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How Wise captured 25% of Brazil’s cross-border market (and what it reveals about fintech’s future in LATAM)

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While attention often focuses on developed markets, the most exciting fintech innovations are emerging where mobile technology, young digital-native populations, and gaps in traditional banking converge. These regions aren’t just adopting Western models – they’re creating entirely new paradigms that may eventually reshape global finance.

Today I’m joined by Nadia Costanzo, Director of Banking for the Middle East, Africa, and Latin America at Wise. Nadia drives Wise’s expansion across these regions by building banking relationships, securing licenses, and navigating complex regulatory frameworks.

Her background is uniquely valuable – before Wise, she worked with Kiva in Nairobi facilitating microfinance across Africa, contributed to the World Bank’s Universal Financial Access agenda, and worked directly with microfinance institutions in Paraguay.

Today, we’ll explore how fintech evolves differently across emerging markets, examine key challenges, and discuss surprising innovations where traditional banking is limited. We’ll also consider what these developments mean for established financial institutions looking to engage with these dynamic markets.

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Focused expansion in LATAM’s diverse markets

Latin America is often viewed as a unified market, but Nadia breaks this perception. Each country presents unique opportunities and regulatory conditions. Wise currently operates in Brazil, Mexico, Chile, Colombia, and Costa Rica. It prioritizes depth over breadth. “Whenever we choose a market, we want to be able to ensure that we offer our whole product offering to the customers over there,” she shares.

A key driver for Wise’s regional strategy is customer demand for cross-border services. In Brazil, Wise holds approximately 25% of the market share in cross-border transactions. “That’s because we’re offering a more convenient product. It is more transparent and less costly than traditional financial services,” Nadia explains.

Regulation and Collaboration: Navigating the fintech landscape

The regulatory landscape in Latin America is actively evolving, and Wise is growing with it. Countries like Brazil and Mexico are building open regulatory frameworks. These support the growth of fintech partnerships. They also enable new entrants to offer services independently. “You see how they’re modelling their regulatory developments on each other rather than looking only to the Global North,” says Nadia.

Wise recently secured its second payment institution license in Brazil. This granted access to PIX, the country’s instant payment system. Nadia points out that this has dramatically changed consumer expectations. “Brazilians wouldn’t understand why you wouldn’t offer PIX. It’s that embedded in everyday use now.”

Fintech and Banks: From competition to cooperation

Instead of direct competition, Nadia observes increasing collaboration between banks and fintechs. Wise depends on local financial institutions for payment execution in some markets. Those institutions rely on Wise’s international infrastructure in return. “Partnership has always been part of our model,” she says. “We offer something to them, and they offer something to us.”

This approach echoes the banking-as-a-service model. It is particularly useful for SMEs and micro merchants seeking digital tools for cash flow management. Banks are also responding by creating their fintech branches or collaborating with firms like Wise. They are doing this to reach digitally native customers more effectively.

Financial inclusion and digital accessibility

While Wise currently serves mostly banked users, the broader vision involves expanding access. “Hopefully that will change,” Nadia adds. She talks about reaching unbanked populations in LATAM. This goal is becoming more achievable as smartphone access and digital literacy grow.

The trend toward small business digitization is also contributing to greater financial inclusion. “People want extreme speed—instant payments, seamless transfers. That’s driving adoption,” she says. Wise’s presence is helping local economies, especially SMEs. It helps them to gain access to transparent cross-border tools. It bypasses traditionally complex and costly banking methods.

Building local teams, strengthening local economies

Wise’s model is deeply rooted in local presence. In Brazil alone, the company has over 200 employees. “There’s no one who knows the ins and outs of how to operate in these places like local people,” Nadia emphasizes. Local hiring ensures that Wise can navigate regulatory uncertainty. It allows them to better serve communities in line with cultural expectations.

She also highlights a growing fintech ecosystem in LATAM. It is supported by fintech associations. These allow players to share challenges and regulatory concerns collectively. This collaboration is essential to ensuring long-term growth. It ensures safety and cybersecurity within the region’s digital banking systems.

There’s more work to be done (and opportunities to grab)

LATAM’s fintech ecosystem is becoming more connected and user-focused. In response, Wise is expanding its services. They’re building strong infrastructure for cross-border payments. They are focusing on digital banking as well as support for small businesses. Wise has obtained new licenses and is forming stronger partnerships. This helps them expand their services across Latin America. They can now offer both global reach and local understanding to their customers.

As Nadia notes, the work is far from over. “I’m excited to bring our global products to customers in the region,” she says. And with 2 million cards issued in Brazil alone, the appetite for better financial solutions is clear—and still growing.

The Big Ideas

  1. Each LATAM market is a unique opportunity. “We tend to go deep in the markets that we operate in.” Wise targets specific countries rather than treating LATAM as a homogenous region.
  2. Regulation is opening doors. “You see how they’re modelling their regulatory developments on each other.” Governments are enabling fintechs through open payment systems and licensing.
  3. Fintechs and banks need each other. “We need partners, but increasingly, they also need Wise.” Mutual dependencies are shaping a new model of embedded finance.
  4. Financial inclusion starts with accessibility. “You need to have access to the banking system and a smartphone.” Current users are mostly banked, but Wise is positioning itself for broader reach.
  5. Local teams build better products. “No one knows the ins and outs like local people.” Hiring regional talent helps navigate unwritten rules and strengthens market fit.

Read the transcript

Wise’s Latin America strategy and market share

Latin America for us is one of the most promising markets that we see, right? We have, we have a few countries specifically where we’re already operating in quite actively. Those are Brazil, Mexico, and then we have smaller operations to Chile, Colombia, Costa Rica, Uruguay. So we’ve been, we’ve been in the region for over a decade now, I would say, or around a decade. And the evolution that we’ve seen in that market is quite remarkable, mostly because of how those markets themselves have evolved, we’ve obviously seen a huge uptake of our product in the market. So in a place like Brazil, we have approximately 25% of the market share on all cross border transactions, which is amazing. But what we’ve also seen kind of throughout that journey is the resurgence of lots of local fintechs who have been really changing the game for banks and incumbent financial institutions, and with that, also regulatory changes, which has allowed companies like wise to really, you know, change things and enter those markets and offer, like, more importantly, really impactful services to customers in those markets.

Partnership strategy vs competition

So in a place like Brazil, I would say that we were kind of one of the first ones on the ground offering a product that’s really cross border in nature. We that has changed a lot since we joined, since we went there, right? So that was probably around 2016 that’s changed a lot. What we see now is actually huge potential for partnerships, right? We see local fintechs who are hugely focused on the domestic offering, but they also want to offer international products to a population who is also changing, right? You see incomes increasing in these markets, people who are traveling a lot more, and so they’re looking to also go cross border as well. So while they’re focused maybe on the domestic products that they can offer, wise comes in to offer this more international product. So what happens is that we have these partnerships now. Partnerships has always been a part of our model. So and it exists, you know, still today, in Mexico and Brazil and Chile, all these markets that I’m referring to, we need partners, right? We need to partner with the financial institutions to execute the payments, especially where we don’t have local connections to payment systems, which is something we can hopefully talk about later, but, but that’s somewhere where we need the banks. But more and more we see the banks or new fintechs needing wise right? And so it’s a really cool two way kind of partnership, where we offer something to they offer something to us. And then on our side, we have what we call the wise platform product, where we essentially offer our rails internationally to allow for residents and customers in these countries to be able to, you know, have multi currency accounts offshore, right? Have be able to do cross border payments at a much cheaper cost and much more transparent and and that’s all through partnerships. And we’re really excited to see the likes of new bank Itau in Brazil, right? These are some of the biggest financial institutions in the region, partnering with us to use our payment rails. So it’s pretty cool.

Market entry strategy and regional differences

Absolutely, we. We tend to look at the markets by opportunity size, obviously. So what we would look at is, okay, where, what does this market offer, in terms of, Okay, is there an actual need and demand for this product? We’re very customer focused as a business, right? So we’re only gonna go and offer products that are needed by customers in a particular place. So where we see that there’s huge cross border flows, we know that there’s definitely a need for wise, right? Because the benefits that wise is offering by coming is offering a much more convenient product, right? If you’re a FinTech, and we can talk more about what that actually means in practice, but you’re offering a product that is much easier to use than traditional financial services in these markets, which are very paper heavy, right? Paperwork, bureaucracy, et cetera, very costly, lots of hidden fees in the transactions and and just, just generally difficult to use. So again, so we’re looking at markets where there’s a demand. Now we would also look at markets and in terms of, well, so before we look at the demand, then we see, okay, once we launched the market there, how much is actually used, right? So is that demand actually equal to the reality, and then we would continue to invest further. If we see that there’s huge uptake, we would also pair that with kind of our understanding of the local market, right? So in places where there’s a relatively open regulatory framework, for example, that’s that’s a country that we would probably want to go after as well, because we know that there’s the demand paired with the openness from the regulator, so that makes it relatively ripe for opportunity, right where we can go in there and operate. So I would say those are two of the main components that we would look into. We tend to go really deep in the markets that we operate in. That’s why you heard me talk about a few countries, and we’re not in every single country in Latin America directly. But that’s because whenever we choose a market, we really want to be able to ensure that we offer our whole product offering to the customers over there. And we will try our best to find a way to do that, usually it will have regulatory implications, right? So we need to understand, what are the licenses available, what are the what are the regulations that would allow us to offer all of the different products. And it doesn’t mean we would not pursue new opportunities just because we haven’t launched everything in one market, but we really tend to be pretty focused on delivering as much as possible in that market.

Regulatory evolution and cross-regional learning

So the region has, I mean, generally speaking, and you look at a lot of these markets, and they’re also looking at each other’s own developments, right to learning each other, which is really cool, right? Because you you see how they’re modeling their regulatory developments on each other more so than always looking to, you know, the global north, right? And so that’s pretty cool as a development, and they’re actually ahead of the curve in many ways, right? So I think with our two biggest markets, Mexico and Brazil, but you see this in also other markets, like Colombia has a FinTech license available, and Chile is developing a FinTech license. And then, yeah, of course, Brazil and Mexico already have these FinTech licenses. And these were both licenses that were launched in the last six, seven years, whatever it is, right, paired with the development of a local instant payment system that is open and accessible to these fintechs. So just by opening it up, you can just see the appetite that these regulators have for bringing in fintechs and fostering kind of the development of local fintechs, not just international ones, but also learning from them and and you you essentially see them wanting to understand the experiences that fintechs are having, openness in consultations on regulatory developments and, yeah, just a general openness to having a thriving FinTech environment.

Brazil’s payment system revolution: the PIX story

More specifically. I mean, I think one of the coolest things on my journey at wise, for example, has been watching how Brazil has developed, right? So, you know, 678, years ago in Brazil, you essentially had two main payment methods, and one was very much like, like, kind of like checks that we have in the US, right? Which, to me, is mind boggling that we’re still using checks. But we had that, and then we had kind of a, you know, form of, you know, just like a local payment transfers, right? So, so was I going to say? So, yeah. So over the last few years, they developed this system called pix, right? And that’s an instant payment system. And what’s incredible about that, it was launched in around 2019 and now, like, I think more than 70% of all domestic payments are operated through pix like Brazilians. They they wouldn’t understand why you wouldn’t offer pix. If you’re a financial institution locally, they will be very confused if you can’t offer pix, right and and just just the development of that you know, the usage of QR codes as well, the fact that you can self determine your account identifier on your pix on your account, right? So I can get paid. It’s almost like a Venmo, right? So you’re using a banking system that becomes almost like Venmo, but that’s in the banking system. And you can, like, example, in Brazil, you can, you can, um, you can choose up to, I think it’s up to five different pix keys, is what they call them. I think it’s five. So you can choose Email address, you can choose your phone number to be identified by. You can choose random, random keys, etc. So you can use all of this and then just get paid instantly, right? And and this is through the like a banking system, right? It’s not through some separate ecosystem, like we have with Venmo or whatever, right? So that’s just something that’s been developing over the last less than decade, right? And that’s happening in Mexico too. You see the development of spei, right? Most payments are instant through spei, which is a local instant payment system, and it’s happening more and more. It’s almost like a domino effect that we’re seeing across the region and, and, yeah, I’m super excited to see what’s going to happen next, right? Because you’re also seeing these countries develop really strong open banking, open finance frameworks and, and I just think that you’re going to see these markets becoming ahead of the curve very soon.

Incumbent banks vs fintech: collaboration over competition

I would say it’s pretty similar. And look maybe in 10 years, it’ll look very different, but in what we see now is kind of what I was saying earlier, right? We still rely FinTech, still rely on banks for the most part. Right now, of course, when there’s a more developed system where you can have access to the local payment system, you know that, which is that’s very different from the US. Right in the US, you actually need to be a bank to directly connect to the payment system, whereas in in some of these markets, Mexico, Brazil, etc, you can actually, as a FinTech connect directly, so you can essentially cut out the banks eventually. I don’t think we’re quite there yet where, you know, all fintechs can completely cut them out. You know, there’s still a component where we still need them. I also think banks are learning with the fintechs, right? And so, you know, again, they will start seeing partnerships being more valuable, similar to the partnership that we have with with those partners in Brazil, where they’re using our international rails, but even even for other purposes, right, there will be products that local fintechs will be offering that banks can’t and and banks are changing right? There’s they’re understanding more and more that fintechs aren’t just like some pesky little like startups on the side, no, they’re actually a real threat if you don’t keep up with the times. So they’re trying to develop stronger systems to kind of keep up with this, stronger APIs that you know, maybe fintechs can connect with, or that other type of clients can connect with. But they’re also developing, for example, their own fintechs, right? So you see this in Colombia is happening quite a bit, where some of the major banks ban Colombia David, they each have their own FinTech arm, essentially, where it’s completely separate from how the bank is actually operating, right? So it’s two separate entities, but they belong to the same bank, right? And so you’re seeing that banks are understanding, okay, actually, clients want a more fun way to interact with financial services, but still secure and trustworthy, right? And I think that’s where the banks, in many ways, still have an upper hand, right? Is that they’re very established institutions. Ins, they bring that trust. They’ve been there for, you know, in some cases, hundreds of years, and so customers continue to trust them. And maybe, you know, you might not see all individuals wanting to, let’s say, move all of their savings over to a FinTech, because they don’t quite trust them enough, right? So, so it might, you know, look different at some point in the future, but I would say that banks are starting to change, and this is happening at a faster and faster pace, and they’re starting to think more creatively as well, because they understand that it’s an opportunity for them.

