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Innovation

Business & Financial Services – A Traditional Finds New Strength in Diversity

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Delaware is known throughout the business world as a destination for companies to incorporate, thanks in large part to deep bench of law firms and corporate services providers already located here. Financial services companies abound as well, with many banks and a growing presence in the fintech space headquartered in the First State. For example, Delaware is home to such longstanding, multinational corporations as Bank of America, Barclays, Capital One, JPMorgan Chase, WSFS Bank, PNC, M&T Bank and others.

Many of those traditional financial services employers have continued to innovate. JPMorgan Chase works steadily at developing new digital and fintech capabilities, and much of that work is being done by programmers working at its Delaware Technology Center in Wilmington. Through a partnership with coding nonprofit Zip Code Wilmington, JPMorgan Chase has also worked to expand access to coding jobs among traditionally underserved populations.

In fact, promoting diversity in the business and financial services sector has become a watchword for many local companies. In 2021, Capital One donated its $4.7 million facility at the Wilmington Riverfront to Delaware State University.

The bank and Delaware State, a Historically Black College or University (HBCU), will partner on a recruitment scheme that is designed to create more opportunities for students of color to enter fields like business analysis, tech and product development.

As you’ll read below, Delaware’s law firms also are beginning to work toward more diversity, equity and inclusion (DEI) in their field. Well-regarded firm Potter Anderson & Corroon, for example, has redoubled its DEI efforts, notably through its pro bono work.

These established players are being joined by an ever-burgeoning population of technology and social-impact startups. Wilminvest, for instance, works with social services organizations to provide housing for those experiencing homelessness. Investor Cash Management (ICM) created a product that offers better investment returns and cash liquidity for customers with limited investment experience or capital. Mercury Financial built a digital credit card for its underserved customers. And Marlette Funding launched two new services in 2021 that align with its mission to help consumers bounce back from financial setbacks.

Right: Wilminvest co-founders Joel Amin and Bryce Fender on site at the company’s
pilot project. | PHOTOS COURTESY OF WIMLINVEST

Clearly, the First State is the first choice for innovation.

Wilminvest: Invested in Helping People 
Wilminvest wears its heart on its sleeve — well, on its homepage, anyway. “We believe that investments should have a purpose,” it says. That purpose: to buy vacant housing properties to fix and flip, but not to sell to the highest bidder at the greatest profit. Co-founders (and friends since middle school) Bryce Fender, Demetrius Thorn and Joel Amin formed their company while in college to provide families experiencing homelessness with stable housing and social services to help them build financial security. To date, they have rehabbed six buildings that house 15 families who, with stable housing, have been able to land jobs and rebuild their lives.

The company launched in January 2017. Its model is to form public-private partnerships to raise low-cost capital to purchase and renovate the vacant properties, and work with partner organizations to help their tenants become homeowners in neighborhoods that also need a boost.

Fender and Amin “had a shared passion in making the world better place,” Fender says. They enrolled in the University of Delaware, where they found their mission: “We realized there were lots of vacant houses and families and veterans with access to government support,” but no one was putting the two together. “We act as a liaison between government nonprofits and real estate professionals,” he says. This idea earned them the $1,000 main prize at a competition sponsored by the University of Delaware’s Horn Entrepreneurship program in 2017 and was recognized as a semi-finalist in the Pete du Pont Freedom Foundation’s Reinventing Delaware program.

Amin’s family was already experienced in renovations, which helped inspire the idea and allowed the co-founders to do much of the rehab work themselves at first (they contract most of the work now). “We saw the opportunity to create a company that specialized in this work,” Fender says. He even earned a real estate license to learn more about the business. He says that social services organizations “found it valuable to have landlords aligned with their goals.”

Fender says Wilminvest has met with some success, and though not at“massive scale” yet, the co-founders are growing the business and working to form new partnerships, with the goal of working on 12 new housing projects by the end of the year. Asan unusual model — traditional fixer-upper investment meets social impact and innovation — “there are some for-profit sacrifices we have to make,” Fender says. “We are a for-profit company, but we believe you can create business models with spirit and integrity and a mission to help people. We have to help people. That’s our model.”

Potter Anderson & Corroon: Advocating for Meaningful Change
The past few years have opened the nation’s eyes to fault lines in our country. The COVID-19 pandemic, the #MeToo movement and the outrage at racial injustice has forced an awakening under-standing of the need for diversity, equity and inclusion in all areas of our society, including business and financial services.

