Today, the FICO score is starting to show its age. This is apparent from a new breed of financier who is capable of tapping thousands of  data sources to make more personal decisions, and who can offer credit in ways that traditional lenders do not. One example is ZestFinance, a new style of underwriting company that uses 70,000 data signals and ten parallel machine learning algorithms to assess personal loans.

Speaking at GigaOM’s Structure Data conference in New York, CEO Douglas Merrill explained that ZestFinance employs a host of untraditional signals — such as whether or not a would-be borrower has read a letter on its website — to determine if someone is credit-worthy.

The company’s tools have also allowed it to make a lively business from “dead” people. These are borrowers who banks believe are deceased on the basis of their FICO score. According to Merrill, these dead make up 10% of ZestFinance’s customer base and their rate of repayment is better than that of the living.

Small business lenders are also making use of non-traditional credit signals. The lending firm Kabbage, for instance, taps into data like a company’s UPS activity to assess their financial health — everything from the volume of shipping to the size of the parcels provide signals about how a firm is doing.

CEO Robert Frohwein, who also spoke at the GigaOM event,  said traditional banks simply do not seek out such signals in the first place, meaning they must rely on a much cruder set of metrics when they evaluate loans.

The extra data signals lead to more successful lending rates and are also making credit more affordable and available than it was before. ZestFinance, for instance, provides the 60 million American who use payday loan companies an alternative to high balloon payment fees. Meanwhile, Kabbage is offering more loans than banks to internet-based businesses and to companies whose executives do not match corporate stereotypes.

Check out the rest of our Structure:Data 2013 live coverage here, and a video embed of the entire session follows below:

A transcription of the video follows on the next page

Go to page 2 (of 2) on GigaOM .

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To be clear, this isn’t about finality or absolutes, and we should especially not think in that fashion in a field such as digital media and its technologies – a field that is forever transforming. We should, however, consider the subject of maturity in its relative sense, in comparison to points of reference: a time, a sector, a different pace, perspectives that always evolve.

Media, as a segment, has always been unique (and fortunate) in its public relations. After all, it’s perhaps the only sector that reports on itself. The challenge then is to sift through the noise and vested interest. To help us out, we can rely on the cold, disinterested financial markets.

Here’s what we have observed:

(1) There has been venture capital consolidation, leading to fewer individual points with bigger and possibly less adventurous pools to deploy.

(2) There is an increased emphasis on revenues and earnings (as distinct from pure potential and option value), accentuated by post-IPO flagship properties that have been penalized as the operation has not kept up with the optionality.

(3) A significant portion of M&A activity has consisted of smallish “acqui-hires“ that take out the upside of willing sellers before the startup has hit its theoretical stride.

(4) Cash accumulation by some of the largest competitors continues, and sometimes the cash is even sent back to shareholders through dividends or buybacks.

(5) Many of the sector leaders have underperformed relative to analyst growth expectations in the latest reporting period.

With this backdrop, a number of predictions are in order. Think of these as New Year’s forecasts if you like, considering the season, but more truly they’re observations for the visible future.

• With maturation in the underlying assets, look for maturation in the way these are funded. As we climb up from small and early venture equity to mid-stage to late-stage to growth equity, buyout finance, and even debt capital, look for all of these follow-on pieces to increase in prominence and traffic. Some of the sector linchpins are already tapping the bond markets and securing debt ratings, which reminds us that media was at one time a borrowing sector (when it was old enough).

• Look for greater business emphasis on volume, capabilities and capitalization. While it pays to be small, nimble, and agile – able to navigate sharp turns in periods of high volatility and find plenty of new openings into which to dive – when the terrain is calmer and the openings narrower, this value proposition can start to lose its charm. Look for dominance (if not survival) to overtake iteration as buzzword of choice in our vernacular.

• In the strategic community, look for M&A activity to take place based on the integration of disparate parts. We have already observed the confluence of media and commerce, of finance and technology, of media and finance, and obviously media and technology. Look for these combinations to continue and for strategic directions to be set on an increasingly integrated field, where the distinctions will be blurrier between retailer and media outlet, between hardware and software company, and, most notably, between information and money flows.

