”

The investment by Alchemy “sees DNA well positioned to benefit from the strong market opportunity, with the UK beginning to see signs of a recovery from the Covid-19 pandemic,” the announcement noted.

Arif Babayev and Nurlan Zhagiparov, the founders of DNA, stated:

“Alchemy’s investment marks a historic day for DNA and is a huge endorsement of our company and our technology. We have been looking for the right partner with the right ethos, vision and experience and we are lucky to have found this partnership with Alchemy.”

The past year has been quite challenging for businesses, and at DNA they have been “fully dedicated to helping [their] customers manage through the pandemic,” the firm’s management noted while adding that during the last few months DNA has expanded its digital commerce solutions and payment methods, “providing merchants with Pay by Link, Checkout v3, ApplePay, Pay by Bank, PayPal, Open Banking and many other new capabilities.”

As noted in the update:

“This transaction will allow us to accelerate our growth, helping more merchants accept payments quickly and easily, both in-store and online. Our technology and vertical integration give us an unparalleled advantage in servicing our partners and customers, but also provide a great foundation for bolt-on acquisitions.”

This investment will allow us to further improve our product offering and continue with our business strategy of making key acquisitions to grow our presence “not only in the UK but also internationally,” the firm’s management added while pointing out that they have “more than doubled [their] estate size and turnover in the past 18 months.”

Toby Westcott, Partner at Alchemy Partners, remarked:

“We are delighted to be partnering with DNA. Alchemy is always looking for opportunities to partner with talented business founders and uncover attractive investments that others may not be able to access.”

Wescott also mentioned:

“We are focused on helping companies grow and develop, and having worked closely with both Arif and Nurlan during this extraordinary period caused by the Covid 19 pandemic, it was clear that DNA and Alchemy’s goals, missions and values were closely aligned. Merchants’ increasing need for omni-channel payments solutions combined with the strength of DNA’s product proposition creates a compelling investment opportunity and we are excited to join DNA on its journey to build a leading payments business in the UK and expand into Europe.”

DNA Payments was advised by Proskauer, Houlihan Lokey and EY and Alchemy was advised by Macfarlanes and PwC on this transaction.

Launched in 1997, Alchemy aims to target key opportunities across Europe to team up with and work with management teams, assisting them with creating value by addressing problems, helping “take difficult decisions and driving through change.”

Since introducing its services, Alchemy has finalized more than 190 transactions, investing  £4 billion+ into firms and organizations based in 14 different countries.

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Source: https://www.crowdfundinsider.com/2021/06/176583-londons-dna-payments-group-enters-100m-deal-with-alchemy-partners/

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Crowdfunding

Equifax UK Updates Flagship Credit Risk Product, Risk Navigator 5, Will Support Improved Decision-Making

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Equifax UK has reportedly made updates to its flagship credit risk product, Risk Navigator 5, which should establish a new standard in supporting improved decision-making and enhancing consumer credit outcomes.

Implemented using Equifax UK’s largest-ever data set, Risk Navigator 5, has demonstrated its potential to provide a 6% average improvement in predictive power, which may lead to a significant increase in acceptance rates for credit applications. With access to more reliable, representative data sets, lending platforms and creditors will be able to make informed and explainable decisions.

The improved predictive power could also lower bad debt provisions, thus enhancing the portfolio performance of lenders.

For the consumer, Risk Navigator 5 may increase access to credit, particularly for younger individuals who might not have an established credit history. Testing of the product reveals that there’s about an 8% overall improvement on credit score accuracy for people with a relatively thin credit file. This should mean that lenders may be more prepared or better equipped to provide  credit to a segment of clients that were underserved by mainstream or larger financial institutions.

Jayadeep Nair, Chief Product and Marketing Officer at Equifax UK, stated:

“Building a true picture of creditworthiness is a challenge for lenders, with important risk consequences for both their businesses and the wellbeing of their customers. Ensuring credit decisions are made using the latest predictive data available is more important than ever, as society navigates through the continuing financial uncertainty created by the pandemic.

Nair added:

“The launch of Risk Navigator 5 provides lenders with powerful insights that inspire confidence and transparency in decision making, with seamless and flexible integration alongside current risk models or as a standalone credit risk assessment. This latest evolution in credit risk will help improve responsible lending and financial outcomes for businesses and consumers alike at all stages of the credit lifecycle.”

As covered earlier this year, Equifax announced that it acquired transaction data analytics company AccountScore Holdings Limited to bolster its Open Banking and insights capabilities. Equifax reported that the acquisition will see it enhance its consumer and commercial product offerings, combining traditional credit bureau information held by Equifax with bank transaction data, facilitated by AccountScore.

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Source: https://www.crowdfundinsider.com/2021/06/176579-equifax-uk-updates-flagship-credit-risk-product-risk-navigator-5-will-support-improved-decision-making/

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Crowdfunding

Nomura has Chosen Refinitv, a Financial Market Solution Provider, to Support Wealth Management in Singapore, Hong Kong

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Nomura has reportedly chosen Refintiv, a multinational provider of financial market data and infrastructure, in order to leverage the Fintech firm’s wealth management solutions across Hong Kong and Singapore.

The Refinitiv Workspace for Wealth Advisors will be used as the main platform to provide up-to-date analysis and key market insights for Nomura’s relationship managers and investment advisors across the two Asian countries.

Refinitiv wealth management services aim to empower companies with much quicker time-to-market for digital properties.

It also provides a robust and flexible framework that includes web-based components, pre-built pages, APIs, mobile applications, and collaboration tools like video, co-browsing, and secure chat communication that can be configured for a clients’ specific requirements.

During the past couple of years, the company has been making strategic investments in the business via acquisitions like Scivantage and the introduction of Refinitiv Digital Investor and Refinitiv Workspace for Wealth Advisors.

Christopher Sparke, Head of Advisory Solutions at Refinitiv, an LSEG business, stated:

“We are absolutely thrilled to be working alongside Nomura’s International Wealth Management business to support their expansion. With Refinitiv Workspace, Nomura’s advisors and relationship managers will benefit from market leading data and tailored workflow, driving client engagement and advisor productivity.”

Akshay Prasad, Head of Investment Products & Advisory Solutions, International Wealth, remarked:

“We chose Refinitiv’s solution as its user-friendly interface and actionable insights will allow our client advisors to attract, engage and advise clients as we accelerate the expansion of our franchise across Greater China, Southeast Asia and the Global NRI markets.”

As covered last month, Refinitiv, a provider of financial markets data and infrastructure that has served more than 40,000 institutions in over 190 countries, joined forces with Fintech Studios, an AI-based news, market intelligence, and analytics provider, to provide industry, local and regional news, and research to wealth management professionals across Latin America.

In March 2021, Refinitiv expanded its digital investor solution with the launch of Wealth Connect, which was designed to help wealth management firms and their advisors advance with the growing pace of digital transformation within the wealth management industry.

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Source: https://www.crowdfundinsider.com/2021/06/176555-nomura-has-chosen-refinitv-a-financial-market-solution-provider-to-support-wealth-management-in-singapore-hong-kong/

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