The law firm Potter Anderson & Corroon is leading the way in this regard.In June 2020, in the wake of the killings of George Floyd, Ahmaud Arbery, Breonna Taylor “and the long list of African-American men and women whose lives have been stolen by injustice,” it issued its Commitment to Advocating for Meaningful Change. The firm vowed “to fight against the systemic and institutional racism that stands in the way of achieving racial equity and the promise of our nation. While we rededicate ourselves to aiming higher, we are uniquely positioned as lawyers to advocate for true equality and justice and to support those who face marginalization, oppression and violence.

William Chapman, Jr.

Leading that mission is William Chapman, Jr., of counsel, chief diversity officer and director of pro bono services. Chapman, who joined the firm in 2015, previously served as a Family Court judge for the state of Delaware and as Deputy Attorney General for the Delaware Department of Justice. His approach includes attracting attorneys and staff that represent “a broad spectrum of cultures, races and ethnicities,” and creating “an inclusive work environment where everyone feels valued and respected.”

More than just talking the talk, Potter Anderson is walking in step with programs like First Chance Delaware, with which it formed a pro bono partnership; the Delaware State Bar Association’s Multicultural Judges and Lawyers Section; the Leadership Council on Legal Diversity; the Law Firm Antiracism Alliance; and the 1L Fellowship Program of the Thomas R. Kline School of Law at Drexel University. “We doubled the number of students interviewed this year and we have hired a law student who is diverse in partnership with the program,” Chapman says. “The student will work with us for eight weeks and spend two weeks with Nemours Children’s Health.”

Diversity, equity and inclusion is “internal and external,” Chapman says. Along with building a more diverse internal organization, it involves helping the community you serve. “Our chair-man always says, to be a better neighbor, you have to look out your window.” For example, the firm recently offered pro bono services to three children in foster care. “To see the connection between our young lawyers and the kids was so rewarding. To see them take ownership of the case was really neat,” he says. “The professional development and commitment to meaningful public service is really rewarding. If you do something to help one person, isn’t that helping everybody?”

Investor Cash Management: Making Investments Work for More Delawareans
Fred Phillips
, CEO and founder of Investor Cash Management (ICM), was inspired to start his business by his mother. “I worked in financial services for long time, and I started to think why people like my mom, a Mexican immigrant who lived in public housing, why people like her never invested.”

Fred Phillips

He came up with three reasons:
1. The high transaction costs. “It will depress the activity,” he says.
2. The overwhelming number of choices. “There are 28,000 funds to invest in. How are you supposed to know which of these is right for you? It can become paralyzing?”
3. Limited resources at their disposal to invest at all.

That revealed an opportunity. “If we can build a product that reduced or eliminated those barriers, that could work for these people,” he says.That product became the investor cash management account. With this account, the investor not only earns a better return than a simple savings or checking account, it allows the investor access to his or her money. “We are the only company in the world that can transform an investment product, like a mutual fund or ETF, into liquid digital currency,” he says.The most fundamental personal finance problem, he asserts, is “what to do with your money.” Banks pay are turn of three basis points in checking, he says, so an investment of $100,000 earns only $30 at the end of the year on average. A bond fund or bond ETT pays “60 times more over a decade, but it’s difficult to pay for groceries or take a friend to dinner with a mutual fund.”

An ICM account falls somewhere in the middle, with both better liquidity and better returns. “For people who have never invested before, this is a far better way of managing their money,” he says. “You can have your cake and eat it too, become fully invested with immediate access to your funds.”

He formed the company in 2018, “but it took a substantial amount of time to build the product,” he says. For one thing, it required building 150 application program interfaces (APIs), which connect banks, brokerage firms and his company: “We are the hub in a ‘hub and spoke’ architecture,” Phillips says. “We tell the bank, this person has X money in real time, and it tells us her transactions. To do that, you have data sets communicate with API. It takes along time to build something that has never been built before.”

Phillips launched products “at scale” in late 2021, and has partnerships with major financial institutions, including Visa, which works with ICM on a product known as the Foundations Cash Management Account. “We are the youngest tech company Visa has invested in,” he says.