• In keeping with the motifs of size, capital and integration, look for hardware to assume a more central place in the imagination of founders and the strike zones of buyers and investors. In comparison to software, this realm is more capital intensive, longer cycled, and difficult to “pivot” – which is alright when the turbulence is diminished and the money is perhaps more patient.

• Lastly, look for traditional media to garner increased attention from new media. This sub-segment that was at one time the only segment had been of late forgotten. As the breathlessness for novelty subsides and competition for market share and revenue intensifies, traditional media will be revisited and its audience and communities recognized for untapped value.

There are two overarching themes in these assorted observations and the handful of forecasts presented: On one hand, convergence and overlap (of sectors as well as capital sources); and, on the other, a progression from an era that was arguably defined by its financial ventures to one that is more highly strategic in nature.

Seeing these parallel patterns from another angle still, we note a transition from the more or less speculative gambit to a market that is structured, calculated, and framed within a narrower band of potential outcomes. We are seeing, in short, that digital media is verging on adulthood at last.

Dan Ramsden is founder and partner at CoRise. He blogs at discourseandnotes.com; follow him on Twitter @d_ramsden.

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The San Francisco-based startup is a software-based financial advisor and, in its mission to bring financial and investment advice to a broader audience, CEO and president Andy Rachleff said, the company is starting with people in tech.

The new interactive tool, launched today, lets tech company employees sort by job function, level, company size and region to see the range of salaries and packages for each role.

“There are a lot of good sites on the net – Glassdoor.com, Salary.com – for finding salaries. But it’s very opaque when it comes to how much equity people should get,” Rachleff said. “We think that a symmetrical market is a better market.”

To create the Startup Compensation Tool, Wealthfront licensed compensation data from an annual survey of 135 private technology companies, which included 8,000 employees (as part of the agreement, the startup can’t disclose the source of the data).

A quick search, for example, shows that biz dev folks tend to earn higher salaries than those in product development (salaries in the 75^th percentile are $185,000 vs. $160,000) but get less equity (.098 percent vs. .113 percent – for packages in the 75^th percentile).

The data also reveal that the mean cash compensation across all tech companies was $112,000 and the mean equity compensation was .072 percent.

Not surprisingly, the smallest companies (with fewer than 20 employees) granted the largest equity packages but, interesting, Rachleff pointed out that once a company reaches 20 employees, the salary doesn’t significantly increase (although cash compensation is slightly higher in companies with more than 50 employees).

Earlier this year, the company launched a simulator for figuring out the best time to sell stock post-IPO and it plans to build out a fuller suite of tools in the future.

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Seattle-based FutureAdvisor allows users to link their investment accounts and get free, personalized advice on their portfolio. The company, which launched its service in March, isn’t releasing the number of users it serves but says that it has more than $4 billion in assets linked by customers.

FutureAdvisor is designed to give a lot of simple advice to users without forcing them to pay for a personal advisor like Personal Capital or open a new account as WealthFront does. Users just get simple computer-generated tips on how to eliminate fees and taxes, diversify their existing portfolio and achieve their financial goals. The company is rolling out a new personalized 401k analysis tool that lets users see what fees are being applied to their 401k plans and how to reduce them.

FutureAdvisor plans on making money in future by offering a premium tier of services. But there will always be a free level of service, said co-founder Bo Lu. He said the financial services market currently offers financial advice to about ten percent of American households who have enough assets and can afford to pay the quarter of a million human advisors in business today. But he said the bigger opportunity is in offering accessible tools to the vast majority of the market that has some investments but often don’t understand how to optimize it.

“Software hasn’t eaten finance yet but it will and we will do it,” said Lu.

FutureAdvisor previously raised $1 million in seed funding last year from Sequoia, Rabois and Stoppelman. The new money will be used to expand its operations and build its team.

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The company, which arranges secondary sales of shares in privately-held companies, said in a statement Thursday that Murphy’s background in finance and public policy will be valuable to SecondMarket’s business and policy efforts.

“Scott’s public service and entrepreneurial experiences provide him with unparalleled insight into our various business segments,” SecondMarket Founder and CEO Barry Silbert said in a statement. “He will be a tremendous addition to the SecondMarket team and we look forward to his leadership and support in the coming years.”