Banking as a service and embedded finance

Yeah, it’s definitely happening more and more. There are, in some cases kind of regulations that allow it, and in some cases regulations that don’t allow it. So So I think it’s going to be something that’s going to increase, and we’ll see more of this kind of over time and again. I think it’s very similar to our wise platform product, where we’re just using each other for different types of services. And, yeah, you you’re seeing this happening a lot in these markets.

Building a fintech startup ecosystem

So I think it’s, it’s fine, right? Like, I think you, what you’re seeing is, for example, FinTech associations that are present in most of these markets, and that are developing more and more and that are gaining a lot more membership from the FinTech community. And those those associations, are essentially creating a community of fintechs who can learn from each other, you know, I think the worst thing that any FinTech could do is work completely in isolation, you know. So we do have to collaborate with these fintechs to have some form of influence on how the market is developing. So if a regulation is being issued, that makes zero sense for how a FinTech operates. There’s more power in unifying and doing it together, right? So approaching regulators together, obviously, you know, we each have our priorities and where, you know, we’re all maybe competitors to a certain extent. So, so, you know, there’s limitations, but I do think there’s, there’s a lot of value in working together on that. And then beyond that, there’s, there’s a lot of talent in these markets, right? So you it’s actually like, you know, when you go out there and you start hiring, you see not just the talent, but just this hunger for working on these kind of different, more innovative products, and people are super knowledgeable, and that ranges from anything from lawyers to engineers, right? And so I think the importance there is really building a strong local team and building a team who really understands the market. And this is more specifically speaking, from an outside perspective. You know, I think when you’re building something inside, obviously that’s, that’s kind of, yeah, it’s kind of obvious, right? Like, yeah, we’re gonna hire people who understand the market. But I think if you’re an international FinTech who’s trying to enter these markets, I mean, there’s no one who knows the ins and outs of how to operate in these places, like local people also, because there’s a lot of unwritten rules. And I think it’s maybe like that everywhere, but, but you see this a lot of them domestic in your domestic market, yeah, yeah, yeah, exactly. So there’s, like, a very clear regulatory framework, but then there’s also the murky nuances and and that is natural when you have a regulatory framework that’s developing is that there’s always going to be lack of clarity over something within that regulation. And so hiring a really strong local team, I think, is kind of what helps you really break kind of the barriers and then really be able to figure it out. And I’m proud to say that we’ve built a really, really strong local presence, at least in Brazil, we have, we have over 200 people in that office right now, and it’s consistently growing. We’re going to be hiring lots in the coming years. So so yeah, and it’s just really fun to see, wow, like all these people who are so passionate about improving the the financial services industry in their market.

Regulatory risk and adaptation

There’s definitely risk, but I think it’s, you know, it’s, it’s risk that also the regulators are aware of if I’m understanding your your your question correctly, because things can change at any moment, right? Usually there’s enough notice in advance. And once you are a licensed entity, it’s a lot easier to kind of get in the know of, or get get, you know the preliminary announcements, if we want to call them that of you know, how things might be evolving, how things might change. So I would say the regulators tend to be quite open in that now maybe the some of the risk could be more associated to, okay, you’re, you’re enabling lots of new players to come in. You know, what are other kind of risks that might arise? You know, like cyber security risks, privacy risks, et cetera. And I think globally, we’re seeing a lot more focus on that in the last few years, developments of privacy laws, et cetera. And that’s something that’s ever changing. And yeah, just something that as institutions, you need to keep, keep in mind, OK, how are you going to develop a system that’s going to be able to withstand cybersecurity threats, or that’s going to protect the privacy of your individuals. So those risks are going to continue coming up. But I would say that the the central banks and regulators have actually done a really good job about, you know, putting really stringent security protocols in place for their own payment system, right? So to ensure that whoever’s coming onto the system is very robust, and so, of course, that makes it very difficult to do, you know, the integrations that are necessary and to comply. But I think it’s a good thing, right? I think it protects consumers, which is ultimately what we want.

Customer demographics: banked vs unbanked

For us, I would say we’re targeting mostly a banked community. Hopefully that’ll change. I’ll explain why in a second. But typically, you know, to use our services, you need to have access to the banking system and and while I do think that that’s becoming easier in the region. Obviously, there’s still barriers to financial inclusion, but, but you still, you know right now, you still need to be part of the banking ecosystem. You need to have a smartphone, right, or a computer, right, because you need to be able to onboard and that is all done remotely, right? And so you need to be able to do the checks remotely. And so in that sense, you need to be kind of tech savvy to a certain extent. Like, you know, we have customers of all ages, of all ranges, right, all types and and, you know, we really focus on developing our product and doing user research to make sure that we’re developing such that everyone there’s, there’s high accessibility of it. But you know, again, I would say that most of our consumers are people who already have access to financial services. And the reason why I say like, hopefully that will change, is because, you know, I think with the kind of increase in fintechs in these markets, you’re also seeing the ability to to onboard or for customers to understand how to operate within a like more traditional or more formal, let’s say financial system, rather than a cash based system, is going to be increasing. So, you know, I think globally, there’s a trend, especially post COVID Probably. But even just in general, where cash is becoming less of King. And you know, as I was saying earlier, you’re seeing more people wanting to have that extreme speed right like instant payments right away. They want to get access to their money. They want to be able to make a payment and not think about it again. And that’s happening more and more. You’re seeing cash reducing, and typically the people who are using cash are people who are kind of the unbanked, so So yeah, hopefully that will change in the future, as, you know, as kind of people shift away from the cash based mindset. But you know, it’s still, it’s still pretty present.

Emerging opportunities: super apps and credit innovation

Yeah, it’s an interesting one. I think what you’re seeing a lot more, but this is super hard to develop, is this focus on, like, super apps. So you see that a lot in Asia, right? And I think more and more you’re seeing specific ones pop up in each domestic market, right? So an app that will allow you to offer all types of services all in one place, I would say there’s that the I would say the region tends to be very credit oriented, and that’s been kind of the success of Nubank, right? Like, you know, they’ve sold credit, and they basically have democratized credit, credit for all of Brazilians, right? That’s why you see the vast majority of Brazilians actually have an account with Nubank, and why you’re seeing success in other markets as well. It’s very impressive, right? So you Yeah, you’ll definitely see credit being a space where, you know, there’s, there’s probably a lot of innovation that can continue to take place, and that, you know there’s, there’s clearly appetite and need for that, for local consumers.

2025 goals and product expansion

I’m really excited, you know. So we got a license in Brazil last year, our second license in Brazil last year, to the payments institution license. And so for me now, I’m really excited that now we’ve done most of the work to, you know, be fully compliant and to access the local payment system. It’s like, okay, what other doors did this? Does this open for us over there? But more generally speaking, I’m just excited for us to really bring our global products to to customers in the region, right? You know, I mean, like, we’ve seen such big appetite in in a place like Brazil for our account product in in in Brazil. So globally, we have around 11 million cards issued, and I think 2 million are in Brazil, right? And we, we launched cards in Brazil, like, four years ago or something. So, so you just see, like, wow, there’s such appetite for this. And I’m really excited to bring that to the rest of the region, you know, probably starting with Mexico as one of the bigger markets. But you know, how can we bring that, then to to the other markets? So I know that there’s the demand and and more broadly, right? You know, we have, we have an assets product as well. So that’s basically where we’re allowing customers to to put money aside and in a money market fund, right, and make a bit of a return. How do we allow that for for local customers, right? Because that’s a huge, huge opportunity as well. So it’s really like, going back to what I was saying earlier, is, how do we bring our entire product offering and really build something that’s very localized and very strong for the customer base in the region? I think that’s just, you know, something that keeps me excited every day.

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“Embedded investing isn’t a feature — it’s a platform”: DriveWealth’s Harry Temkin on the future of investing

DriveWealth harry temkin

The financial services industry is undergoing deep technological change. API-first architectures are creating new possibilities for integration. Digital platforms are democratizing access to investing. Artificial intelligence is personalizing wealth management. Digital-first brokerages are redefining what’s possible. Global investing barriers are falling. Traditional firms are navigating complex digital transformations. And infrastructure companies are scaling to meet growing demands.

To help us understand these critical trends, we’re joined by Harry Temkin, Chief Digital Officer at DriveWealth. DriveWealth is at the forefront of embedded investing technology, powering fractional trading and digital investment experiences for partners across the globe. As CDO, Harry leads the company’s technology strategy and digital innovation initiatives, bringing decades of experience in financial technology.

Temkin shares, “Our mission is to democratize investing through embedded finance. We’re powering digital wallets around the world. We’re making it seamless for users to invest in U.S. equities, even if they’re in countries where that wasn’t possible before.”

What makes DriveWealth stand out is its technology stack. It enables global retail investing at scale, powering apps from Brazil to the Philippines. “We’re not just a brokerage. We’re a technology firm that embeds investment capability into ecosystems.” Temkin notes.

He also discusses how real-time trading and fractional investing are changing expectations. “People want to make decisions quickly, and our systems make that possible in real time, not hours later.”

As digital platforms evolve, DriveWealth is preparing to integrate emerging technologies. Such as merging generative AI to further enhance user engagement. “We’re looking at how AI can personalize investment journeys, not just provide chat responses,” Temkin says.

Listen to the full episode

Subscribe: Apple Podcasts I SoundCloud I Spotify

Watch the episode

Enabling cross-border investing with embedded technology

At the heart of DriveWealth’s strategy is cross-border investing, allowing users in Latin America, Asia, and beyond to access U.S. equities. “We’re operating in over 150 countries today,” Temkin shares. “And it’s all powered through APIs that integrate with digital wallets and fintech apps.”

The conversation dives into how DriveWealth partners with digital wallets, neobanks, and super apps to bring investment functionality directly to end-users. “What we’re doing is embedding the brokerage experience directly into those platforms,” Temkin explains.

He also highlights the regulatory complexities of operating globally. “Every market has its own KYC/AML requirements. Our job is to streamline that, to abstract complexity away from our partners.”

The power of real-rime trading

Real-time trading isn’t just a feature — it’s foundational to user trust and experience, says Temkin. “When someone executes a trade, they want confirmation and clarity immediately. That’s what we deliver.”

DriveWealth’s platform enables fractional, real-time execution of trades. This makes investment accessible even for users without large capital. “We don’t just support buying a share of Apple; we let you buy $5 worth of Apple, instantly,” Temkin adds.

This has opened new opportunities for fintechs offering stock back rewards, giving users fractional shares as loyalty incentives. “It’s one of the fastest-growing embedded investment use cases,” he notes.

From APIs to personalization: What’s next in Embedded Finance

Temkin shares that DriveWealth’s roadmap includes more than just APIs and execution. “We’re thinking about next-gen engagement: how do we use generative AI to guide users based on their behavior, preferences, and goals?”

He adds that personalization will be critical in making digital investment experiences feel natural, not forced. “We’re evolving from passive tools to active partners in a user’s financial life.”

Generative AI might soon play a role in surfacing insights and next steps for users. It may even create an intelligent interface for investing. “This could be a game-changer for less experienced investors,” Temkin suggests.

The Big Ideas

  1. Embedded investment is an infrastructure play, not just a feature. “We’re not adding investing to apps. We’re powering platforms that center investment in everyday experiences.”
  1. DriveWealth is making global retail investment seamless. “From Brazil to Indonesia, users are accessing U.S. markets without needing to know what happens behind the curtain.”
  1. Stock back rewards are building financial engagement. “You spend money and get a piece of the companies you support. People love that. It’s simple, but powerful.”
  1. Real-time trading is no longer optional. “It builds trust. People need to see confirmation and execution instantly. That’s become the norm.”
  1. Generative AI could become a personalized investment guide. “AI won’t replace the interface, but it could enhance understanding and help users take smarter actions.”

Read the transcript (for TS Pro subscribers)

DriveWealth’s API-first origins

I think it’s kind of cool to talk a little bit about our roots. Bob Courtright founded the company back in 2012. He had built a phenomenal FX business, a global effects business, and realized that there was this huge gap – that there was demand by global retail investors to have access to US Securities trading. Ultimately, back then, the real problem was there were huge technological barriers, and there were huge financial barriers. If you remember back then, we had stocks like Priceline and Google that were trading at hundreds of dollars, if not thousands of dollars. And to a new, nascent retail investor, it just wasn’t accessible financially for them.

