FinTech startups wield data and smarts

New York, already home to an impressive number of financial technology startups, just welcomed a new batch of companies that are bringing some impressive ideas to bear on data, analytics and payments. The FinTech Innovation Lab, a collaboration between the New York City Investment Fund and Accenture with support from the New York banking community, just graduated its first class of six companies on Friday and showed them off to a group of investors.

I had a chance to hear their presentations, and it was a rock-solid group pulled from more than 90 applicants. The class showed that there is a lot of innovation happening in this field and that there is still room for new approaches in the financial sector. And the program showed that New York overall is honing its pitch to be a home for startups. Category-specific programs like this and NYC SeedStart’s media-focused summer class show that the city has some attractive accelerator options for entrepreneurs that address particular verticals. That may be the next step for accelerator programs, to focus on specific areas rather competing head-to-head as general startup programs.

Back to the new FinTech Innovation Lab class. I really enjoyed hearing from all the startups, but a few stood out to me.

Zipmark CEO Jay Bhattacharya

I liked Zipmark, a new mobile-payments service that is leveraging checking networks to enable fast, simple and cheap payments. By tapping the existing low-cost check-processing infrastructure, Zipmark is able to limit the cost of P2P payment fees to $1 for transactions of between $40 to $400 and makes it free for anything less than $40. Vendors using Zipmark pay fees of 1 percent, capped at $5 per transaction.

The system is not only cheaper than competing offerings such as PayPal but it also offers ease of use, especially for companies that are used to taking payments in checks. Real estate and property owners and other billers can include a QR code on their bills, allowing Zipmark users to scan and pay. The system basically connects to a user’s checking account, verifies and authenticates the payment and then sends a check to the recipient’s bank account by the next day. Zipmark doesn’t hold on to the funds or force people to carry a balance with them.

I like Zipmark because it taps existing accounts, similar to how Dwolla and eWise also connect payments to a user’s bank account. We’re hearing a lot about new approaches like near-field-communication payments, but for some payment situations, it makes sense to tap existing networks. Customers track their Zipmark payments and see a digital check receipt. Zipmark will need to find traction with billing services and commercial banks; right now, it has just one pilot under way.

CB Insights CEO Anand Sanwal

CB Insights, which already provides structured data on startups and private companies, is taking its service to the next level with Mosaic, a real-time insight and intelligence service that pulls in a wealth of data — unstructured, semi-structured and structured — to paint an overall picture of the health of a private company.

Mosaic integrates data from social media, job boards, press publications, government filings and other sources to create an index about how a company is doing. Some services give a limited look at specific signals, and some research firms look at a group of startups in particular areas. But Mosaic should be able to cover a wider array of private companies with at least 10 employees and provide a deeper assessment of their current state. It’s reminiscent of DueDil, a British company taking a similar approach to assessing companies with publicly available data.

This is helpful for firms doing business with a private company, to understand how reliable their partner might be. But it can also be useful for vendor selections, supply-chain decisions and secondary markets and should be attractive to investment bankers, private equity firms, venture capitalists and corporate M&A teams. The key is in ingesting a wide array of information, applying sentiment analysis to things like press mentions and then properly weighting the data to come up with a comprehensive picture.

“There’s no one smoking gun, but when you weave disparate signals together you can create a picture of a company’s health,” said Anand Sanwal, the CEO and co-founder of CB Insights.

Aqumin CEO Michael Zeitlin

The most visually arresting startup was Aqumin, a software company that lets traders, investment researchers and analysts use its 3-D visualization and analytics tool to create interactive “landscapes” out of mounds of data. More than just a visualization tool, Aqumin’s AlphaVision lets people get into the data, apply filters and algorithms to it and see how it responds in real time. Users can zoom around a set of data supplied by Bloomberg, for instance, and click on information to get more information.

By letting people visualize data and interact with it, Aqumin enables people to see patterns and trends much faster than if they used traditional spreadsheets or 2-D charts. CEO Michael Zeitlin said the tool takes advantage of our ability to naturally pick out patterns visually, something that is much harder to do when poring over spreadsheets. He said AlphaVision will be indispensable in ten years as financial workers try to grapple with a deluge of data. Zeitlin has had success before with data tools, building a geo-seismic software company called Magic Earth. The company offered a 3-D visualization product for the oil industry that was eventually bought by Halliburton for $100 million.

I’m not sure if everyone will be using AlphaVision, but I do think these types of tools will be more critical as people delve into more data. Visualizing information is important, but as we’ve said before, the big money is made in analyzing it. AlphaVision helps people do both in a way that’s fast and pretty easy to use.