Murphy represented New York’s 20th Congressional District from 2009 to 2011. Prior to that he founded and worked at several companies and was a managing director at Advantage Capital, a venture capital and small business financing firm.

“When I first met Barry, I was struck by the uncanny parallels between my professional background and the company’s business segments,” Murphy said in a statement. “As I learned more about the company, its vision and management team, I became increasingly intrigued by the prospect of joining the SecondMarket board.  I believe I can provide a unique perspective on a number of business and policy initiatives.”

(Image by United States Congress via Wikimedia Commons)

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But it looks as if the landscape is shifting in his favor. Morgan Stanley said Monday that it will let its 17,000 financial advisors use Twitter (for pre-approved messages only) and LinkedIn. Goldman Sachs is searching for a “social media community manager.” And earlier this year Bloomberg featured the one investment banker authorized by Deutsche Bank to tweet.

“The walls are coming down,” says Lindzon. “The banks are reaching out to discuss best practices….The acceptance phase is upon us.”

If a new era for social media and finance really is afoot, StockTwits plans to be as prepared as possible. Today the company is rolling out a redesigned website that makes it easier for investors to follow the information and people connected to the companies they care about.

“The new design focuses on our core strength: real-time sharing around markets and tickers,” Lindzon says. “It also has much more curation around highly discussed tickers [and] a greater amount of detail and thinking around people and discovery.”

Adding a social layer to stock price and volume

Beyond the commodities of stock price and volume, Lindzon says, StockTwits gives investors a social layer through which to see what the “smart people, traders and long-term investors” are thinking. The site’s latest redesign aims to simplify the process of following and communicating with individual investors and traders, as well as following specific stocks (such as Apple or Google) and markets (equities, futures or options).

That’s a lot of information to organize, especially in real-time. But, as opposed to a single, Twitter-like stream of messages, the redesigned platform allows users to create multiple streams and “watch lists” of “ideas” (the StockTwits version of a “tweet”) organized by people, stocks and markets. It also lets users select streams of “ideas” that are trending, suggested or that include charts. Instead of separating a users’ mentions and Direct Mentions, the new site also combines all of a member’s messages into a unified inbox that alerts them when new messages appear.

As the volume of messages on the sites increases (140 percent year-to-date), the company has added “Top Filters” and “Top Contributors” to the Ticker pages to help keep them useful and relevant. StockTwits’ heatmap, which shows the chatter around the different stocks, also features prominently in the redesign.

Traders use StockTwits on the side

In May, the company says it had more than 400,000 unique users to both StockTwits and the Chart.ly websites, a 100 percent increase from the previous May. It also says engagement is up 125 percent from last May, with the average registered user spending more than 32 minutes per visit. StockTwits has also cut deals with Yahoo Finance, CNN Money and other sites to power a box showing tweets about trending stocks, and has signed on about 170 public companies (many of which pay for a investor relations marketing service).

Still, though engagement and usage are climbing, Lindzon acknowledges that there are plenty of people who work in the finance industry who can’t use the platform because their institutions won’t let them. Some of the resistance is real (because of regulatory compliance issues), he says, but some of it has to do with entrenched ways of doing business.

“[Traders] email us and tell us they love what we’re doing but can’t use the product,” he says. Some already use the site “subversive[ly] on the side” with non-work devices, but with many, “it’s a waiting game.”

Still, anticipating the needs of financial institutions that could eventually want to use social media to distribute research, StockTwits is starting to build in features that ensure compliance and legality. For example, a StockTwits Pro feature currently in beta with a few dozen analysts makes sure that a link providing all of an analyst’s financial disclosures travels along with any tweet he or she sends from StockTwits. (Analysts can link Twitter accounts to StockTwits to send messages to both StockTwits users and the larger Twittersphere.) The Pro package also gives analysts the compliance-friendly ability to archive messages.

