Argyle’s Shmulik Fishman on the firm’s recent Series C investment and the future of payroll connectivity

  • When Argyle launched its income verification product, payroll connectivity wasn't a thing yet -- the status quo for many FIs and their clients was uploading a lot of documents and manual reviews.
  • Argyle CEO Shmulik Fishman joins us on the podcast to discuss how far the company has come, the recent news of Argyle's Series C funding, and the future ahead for payroll connectivity.

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Argyle’s Shmulik Fishman on the firm’s recent Series C investment and the future of payroll connectivity

Today, we have a special guest joining us—Shmulik Fishman, CEO of Argyle. I’ve spoken to Shmulik a few times over the years and it’s been really interesting to see how early he was to the space he’s playing in, as well as the impact Argyle is having on financial services. The firm’s recent investment round I think speaks to that.

Argyle has been at the forefront of digital income verification, transforming how lenders, mortgage processors, banks, and fintechs verify income. 

In this episode, We’ll explore Argyle’s mission to enhance data completeness and streamline user experience through payroll connectivity.

We’ll dive into Argyle’s recent Series C fundraising, Shmulik’s and Argyle’s vision for the future of payroll connectivity, and the impact they’re making in the financial services industry. 

Without further ado, let’s jump right into the conversation.

The big ideas

  • Argyle’s Mission and Accomplishments: Shmulik highlights Argyle’s mission and recent achievements, positioning the company as a leader in digital income verification. “Argyle is a digital income verification tool…The big news is that we just closed our Series C, and we have an additional $30 million in capital…This mark, sort of the 100 million dollars in capital raised, I think it’s really important.”
  • Disruption of Outdated Processes: The conversation underscores how Argyle is disrupting traditional, paper-based processes with its innovative solutions, offering ease of use and security for consumers and lenders alike. “For too long, outdated processes have plagued industries like renting, lending, and mortgage processing, requiring consumers to deal with cumbersome paperwork. With Argyle, we’re changing that narrative…”
  • Partnership with Rockefeller Asset Management: Shmulik discusses the significance of Rockefeller Asset Management joining Argyle’s board, highlighting the alignment of visions and the potential for greater impact. “Rockefeller asset management’s entry into our board brings a wealth of experience and resources, aligning perfectly with our mission to build an enduring business.”
  • Focus on Payroll Connectivity: The podcast emphasizes Argyle’s focus on payroll connectivity and how it’s reshaping the landscape of income verification, setting new standards in the industry. “Payroll connectivity is at the heart of what we do at Argyle…we’re empowering lenders to make faster, more informed decisions while enhancing the user experience for consumers.”
  • Client-Centric Approach: Shmulik highlights Argyle’s client-centric approach, emphasizing the importance of partnerships and customized solutions tailored to clients’ needs. “Our priorities moving forward revolve around enhancing the user experience, improving data completeness, and exploring new verticals where income verification can make a significant impact.”

Listen to the full episode

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The following excerpts were edited for clarity.

I’m Shmulik Fishman. I’m one of the founders of Argyle. We’ve been building this company for the last six years. Argyle is a digital income verification tool. And we work with lenders, mortgage processors, banks, and fintechs to help verify income on behalf of their consumers.

Raising a Series C

The big news is that we just closed our Series C. We have an additional $30 million in capital. It’s a really big milestone for us, and the $100 million in total capital raised. I think it’s really important to take a step back for a second. There’s a lot of exciting news around the fundraiser, but there’s a really big change happening in the marketplace. For so long. If you’ve been renting an apartment or getting a loan, perhaps getting a mortgage, or getting insurance, you’ve experienced this process of uploading pay stubs or your W2 or sending an email. With those documents. It’s the age of AI and automation in 2024. Yet, here we are with these pieces of paper that are being updated and manually moved around.

And here is this opportunity. Instead of doing all of that antiquated paperwork, you can log into your own payroll account and share your income data with these banks with these lenders. It’s a process where the consumer certainly has a lot of gains around ease of use and security. But it’s a huge step forward for lenders where they’re unshackled from these very manual antiquated processes of looking and reviewing and approving their consumers. There’s a much bigger theme at place than just us raising some additional capital, but it will allow us to get our message out to more people for sure. Absolutely.

Who invested?