And then, of course, the technology. When you think about legacy brokerage technology, you’re talking about massive order management systems, fixed connectivity, beginning of day files. And you had clients, you had partners who were building these new mobile experiences, and they didn’t have a clue what an order management system was, much less fixed connectivity. And so really we had to rethink the way that we would deliver brokerage at scale globally.

Building cloud-based brokerage as a service

Bob’s vision was to really build the first cloud-based API-delivered brokerage as a service platform. What does that mean? It allows our partners, effectively, to natively embed investing directly into their mobile experience or their web experience with literally no traditional brokerage infrastructure. All of these new emerging FinTech firms, digital wallets in particular, they want an API-based experience. That’s really their expectation. And if you walked in and said, you need fix, you need order management, you’re gonna have to do statements, confirms, handle corporate actions – that really wasn’t going to fly.

So ultimately, we set out to build a new brokerage type of infrastructure that literally would handle all the components of brokerage – onboarding, money movement, order management, portfolio management and all the post-trade services, corporate actions and the like, and to really serve that up in an API. So that solved the technical barrier to entry, then we had to really solve the financial barrier to entry, and the way that we did that was we truly were the pioneers of fractional investing. We enabled securities to be fractionalized, ultimately, to just send us a notional order. Back then, we started with a minimum amount of $1. Today, we actually go to a penny, which creates all kinds of other really cool products, like roundups and other things that many of our clients take advantage of. But when you combine those two things – the fractional trading capability and the technological advancement of delivering everything to an API – all of a sudden it unlocked all of these new markets and these new types of partners to be able to bring investing to their client base.

Early vision for global expansion

Bob had built this global retail base of currency investors, or currency traders. I think ultimately, he began to see, particularly from foreign investors, this demand. They wanted access to these huge brands. Certainly, these technology stocks were incredibly popular, they were very expensive, but there were all those barriers. When we started the company, some of our earliest partners, like our earliest partner in the United States was MoneyLion. Today, you can see the size and how big MoneyLion has grown their business, and they’ve expanded their product and capabilities with us over those years.

But certainly, we were very focused outside the United States. We saw new entrants in the Australian market. We have Stake, which is a digital broker dealer, going way back to the early days. Then ultimately, we were focused heavily on Asia. You had all of these traders who wanted access to the US market. And it was very challenging to give them that access without this sort of change in technology to make it available through a mobile application. From our very early days, we were very much focused outside the United States. That’s why I say the demand by a global retail investor and reaching all of these new entrants – the US market was pretty saturated.

Innovation with digital wallets

It didn’t mean that there weren’t also new players coming into the market. Certainly, one of our biggest clients, and one where we had built some incredibly cool, innovative technology, is Cash App. Many of your listeners may not realize that we power all of the equity investing in Cash App, as we do in Revolut Securities. These are some of the largest digital wallets in the world.

What was super cool about what Cash App wanted to do, and other wallets, and we made some really significant innovation in money movement – they wanted to tie the brokerage account so much more closely to the wallet. In a sense, they wanted the brokerage account just to be a sleeve of the wallet. When you think about traditional brokerage, what do you need to do? I have my bank account, and then I have my brokerage account. Typically, they were at two different parties. So you have to go through the onboarding process of brokerage – back then that actually potentially took a day, upload a driver’s license, some paper form, potentially. Our innovation was to make it totally digital, onboard just about instantaneously, and then to be able to actually trade instantaneously as well. Those kinds of things had never been done before – to go directly from nothing to actually owning a stock within seconds.

Eliminating friction points

The idea was, we want to actually have the digital wallet be the one account of record where all the money stays. I don’t want to have to have the user think about wiring money or transferring money over to my brokerage account, and then I have a separate buying power in the brokerage account. Now I have a wallet over here on the left, and I have another application for brokerage on the right, and I have to think about moving money. All of those things were barriers. They were friction points, particularly for a new investor.

So imagine a world in which you’ve got a wallet user, and they’re using that wallet to do peer-to-peer payments, send money to a friend, pay for dinner with a friend. They’re using that wallet to go into a coffee shop and tap the phone or use the debit card. Imagine a world in which that experience would be exactly the same as buying Starbucks stock. So I went into Starbucks, I tapped the phone, it took $6 out of my wallet, and then immediately I said, “Oh, go buy $6 of Starbucks stock,” the money just came out of the wallet. There was no wait, I have to transfer money first. How much buying power do I have? It was incredibly transformational. All of a sudden, all of these friction points we were able to eliminate with our technology and to create an experience that had never been done before. For us at DriveWealth, that’s always what it’s been about when we think about digital innovation and brokerage – how do we take traditional, analog brokerage and do something different, deliver it through an API, build something that hasn’t been done to enable this really cool, unique experience that our partners want to bring to the marketplace.

AI’s impact on financial services

I think it’s a really interesting question. For us, remember, we’re really like the Intel model – we’re the Intel platform inside. We create or enable the investing experience with our partners, and so now a lot of our partners certainly are engaging AI, whether that’s to, particularly in a managed account structure, build more efficient portfolios, more accurate portfolios for a client based on their profile or how they onboard, and have that be more dynamic in terms of potentially rebalancing and those things.

For us on the backside, certainly AI will help tremendously around risk management with respect to anti-money laundering, our monitoring of transactions through our platform, our customer service portal in terms of how our partners engage with us. We can create much more efficient experiences with AI for our partners in terms of the way they work with us. So there’s both the back end and there’s the front end. A lot of our partners are beginning to think about how they utilize AI to bring a better investing experience to their customers. And then, on our side, we are thinking about how we use AI to be more efficient in our processes.

Today, we support over 20 million users, so there are a lot of really cool tools that we use today to monitor transactions, monitor money movement, continuously monitor users on the platform for sanctions or other things. And I think these emerging technologies significantly help in the process of monitoring and managing all of those things.

Redefining digital brokerage

Let’s break it up into a couple of different archetypes. One is, obviously, global digital wallets – it’s one of our sweet spots. We power Cash App, we power Revolut, we power Toss Securities in South Korea. We pretty much are powering some of the largest digital wallets around the world.

We also obviously cater to traditional broker dealers and asset managers who are making the move to digital, meaning they’re investing in their infrastructure. They want to build a new digital experience for not just a nascent retail investor, but even their high net worth investors. Give them a whole new experience, give them better access to their advisor and what they can do within the application.

We’ve always kind of been in the space of servicing digital robo advisors and some of the tools that we provide them. And then, interestingly enough, what we’re seeing now is you’ve got some of the big retail platforms coming into the space. When you look globally at some of the biggest retail platforms and their mobile experiences, they’re going well beyond just a shopping experience. They’re offering buy now, pay later. They’re offering insurance products. They’re offering banking products. We had that concept just a couple years back of the Super App, and a lot of these companies are doing just that. They have a huge user base that they want to continue to engage and to retain, and in order to do that, they need to continue to provide more services to that customer, and to tie these capabilities all together into the other experiences that they already provide.

The power of roundups and behavioral finance

With digital wallets, to me, it’s one of the coolest experiences that we’ve been able to create – this ability to take a brokerage account and literally put it inside of a wallet as just a sleeve. I don’t need to think about movement of money anymore. It’s just another element of the wallet and that experience. So buying a cup of coffee or buying six bucks of Starbucks becomes exactly the same thing.

But even more importantly, you can tie other really cool, innovative features. One of the biggest things that we’ve seen to draw users in and to engage a user is the Roundup. Every time you swipe the card, the remainder up to the nearest dollar gets immediately invested in a stock of choice. Imagine as that continues to be enhanced. Imagine a world in which we can actually recognize what you bought with your card. So, oh, I went into McDonald’s and I bought a hamburger. We can round that up into McDonald’s stock. Oh, I walked into a Starbucks and I bought a cup of coffee, I rounded up the remainder into Starbucks stock. So imagine being able to code against the transaction code, understanding where you purchase something. And if it’s a public company, be able to do that. There are companies today who actually have that software that does that.

I always have felt that at some point, credit card companies, instead of cash back, would do stock back rewards. I think there’s going to be an evolution here of how you can continually tie investing against spending and the like. When we kind of pitch clients about the beauty of roundups, I talk about the balance between spending and investing. The most important thing for a young investor is beginning the investing journey, the savings journey.

The Roundup, to me is super cool, because if I go into a store and I buy whatever, it doesn’t matter, I spend $10.40, the other 60 cents, which rounds me up to $11 – did I notice that? No, what’s the difference between $10.40 and $11? But all of a sudden, I put 60 cents away. Now a lot of listeners here might say, “Well, geez, 60 cents. What’s that going to do?” In my account alone, I’ve done on my Cash App account, I’ve already done well over 1,000 roundups. I’ve been putting the money into Nvidia and even though we’ve had some really big swings in the market, I’ve amassed $500 in Nvidia return and roundups that I never felt – I didn’t even realize, it had no impact on my digital wallet. I didn’t see all of a sudden the money disappear. But I’ve already amassed $500 in investing. That’s the power of a roundup, particularly for a young investor – it gets their journey started with no real financial impact to them.

What we’ve seen is a huge percent of users that use roundups on any of the platforms end up actually going on to becoming a self-directed investor. They then go do their own trading in the account. So it’s an incredible engagement tool or retention tool. And I think you’re going to continue to see those types of tools evolve, whether that’s stock back reward or the like. And it’s all made possible because of the technology of having ease of integration and a fractionalization engine that allows you to trade any stock for as little as a penny.

Passive and active integration

It sounds almost like you’re saying once you’ve gotten over that technological hurdle of not having a separate bucket for your brokerage account, and it’s integrated into a wallet experience, and you’re tying together brokerage experiences into your core experiences, then brokerage is something you don’t go to and it’s something that kind of happens in the background. There’s a passive role of brokerage.

It’s both – it’s passive and active. So every time that I’m doing something in the app, if I buy something, there’s this passive investing that’s happening continuously, but then it’s right there. The experience of not having to think about how much buying power is over there – think about a young investor, and you ask them to segment their money. They’re scared to death to do this, because they feel like they need all their money in their checking account right now, but in that wallet, the fact that they don’t have to segment anything. And every time they do something, they’re getting a little bit of investing, and then they realize, oh, I can spend $5 on something, $10 on something, and six months later, they’ve amassed so much more money.

Global integration examples

With respect to brokers that are making the move to digital, one of the cool things that the technology allows those partners is they’re able to build a next generation experience for their customer, which incorporates both self-directed trading as well as discretionary or managed accounts, but more importantly, it allows them to tie together banking in a way that wasn’t possible before.

One of the cool things about our – we have a very large partner in Brazil, BTG Pactual. And one of the cool things that they were able to do with our technology was build this sort of seamless integration between having a Brazilian bank account, a US bank account, and the US brokerage account, and the ability to very easily move money from Brazil to the brokerage account, or from the US account to the brokerage account, or vice versa. And doing that, by the way, in an instantaneous way.

In that sense, the brokerage account is sort of traditional. There’s buying power. You’re moving money. And there’s reasons why we have both actually, and when there’s foreign exchange involved in other things, you potentially want to put money into a US brokerage account, have US dollars. These are more sophisticated users who understand buying power and what they’re doing. But the experience of literally being able to move money in that mobile experience instantly from either Brazilian Reais into dollars, or from a US domiciled account, and to have that triangle connected, and to be able to offer more than just equities, but offshore mutual funds and fixed income – access to US Treasuries and access to US high corporate bonds, that’s what they’re able to do now.

If you think about a traditional brokerage, client has to figure out – well, not figure out, but they know what to do. But still, they have to wire money. They have to convert money. They have to go to the bank. Sometimes it’s even a manual process, it’s an in-person process, and then pick up a phone and place an order. That’s still a world in which it’s very analog. And so these companies are making investments in their technology to move to this really incredible digital experience. And again, that’s because of what we’ve built with our technology stack.

Scaling challenges and cloud-first advantage

I’ll tell you, I think the beauty of DriveWealth is we started from scratch. We really didn’t have legacy infrastructure. We literally started the platform in AWS, in the cloud. And I have to tell you, back then, it took us about two years to get our full carrying licenses. So the company started in ’12, and we really got the licenses in ’14 and began the build out of the tech stack. And really had gone to market and started having our first clients in ’14 and ’15.

I remember those days. And actually remember sitting on a panel, I think, at Thomson Reuters, with traditional brokers. And here I was at DriveWealth, and I literally remember saying, “We literally could run the entire broker dealer from a MacBook.” Think about how cool that was. It was all dials and gauges in Amazon, and we literally could, in an instant, scale boxes up, add new boxes. We didn’t have this issue of, we have bare metal in a cage somewhere that we had to manage and deal with scalability. And so we really had this advantage that as we scaled and Amazon really grew as well.

At the time, I think they were built to support Netflix, it wasn’t really built to support brokerage. And so there were some things that we did and took advantage of some of their new technologies over time to support our scale. But really the beauty of living in the cloud from day one was exactly that – on demand. We could add more boxes. We could add capacity to handle the number of users, and we could burst boxes if we saw heavy transaction rates. Remember, back then, we were still on T+3, we hadn’t even gone to T+2 yet, much less T+1. So we had some – I’m not going to say we didn’t have our issues over the course of time, because again, they were growing pains with Amazon. They weren’t really in the business of supporting brokerage at the beginning, but it worked for us. It allowed us to take advantage of some really cool tech and to be able to scale the business as we needed.