Social platforms provide new trust system

StockTwits isn’t just getting ready for the day when banks are really willing to embrace social media. Lindzon is looking to a time when social platforms have helped remake banking and finance. As the rise of crowdfunding, social financial platforms and alternative payment services like Kickstarter, AngelList, Dwolla and PayPal show, financing is increasingly taking place outside realm of traditional institutions. And that isn’t a trend that’s expected to let up any time soon.

“The banks are broken. We don’t trust the banks [and] they’re never going to get our trust back,” he says. But platforms like AngelList, LinkedIn and StockTwits, provide a “new way to network [and] meet people you’re going to invest with.”

“It’s a whole new trust system being built,” he says.

Disclosure: StockTwits is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, GigaOM. Om Malik, founder of GigaOM, is also a venture partner at True.

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Square has hired Sarah Friar, who was formerly the senior vice president of finance and strategy at Salesforce.com, to lead its financial operations as the company makes a push to expand in international markets. The company also announced that it has grown from 80 employees last year to 300 employees this year.

GigaOM reported in April that Square had reached a $5 billion annualized rate for processed transactions, and the company hit $4 billion only a month before that. The company allows sellers to accept mobile payments via credit cards and mobile apps, and has found success among small merchants and business owners.

By comparison, PayPal expects to do $7 billion in mobile-payment processing this year, although it has also seen its mobile sales predictions rise rapidly over the past year.

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But, as the company eyes a stock market flotation, it’s still struggling to overcome its biggest hurdle: the stigma associated with lending money.

A slew of reports bubbled up over the weekend suggesting the company — which offers people the chance to apply online for short-term loans with interest rates that are pretty eye-watering if you extrapolate them — was talking to U.S. banks about listing on Nasdaq.

Here’s The Daily Telegraph, which suggests that the company concluded London couldn’t offer the right exit opportunity:

“The Telegraph understands Wonga, led by co-founder Errol Damelin, is beginning a ‘beauty parade’ to choose two banks to lead the likely process […]

“A decision on a float has not yet been taken, but it is understood that a float on the London Stock Exchange has been internally rejected by the company’s board. A source indicated that Wonga is looking at its strategic options, and pointed to early 2013 as the likely time if market conditions allow.

“However, there can be no guarantee of a float or a sale, with it remaining a possibility Wonga chooses to simply add to its raft of existing venture capital investors. It is known that Wonga has rejected London as a venue for a market listing as it is felt British investors are more sceptical about growth value and there is a lack of sizeable IPOs in the UK market.”

While its decision to skip the British capital does nothing to help the local startup scene — something likely to irritate investors trying to stimulate the European IPO market — it also raises the question of whether the business hopes it can sidestep public skepticism by crossing the Atlantic to go public.

Just look at recent headlines about the company and it’s clear that money lending carries a stigma that just won’t go away. While crowdfunding services and disintermediating lending sites like Zopa are generally welcomed, Wonga’s approach has been called every name under the sun.

British politicians have criticized Wonga, calling it a loan shark circling the poor and saying it markets too aggressively. Even now it’s accused of “running shy” of its U.K. reputation and pumping up a debt bubble that is “even nastier” than the one at the heart of the 2008 financial crisis.

Of course, the business tries to shake it off. Co-founder Errol Damelin is on the record saying “We don’t walk around feeling hard done by”. But it’s a constant accusation that could cause damage.

There’s an argument that this is just bad press. Payday loans are widely derided, but they are also widely used, and — for many people — a necessary evil. I certainly know that I used payday loan companies pretty regularly when I was trying to make ends meet when I was just starting out my adult life. In tough economic circumstances they fill a gap, even if it’s not a particularly nice one.

But Wonga’s problems aren’t just with PR.

It’s been censured by the Office of Fair Trading, Britain’s equivalent of the FTC, for its debt collection tactics and threatened with fines.

And then there’s the scale issue. While it’s a venture-funded startup, it isn’t really a technology company as such — it’s a finance and marketing business. You can argue, as they do, that the money-matching algorithms and credit scores are tech, but by that logic almost any financial services company — or any modern business, in fact — is a technology company. Scaling up looks a lot more like Groupon than Google. And that’s something that could make investors wary.

