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MEDICI now! The Finicity Story

MEDICIGlobal Head of Content

MEDICI now! Startup Stories highlights the companies that are shaping the new financial technology industry. Keep an eye out each week for new stories! If you or someone you know should be highlighted, send us a note. Without further ado…

MEDICI now! The Finicity Story

Company Name: Finicity

Name/Title: Steve Smith, CEO & Co-founder

Industry Segment: Credit decisioning, data aggregation

Target Market(s): United States

Let’s Talk Payments: Tell us a little bit about yourself.

Steve Smith: I’m the CEO & Co-founder of Finicity, a financial technology company I launched in 1999 with my Co-founder, and current EVP, Nick Thomas. Prior to founding Finicity, I served as the Executive Vice President of Operations at Megahertz Corporation, the world’s leading supplier of data communication products for mobile computers. After my departure from Megahertz, I led the acquisition and management of an industrial engineering and manufacturing firm, DeltaValve, and its sale to Curtiss-Wright. I’ve been a Utah native my whole life and received a degree in finance from the University of Utah.

LTP: Give us a paragraph pitch of your company.

SS: Finicity is a leading financial data aggregator enabling innovation in the FinTech industry by providing access to consumer-permissioned data. We believe that data is at the heart of good decision making. As a result, our focus is to improve the financial decision making of consumers and organization by providing them access to and insights from financial data. Whether that’s using it in the credit decisioning process or for personal financial management purposes, Finicity’s role is to safely transport that information and where necessary provide analytics.

In December, we announced $42 million in new funding led by Experian, and have also announced partnerships with Experian and Inuit, along with data exchange deals with JPMorgan Chase and Wells Fargo.

LTP: In a sentence or two, what problem are you solving today?

SS: We are working to give consumers more control of their finances by digitizing financial processes. A great example of this is lending. In the traditional credit decisioning process, it can take months to get approved for a loan and can require extensive paperwork. Finicity is working with Experian to digitize this process and shorten loan approvals to days instead of months.

We’re also enabling consumers to access their finances via third-party apps in a quick and secure manner thanks to tokenized access, so that bank customers never have to reveal their financial information.

Finicity has data exchange agreements with Wells Fargo and JPMorgan Chase in which the banks push their customer’s data to Finicity through an API and that data is then shared with digital lending and personal financial management apps of interest to the bank’s customers.

LTP: Who are you selling to?

SS: Finicity sells to app developers and financial institutions to assist them in digitizing financial processes.

LTP: Why did you start the company?

SS: I was driven to start Finicity in 1999 due to my passion for utilizing technology and data to develop products & services that have positive impacts on people's lives. My goal is always to improve the financial health of consumers.

LTP: What's the most important change coming to your segment in the next 3-5 years?

SS: The financial industry is moving toward an open financial web. Historically, banks have been very cautious to protect customers’ data and information, which created challenges in sharing data with third parties. Now, banks and FinTech providers are beginning to work more closely together to let customers securely share their data with apps of their choice such as Lendio or Mvelopes. Finicity is leading this charge through data exchange deals with Wells Fargo and JPMorgan Chase.

Within the lending space, we will also see great changes in the loan process as we digitize legacy processes. This also includes the potential for loans to become more available to consumers who have little to no credit history. These thin-file or no-file consumers, such as millennials, often find they cannot secure a loan even if they have a consistent cash flow. In the coming years, we will see an expansion of the data points that can be used for credit decisioning, such as analyzing transaction data and reviewing a borrower’s history of meeting payment obligations. With the increase in data availability, millions of additional borrowers will be ‘credit visible’ and can better demonstrate their loan suitability.

LTP: What’s your next milestone?

SS: We have a few announcements in the pipeline, but none that we’re able to share at this moment. We are, however, continuing to build out our partnership with Experian and other major industry players to utilize transaction data in new ways for credit decisioning. And we are continually focusing on improving data access and data quality, so we can demonstrate our leadership within our market as a top data aggregator.

LTP: Anything else you want to say to our audience?

SS: Our main objective is to improve consumer financial health by digitizing processes that give them easier and more secure access to their financial information. We currently focus on two main ways to accomplish this.

The first of which is enabling consumers to share their bank account information with third parties. We strongly believe in an open financial web where consumers can own their data and permission anyone or any app to access it.

The second is by digitizing lending. We currently provide verification of assets and income solutions, which can reduce the loan approval process while significantly improving the experience. We refer to it as ‘frictionless lending’. We also have the opportunity to enable credit invisible consumers to demonstrate loan suitability by analyzing their transaction data.

Bonus Questions!

LTP: What's one thing you wish customers knew before a sales meeting?

SS: The one thing I wish customers knew was how quickly the digital transformation in financial services is coming. They need to make rapid changes to every part of the organization responsible for interfacing with customers including businesses and consumers. This transformation will wait for no one, and no internal legacy process or system. Those that understand this clearly, are ready to engage in very meaningful dialogue. And frankly, those that don’t will be left behind.

LTP: If you could change one thing that financial services people do incorrectly, what would that be?

SS: I would change the incorrect belief that the financial industry is insulated from disruption and that somehow what’s worked well in the past is going to serve the financial industry well going forward.

LTP: What keeps you awake at night?

SS: The question of whether we can sustain the level of rapid innovation needed to keep pace with the current disruptive forces within the financial services industry. And secondly, the question of whether we can execute well enough on our current product, technology, and operations strategies to remain a highly relevant leader in driving the current digitization revolution within the financial services industry.

LTP: Thank you, Steve!

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Elena Mesropyan

MEDICIGlobal Head of Content

Global Head of Content, MEDICI

Elena is a research professional with a background in social sciences and extensive experience in consumer behavior studies and marketing analytics. She is passionate about technologies enabling financial inclusion for underprivileged and vulnerable groups of the population around the world.