He adds that today’s inflationary market “is the best environment possible for our company. High interest rates cause a loss [on bank investments]. You just become substantially poorer. High inflation and low rates are a perfect catalytic for our product.”

Mercury Financial: Helping Customers Rebuild Their Financial Lives
Mercury Financial, based in Austin, Texas, and with offices in Wilmington, offers credit services and improves financial mobility for the often-neglected near-prime customer. (Near-prime customers are those whose credit score doesn’t quite quality them for the best interest rates, but they could get to that point by engaging in responsible financial habits.)

The company says it has provided nearly 1 million customers access to more than $3 billion in credit lines since its founding in 2013.

Its most recent innovation is the introduction of its Mercury Mastercard, and co-branded credit cards, to be used in digital wallets. These credit cards give cardholders access to digital wallet and tokenization capabilities to make in-store, in-app and online payments at participating merchants from their Apple, Google or Samsung smart devices.

These products are responding to a growing need among its near-prime customers for contactless payment accessibility. “Our focus is to deliver a seamless experience to near-prime customers and access to payment technology that is safe and convenient,” says Marge Hannum, Mercury’s chief risk officer in Wilmington.

“We understand these consumers have had challenges in their past and are in the process of rebuilding their financial lives. We continue to focus on innovative solutions, all to help them improve their credit.”

Andy Shah

The growth in mobile payments is “off the charts,” says Andy Shah, chief technology officer, in Austin. The COVID-19 pandemic is a primary reason. “The pandemic reinforced the value and increased customer usage,” Hannum says. “It accelerated, from the consumer standpoint, the need for mobile tech for this population.” The company began working on this new product before the pandemic struck, and is ready to take part in the market, which has rocketed from a total value of about $400 billion to a current $1.8 trillion in the past couple of years. The new mobile wallet is “extremely important and key for our success,” Shah says. “From a competitive standpoint, it helps us really stand out.”

Mercury Financial “is more a service partner than service provider,” Shah says. “We focus on customer needs and tailoring solutions to their needs. ”Previous solutions include debit cards that allow customers to pay off the debt in weekly micropayments rather than a larger monthly bill. “These people often live paycheck to paycheck, so small micropayments are better aligned with how they get paid,” Hannum says. The new product “reinforces who we are,” she says. “We are focused on this community and work with them in ways they want to work with us. We offer new and creative things that others aren’t.”

Marlette Funding: Putting Data to Work for Consumers
Since its launch in 2014, Marlette Funding has grown into a leader in online lending services, having facilitated more than $7 billion in loans to more than 350,000 people through its Best Egg digital platform. The company had a record year in 2021, thanks in part to two new products.

In June, Best Egg began piloting anew Visa credit card that provides spending controls and features that will grow and evolve as customers rebuild their credit. As of January 2022, 19,000 consumers had signed on to the Best Egg credit card. And December saw the launch of Best Egg Financial Health, a free service that gives customers access to their VantageScore credit score with monthly updates, credit report alerts, credit score factor explanations, a credit score simulator, financial calculators, and a Knowledge Center full of tips and ideas to help people with their finances. The platform has signed on more than 100,000 members in the short time it has been available.

“Our aspiration is to achieve excellence and create a cohesive ecosystem that delivers for our target consumer,” who has little or no savings, says CEO Jeffrey Meiler. “This is an opportunity no one in banking is executing or in fintech is cohesively delivering in the way we aspire to.”

The company employs artificial intelligence, machine learning and other models to optimize pricing and loan amounts, which drives growth, Meiler says. “Everybody talks about big data, not so much how to operationalize it. We created a customer attribute service where we can operationalize attributes. For example, we can check credit scores, and when [customers] apply for a second loan, we can use that to say yes more often than no. It sounds simple, but it’s actually a difficult thing to do, to create an ecosystem where strategic data is operationalized.”

Sabrina DeVito

The Best Egg platform turns eight years old this year. “We spent the first seven years building a frictionless, online personal loan product that made money easily accessible, primarily to consolidate and pay off debt,” says, chief strategy officer. “Over time, we began to think about innovations around the consumers we are serving.” She says the company studies its target market’s needs through a “proprietary research community,” comprising more than 3,000 customers and prospects. “We interact with them every week to understand where they are on their financial journey. The outgrowth of that is the products we offer. That’s how we think about innovation.”

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