In about two months since arriving in Little Rock, Alain Glanzman completely revolutionized WalletFi, his startup company participating in the second Financial Technology Accelerator program.
WalletFi is one of 10 high-tech startups taking part in the FinTech Accelerator program. The 12-week program ends with demonstrations by the companies on July 26 at the Clinton Presidential Center.
For many people, when they have a credit or debit card reissued, it is difficult to get their subscriptions and recurring payments switched, said Glanzman, co-founder and chief executive officer of Chapel Hill, N.C.-based WalletFi.
"If their card is ever lost, stolen or reissued, it can create a large problem, not only for the consumer but more so for the bank," Glanzman said.
Before the consumer can get a new card in the mail, a recurring charge may hit the old credit card or he may use the old card to pay for something. When told that the old card is no longer active, the consumer uses another card from his wallet to make the payment -- and the bank reissuing the card loses a customer, Glanzman said.
Glanzman designed WalletFi to make it easier for customers to move recurring charges and subscriptions to other credit or debit cards.
But in discussing his company with bank and credit union executives at the FinTech accelerator, he was advised that his startup would have more potential if he targeted financial institutions instead.
"Now [WalletFi] becomes a different company," Glanzman said. "It goes from being a mobile app to a real company."
The 10 startup companies have access to some of the top executives at Fidelity National Information Services Inc., better known as FIS Global.
FIS sponsored the accelerator program last year and again this year with The Venture Center in downtown Little Rock.
FIS is based in Jacksonville, Fla., but has about 1,200 employees in Little Rock. It has more than 57,000 employees worldwide, about 23,000 financial clients and more than $9 billion in annual revenue. Its clients include about half of the financial institutions in the country.
That connection to FIS was the reason Glanzman chose to participate in Little Rock's accelerator program and turned down an offer from a similar program in Capetown, South Africa, sponsored by a centuries-old British bank. Two other FinTech accelerator companies also chose Little Rock over the British bank's program.
Grant Taylor, co-founder and chief executive officer of Mexico City-based Quotanda, attended business school in Spain. Quotanda offers technology that helps schools introduce flexible and affordable financing programs for students.
Ninety percent of his class didn't have access to funding that would even cover tuition, Taylor said.
In Mexico, only 2 percent of college-age individuals have access to educational financing, Taylor said.
"There is plenty of money in banks and schools often have balance sheets that allow them to offer financing, as well as foundations and governments," Taylor said. "But how do you unlock that capital? The answer we came up with was something that has been done in the U.S. -- online lending in the service platform."
Quotanda's executives, when they worked for a different business, helped to pioneer a similar business model for a program that raised $4.5 billion for student loans for 250 financial institutions, Taylor said.
"We rebuilt that technology in the cloud so it's much more flexible," Taylor said.
Quotanda has three schools and one financial institution that are using its financing platform, Taylor said. It also has a pipeline of 100 potential deals valued at more than $60 million of recurring revenue a year, Taylor said.
"That's if we close them all, which we won't," Taylor said.
Filing a loan application can be done on a mobile device, Taylor said. With FIS' assistance, Quotanda enables the bank to make a decision with just the borrower's user name and password*, Taylor said.
That's compared with the normal process of filling out a pages-long application and getting a response back in 45 days. With Quotanda, the lending decision can be made in 10 minutes, Taylor said.
Quotanda is in Mexico and Spain, but it has proposals with lenders and universities in three other countries, he said.
Mexico-based Quotanda has participated in another FinTech accelerator program, but with the presence of FIS, The Venture Center program is on another level, Taylor said.
"FIS, with all its bank connections all over the world, we're getting in front of people that we would never have access to," Taylor said. "Or it would take us years."
AltoIRA, based in Nashville, Tenn., allows a customer to establish a self-directed individual retirement account and invest in things such as private companies, real estate, precious metals or even the restaurant around the corner.
"You can think of AltoIRA as the TurboTax for self-directed IRAs," said Eric Satz, co-founder and chief executive officer of AltoIRA.
Typical IRAs only allow investments in stocks, bonds, mutual funds and certificates of deposit. Self-directed IRAs allow for other investments, including real estate. The average initial transaction fees and maintenance fees for a typical IRA are at least $300 a year, plus added fees when the account is over $100,000, Satz said. AltoIRA charges $99 a year.