Current scale and performance

Today, just to give you some stats, we support about 90 partners pretty much all over the world. The combined number of users across those platforms is well over 20 million users. And we support, quite frankly, not just new sort of digital FinTech, but we also support brokers with traditional FIX. And the way we’ve enhanced that is we’ve built out infrastructure at NY4, so we’re co-located with everybody else, very high speed, capacity and efficiency. And we’re able to accept notional orders on those FIX lines, and we can go 24 by 5.

We take certain aspects of our tech platform and make them available, sort of in still old school ways for those clients that want to come to us via FIX for more speed and access to the market. I would say again, also that with Amazon, we’ve evolved our APIs as well. Traditionally, when you think about REST APIs, they’re RESTful – you make a request, something happens, and then you hit another endpoint to get a status of something. Well, we took advantage a bunch of years back of Amazon’s SQS event service, and so for every API request that you make, once you do that, you basically get continuous streaming updates on what is occurring to the user’s account or anything else. So effectively, the client just needs to build a data store. They don’t need any other traditional infrastructure, as we said. And the fact that the events come in streaming now was a huge enhancement when we made that available, actually, it’s been quite some time. It was probably six years ago, seven years ago when we did that, but Amazon evolved. Their platform became more apt to handling high speed transactions, not just streaming video, but the things that we do in brokerage, and it’s worked out very well for us.

I think if we had to start with legacy infrastructure, that would have been a real issue for us. I’m not saying – books and record system that’s still third party, if you want to call that legacy, fine, but part of the innovation was learning how to take and adapt a real time API-based system and engage it with a traditional books and record system. And we’ve done that. And over the years, you upgrade it, enhanced it. But I think that worked out really well for us.

Growth trajectory

I will share with you – look, as a small company, and I mentioned the 20 million users. We started the company as an A round, $6 million A round with, I think, 38 employees, maybe mostly on the brokerage side. My tech team at the time was, I think, a dozen strong. And in August of ’21 we did a D round at $450 million. And today, we were around 300 plus employees. So the company has really, really grown.

And I’d say even looking at Q1 of ’25 versus Q1 of ’24, our assets have grown 4x, our notional trade volumes grown 3x, our daily average revenue trades DARTs up 60%. We just had an incredible run over these last couple years, really significant growth. That round really helped us to be able to invest in the business further, to go beyond just being an equities business to really beginning to offer all of the other asset classes on the platform.

You can always share stories going back to the super, super early days where you were using maybe a lower cost data feed, because, very early, and the data feed gave you bad data, and all of a sudden, oh, my God, you had a day in which you came through it, but your blood was pumping. Let’s put it that way. And that’s real startup, and that’s exciting at the same time as it is scary. But now we’re this really well established business with incredible partners around the world and a technology platform that we’ve continued to scale and build out to handle the number of transactions that we see.

Today, on any given day, we’re doing several million transactions a day. That puts us up in the top five tier of broker dealers in the United States, and many of those trades are fractional in nature. That’s how important fractional trading has been. So I think it’s been wonderful that, again, we weren’t burdened by starting with legacy tech, we really started out of the box, brand new.

Future innovation and roadmap

For us, our roadmap right now is pretty full with extending our offering – additional asset classes that our customers want and need, and as we expand those asset classes, it’s also about, how do you do that in an innovative way? How do you make, how do you normalize the ability to buy a bond in exactly the same way that you buy an equity, or an option, or an offshore mutual fund, or a US mutual fund? It’s once again, bringing those assets onto the platform in innovative ways and making them available through our existing API stack. So for our clients, the integration is very, very easy to add these other capabilities.

International expansion

I think also we’ll be having a look at international markets. Your users may not be aware, but not too long ago, we obtained our licenses in Lithuania, and we obtained our licenses in Singapore. Lithuania gives you passport, as they call it, to the EU and so ultimately, our first thought process was that makes it easier for us to offer US securities in those markets, being licensed there. Every country has a different regulatory regime in terms of how you can offer products. What products can be offered? Is it fully disclosed? Is it omnibus? And so forth. So having a license in Singapore and a license in Lithuania makes it a bit easier for us to disseminate product in those areas of the world.

I do think we are seeing demand from our customers to have access to more than just US, particularly our partners that are in Europe, or our partners that are in Asia. They’d love to work with a single provider that can not just give them access to US, but other markets as well. And so that’s something that we’ll be exploring over the coming quarters, as to whether we think it’s an important thing to expand right now.

We’re very focused, though, on continuing to offer the remainder of the core US offerings, because that, particularly in South America, there’s huge demand for fixed income products and mutual funds, and so that’s where a lot of our energy is right now.

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PayPal’s Embedded Finance Vision: Michelle Gill reveals how cash flow lending is reshaping SMB access to capital

As General Manager of PayPal’s Small Business and Financial Services Group, Michelle Gill is responsible for bringing together the products and services that help small business owners run and grow their business. She is my guest for this episode of the Tearsheet Podcast.

Michelle brings deep financial expertise and experience building platforms and tools that help customers manage their finances to her role on PayPal’s Senior Leadership Team. Michelle was previously Senior Vice President of Intuit’s business money management, payment, and banking service, QuickBooks Money Platform. Prior to Intuit, Michelle successfully integrated and expanded SoFi’s lending business as General Manager and Executive Vice President of Consumer Lending and Capital Markets.

Drawing on her early career experience as a Managing Director and Partner at Goldman Sachs, Michelle also served as SoFi’s Chief Financial Officer before moving into the product leadership role. Before that, Michelle spent a decade leading the U.S. Assets business for global investment firm Sixth Street Partners.

Given her career and experiences, Michelle brings a broad view of fintech innovation. She focuses on user-centered solutions. At PayPal, she leads efforts to help entrepreneurs navigate the complicated web of financial tools they often depend on.

“The preponderance of [small businesses] use greater than 15 tools to run their business,” she shares. “What they got into business for is the passion… and yet they end up spending more time on things that are not what they love.”

Our conversation explores how PayPal is actively trying to reduce that complexity. It does so not by offering more tools, but by making the ones they already use work better together. Gill outlines the strategy behind PayPal’s cash flow-based lending model and how it fits within their open ecosystem, whether it’s digital lending, embedded finance, or leveraging open banking.

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How PayPal for Small Business solutions addresses complexity

For many small business owners, managing finances often means juggling over a dozen platforms. PayPal is stepping into this chaos with the goal of integration.  “It’s not the adoption of the new tool in and of itself that’s the problem. It’s how it feeds back into your broader ecosystem,” says Gill. PayPal’s strategy focuses on streamlining tools through a single integration. It aims to reduce friction and give entrepreneurs more time to focus on their craft.

How PayPal cash flow lending works

PayPal’s approach to cash flow-based lending matches repayments with earnings. It is unlike traditional fixed-schedule lending. “Repayment is predicated on the receipt of those earnings,” says Gill. She describes the flexibility of the PayPal Working Capital product. This flexibility makes the loan more manageable for merchants with fluctuating revenue.

But, until recently, merchants couldn’t access more funds until fully repaid the loan. That’s changing. “We are changing our product to allow for the ability to redraw,” she notes. She signals towards an update that will help entrepreneurs recycle capital more efficiently.

Leveraging Open Banking for better lending models

Previously, PayPal could only lend based on what it processed. But open banking now enables them to assess a holistic view of merchant cash flow. “We now can have visibility into the entire merchant account, both on and off PayPal,” says Gill. This broader perspective supports more accurate underwriting. It offers larger loan sizes without expanding the credit risk.

PayPal is embedding finance into merchant workflows

PayPal isn’t just offering loans—they’re embedding them into the workflows merchants already use. Through the PayPal dashboard, users are notified of pre-approved loan amounts as they manage daily tasks. These are like refunds and chargebacks. “We are planning to add the amount that merchants have been pre-approved for, so they know going in,” Gill shares. PayPal is also collaborating with vertical SaaS providers, as well as with marketplaces, to bring financing directly into partner platforms.

Growing with merchants in the Open PayPal ecosystem

Through its open ecosystem, PayPal aims to grow alongside its customers. “We do things from point of sale to lending to online payments for e-commerce… we’ve tried to grow with our customers as they’ve grown,” says Gill. That includes helping businesses navigate newer challenges, like Generative AI and complex commerce models. “We do that through education, tools, and end-to-end services,” she adds.

The Big Ideas

  1. Small Businesses Face Tool Overload. “The preponderance of them use more than 15 tools to run their business.” This overload creates inefficiencies—PayPal’s integrated platform is intended to reduce that friction.
  2. Cash Flow Lending Matches Business Realities. “Repayment is predicated on the receipt of those earnings.” This model reflects how small businesses operate, especially in unpredictable markets.
  3. Access to Capital Expands with Open Banking. “We now have visibility into the entire merchant account… not only borrow against your PayPal receivables, but also your off-US receivables.” This broader access supports more accurate and inclusive lending.
  4. Embedded Finance Increases Accessibility. “Merchants who use PayPal come into their dashboard generally at least once a week… We let them know they have access to capital.” In-app lending notifications simplify the financing journey.
  5. Loyalty Grows with Product Adoption. “If you borrow once from us, you tend to borrow five or six times.” This repeated usage signals that the lending tools are resonating with merchants.

Read the transcript (for TS Pro subscribers)

A unique perspective on financial services

I’ve always loved serving the customer, as you mentioned, be it at the enterprise level, the consumer level and the small business. When you think about the number of companies that serve enterprises, it’s pretty meaningful. Similarly, the number of companies who serve consumers, it’s also pretty meaningful.

When you look at the number of companies that seek to serve small businesses, it’s actually a smaller number. And the complexion of small business is much more complicated in that they vary dramatically. And so far as the types of businesses that they are, both online and in store, both, you know, they have a pretty global reach and footprint their sophistication level varies all the way down from solopreneur up to small and medium sized small businesses.

It’s a really complex group of businesses to serve with single point solutions. And so what you find is there is a much smaller set of companies that serve them. And so the thing that I’ve loved about the ability to serve them is really getting to know them a lot better, understanding the complex needs that they have.

The preponderance of them use greater than 15 tools to run their business, and yet, the last thing that they have time for is managing that complexity. What they really got into business for is the passion that drives the particular thing that they built or are selling.

They end up spending more of their time on things that are not what they are core to them or what they love, and so our goal is really to reduce that complexity and really try to allow them to have that time back to pursue their passion.

Reducing complexity for small businesses

I think the complexity comes from, as you expand your business, or you think about doing new and different things, you often need to adopt an incremental tool through which to do that.

Whether PayPal offers that directly or through partners, the notion of being able to ingest it in a singular integration and not have to integrate with the new solution make it work with your reporting, having everything sync, right?

It’s not the adoption of the new tool in and unto itself, that’s the problem. It’s how does that feed back into your broader ecosystem, from a small business perspective, and making sure it all ties together.

That’s the place where it would be nice to have a single place to actually undertake many of these tasks, rather than having them distributed through a very broad ecosystem that doesn’t always necessarily work seamlessly together.

The challenge of scaling FinTech solutions

That’s right. As companies develop, they become incredibly specialized in one particular thing. And when I look at what I have loved about the portfolio that we have at PayPal is, we do things from point of sale, which is an in store solution, to lending, to online payments for E commerce.

We allow merchants to transact in over 200 currencies. And so the ability to migrate from geography to geography or online to in store, or complexity of the level of payments and how you’d like to accept payments, we’ve really tried to grow with our customers as they’ve grown.

Balancing growth with simplicity

At Investor Day, we talked about PayPal Open, which was bringing to bear all of our capabilities under one umbrella. One of the things I mentioned at our investor day was, you know, it’s one thing to come out with a brand. It’s another thing to come out with simplicity, and those two things are very different.

You can tell everyone, oh, everything is now housed under one umbrella, but as I described earlier, if that necessitates the merchant to have to actually do incredibly hard and challenging work to do the integration themselves, rather than having it all pre integrated on the back end and having just switches that you’re able to turn on and off as you’d like to actually utilize a particular part of a product.

In one instance, you’re asking the merchant to take on the complexity, and the second, you’re taking on the complexity. And so we’ve spent the last couple of years really taking on that complexity and ensuring that our products actually do work together under a single integration.

We came to market with that. We’ve now rolled that out in 200 countries. And we’re really excited about the ability for merchants around the globe to be able to adopt that single integration, which includes both getting the branded button, being able to accept credit card payments, being able to accept local, different types of payments, methods, locally in each geography, etc.

We’ve really tried to take all of the acquisitions that we undertook and all of the capabilities that we now have, and house them into one thing that makes it much easier for merchants to adopt.

The evolution of small business lending

Obviously, one of the things we’ve been tracking over the past few years, particularly with COVID, is like small business lending really changed dramatically, and has been doing so really over the past decade. And I’m kind of curious where you see the biggest gaps in the current market that PayPal is uniquely positioned to address.

A recent Goldman Sachs study came out and said that more than three quarters of small businesses are concerned about access to capital as they maintain or grow their businesses this year.

What we continue to see is the appetite for the simplicity of the product that we offer, and the way that that manifests itself to us is a very high net promoter score from the merchants who do take out that product. It is incredibly easy to use in that it is entirely a digitally native product.

The PayPal working capital product in particular, aligns incredibly well with the way in which a business earns. One of the concerns as a small business, particularly in a changing environment, and the current macro being amongst that, is, how do I know that predictability of the cash flow that I’m going to have coming in, such that I feel comfortable taking a loan on a fixed repayment schedule?

The reality is that businesses are cyclical, and there is a changing macro, and so you may be deciding to buy inventory to grow, and yet it may take you longer than you initially expected to sell out of that inventory. If that happens to be the case, then you’re on a fixed repayment schedule, as was the case with traditional lending, and now you’re in a situation where you have to repay the loan before you’re getting proceeds from the sale of that inventory.

