Extend’s Andrew Jamison: ‘There’s a broad disconnect between what happened in ERP with what’s going on in financial technology’
- Managing B2B products at Amex, Andrew Jamison saw card issuance didn't serve the way the economy was headed.
- He founded Extend, which works with banks' existing technology to issue virtual cards.
Fintechs basically have a major decision to make early on. Do you compete head on with incumbents and try to displace them? Or, do you go the B2B route and empower the bigger players with tech?
Andrew Jamison, co-founder and CEO of Extend, took the second route. He and his firm have built a credit card platform for existing players to instantly distribute credit cards to anyone at any time. He joins us on the podcast to talk about his experience at Amex running B2B payment solutions, including virtual card platforms, and how that informs what he’s building with Extend. We also discuss how Extend differentiates in a quickly growing competitive space and what he’s cooking up in the product pipeline in the near future.
The Amex experience
After getting my MBA at Insead, I joined American Express in 2004 in commercial cards. I spent 12 years with Amex in total. For the last 5 years there, I managed the portfolio of B2B commercial products. We were growing digital products at a CAGR of 45 percent.
One of the four key products was a virtual card technology platform, which we acquired when we bought the GE commercial card portfolio. The whole idea was to use virtual cards as a means of making payments. North of 50 percent of rooms booked with a credit card are now done via a virtual card. That's probably the biggest single use case, as well as some some uses in the automotive space.
I took a risk on an idea based on information I acquired as an ERP consultant and at Amex: the old processes where you issued credit cards frankly didn't marry up to the needs of today with the explosion of freelancers and the gig economy.
We were also seeing companies like Marqeta that sit behind the new Apple Card that were handling digital distribution but were sitting on prepaid rails and not credit rails. No business prepays for anything unless it has to. The way we thought about this was by working with existing banks to tap into a really large, underserved user base without trying to revolutionize the whole world.
Fighting against or working with banks
As little as five years ago, banks were trying to go it alone and out-compete each other. Eventually, they realized they simply couldn't compete at the speed fintechs were growing. So, their strategy had to change to exposing APIs for fintechs to use while banks remained the foundational relationship with customers.
Credit cards are a fairly mature space. For us, we knew we would only be successful if we could deploy these cards within a bank ecosystem without them needing to do their own technology integration with us. Their platforms are 40 years old and weren't designed for innovation.
We will be integrated with three of the top six issuers in North America by the end of this quarter. We're augmenting their capabilities and not disintermediating at all.
We found a way to work with the card networks where we could plug our capabilities in and provide natural extensibility against these 40-year-old platforms like TSYS. We can make them look and feel like they're fresh, new platforms where you can design and innovate to solve for customer problems.
We see ourselves as an 'Intel Inside' -- we want to be a processor without being visible. There are consumer apps, like with Amex and your bank, which you can input your business card. But there isn't really the same functionality a business would use. So, we created a broad gateway -- one connection into many banks -- and provide one connection out over time to an ecosystem of technology players. We built intelligence into our middleware which wasn't readily available from banks or network tools.
Plaid normalizes data. We think about how we normalize digital credit cards in this ecosystem.
The technology ecosystem
After we've been able to integrate all the major financial players in our platform, we can now expose that in one simple, uniform API across issuers and networks. That allows a company like Concur to use our API to let their users distribute virtual credit cards through their existing user experience.
In the future, we see ourselves connecting further into the technology providers in the space. Over time, I also see us going into consumer. The process of sharing access to credit is a bit broken. If you were a parent and want to give credit to a child, you have to go through a whole process and fill out forms. This can extend to the nanny or even parents who live overseas. Instead of using international money transfer solutions to send money to your parents to buy a washing machine, we could spin up a card account number, send it over to them, and let them use it for the products we specify. They would avoid the hassle and fees associated with moving money.