The newcomer to the board is Rockefeller Asset Management. Rockefeller is best known for owning quite a bit of real estate around the country and around the world. But they have set up a fintech fund. And we’re really lucky that Chris is joining the board. And we’re one of their initial investments out of this new fintech fund. It’s been great to have them around the table. We’re definitely building an enduring business that is going to be here for the long run. And Rockefeller shares that type of vision of building an enduring business. And so it’s great to have them join.

In addition to Rockefeller, all of the investors from our previous rounds — Bain, SignalFire, and Checkr — participated in this round, as well. So it’s really exciting to have all this firepower behind us.

Raising in this environment

I’ve come to really enjoy working with investors and pitching our business. I think it’s very important that we have a business that is great for our clients, for our consumers, and for the people that use our product. But it’s important also to build a business that works for investors, a business that is investable, and one that has returns.

Being able to focus that message and work with investors to understand the metrics of how we have a top-performing business — is something that I’ve taken a lot of pride in. And I’m glad that we’re able to put those metrics on the board for our board and for our investors, as well.

The new category of payroll connectivity

We’re sort of the Pattern for payroll if we can make that joke. There are a lot of businesses that aggregate or connect into datasets. And there’s a set of businesses that connect to bank information, and perhaps there’s a set of businesses that are connecting into payments. We’re a business that connects to payroll processors. And as we were alluding to before, payroll holds a ton of information and a ton of depth on how people are making their money.

For really the very first time, it’s now possible for a lender to access all of that information digitally through a very integrated offering or platform. And so while the technology might be new to be able to access all these payroll systems all through one pattern called Argyle.

The use cases had been around forever — the use case of applying for a loan and needing to verify you have enough money to cover the monthly installments. That use case has been around for a very long time. The problems that everybody can relate to, or the problem set of I want to get an apartment, I need to verify that I have a job in order to get that apartment — everybody can relate to that problem set. or even a mortgage. I’m buying a house, maybe it’s worth $500,000. And I want to get a 30-year fixed. That process requires a ton of paperwork and verifying your employment several times in the process.

We want to make it easier for the person who’s trying to get that mortgage, that loan, that apartment, but also, for the lender, for the business that wants to have a quicker close time. What’s great is to see these outcomes really taking place. We’re working with a set of customers where they’re able to consolidate down close times, sometimes by weeks. This is because we’re adding technology into these process points that we’ve been talking about.

Setting standards

I’m glad that you’re so bold to say that we’re setting the standards — I think so, as well. I think there’s a set of standards around defining what payroll connectivity is. And I think there’s also a set of standards around certain metrics that our lenders want to achieve. A big focus for us is this concept around conversion. What that really means, just to make it really practical, is if you have 100 consumers that want to get a loan, how many of those consumers can Argyle verify income on? The lender is always going to make the choice on who they’re going to approve or reject for a loan. But Argyle wants to provide data for as many of them as possible.

Last year, we hit a conversion high watermark of 55%. That means on average more consumers are having a successful experience with Argyle than not. And this year, we’re trying to take that up another step — we have a goal to have 60% conversion. I think we’re going to beat it given some of our internal metrics. So we’re definitely setting standards around our conversion.

The other thing is around data quality. We’re returning 175 fields for every payroll connection that we make. These are fields around job title and start date, base pay, taxes, commissions, and 401k contributions — there’s a bunch of granularity there. System-wide 95% of the time, all those fields are returned. This is a really high level of data quality that you’re not getting through any other platform.

Setting standards around humans

I’ll add in one other place that I think that we’re setting the standards, and that’s around humans. We’ve taken a very hands-on approach. In fact, a substantial amount of the dollars from the C round are going to go further and double down on this approach. We believe working on-site, in person, with a hands-on consultative approach with our clients is super important. And so we’re really trying to take a much friendlier approach with our lender partners and say, How can we assist you? How can we add technology into your workflow that helps and customize it for your operations? So that’s a big place we’re focusing on, as well.

The complexity behind the Argyle platform

I happen to nerd out on data quality and conversion. I’m quite lucky that the metrics that are so important to our lenders, I happen to love working on, as well. We also have a team, frankly, that I enjoy being caught up and cooped up with on these issues, but they are very nerdy issues. You know, conversion is the real art of looking at the smallest changes on screens. And I find it just fascinating that the transitions, the colors, the buttons, the fonts, and the spacing that help text that’s in each one of these screens affect user behavior.