The thing that we love about PayPal working capital, which our customers love as well, is it is the repayment is predicated on the receipt of those earnings and proceeds. Hence, the merchant can feel very comfortable when they take out a loan that they are not going to be in a situation where they’re forced to repay ahead of the receipt of proceeds.

Now, the downside of that structure, in current form is you could have paid down substantially faster than expected, and actually want to re up that inventory. And in today’s environment, which we are looking to change, we haven’t given you the ability to redraw on that loan ahead of the full repayment.

What ends up happening is, let’s just say that you have a small tail out there that you haven’t repaid. You’re in a position where you can’t redraw, and if you would like to recycle that capital and really put it back into inventory, you have to wait. And so we are changing our product to allow for the ability to redraw such that merchants can have the flexibility as repayments may come in faster than expected, to actually have access to that capital, to continue to double down on the growth of their business.

Product evolution and underwriting

It won’t be a difference in credit, right? Because realistically, it’s the same merchant that one is underwriting and you’re underrating again the ability to repay those proceeds. And so the underwriting box actually remains quite similar.

It’s really more of both a policy change as well as a technology change, a policy change. In the context of today, you cannot re borrow unless and until you’ve repaid. So you cannot have two PayPal working capital loans outstanding at the same time.

In the future, in order to allow this to happen, we would want to be able to have you have two PayPal working capital loans outstanding at the same time, which requires, again, like I said, both a technology change on our side as well as a policy change.

Advancements in underwriting technology

It used to be the case that we relied almost exclusively on PayPal data.

What I mean by that is, if you’re a merchant and you sell whatever your goods are that you sell and you receive X percent of your payments through PayPal, you could only borrow against that portion of your receivables, because that’s what you had visibility into.

Now, with the advent of open banking, we have visibility into the entire merchant account, both the receivables that they receive on PayPal as well as those that they receive off PayPal. And so we’ve recently introduced the ability to not only borrow against your paypal receivables, but also your off us receivables, because we now have the ability to have visibility into your entire business and the receivables, and the ability to collect against both of those.

That has been a very meaningful change. We’ve seen our customers that really have gotten to take advantage of this be very happy with that change.

The other change is, as I mentioned before, by consolidating all of the properties within PayPal, some of the receivables that were coming in at the physical point of sale, you couldn’t re borrow against, or you couldn’t borrow against, and now you have the ability to borrow against those as well.

What we’ve really done, again, with that single integration point is allowed all of that data to flow for both the PayPal receivables and then again, the ability to ingest that third party data and make credit decisions based on the holistic picture.

Embedding financial solutions into business workflows

The way in which we do it today is one way, and then we intend to actually expand on that pretty meaningfully.

The way in which we do it today is merchants who use PayPal come into their dashboard, generally, at least once a week, if not greater than that, and they review their outstanding receivables, whether they’ve had any disputes, refunds, chargebacks, etc.

As part of that, on that dashboard, we actually let them know that they could actually have access to capital. And we see a lot of that through the dashboard, both on the app and on the web.

We are planning to add to that, the amount that merchants have been pre approved for, so that they know going in. Here’s how much you’ve been pre approved for. And again, one of the biggest complaints has been loan size. But now, again, as I mentioned, with the advent of open banking and the ability to lend against a broader swath of receivables, there really should be the capability to achieve the loan size that merchants are looking for. So that’s one way.

Then you mentioned embedded finance. The other thing that we are working on with some of our larger partners is also embedding it into their experience, and making sure that as merchants log on to their experience, which may be something that is more persistent. You know, they also have access through that experience.

Lending is one of those things because of licensing is a little bit harder to white label. However, trying to make sure that it really fits into their experience, we’ve done a couple of tests with some partners where partners were looking for their merchants to upgrade the integration on the partner, and we’ve financed that integration, and really given a discount, actually on the amount charged to the merchant to borrow for that integration.

We’ve really enjoyed working with our partners to help them grow, and using lending as really an ability for them to help create the growth solutions that they want for both their merchants and themselves.

The changing landscape of small business finance

I think that when you look at small business lending, it really, despite the fact that everybody understands the need, I wouldn’t say there’s been a massive expansion of the amount of lending that is being done globally relative to the need in the market.

It is a very wide open space with a much bigger need than there is supply of capital. And I think the really interesting thing is, when we talk to investors who are interested in the asset side of this, there’s a lot of appetite for this asset.

I think people understand that it’s an incredibly interesting asset, particularly because it’s tied to cash flow. Investors really like cash flow based lending. It’s incredibly tangible. And so it feels as though there continues to be a dearth of supply of capital relative to the amount of lenders that are out there.

One of the things that’s been really interesting when we’ve talked to third party investors, is the reason they like someone like us lending relative to a third party is the access to data, a proprietary access to data that we have that allows us to do that lending responsibly, and allows us to do it in a way that doesn’t put merchants into a cycle of debt, that doesn’t actually hurt businesses, but instead helps them grow, is what they really like.

They like being part of that story. They like the history that we’ve had in the business, and they like the incredibly measured growth that we’ve had.

Interestingly, as we look at expanding, we’re not really meaningfully expanding the credit box. We’re expanding in the ways I just talked about, right, bringing in third party data that allows us to better underwrite the customer and be able to underwrite them for larger loans, serving segments of the market that we haven’t served historically, because we haven’t done loan sizes that are lower or higher.

I talked about that a little bit at our investor day. Is really a focus for this year of trying to ensure that we can really grow the base that we can provide capital to.

We are incredibly excited about all of these things, because we do think that businesses have and will continue to have a need for capital to facilitate growth, and the ability to do so at such an early stage in a company’s life is what can be a real difference maker in their ability to compete.

One of the things that we hear from our merchants all the time is, yeah, sure, everyone will lend to me once I’m successful and at large, it’s when I am starting out and I really need the capital. That’s when PayPal was there for me. And I will never forget that.

I think that’s something that really shows true. As I mentioned earlier, the Net Promoter Score and it again, it is much easier for a company like us, with the data that we have and the insights that we have into these small businesses, to be able to be there for them when they are smaller, and then to stay with them as they are growing, because we can uniquely meet their needs, because we understand their cash flow.

Creating a virtuous cycle

[Growth in the product has been almost exclusively organic. We really haven’t done much outside the ecosystem to inform and so we’ve started testing really trying to get to our merchants, not just through internal channels, but also external.

I 100% agree with you. I think what we see is, if you borrow ones from us, you tend to borrow five or six times, which is evidence of the fact that you like the product and that it is working for you.

I think the other thing that we see is, as you are borrowing, we do see meaningful growth in the businesses that do borrow, which is amazing. And then lastly, we also see that the more products you adopt, the greater your persistence and longevity is on the platform.

The things that we get excited about are the notion that the more PayPal receivables that you have, the greater amount that you can borrow. Obviously, the receivables that are off us are quote, unquote riskier to us in terms of the ability to collect against them, etc.

Yes, it 100% creates a virtual cycle of the more merchants do with us, the more like they grow, both for themselves and on us, and we really want to help facilitate that growth. That’s what we’re all about.

The future of small business financial services

So I think you’re one of a handful of people that sort of been at the epicenter of this convergence around serving small businesses. And I’m curious what your perspective is, looking ahead a few years, like, how do you envision the relationship between like, payment processors, banking services and lending platforms evolving for small businesses?

I think that small businesses will continue to face increasing complexity with the advent of agentic tools, agentic commerce, etc.

I think being able to be a place that can help them continue to navigate a changing landscape is really critical, and we do that through education. We do that through new tools. We do that through end to end services, and we try to take on the things that drive the greatest complexity, generally in their financial lives.

Because nobody is excited about doing their finances at the end of the month, but everyone is excited about seeing their bottom line grow. And so how do we take the stressful part of that out, and how do we bring the joyful part of that back and let small business owners spend the time doing the things that they really love doing, which is creating their product, speaking to their customers, growing their businesses in new ways.

And how can we be an agent for growth rather than that point of stress?

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Venture Capital’s shift from consumer fintech to infrastructure ft. Ryan Falvey

Venture capital Ryan Falvey

In today’s financial landscape, innovation is more than just a buzzword—it’s a driving force separating industry leaders from those left behind. Finding, nurturing, and scaling the right technologies has become a specialized skill set all its own.

Joining us today is Ryan Falvey, Co-Founder and Managing Partner of Restive. Ryan has spent the last 15 years at the forefront of identifying and championing market-changing innovations in financial technology. His track record speaks for itself—since 2015, he’s invested in 40 early-stage fintech firms that have collectively grown to represent approximately $3 billion in aggregate equity value.

Before founding Restive, Ryan led the development of the Financial Solutions Lab, a groundbreaking partnership between JPMorgan Chase and the Financial Health Network. His experience also includes developing payment solutions with leading tech companies at Silicon Valley Bank and serving as Strategy Group Lead at Enclude Solutions, where he oversaw global strategy consulting for mobile-enabled financial products.

“We’re not investing in fintech apps — we’re investing in infrastructure,” Falvey explains early on. That distinction underscores a larger trend he sees in the market: a move away from flashy consumer-based apps toward foundational financial APIs. It also focuses on backend tooling and embedded finance capabilities.

Falvey’s insights aren’t theoretical — they’re rooted in his day-to-day decisions as an investor. At Restive, he’s helping startups through early product development. He emphasizes practical scalability and regulation-ready business models. “You don’t build a consumer business by launching an app anymore,” he says. “It’s not about the app — it’s about access, context, and integration.”

From fintech regulation to platform economics, Falvey shares grounded wisdom. He focuses on how successful startups are navigating today’s uncertain investment landscape. What’s emerging is a more nuanced strategy for funding — one that prioritizes durability over disruption.

Listen to the episode

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Watch the full episode

The shift from consumer apps to infrastructure

According to Falvey, the biggest shift in fintech is where the value is being created. “The last wave of fintech was all about building shiny apps for consumers,” he says. “Now, it’s about making the systems that power those apps smarter, more scalable, and more secure.”

He points to the importance of financial APIs. He focuses on other backend solutions that serve as the connective tissue of modern financial services. These are often invisible to consumers. But they are essential for delivering the kind of embedded finance experiences users now expect. “The infrastructure layer is where the real innovation is happening. That’s where we’re seeing the biggest opportunities for venture capital.”

Reframing embedded finance as context, not channel

Falvey is careful to clarify what embedded finance means in practice. “It’s not just about plugging in a payment widget,” he notes. “It’s about being in the right place at the right time, with the right financial product — whether that’s credit, payments, or insurance.”

For him, embedded finance is less about technology and more about use cases. When startups can identify the consumer-based need and deliver financial functionality at the moment of need, that’s when embedded finance makes sense. Otherwise, it risks being just another buzzword.

The new venture capital playbook

“Startups are now being built in a different economic climate,” Falvey says. Gone are the days of massive burn rates and growth-at-all-costs thinking. In their place: a greater emphasis on operational discipline, regulatory readiness, and long-term scalability.

He explains how venture capital firms like Restive Ventures are adapting. “We spend more time with teams on product development than ever before. It’s not about speed to launch — it’s about building something that works, that scales, and that fits into the regulatory environment.”

Navigating fintech regulation and compliance

Compliance isn’t just a checkbox — it’s a design constraint. Falvey emphasizes that startups must build with fintech regulation in mind from the outset. “If you’re in fintech, you are in a regulated business. You can’t build first and figure it out later.”

He sees a growing appetite for products that are “compliance-first,” and that build regulatory considerations directly into their infrastructure.

The Big Ideas

  1. Infrastructure Is the New Frontier. “We’re not investing in fintech apps — we’re investing in infrastructure.”
  2. Apps Are No Longer the Centerpiece. “You don’t build a consumer business by launching an app anymore.”
  3. Embedded Finance Depends on Context. “It’s about being in the right place at the right time, with the right financial product.”
  4. Venture Capital Is Recalibrating. “We spend more time with teams on product development than ever before.”
  5. Compliance Must Be Baked In. “If you’re in fintech, you are in a regulated business.”

Read the transcript (TS Pro susbscribers)

The evolution of fintech since 2021

Well, thanks for having me excited to be back. Maybe that’s a great way to start. I mean, that’s interesting, because we probably spoke at the absolute kind of high water mark of, you know, FinTech 2021, I was kind of the year. I remember, you know, you talked to other investors, and we’d like, man, we just should have done all the deals in the last like, shoot your fish in the barrel. Yeah. Any, any discrimination in selection was, was, was a, was a negative bias. And then, you know, things obviously changed really dramatically, starting in, starting kind of in 2022 and I think to a degree, continuing, kind of to the present day, really certainly been a shift in sentiment of fintech. More broadly. And then I think also, you know, kind of a shift in sentiment kind of increased a little bit away from tech too. So it definitely kind of feels more like kind of back to basics in what we’re investing in and how we’re working with the founders. But at the same time, I’ll say a lot of that. You know, we are investors in companies, and so the main thing we’re looking at is like, what’s the only performance of the companies? What are these businesses doing, and are they making money? And how much money are they making? And how fast is, how quickly are they growing? And what’s interesting and surprising is at the company level and at the portfolio level, it’s literally never been better. I mean, we already have companies that are growing much faster and making more money earlier in the life cycle than really ever in my investing career, going back into over a decade. Now,

Performance of recent investments

Yeah, do you mean honestly? I can tell you, I can tell you the date that things change, and it’s January 1, 2023 really? It’s really looking and I think it’s really the impact you had of a lot of these new kind of LLM models, AI driven tools, especially on the coding side, it’s just dramatically accelerated how quickly technical startups can develop product and iterate, try new things and kind of push, push their vision out in the world. And the faster you can move in a startup, the more things you can try, and the more, the more kind of shots on goal you have, and the more ways you can improve on a product once it starts working. And just to give you a snapshot, the investments we made since the beginning of 2023 now make more money into aggregate than everything we did in COVID combined. And there’s probably half the companies there, and the ones that are the ones that are the ones that are driving the revenue in that kind of COVID cohort are the most technical founders, like the strongest, you know, technology solution. And there we’re seeing a similar dynamic. There’s, they’re raising, you know, very little follow on capital. They’re running really lean teams, getting a profitability much earlier. And so it’s actually a really exciting time to be investing at the early stages, because we are, we are really seeing of COVID, the total phase shift in technology, and how these businesses are being built, and how big they can get.