Looking to cash out with a public flotation doesn’t necessarily solve any of these issues, and it certainly doesn’t solve the PR problem. And going to the Nasdaq does nothing to alter the popular image that Wonga is running away from a market that loves money but can’t bring itself to deal with the dirty business of lending it.

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So he and Hilaly founded Motif in 2010 with the goal of helping people turn ideas into investments and making the whole service social. The service, which has been in private beta, is now finally launching formally today and it’s got some big financial names helping it get off the ground. Former Securities and Exchange Commission Chairman Arthur Levitt is joining as a board advisor while the former president of Bank of America’s wealth-management division Sallie Krawcheck, who was also CEO of Citigroup’s global wealth-management unit, is joining as board member.

This is how Motif works:

• For now people buy into more than 50 Motifs, which are basically thematic indexes that include up to 30 stocks that are researched and weighted on how much revenue they get from a central idea. The Motifs capture some of the biggest current trends — things like Mobile Internet Tsunami and Tablet Takeover —  to more political and news driven themes like Repeal Obamacare and Housing Recovery. There are also a few new Motifs for today’s launch including “Lots of Likes,” which covers some of the most-liked companies on Facebook and Income Inequality, that looks at retailers on the high and low end.
• When users select a motif, they can put in as little as $250 or up to $100,000. Each motif can be bought for $9.95 though commissions are waived through the month of June. Users can see how a motif has done historically against the S&P and see how Motif has weighted each of the stocks, how they’re organized into different investment theme categories and how each stock is doing. If they’re not happy with the motif, users can customize it by dropping certain stocks, adding back others from an index of 100 or so or reweighting how much each stock or category gets. At any time, a user can choose to sell a stock for a one-time fee of $4.95. On a quarterly basis, Motif will offer to rebalance the portfolio for a small fee.
• The service is also designed to be social so users can share what motifs they’re looking at or investing in with Facebook friends or a certain investment circle. They can choose to make their actions as private or as public as they want.

 In the future, Walia said, users will be able to create their own motifs. And over time, they’ll also be able to rebalance whenever they like. But the idea is to help people turn their expertise, interest or knowledge about certain topics into an actual investment that is diversified across themes they understand.

“People have ideas and they want to put it them to work. We make that easier to do. You can get exposure to an idea not just to an individual stock,” Walia said.

Motif is part of a new class of online financial services that are making investing and portfolio tracking much easier. Services like SigFig and Personal Capital are bringing a lot of new technology tools to finance, helping users get a lot more intelligent about how they invest. Finance is one of those areas that can be transformed by online tools, but to date, it hasn’t really undergone much evolution beyond the emergence of online brokerages. That’s changing now. Motif has raised $26 million to date from Foundation Capital, Ignition Partners and Norwest VenturePartners.

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But what does the history of Chinese digital stocks, of which there are many in New York, tell investors about both companies’ future courses?

Portals - have provided decent returns, but Baidu has led the way…

BIDU data by YCharts

Online gaming - the segment is huge in China, raking an estimated $1.7 billion in Q1 2012 alone. But, whilst locally-listed Tencent leads the way, most U.S.-listed operators have fared poorly

SNDA data by YCharts

Video sites – the main independent sites not affiliated with portals languished since their floatation. But their March 2012 proposal to merge, in a bid to cut licensing and distribution costs, boosted especially Tudou, whose stock Youku is buying.

TUDO data by YCharts

Social – Often called the “Chinese Facebook”, the visually-similar real-name network RenRen has been a disaster on the Nasdaq, despite almost doubling revenues within a few months last year. Are investors starting to worry about China’s growing state social media censorship, or about the growth of microblogs from portal powerhouses like Sina and Tencent?

RENN data by YCharts

E-commerce – these should be boom days for businesses serving China’s growing digital affluent class. But travel booker Ctrip and diversified Amazon rival DangDang, which is also moving in to e-books and e-readers, are way below their 2010 opening prices.

CTRP data by YCharts

Mobile/broadband – Mobile ringtone, game and news provider Linktone is climbing back from a slump, but mobile security outfit Qihoo 360 and data centre host 21Vianet have tracked each other on the way down, only seeing improved fortunes during this 2012 year of the dragon.

LTON data by YCharts

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