The reason Satz chose to participate in the Little Rock program is because of FIS, he said.
"They represent a distribution channel to more than 50 percent of the banks in the country," Satz said. "Those banks have clients. More and more, they want to invest in alternative assets. But the banks don't have a way to serve them."
He already has shared his business with a banker at a multibillion-dollar bank in Arkansas.
"FIS can get me to decision-makers at banks faster than I could ever do it," Satz said.
Satz believes AltoIRA can facilitate the move of $2 trillion to $3 trillion of the $25 trillion invested in IRAs to self-directed IRAs over the next 5 to 10 years. Currently, only $300 billion is invested in self-directed IRAs, Satz said.
New York-based Bond.AI has developed an artificial intelligence platform that allows users to meet their financial goals in the shortest possible time. If needed, Bond.AI's artificial intelligence platform interacts with any other artificial intelligence, whether it's voice technology from Apple or Google or Amazon.
"For example, if I need to buy a house, I can ask Alexa, 'Alexa, ask Bond to help me buy a house," said Uday Akkaraju, founder and chief executive of Bond.AI. "Will you help me save? Will you help me meet that particular goal in the shortest time possible? We analyze all the consumer data from the bank in context of whatever [the customer's] needs are."
For something much simpler, if a customer asks Bond.AI to pay a phone bill, it would access the bank's bill-paying system and complete that transaction. And it can be completed by text or voice interaction.
Bond.AI is selling the platform to banks, Akkaraju said.
"One [bank executive] said Bond was the most transformative thing he'd ever seen," said Lee Watson, chief executive officer of The Venture Center.
Detroit-based Hedgehog bills itself as allowing investors to have both the benefits of managing their own money and the advantages of professional research, without the fees and frustration.
"If you're a soybean farmer, and you need enough rain within a certain number of months, and you don't get enough rain to get the crop you need, you can hedge that by either locking in the price for your crop or betting that there will be enough rain," said Francois Nabwangu, one of Hedgehog's founders. "We address very narrow risks and find solutions."
Hedgehog's technology can mine the available data and present that risk to the investor, Watson said.
"That allows the investor to make a better decision," Watson said. "It's activity that people have been trying to do, but the volume of the data and the inability to mine the data to get information from it has been poor. The specific technology [Hedgehog] built has enabled them to do something that traditionally has not been done."
Plinqit, based in Ann Arbor, Mich., seeks to connect community banks with their digital customers, said Kathleen Craig, founder and president.
"Community banks know their walk-in customers really well," Craig said. "But that is a small percentage now."
The process begins with a goal-based savings account, which can be opened in 60 seconds, she said.
Craig received a grant from the state of Michigan in late 2015. Plinqit is now launching with its first bank in Michigan, beginning with offering the program to the bank's employees.
Plinqit also has a kids' financial educational app called Banker Jr., Craig said.
Craig said she likes the fact that the accelerator is focused on business development and building a sustainable business.
Chicago-based Omnetrium Inc. helps banks build stable core deposits and customer relationships by offering prize-linked savings accounts, said Rosemary Hackett, chief executive officer.
"Customers put money into the savings account and get raffle tickets and win prizes, all in an [Federal Deposit Insurance Corp.]-insured savings account," Hackett said.
The prizes are typically cash, she said.
The prize-linked accounts run off a software program for the banks, Hackett said.
Since entering the FinTech accelerator program, Hackett has learned the importance of presenting a clear message about what the business does.
"I've also learned more about meeting the bankers and learning more about how the banks work, because they all work differently," Hackett said.
Also enrolled in the FinTech program is London-based eGiftify. The company provides businesses with gifting, payment and marketing solutions that improve customer loyalty and increase revenue. EGiftify was founded by longtime Little Rock resident Susi Barakat, daughter of Jerry Barakat, who owns several Little Rock restaurants. Susi Barakat now lives in London and was unavailable to comment.
Also unavailable for comment were executives with Alpharank of San Francisco and Xplanr Analytics of New York. Alpharank has developed software to help banks cut their attrition rates by up to 50 percent. Xplanr Analytics provides technologies to help banks remain in control of regulatory initiatives.
SundayMonday Business on 07/17/2017
*CORRECTION: Quotanda, a participant in the FinTech accelerator program for startup financial companies, requires customers using mobile devices to enter a user name and password to access the service. A previous version of this story incorrectly described the procedure.