Impact on exits

Yes, yeah. I mean, I think we’re already seeing, you know, it’s, yeah, I know when you’re going to air, air these this session, but, you know, it’s, it’s early April right now, and we’re seeing, you know, there’s a number of kind of FinTech companies that expect to go public here and in the next, you know, them kind of listed so far this year, yeah, the public fintechs have generally done, done relatively well over the last, you know, year and a half or so. So, I think there’s definitely a shift, kind of an appetite there in a late stage, and probably see more come. You know, the stuff that we’re investing in now. I mean this, many of these businesses are probably still five years away from from going public and you know you, we meet you, you tend to see mergers at this stage more and more frequent acquisitions. And I say that what we’ve seen on the acquisition front has been, has been pretty robust. But I think the best companies are probably not gonna be acquired. They’re gonna continue to try to grow. And I would, I would expect them to be, expect us to be seeing some, really significant businesses being built, kind of in this current era.

Thematic shifts in investment focus

I mean, we’re seeing a number of things. I mean, the big thing would be tech like, I can’t, like, you know, we’re investing in technology companies, okay? And that that is, and I think to a degree, you know, we, you know, we raise money ourselves, we explain to our investors, you know, we’re investing in technology companies who just happen to be in the financial services industry and and I think that that’s, that’s a real shift from 21 where, you know, people are like, Oh, we just needed digital. Stuff is going to take over, you know, so if it’s online, it’s going to be better than being offline. And you had just incredible growth of a lot of the businesses that existed and were doing which were strong, but it wasn’t like, hey, there’s a completely new technology here. And I think now we are seeing some truly new kind of technology innovations that are allowing founders to build entirely new, new approaches to financial services. And I’d say there’s kind of, there’s kind of, like six, kind of big categories where we’re seeing a lot of activity.

One is obviously generative, AI tools. The biggest impact there is actually probably within the startup, I’d say that, like, the best, best use case of AI is creating a company. Because, you know, if you have to create a bunch of stuff, you know, tools like, you know, chat, GPT and Claude and coding assistance like cursor, are incredibly helpful to create that stuff more quickly.

A lot of the crypto infrastructure that kind of got laid down over the last couple of cycles is now pretty useful, um, you know, there’s you there are there stuff out there that’s allowing for kind of agentic payments and ways of, kind of just automating kind of, you know, background, kind of purchase and inventory management systems that’s going to come directly out of, out of crypto. You have a company in a political Crossman that basically does that allows, you know, it was originally a lot of infrastructure for nfts, and is now being used to basically just kind of automate, you can automate payments, and, you know, just kind of set these kind of agentic payments to kind of run the background.

We’re seeing, I think the service industry, particularly around like consulting law firms, anyone who is making a lot of money by creating paper tax prep. I mean, those industries are under serious threat. And so we’re seeing startups there that are just, I growing at unbelievable rates, in large part because they’re just, they’re able to create advice layer. So, like in finance, about financial services, to say, like, you know that you have, you have services, and then you get a license from the government to do the finance part. And a lot of those services. You know, you’re you’re doing something that has an audience of one or an audience, maybe nobody. You’re just creating paperwork that sits on a shelf in case someone wants to see it in the future. I see you’re thinking about Iron Mountain. There’s a mountain just full of paperwork that somebody paper. Yeah, yeah. How much did all that paperwork has to get created? Like it was a lot. And if I can spin up it, like, you know, an AI engine that goes and generates that paper, and it takes five minutes instead of five months, that’s a huge cost savings. And there. A lot of parts of the financial service industry that just create paper. It might be you might might be support you need for a credit decision that you’re already going to do, but you need to go collect all that if you ever got apply for a mortgage. Great example, there was, like, tons and tons of paper associated with that. It’s all there for a reason. It’s all important in certain circumstances. It’s not necessarily all important to be done every single time by a human being. And so if you can find ways to kind of create, make, make that process automated, it’s really valuable.

You know, think about really expensive law firms that are reviewing a law firm might be reviewing multiple 100 page long documents associated with an extension of credit to a company, or the COVID signal back and forth. You know, a lot of that’s, you know, rope, boiler plate. It’s there for regulatory and legal reasons, and you’re still, every time you do all these deals, you’re spent, you might be paying millions of dollars to a fancy law firm to review all that we’re seeing that those types of the business can get start getting kind of get commoditized down very, very aggressively and very quickly.

Yeah, we’re seeing new technologies, like, kind of Horizon technologies are going a lot faster than you’ll be given credit for. Like, you know, there’s a lot of advances in quantum the first kind of uses of that will be in financial services, increasingly personalized and really intelligent ways of thinking about commerce. So we have a company a portfolio called aisle. Really interesting. They essentially connect brands directly to consumers. So instead of like you see an ad right now for, for, you know, Red Bull or something on online, online, and then maybe, maybe you go buy a Red Bull. And then, like, Red Bull kind of has to figure out, well, did the ad? Did it work, right? What happened here, attribution, models, all that stuff. Well, now this company allows Red Bull just, hey, go buy a Red Bull today, and we’ll just pay you back. And in exchange, like, the consumer gets a free Red Bull. That Red Bull gets to know exactly who the customer is, where they live, they shop. It’s like, acquiring a customer, post purchase in a way. And you know who they are. And very cool. That. So that’s, that’s a really good example of, you know, going to, kind of the future of commerce, where it becomes a lot more personalized, a lot more specific, and I think a lot a lot better, you know, kind of across the board.

The social impact of fintech

Certainly. I mean, I think you know when. So I, you know, I started my career. I started an accelerator that was backed by JPMorgan Chase in partnership with a nonprofit. And so we’re very focused on kind of, very consumer friendly financial services innovations. So we were investors in a company called dave.com which eventually has gotten now gone public and to help consumers avoid overdraft fees. You know, that’s probably on the podcast a few times. Yeah, that’s a really good example. I mean, I think we’re, you know that, like, as a public company, he had a, he had a little bit of a roller coaster ride. And, you know, over the last, I think last year was, like, the best performing stock, and like the net, like the Russell built a real business, yeah, and, and I think that that goes to show that, you know, if you dollar advances, right, yeah, yeah. If you have a, really, if you have an, if you have a, if you have a solution that really helps people, there’s, there’s a lot of, there’s a lot in that.

I mean, I think, I think it’s been, you haven’t heard as much about them, because I think the investor, investment community has gotten more concerned about, you know, kind of consumer businesses, large, I will tell you, as an investor in a number of these, because almost all these businesses are going to consumer facing, right, like you’re helping low income people or more moderate income people do something like, You need to acquire those people. You serve those people. There’s, there’s, there’s regulatory. Historically, there was regulatory kind of issues associated with, with, we’re serving those people. And so that was one category that was really kind of hit hard, kind of in that kind of post COVID, kind of, you know, FinTech, no crash again. Underlying company performance has been extremely strong. And, you know, Dave is a public company, and so anyone can see that, you know, that company grew throughout the last couple of years, it became profitable. As you said, you know, you kind of create a real business and that, and we’re seeing that kind of across the board. So I think investor sent them will probably catch up, and they’ll probably start hearing more about those types of solutions.

I’ll tell you that is one area where, where all of these generative AI. Tools are actually going to have a real big impact, I think, on customers. How so positive well we have so we have a company in the portfolio, small, small firm called charge back and basically look at your subscriptions that you rocket money has a similar solution with this too. They kind of look at your subscriptions, look for things that you can cancel, and kind of proactively go out there and try to save you money, cancels permission you might not be be using, and really just kind of low out there go looking for how to, how to, how to save, how to save consumers money. Well, they’re the ability to that, that that service, and I’m sure that with the team at at rocket has also made just dramatic improvements in what’s possible there, because I’m no longer just looking for, you know, Netflix to show up for, you know, 1399 every month. And these tools can go through and say, Okay, what? What it like, what are you actually using? Like, right? Like, I can connect your, you know, your browser history. Like, maybe you are getting a lot of value out of Netflix. Maybe there’s a service you signed up for that you really should cancel. Or maybe there’s a you bought something and you should have got a refund because they violated the terms of service and you didn’t know. And that is just that is a level of sophistication beyond where you saw before I saw I read something.

This is kind of off, you know, not, not really fintech. But I read something somewhere, some, some, you know, business, it was basically taking advantage of these individual arbitration clauses like forced arbitration. And everybody has been forced into, like, whenever you sign up or something, you basically agree to just binding arbitration. And the reason the companies do that is because, like, the most you’re gonna win is, like, $100 and I think this company was going, I basically, basically just doing this at like, mass scale. So like, instead of, like, you know, Disney video getting to fight you over $100 and you stop being worth it to you, like, they’re fighting 1000 fights for $100 across the country. And it’s just like, it’s more expensive than a loss it would have been. And so, like, that kind of stuff either requires a huge amount of technology to do that. But I think, I think you’re kind of going to see, see more of that in the coming years.

About Restive’s investment approach

Yeah, yeah. So we’re early stage technology investors. Our goal is to really be the first money into the companies and founders we back. So we like to say, you know, nothing’s too early for us. And you know, we are probably the first capital in the mains companies, and probably about a quarter to 30% of the time, and then, you know, the majority of the time, we’re going to be kind of pre seed investors. And so that might be a founder that’s raising, you know, let’s say one to $3 million probably, you know, pre might, might be pre product might be, you know, a couple months after rolling out a product. So probably, probably earlier than you assume, for kind of product market fit. But typically, we can get a sense of what they’re doing, understand what their vision is. And you might be a team of, you know, four, four or five people is kind of on average, and our strategy is to write relatively small initial checks. So our first check is about a half a million dollars into most these companies.

And then we work really closely with the founders to really help them to kind of to connect them to the broader financial services industry. So like I said, we’re looking for technology businesses just happen to touch the financial service ecosystem. So they might want to sell into them. They might want to manage, handle payments. They might want to, you know, access financial, financial data. And so we can bring a lot of expertise to the companies, and what we find is that can really be transformative to the best teams. And then we’ll look to really kind of dramatically build on our positions in these companies very quickly and grow and scale with them as they grow their businesses. So we’re pretty high frequency investors where, you know, we’re investing about once a month, we’ll find it. We’ll find a deal we like to do. And you know, like we at the outset, you think we were actually probably close to about 80 portfolio companies at this point. We’re now investing out of our third fund. And you know, we’re all, you know, former FinTech, you know, founders and operators, and so we really pride ourselves on being able to really try to become an extension of the management team and hopefully open up doors and kind of take things off the plate of the founders we’re working with, so that they can just move, move faster and grow more quickly.

Collaboration with founders

I think, I think most founders want help that’s helpful, right, right, like resistant against help that’s not helpful. We do try to be that help you with this podcast. You’re, like, probably not. You can sit there and like, you know, have a quiet room you can sit in. That would be the most helpful thing. Like, y’all need you with the dials and so.

We are, we are helpful in a really specific ways. We’re helpful in helping connect you the financial services you’re helping if you need to figure out, like a complex issue around your legal or regulatory dynamics, or you need expand your network to sell it or do more partnerships, if you’ve got a business that’s going to raise a lot of money, you know, our model is to connect our founders to downstream investors, and we spend a lot of time helping them build those relationships. And so if you know, for say, You got to bring it back to Jason today, if you know we’re one of the first investors in that company, help connect them to a series B investors, and we continue to be investors in that company now. And so we really see this as a really long term relationship. And, you know, try to be, try to be helpful in a way that’s, you know, going to be constructive to the relationship, and are going to get out of the way, or we’re not.

So we generally to that set. We generally aren’t taking board seats. As our view is, we’re really good at kind of pre seed and seed not super good at, like, series D, and like the decisions around going public, like, I don’t have great advice on who to your 18th engineering hire should be that, but there are investors who are really good at that, and those people should be on your board and and that. And you should the business should where it’s at in this life cycle. And so we are very focused on the part of the market we sit in. And I think we’re probably some of it, hopefully the most, most helpful investors to our founders at that category. And I what we found is, is most founders are quite appreciative of that, support. And, you know, they’re trying to build big businesses. And there’s a lot of talk of the Billion Dollar Startup of one person. I haven’t seen it yet. Yeah, we certainly have a number of billion dollar startups that have many people in them, and managing other people is hard and requires, you know, requires a lot of people helping, helping out to get there.

