‘People don’t care about privacy’: How payment app Mezu pivoted to become embedded finance platform Alviere
- Mezu, a privacy-focused payments app, didn't manage to catch on - so the management team decided to turn it into an embedded finance platform - Alviere.
- Alviere focuses on big brand companies with an existing customer base that want to add banking services to their toolkit.
Brisker wanted to center his business around consumer privacy, which he believed to be a growing concern among the general public.
When other payment platforms like Venmo were creating a public data ledger on individual payment history, Mezu allowed people to exchange money without having to give their personal information. People could simply input the sum they wanted to exchange, and the app created a one time, self destructing encrypted code valid for three minutes.
“We thought we had this great idea, we raised money, and then we spent the next 18 months getting Mezu enabled – building the relationships with the regulators, with the banks, with the networks, everything that you need to do in order to actually launch,” said Brisker.
In many ways, Mezu was a neobank – it offered payments, a debit card, and a bank account. It was all about efficiency, making everyday transactions easier and faster. But it turned out to be an unsuccessful business model as “people didn’t care about privacy”.
“It's very hard to change people's behavior if there's not a huge incentive, or an established connection. Privacy was not enough of a reason for people to change, they needed a real economic incentive. The convenience factor was more important than privacy,” Brisker told Tearsheet.
Despite managing to build some momentum and getting to a million downloads, the investment community still didn’t believe in the idea. Competition from Venmo and Cash App was strong as they continued to dominate the market, making it nearly impossible to compete against them.
“[Investors] were like, ‘What are you doing with the data?’ We’re not using the data. ‘Oh, you're not making money off the data? Not interesting for us.’ Plus, there were already two very strong payment apps in the market, and people liked them enough,” Brisker said.
So, in June 2020, Brisker and the Mezu leadership team decided to shut down the project. As everyone was stuck at home due to the pandemic over that summer, the team took the time to figure out what to do next.
The technology underlying Mezu was the starting point, as they knew they had a strong product under the hood. Having already built a sophisticated platform for themselves, they wanted to change direction in terms of its application.
“Many people along the way had asked us if they could use our platform, because they didn't want the payment app, but they wanted everything below it. This gave us an inkling that we were onto something below the surface, but nobody had really articulated it well – the words ‘Banking as a Service’ weren’t even on their tongue, definitely not embedded finance,” Brisker told us.
The transition to Alviere
The end result was Alviere - a full stack embedded finance platform. Foundationally it's the same company as Mezu, with the same people and underlying technology, but Brisker and his team wanted a whole rebrand, not just a pivot.
In April 2021, Alviere raised $20 million in a Series A funding round led by Viola Ventures and Viola Fintech, with the participation of CommerzVentures, Mitsubishi Capital Corporation, Wix.com Capital, Draper Triangle Ventures, Cross River Bank Capital, CERCA Partners and others. Six months later it landed another $50 million in a Series B investment.
The company’s first inclination was to go into banking as a service, but then the team realized that embedded finance was more in line with their experience and strengths as a business.
“Banking as a service is a lot more technical and focused around transformational technology, but embedded finance in my mind is not just tech, it's going after companies whose core business is not financial services or products,” Brisker said.
Alviere could build on Mezu’s experience, having faced the trials and tribulations of a company coming from the outside and not knowing what to do. It knew that clients would need more than a service that could enable financial services capabilities. It wasn’t just about the technology, but also about integrating financial products into the existing business ecosystem and network.
So, Brisker positioned Alviere not just as an API vendor, but also as a committed partner in revenue generation and business growth for businesses that want to enter the financial services space.
“We're not just a technology provider. It's not ‘Here's an API and have a nice day.’ It's ‘Here's an API, and by the way, we know how to go to market to build a consumer facing, financial product, and we can help you.’ So it's consultative, as well as technological,” Brisker told us.
As for prospective clients, Alviere decided not to focus on fintech startups or enabling software or technology companies to get into financial services. Rather than service fintechs that want to attract customers, Alviere’s approach was to go where the customers are, whether it's Home Depot, Toyota or AT&T.
“A good potential customer for us has a strong existing customer base they want to further monetize, enhance the relationship and build more stickiness to it,” Brisker noted.
Alviere is already collaborating with one nationwide telecom brand who is “going all in” and offering real neobanking capabilities to their customers. Further details are to be announced early next year.
Brisker believes that people are ultimately going to look to recognized brands they trust when it comes to shifting their financial services providers. Embedded finance can work effectively for big brands, as they have an established connection with their customers as well as a financial interaction.
“I think longer term, it's a much more effective value proposition as there’s a real raison d'etre for that added service because there's a core service that's already provided on top of which you can stack different things,” he said.
Alviere’s go-to-market strategy of targeting large clients together with its scalable platform and proprietary ledger are among its main competitive advantages relative to other embedded finance platforms.
“We have a completed and proven technology, we know it works, we know it can scale. We're going to have a money transmission license in the United States, Canada, and Mexico by the end of Q1 2022. This is a real differentiator among our cohort, as we won't need to actually rely on bank licenses to move money around,” Brisker said.
Embedded finance represents a new inflection point in the marriage of finance and technology, with potential to bring about real change in the banking industry, Brisker believes. There have been big developments in the financial services sector over the past few years, but banking is yet to face real disruption.
“There’s a whole big shift in financial services, but it's still not touching the banks, it’s just building a layer on top of the bank. I think what we're doing is enabling a deeper structural ecosystem change that allows a whole new strategy. Looking at fintechs, they’re successful companies, but how are they really scratching the surface of the stranglehold that global banks have on the financial system?” Brisker told Tearsheet.