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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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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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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.”

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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.