Geographic focus

Pretty heavy focus on the US. We have companies outside of the US market. But, you know, this is the market we know well, and you know, going to your earlier point. I mean, we stick to, we can what we know and where we think we can have a big impact. From an investment standpoint, this is also, like, the US financial services industry is maybe, maybe outside of, like, you know, big tech, the largest pool of revenue and profits in the global economy. And it’s a pretty dynamic one, where, you know, you have an interesting idea, you can very quickly get a lot of them. And so we think it’s a pretty good place to practice venture.

Evolution of partnerships with financial institutions

It’s gotten, I think, a lot more constructive for startups? Okay, great. I think it kind of to kind of two, two ways. One, there’s a, you know, I first started investing in 2014 2015 I was working, we very close to JP Morgan and very small startups. And I’d say it was a pretty common view that, well, we’re gonna, this will help us to partner with JP Morgan, and we’d have to be like, No, it’s not there. And that’s not the case anymore. I think there’s. There’s a lot of smaller financial institutions and banks in this country, across the board, and and also large FinTech companies that which has totally changed the dynamic of partnership. So if you’re just starting out, and maybe you’ve got it, maybe you’re a priest, you know, seed stage company, you’ve got a product in market, you can go and find like, stage appropriate partnerships, whether that’s an issue and maybe, maybe through handling payments. There’s, there’s banks that will do that if you’re looking to kind of, you know, sell into larger incumbents, or there’s kind of smaller, larger incumbents that will, that will buy the product and test it out.

And I think that the kind of that, let’s say that mid market category of financial services businesses that might do, you know, 50 to a couple 100 million dollars in revenue is they’re. Actually very smart now on technology. And there’s a whole more than I could that I know that would, that would be able, that would be excited to partner with startups, almost any stage, in any category. And then I think the larger financial institutions have also gotten very sophisticated, and for the most part, and how they engage with, kind of with startups, you know many of them, you know, many of the the venture capital programs, internal ones that they started, you know, maybe a decade ago now, are actually very sophisticated, really well run organizations that behave, you know, quite similar to VC funds. And so they’re looking for, they’re looking for investments that are going to make money for their companies, and also where there’s a strategic element.

But they’re, they’re, they’re much smarter. I don’t say that’s most that’s not the right way to any they’re, they’re just, they’ve come a lot more realistic on like, how this partnership can work, and like, with the constraints that that they like, the limits of how much a startup can affect their business, and how their own business could affect this. Affect a startup. And so I think it’s actually, again, going back to this has actually been a great couple of years in FinTech, because it’s a much more constructive environment for those partnerships, you know, like, or I can remember horror stories, you know, a decade ago where a startup would start working with a big financial institution and just get the Death Valley of meetings and pilots and all those kind of stuff, you just don’t see that as much anymore.

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Building the bridge between crypto and coffee shops: A chat with Mesh’s Bam Azizi

crypto bam azizi

The Tearsheet podcast often explores the intersection of financial services and technology. What makes this exploration unique is its focus on emerging trends, like the connection of the Web3 technologies of crypto and blockchain with the traditional finance ecosystem. Today, Bam Azizi, the co-founder and CEO of Mesh, joins me on the podcast.

Founded in 2020, Mesh is an embedded financial platform designed to simplify crypto transactions by enabling real-time connectivity and asset transfers. Previously, Azizi co-founded the cybersecurity company, No Password. Azizi has a strong background in robotics and software engineering.

He is now leading Mesh towards a future focused on tokenized assets.“Everything will be tokenized because it’s easier to transfer and build,” says Azizi. He emphasizes the importance of addressing market gaps. Mesh integrates exchanges and enables crypto payments.

The Evolution of Crypto & Embedded Finance

Embedded finance has emerged as a pivotal market structure in fintech. It allows financial services to be seamlessly integrated into non-financial platforms. Azizi sees Mesh as a connection aggregator, not a data aggregator. This sets it apart from competitors like Plaid. “Plaid is the right solution for traditional assets,” Azizi explains. “We are the right solution for the crypto industry.” Traditional platforms focus on aggregating banking data — Mesh enables transactional capabilities. This includes transferring assets between exchanges and using crypto for payments.

Crypto Payments and Practical Use Cases

Mesh’s offerings have evolved from enabling cryptocurrency deposits to powering crypto payments. Azizi describes the creation of MeshPay, which is a comprehensive solution that addresses the unique challenges of crypto payments within a commercial setting. “Imagine paying at a coffee shop with crypto through Apple Pay,” says Azizi. This vision stems from a real-world use case where a small business embedded Mesh to accept crypto as a payment method. For regions grappling with hyperinflation, functionality like this offers real practical advantages.

Tokenized Assets: The Future of Finance

Azizi strongly advocates adopting tokenized assets. He predicts that “everything will be tokenized” in the coming decade. Tokenization can simplify asset transfers, improving accessibility and mirroring the digitization wave of the past two decades. Azizi believes traditional processes are inefficient. He points to asset transfers between brokerage accounts as an example. These processes are often cumbersome. Tokenized systems promise to end these inefficiencies. They pave the way for streamlined financial operations.

Challenges and Opportunities with Regulation

Discussing regulatory frameworks, Azizi underscores the importance of clarity. “Healthy regulation benefits everyone,” he notes. Azizi emphasizes how clear guidelines could boost cryptocurrency adoption and innovation. Mesh’s non-custodial model aligns with the crypto community’s ethos of decentralization. It resonates with users who prioritize privacy and control over their assets.

The Big Ideas

  1. Mesh bridges data aggregation with actionable connections. “We’re not just aggregating data; we’re enabling transactions,” Azizi explains. Mesh’s approach bridges the gap between traditional finance and the burgeoning crypto ecosystem.
  2. Embedded finance evolves alongside tokenized assets. Azizi predicts a shift where traditional and tokenized assets coexist. “Embedded finance must mirror this hybrid future,” he says.
  3. Mesh enables seamless crypto payments for everyday transactions. Azizi highlights MeshPay’s potential. He says, “Users can connect their Coinbase account and pay for things with crypto, just like using a credit card.”
  4. Clear regulations could unlock growth in crypto adoption. “We need clear regulations,” Azizi states. He believes that regulatory clarity will drive adoption, particularly among traditional financial institutions.
  5. Mesh focuses on privacy-focused, non-custodial solutions for crypto users. Reflecting on his experience with No Password, Azizi emphasizes, “We don’t store any user data.” This approach aligns with the decentralized ethos of crypto.

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APIs: Building the digital financial infrastructure of tomorrow — A conversation with Plaid’s John Pitts

APIs John pitts

APIs have evolved from simple data connectors to the fundamental architecture driving financial innovation. In this episode of the Tearsheet Podcast, I speak with John Pitts. Plaid’s John Pitts reveals how they’re driving open banking and empowering consumer control. He is the Global Head of Policy at Plaid. With a career spanning regulatory and policy roles, Pitts brings a unique perspective to the table. He discusses the evolving role of APIs in financial services. From his role at the Consumer Financial Protection Bureau (CFPB) to leading policy at Plaid, Pitts shares key insights on open banking. He explores how APIs are shaping the future of consumer financial data rights and fintech innovation.

Reflecting on his journey, Pitts shares, “I didn’t realize at the time that I was stepping into this nexus of innovation.” He explains how his role at the CFPB allowed him to witness the early stages of non-bank financial services. He shares how these experiences now inform his work at Plaid. He highlights the critical role APIs play in fostering open finance and enhancing consumer control.  

Pitts explores why APIs are essential for modern financial infrastructure. He explains how Plaid is working to bridge gaps in financial data connectivity. Pitts shares his expertise on improving fraud prevention and enabling embedded finance. He emphasizes practical steps to align innovation with consumer needs. His insights highlight the evolving role of APIs in modern financial services.

The Highway Analogy: APIs as the Backbone of Financial Services

Pitts compares the role of APIs in financial services to the construction of a national highway system. “It’s like moving from dirt roads to paved highways,” he says. Pitts emphasizes the necessity of modernized data-sharing mechanisms. Screen scraping once led financial data transfers. But Pitts highlights how APIs now provide faster and safer solutions. Their reliability is transforming how financial data moves securely. “Consumers’ ability to share their data securely is fundamental to unlocking innovation,” he adds. He stresses that the adoption of APIs by financial institutions is critical for open banking.

Consumer Control and Open Banking

A core theme in Pitts’ discussion is consumer control over financial data. He explains how APIs empower consumers to move their financial data seamlessly between platforms. This fosters open banking.  

Unlike in other countries where open banking is largely regulated, Pitts notes that in the U.S., market forces have driven API adoption. “We have more open banking in the U.S. than anywhere else,” he states, citing the high number of connected accounts as evidence. Pitts also touches on the regulatory landscape. He highlights the importance of the recently introduced 1033 rule in accelerating API adoption.

Embedded Finance: Beyond Financial Institutions 

Pitts highlights how non-financial companies are using Plaid’s APIs for embedded finance. These examples show the growing demand for integrated financial solutions. Landlords are using APIs to enable digital rent payments. Tesla is streamlining car purchases with embedded finance. These examples highlight the rising demand for integrated financial services. “Businesses like John Deere and Tesla are early adopters. They’ve embedded financial tools to improve user experiences,” Pitts explains. This gradual adoption, he suggests, will soon speed up as regulatory clarity improves.

Digital Fraud and Risk Management

Digital fraud is a growing concern in the financial services industry, and APIs offer a potential solution. Pitts describes how banks and fintechs can leverage APIs to share data and build network-level defenses against fraud. “Fraud prevention is one of the biggest opportunities in open finance,” he notes. Pitts emphasizes its importance for consumer trust. Banks can also use APIs to provide consumers with tools to monitor and manage their connected accounts. Pitts argues that these innovations can strengthen relationships between banks and their customers.

The Strategic Opportunity of API Adoption 

Pitts urges financial institutions to see API adoption as both a compliance need and a strategic opportunity. It’s a chance to enhance innovation and engagement. He highlights how APIs can help banks deepen customer engagement by becoming the “home base” for financial activity. “When a consumer picks one account as their linked account, their usage of that account increases,” Pitts observes. He suggests that banks can leverage APIs to solidify their role in a consumer’s financial ecosystem.

The Big Ideas 

1. APIs Are the Backbone of Modern Financial Services. They serve as the foundation for modern financial services. This enables secure, efficient, and scalable data sharing. “It’s like moving from dirt roads to highways,” Pitts explains.  

2. Consumer Control Powers the Future of Open Banking. APIs empower consumers to access and share their financial data across platforms. This fosters innovation. “The U.S. has more connected accounts than anywhere else,” Pitts notes.  

3. Embedded Finance Is Becoming a Key Use Case for APIs. Companies outside the financial sector, such as Tesla and John Deere, are adopting APIs for integrated financial services.  

4. APIs Enable Stronger Collaboration to Prevent Digital Fraud. They facilitate data sharing among financial institutions, creating stronger defenses against digital fraud. “Greater data sharing protects consumers,” says Pitts.  

5. API Adoption Is Both a Compliance Need and a Strategic Opportunity. Financial institutions can use APIs to increase consumer engagement and maintain account primacy.  

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Uprise makes entrepreneurial finance simple feat. CEO Jessica Chen Riolfi

Uprise Jessica Chen

Launching a startup is challenging. It becomes even more difficult when tackling personal and business finances that confound entrepreneurs. Enter Uprise, the brainchild of Jessica Chen Riolfi and her co-founders. Uprise offers human-driven financial advisory services embedded into small business (SMB) platforms, like banks or personal finance sites.

Uprise addresses the unique financial needs of entrepreneurs which include dealing with personal and professional cashflow. Jessica has extensive experience from companies like Robinhood, Earnin, Wise, and eBay. This background drives her approach to financial services.

Jessica shares, “Financial advisory, in this context, combines personal and business finances. It helps entrepreneurs make holistic financial decisions.” Lack of personalized financial advisory services at Robinhood inspired the genesis of Uprise, especially for SMBs. Jessica shares a passion for simplifying financial products with her co-founders Chris and Nantha. Together, they work to make financial solutions more accessible, bridging the gap between business and personal finance for small business owners.

Uprise initially targeted Gen Z and millennials but quickly pivoted to focus on older SMB owners. This shift met the growing demand for comprehensive financial advice. It specifically targeted consultants, freelancers, and creators. “The small business world is one where personal and financial lives are intermingled,” Jessica notes. She underscores the intricate needs of her firm’s clientele.

The genesis of Uprise

Uprise emerges from a vision shared by Jessica and her co-founders, Chris and Nantha. They noticed the gap in financial advisory services for SMBs, where personal and business finances often overlap. As Jessica puts it, “We help them make financial decisions. And we kind of ignore the line between business and personal.” This approach recognizes the unique needs of entrepreneurs.

Role of embedded finance in Small Business growth

Embedded finance is at the core of Uprise’s model. It is integrated into SMB platforms and Jessica explains, “Every small business owner interacting with our platform is assigned a human advisor.” This strategy not only builds trust but also addresses the specific financial advisory needs of SMBs. It offers a personalized experience. Jessica highlights the importance of understanding the distinct needs of different SMB sectors.

For example, therapists using the vertical SaaS platform, Heard, prioritize personal relationships. This prompted Uprise to offer more direct communication channels like Zoom calls. “Calls matter a lot to therapists,” Jessica observes. She illustrates Uprise’s adaptability to various client preferences.

Financial planning for entrepreneurs

Uprise has tailored its services to the intricate financial landscapes faced by entrepreneurs. Jessica emphasizes the importance of understanding personal and business finances. She highlights how they are interconnected. She offers advice on entity setup, retirement account options, and mortgage applications. “These are business-related questions, but they very much impact their finances,” Jessica emphasizes. She highlights Uprise’s holistic approach.

