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Fintech Report Card: August 2017

Below is the August edition of the Fintech Report Card, a monthly piece by Riskalyze CEO Aaron Klein originally published in

Welcome to the August edition of the Riskalyze Fintech Review, where Riskalyze CEO Aaron Klein gives you the thumbs up or thumbs down on the biggest pieces of news to hit advisor technology in the last month. Failing to read this piece may be the riskiest move of all!

Orion and Quik! Join Forces for Onboarding Tool

What happened: Orion Advisor Services is collaborating with form-automation provider Quik! on an improved onboarding experience. Orion advisors can import electronic or paper forms into a browser to make them customizable. They can then convert them into interactive PDFs, share via DocuSign or utilize one of many forms in the Quik! library.

Why it matters: You wouldn’t know it based on the sheer volume of paperwork they do, but advisors really hate paperwork. Filling out forms, sending, faxing and printing is a time-consuming process. Orion and Quik! coming together to alleviate this problem frees up an advisor’s time to do things that matter, like advising.

Savings App Qapital Expands into Banking with Checking Account Feature

What happened: Qapital, a saving application that helps users organize finances in a single place, announced a checking account and debit card feature. With other saving and personal finance competitors on the market like Simple Bank and Mint, Qapital aims to set itself apart by combining account aggregation, savings, and spending options in one platform. Qapital’s checking account will have no overdraft or other fees in an effort to compete with big banks.

Why it matters: It’s really interesting to look across the line at banking to see the trends that will eventually affect investing and advice. Great user experiences that people can understand are a hallmark of the products that will win the future. It will be interesting to see if Qapital will be successful in attempting to disrupt banks.

Smarsh Acquires Voice Archival Service Cognia

What happened: Smarsh, an archiving solutions provider for compliance and risk management, acquired Cognia, a cloud-based voice archiving, audio search and analytics service. The merger will give Smarsh customers enhanced capabilities around mobile and fixed-line voice communication. The acquisition will expand the existing presence of Smarsh in Europe and is central to its MiFID II compliance solution for financial firms wishing to retain communication records with clients.

Why it matters: It’s not just all DOL—financial firms in Europe are facing their own changes to the compliance landscape, too. The ability to retain voice communications and present them goes a long way in proving a client’s best interest standard and worst case, protecting a firm from litigation. No matter how some form of inevitable fiduciary rule comes together, we’ll be very interested to see how this technology expands in the years to come.

TruValue Labs announces ESG Momentum Score

What happened: TruValue Labs announced the ESG Momentum score, the first ESG indicator that uses data to formulate a quantitative score showing the direction, or trend, of ESG performance for a company. The ESG Momentum Score measures data in the areas of environment, social and corporate governance. “When it comes to ESG, investment professionals need more than ratings based on annual, company self-reported information—they require timely data from an external, objective perspective,” said Hendrik Bartel, CEO and co-founder of TruValue Labs. “This next-gen ESG data incorporates events around the clock, with scores that demonstrate how company performance is changing over time.”

Why it matters: Socially responsible investing has been a hot topic. Last month, I mentioned that I love to invest in companies with insanely good customer service, but I wasn’t quite sold on a robo advisor dictating to me what “socially responsible investing” meant. The ESG Momentum Score is a great step forward in fixing that subjectivity problem, since it’s using standards established by the Sustainability Accounting Standards Board rather than arbitrary factors and self-reporting by companies with an agenda in mind. ESG Momentum Score gives advisors and investors the data to make decisions for themselves, which is how it should be.

PayPal Acquiring Small Business Lending Service Swift

What happened: PayPal announced it will acquire Swift Financial, a startup that provides small business owners with working capital. The acquisition lets PayPal to add to its own underwriting capabilities for Working Capital, a small business lending service it launched in 2013. “We know and value Swift’s technology platform and people, and we believe their talent and capabilities will further strengthen our overall merchant value proposition,” PayPal’s Darrell Esch wrote in announcing the deal.

Why it matters: PayPal, like a lot of fintech stories this month, is extending more into the banking/lending sector, and this move should make their Working Capital an even bigger disruptor in that space. Advisors are usually great candidates for using debt to fuel succession or acquisitions, given the recurring revenue nature of their businesses. You never know – PayPal might end up being a player in helping advisors make transitions in the future.

Bank of America Launches Accounts Receivable AI for Enterprise Solution

What happened: Bank of America Merrill Lynch is offering commercial clients an accounts receivable solution powered by AI. In partnership with fintech company HighRadius, the Intelligent Receivables service was designed to help companies streamline incoming payments and post receivables quicker. “We are committed to working alongside fintech companies to bring more innovations like Intelligent Receivables to our clients, and create practical applications of new technology that will help them achieve greater efficiency and cost savings,” said Hilani Kerr, head of North America Corporate Global Transaction Services at Bank of America Merrill Lynch.

Why it matters: While it’s not really in Bank of America’s core competency to manage receivables, accelerating cash for their corporate customers is a key priority for BofA, and puts them closer to the action to potentially lend against receivables in the future. Given that advisors have such predictable revenue, is this another source of financing advisors could tap in the future? Time will tell.

SEC’s Office of Compliance Inspections and Examinations Releases Risk Alert

What happened: The Risk Alert released on August 7 by the SEC’s Office of Compliance Inspections and Examinations (OCIE) identifies the policies and procedures that the OCIE staff believes should be part of a “robust” set of cybersecurity controls. The OCIE’s conclusions come after a yearlong review of the cybersecurity practices of 75 asset management firms and funds. The sweep, deemed OCIE’s Cybersecurity 2 Initiative, covered broker-dealer, investment adviser, and investment company practices during the period from October 2014 through September 2015.

Why it matters: The OCIE’s cybersecurity recommendations are coming at a good time when cybercrime concerns are high. Our only concern is that the investigations the SEC covered for this alert didn’t occur in the last 5 months (remember WannaCry?) so hopefully this report is as up to date as it needs to be.

Startup Accelerator Y Combinator Hosts Summer 2017 Demo Days

What happened: Biotech and artificial intelligence emerged as the top startup trends at Y Combinator’s 25th Demo Day. The Silicon Valley investment group invites startups to move to Silicon Valley for three months where the Y Combinator partners work closely with each company to get them into the best possible shape and refine their pitch to investors. Previous startups to come out of the program include Dropbox, Airbnb, and Instacart.

Why it matters: We always look forward to hearing about the startups that come out of the Y Combinator startup program, and these Demo Days didn’t disappoint. Honeydue was especially interesting in the financial space because it focuses on new couples merging their finances for the first time, a challenge some advisors and financial planners tackle frequently. 70 Million Jobs addressed a very compelling employment issue, as well. We’re always amazed at the conversations that can take place when we foster innovation. Nice job as always, YC!

Aaron Klein is CEO at Riskalyze.

Editors note: The views expressed in this column are Aaron Klein’s, and do not necessarily reflect the opinions of

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