And it’s not just blanket user behavior: certain payroll processors submit certain user demographics, and all have changes on net conversion. There’s a certain set of analogies that I actually think are quite helpful. Think what you want about Robinhood, but they have a really addictive app. Think what you want about DraftKings, that app works. And there’s a set of best practices about how to get consumers to click the buttons they need to click. We’re very focused on that at Argyle for the use case of payroll connectivity. And we are not nearly done focusing on all the nuances, all the places where we can optimize the consumer funnel.

It’s something that we do on behalf of all of our clients, the net effect on our clients with is they experience better conversion. And we take care of all these nitty gritty, button sizes, font colors, help text, and transitions on behalf of getting that conversion number up. But it’s the art of a thousand things working very well.

It’s the same thing with data quality — each one of these payroll processors has many different sub-versions and nuances inside of it. I happen to know way too much about it. Nobody wants to learn any of that. And that’s completely fine. But job title shows up in a bunch of different ways, depending on how the payroll processor has built their system. We want to take that complexity, solve it for our clients, and just be able to deliver base pay and job title. That’s what we’re focused on every day. Got it?

Use of proceeds and getting to profitability

The way that we’ve set up our go-to-market operations is a verticalized approach where we have a dedicated team for mortgage processing, a dedicated team for lending, background checks, and employment screening, and we want to grow those dedicated teams. We also want to be able to go into additional verticals that are interesting to us and set up dedicated, go-to-market operations there. So there’s a big focus there.

Also, we want to make sure that in order to get conversion up to 60% and 70% and data quality from 95% to 98%, these are investments that we want to make. We’re hopeful that we can start to use some of our revenue as well to power these operations. I think there’s a healthy trade-off between investment dollars and revenue dollars in order to fund this growth.

Working with bigger clients

It’s important to know that the top 50 names in all these verticals do a substantial amount of volume. So we want to be partnering with the largest lenders, mortgage processors, and background check providers in the world, and that means that we need to build tools for them. And last year, we spent a long time on this. It’s why we’ve spent time getting our D1C certificate from Fannie Mae, integrating with Ice, Compass, Encino, and Dark Matter, which is the former Black Knight platform. This is all in an effort to get Argyle where the volume already is, and it also means that we want to be working with these types of institutions to figure out how to customize the product to their use case.

I enjoy being able to have this very hands-on approach and to work with clients. It’s also fun to see that there are a lot of institutions out there that are not tech-first and that we need to build for them. And while we have a ton of technology on the Argyle side, we’re building products for people who are not tech natives. And that’s okay. I think there’s been a change in our goal to be focused on solutions and to be focused on our clients — not to be first focused on the technology. Let humans lead.

Argyle retention data

I can do a real use case. We have a great client in Regional Finance. And one of the things that we’ve learned is that you always get a local champion. And so some local champions are power users of the Argyle platform that really know where all the buttons are and all the tricks. One of the places where we want to invest is getting those local champions to teach other people at their branch, and other people in their office, and to be able to partner with them. We wouldn’t have discovered this without our verticalized approach, without being on-site and really having that relationship, or consultive-based relationship with our clients. So there’s a lot there. It’s good to see that there’s a set of users who know more about our console or know more about the API than I do at this point.

Biggest goals in 2024

We want to focus on the blocking and tackling of providing better outcomes to our clients. Getting conversion to go up. Data completeness to go up. It’s important to me because that’s what our clients are grading us on. I also think that there’s definitely a conversation to be had about the next 12 to 24 months. But we’re building this business to be very enduring and being around for quite some time. I’m sensing that there’s a lot of momentum around transforming the way people verify income for all sorts of use cases. I think that’s very exciting that we have this opportunity to remake what it means to verify people’s money.

And for right now, yes, we’re very focused on mortgage and lending, background checks, and tenant screening. These are important use cases. But I’m very excited about the 20 or 30 other use cases that we haven’t turned on yet but are very much there. think in the years to come, you’re going to see us branch out into other types, businesses, and other form factors in which income data can really play a role. So I’m looking forward to that as well.

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