Building successful partnerships with SMB platforms

Uprise’s success is intertwined with its partnerships, where Jessica sees a collaborative effort. She notes, “It’s very much a revenue driver for our partners, who are SMB platforms.” Uprise customizes its offerings to meet the unique needs of each platform. This ensures that both partners and end users enjoy their financial advisory services.

The Big Ideas

Uprise focuses on the integration of personal and business finances. “We help them make financial decisions and we kind of ignore the line between business and personal” Jessica explains. She emphasizes the interconnected nature of entrepreneurs’ financial lives.

Personalized financial advisory as offered by Uprise. Jessica states, “Every small business owner who interacts with our platform is assigned to a human advisor.” This ensures that tailored financial advice is adapted to individual circumstances.

Crawl, Walk, Run Approach: “We very much believe in sort of a crawl-walk-run type of embedded approach,” Jessica describes. She highlights Uprise’s phased integration strategy with partners. The purpose is to ensure successful deployment and user adoption.

Uprise focuses on revenue generation for partners. “It’s very much a revenue driver for our partners, who are SMB platforms,” Jessica notes. She highlights how Uprise’s model serves as a revenue generator for its SMB platform partners.

Continuous product evolution is a key attribute of Uprise. “Making sure that our product continues to scale with the new customers coming on board,” Jessica says. She emphasizes Uprise’s commitment to ongoing product development. The aim is to enhance advisor efficiency and meet diverse client needs.

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Why Coast’s live API demos matter in fintech feat. Kara Parkey 

Coast Kara Parkey

Coast stands out in fintech with its interactive API demos.

Kara Parkey, head of strategic accounts at Coast, shares insights on the Tearsheet podcast as to why her firm is working with many of the best fintech brands. It’s that Coast visually simplifies the complexity of API products, making their service essential in today’s fast-changing financial world.

Coast lets users view APIs in action, making vendor and partner presentations interactive. It turns static PowerPoints into dynamic, live experiences. According to Kara, “It’s like seeing APIs come to life.” This is especially valuable for fintech companies focused on the API economy and open banking. It resonates with those driving innovation in these areas.

How Coast pioneers API demos in fintech

Kara explains that Coast’s demos are not just about showcasing APIs. They are about transforming how potential clients experience them. Traditionally, fintech companies relied on static prototypes or lengthy technical documentation. Coast provides a live demo environment. Kara describes it as “a unique URL branded for the client.” This allows users to interact with the APIs in a realistic setting. This approach is especially appealing in fintech, where embedded finance is becoming more common, aligning with the growing trend in the industry.

Impact on sales cycle and Time to Value

One of the significant advantages Coast offers is the reduction of time of the sales cycle. Kara highlights a case study with Sardine, where Coast helped cut the sales cycle by 20% to 25%. This efficiency comes from cutting down the time needed to build demos. It also gives account executives a tool to easily explain complex APIs. As a result, the process is faster and simpler. “It’s huge for embedded technology,” Kara emphasizes. She points out how it aids in reaching both technical and non-technical buyers.

Facilitating API integration and onboarding

Coast’s technology also simplifies the onboarding process, enabling clients to get up and running swiftly. Kara notes that while typical onboarding can take 30 days to 60 days, some clients go live within a week. Coast enables quick setup by using existing API documentation. Companies can import their APIs and build stories around them easily. No deep technical integration is required.

How Coast meets the needs of Financial Institutions

As Open Banking and Section 1033 expand, financial institutions are updating their APIs. The pressure to upgrade is increasing. Kara mentions that Coast is actively engaging with banks to help them “increase adoption of their APIs and make it more scalable.” The ability to visualize complex data flows in a secure environment is crucial for banks. It helps them navigate these new regulatory landscapes.

Ensuring security and compliance within Coast

Security is paramount in the fintech industry. Kara says that Coast takes this seriously. Coast reduces compliance risks by serving as a visual overlay instead of storing sensitive information. This approach minimizes data security concerns. Kara states, “We are your API documentation, just a visual representation.” She says that Coast’s solutions integrate without compromising data integrity.

The Big Ideas with Coast

  1. Coast’s Interactive Demos transform static API presentations into dynamic, live experiences. This enhances client engagement. Kara explains, “We visually simplify the complexity of API products. You can see APIs firing live… marrying that journey for technical and non-technical buyers.”

  2. Sales cycle efficiency is prioritized. Coast’s tools help fintechs like Sardine significantly reduce their sales cycles. This improves time to value. Kara shares a case study, stating, “We did a case study with Sardine… collapsing their sales cycle time to value by 20% to 25%.”

  3. Coast focuses on streamlined onboarding. It facilitates quicker API integration, enabling clients to go live in record time. Kara notes, “We’ve had clients go live in a week… it’s a visual representation of your API documentation.”

  4. Security and compliance focus is integral to the company. Coast ensures data integrity by acting as a visual representation of API documentation. It does so without storing sensitive information. Kara assures, “We are your API documentation, just a visual representation… no PII or anything like that.”

  5. Coast focuses on partnerships with Financial Institutions. The tech firm supports banks in adopting Open Banking standards by offering scalable API visualization solutions. Kara mentions, “We are looking to work with a lot of banks, very focused on helping them increase adoption of their APIs.”

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Peter Renton’s Fintech Forecast: Banking as a Service, Embedded Finance, and the Future of Open Banking

Open Banking peter renton

In the ever-evolving world of fintech and open banking, staying ahead of the curve is crucial. Few understand this better than Peter Renton. He is the CEO and founder of Renton & Co., a fintech consulting firm specializing in media, thought leadership, and event support. Renton is the former chairman and co-founder of Fintech Nexus (formerly LendIt Fintech). He has been out in the lead of fintech innovation for over a decade. His work has shaped the industry during this time.

In today’s episode of the Tearsheet podcast, Renton shared his insights on the current state of fintech. He shares his insights on where he sees the industry heading. Renton has a keen understanding of the fintech sector. His insights provide valuable guidance for established companies and newcomers in the industry.

“Without doubt, the most interesting space in fintech in 2024 is the banking as a service space,” Renton states. “Because of the way the banking system in this country is structured, we need banking as a service. And it’s not going away.”

The evolution of fintech events

Renton’s journey in the fintech world was punctuated with the creation of LendIt. It is a conference that grew from a small gathering of 350 people to a major industry event attracting thousands of attendees. As the fintech landscape evolved, so did the event. It expanded its focus from peer-to-peer lending to encompass broader fintech topics and companies.

“We expanded beyond lending and started it in 2017 and got going in 2018/2019, where we became a real fintech event,” Renton explains. This evolution mirrors the broader changes in the fintech industry. These include specialized lending platforms to comprehensive financial services providers.

The changing face of fintech conferences

Large-scale events like Money 2020 and Fintech Meetup still attract many attendees. Renton observes a rising trend of smaller, more specialized events organized by fintech companies themselves. “What you’re seeing in the event space is more and more companies doing their own small events,” he observes. These specialized gatherings allow companies to showcase thought leadership. They help to engage with their target audience.

Opportunities in Banking-as-a-Service and Embedded Finance

Renton sees significant potential in the banking-as-a-service (BaaS) sector, despite recent challenges. He believes that new regulations will provide clarity and stability. This will create opportunities for community banks. As a result, they will be able to expand their reach through BaaS offerings.

“If you want to grow your community bank, it’s hard to do that geographically now,” Renton explains. “But if you open up a BaaS line of business, there are ways you can grow your bank.”

Embedded finance is closely related to BaaS. It is another area Renton highlights as ripe for innovation. He points to companies like Pipe bringing fintech solutions to non-financial businesses, particularly in the vertical SaaS space.

The promise of Open Banking

Looking ahead, Renton is particularly excited about the potential of open banking. With the anticipated release of new CFPB rules on open banking, he foresees a wave of innovation.

“Open banking… is going to be a moment in time, but then that’s going to be in place and people are going to understand the rules of the road,” Renton predicts. “I think there’s a massive opportunity once that gets going. And when all the data, when your data becomes yours and it becomes more portable. There’s going to be a wave of new fintech companies that are going to use that and take advantage of that.”

The big ideas for Open Banking and Embedded Finance

  1. There is a need for banking-as-a-service evolution. Renton asserts, “We need banking as a service. And it’s not going away.” He highlights the ongoing importance of BaaS in the fintech ecosystem.
  2. Renton highlights the rise of specialized events. “What you’re seeing in the event space is more and more companies doing their small events,” Renton notes. He points to a shift in how fintech companies engage with their audiences.
  3. He observes a growth trend in embedded finance opportunities. “If you’re a vertical SaaS company today and you’re not making revenue from payments and revenue from lending, you are behind the curve,” Renton warns. emphasizing the growing importance of embedded finance.
  4. Renton underscores the potential of community banks. He explains, “If you want to grow your community bank, it’s really hard to do that geographically now.” He suggests BaaS as a growth strategy for smaller banks.
  5. There is a rise in open banking innovation. “I think there’s a massive opportunity once [open banking] gets going,” Renton predicts. He anticipates a new wave of fintech innovation driven by data portability.

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          Resources Mentioned

          Fintech Nexus (formerly LendIt Fintech)

          Renton Co.

          Money 2020

          Fintech Meetup

          Pipe

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          Reshaping embedded finance with KeyBank’s Jon Briggs and Qolo’s CEO Patricia Montesi

          KeyBank -- Qolo partnership on Tearsheet Podcast

          Strategic partnerships – those relationships between traditional financial institutions and fintechs – have become really integral as banks seek to modernize their offerings and fintechs aim to scale their operations and get distribution.

          KeyBank and Qolo have teamed up on an embedded finance offering. On today’s episode, we sit with Jon Briggs, Head of Product and Innovation at KeyBank, and Patricia Montesi, Co-founder and CEO of Qolo. 

          Their collaboration story begins two years ago when a single slide in Qolo’s pitch deck caught KeyBank’s attention. “We still talk about it today,” Montesi recalls. “It was the ‘Series A: Winter Slide’, which was all about how fintech had created this spiderweb ecosystem of suppliers. And sort of put the burden back on banks and corporates to bring it all together.” Their shared goal of simplifying fintech sparked a partnership that’s addressing how treasurer think about and use banking. 

          As Briggs explains, “We enter partnerships because they need a lot of mind share, a lot of sweat equity.” What set Qolo apart was their deep understanding of banking-grade compliance and operational risk. This makes the integration process less painful. The result of their collaboration? KeyVAM, a virtual account management system that simplifies money movement by consolidating balances and transactions in a virtual platform, reducing the need for organizations to manage multiple accounts or complex account structures.

          KeyBank’s Jon Briggs and Qolo’s Patricia Montesi are my guests today on the Tearsheet Podcast.

          Genesis of a Powerful Fintech Partnership

          The collaboration between KeyBank and Qolo is a testament to the power of strategic bank-fintech partnerships. Briggs highlights the importance of cultural alignment. He states, “What distinguishes a partner from a vendor is that cultural and executive alignment.” Their shared vision has been key in overcoming the challenges of launching a new product.

          Unveiling KeyVAM: A New Era in Treasury Management Solutions

          KeyVAM represents a significant leap in core banking modernization. Briggs describes it as “a hyper-modern core ledger” that allows clients to open sub-accounts instantly. What sets it apart is its robust UI and API capabilities. This puts self-serve at the forefront of the product.

          Rethinking Account Opening and Management

          One of the most striking features of KeyVAM is its ability to streamline account opening. “We put our clients in the driver’s seat,” Briggs explains. “They can do it in as little as 60 seconds.” This quick speed and instant payment setup mark a major step forward in digital banking.

          Strategic Importance of Embedded Finance

          The development of KeyVAM is not just about solving current client needs. It is a strategic move in the evolving landscape of embedded finance. Briggs notes, “Deposits are going to become even more important for banks going forward, and it’s frankly going to be the gating item for growth.” KeyVAM allows KeyBank to compete with technology and innovation rather than just on rate.

          Overcoming Challenges in Fintech Integration

          Montesi stresses the importance of education when introducing new technologies in traditional banks. “It’s a really big part of understanding it at that level because a lot of real-time, instant, virtual – a lot of risk and compliance people get nervous when they hear these things,” she explains. This focus on education has been essential for adapting and integrating smoothly.

          The Big Ideas

          1. Cultural Alignment has been crucial in navigating challenges and ensuring a successful partnership. Briggs shares, “What distinguishes a partner from a vendor is that cultural and executive alignment.”

          2. KeyVAM is a recent innovation in core banking systems. Briggs explains, “Nobody’s innovated around the core operating account which is at the centre of every banking relationship.” Such banking innovations represent a significant step forward in business banking solutions.

          3. Speed and Efficiency are the game-changers in digital banking. The ability to open accounts in as little as 60 seconds is a game-changer. Briggs notes, “We put our clients in the driver’s seat,” highlighting the focus on client empowerment and efficiency.

          4. KeyVAM helps KeyBank stay competitive by focusing on the value of deposits. This approach is key in navigating today’s changing regulations. Briggs highlights, “Deposits are going to become even more important for banks going forward.” KeyVAM positions KeyBank to compete effectively in this landscape. It results in efficient cash flow management by streamlining accounts. 

          5. Montesi stresses the importance of education and the integration of new technologies. He states, “You have to spend the right amount of time educating folks along that journey.” This focus on education has been crucial in overcoming integration challenges.

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