Fintech Nexus

When you think of cutting edge fintech you probably don't think about the Caribbean. But some interesting developments are happening there that we should all be paying attention to.

On this episode of the Fintech One-on-One podcast, I talk with Curt Persaud, the Co-founder and CTO of Fintech Islands and Andrew B. Morris, the Chief Content Officer at Fintech Islands. This is the biggest fintech event in the Caribbean and it is happening next week (January 24-26) in Barbados. I will be there along with many other U.S. and Caribbean fintech leaders.

The Caribbean is an under-appreciated region, it is in our backyard with more people (45 million) than Canada. There is a strong entrepreneurial spirit and a thriving fintech industry there already, that is poised to grow significantly in the near future.

In this podcast you will learn:

• The founding story of Fintech Islands.
• Why Americans should care about Caribbean fintech.
• The important fintech trends in the region.
• Details about the Fintech Islands event.
• The different topics being covered on their agenda.
• How their startup competition will work.
• How people can engage with Caribbean fintech beyond the event.

Connect with Andrew B. Morris on LinkedIn
Connect with Curt Persaud on LinkedIn
Connect with Fintech Islands on LinkedIn

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The small business lending space has seen a lot of innovation over the last decade with fintech leading the way. But there is still much more work to do as many small business still lack the access to capital that they deserve.

My next guest on the Fintech One-on-One podcast is Steve Allocca, the head of Funding Circle USA. He has worked at some of the biggest names in fintech (PayPal, LendingClub, Bluevine and now Funding Circle) working on this challenge of helping small business access capital. Funding Circle is a pioneer in this space and recently they received the news that they have been approved for a new SBA 7(a) lending license.

In this podcast you will learn:

• Steve's deep and varied history in the fintech space.
• Some of the lessons he has brought to Finding Circle.
• What attracted him to the role at Funding Circle.
• The typical terms of their core term loan product.
• Their approach to underwriting small businesses.
• The impact on demand of the increase in interest rates.
• What it means for Funding Circle to be approved to be an SBA 7(a) lender.
• The timetable for when they will be able to start making SBA loans.
• How they are building their lending as a service offering.
• How they interact with the Funding Circle head office in the UK.
• Some of the new hires they have made to the leadership team.
• How they can get a clearer picture of small business data.
• What is top of mind for Funding Circle for 2024.

Connect with Steve on LinkedIn
Connect with Funding Circle on LinkedIn

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When we think about embedded finance one of the biggest opportunities is bringing financial services to vertical software companies. These software companies already have the relationship within their vertical and it often makes logical sense for them to add financial services as an add-on offering, as long as it is simple and easy to implement.

My first guest of 2024 on the Fintech One-on-One podcast is Tom Bell, the CEO and co-founder of Maast (as in Money-as-a-service plus). They are a wholly owned subsidiary of Synovus Bank and have been in business for two years. They are bringing embedded payments acceptance and embedded banking to vertical software companies but doing it with the backing of a 130-year-old regional bank.

In this podcast you will learn:

• Why Tom decided to come to Synovus and start Maast.
• The founding story of Maast.
• Why they decided to create a new brand rather than do it under Synovus.
• The suite of services that Maast provides today
• Who they are working with today and their target market.
• Why software providers are a perfect match for embedded finance (see Tom's article here).
• The most interesting innovations in payments today.
• What is involved in integrating Maast into a software provider.
• How Maast stands out from other embedded finance providers.
• How they approach compliance requirements.
• Tom's view on the main trends in embedded finance that will be in play in 2024.
• How he thinks embedded finance is going to play out long term.

Connect with Tom on LinkedIn
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Around the world, several digital banks have achieved impressive scale. But most of these fintech companies have been focused just on their home market. It is difficult to scale a global digital bank because regulations and compliance requirements differ so much between countries. But we have seen some traditional banks achieve scale in multiple countries so there is no reason why we shouldn't see the same in fintech. 

My next guest on the Fintech One-on-One podcast is Sid Jajodia, the Chief Banking Officer for Revolut and the CEO of Revolut US. There is no other fintech company that is as focused on becoming a global fintech leader than Revolut. They already have 35 million customers in more than 30 countries around the world and they continue to open operations in new countries multiple times a year.

In this podcast you will learn:

• What attracted Sid to the role at Revolut.
• How he describes Revolut today.
• What he means when he says it is a financial super app.
• The number of customers Revolut has globally.
• How Revolut is differentiated from other digital banking offerings in the US.
• The typical Revolut customer in the U.S. and globally.
• How they are getting the word out.
• Their ambition to be a bank in different markets.
• What Revolut 10 is and why it is important.
• Their approach to user experience.
• What CEO and founder Nik Storonsky is like to work with.
• What it is going to take for Revolut to reach scale in the US.
• Revolut's vision for the future of financial services.

Connect with Sid on LinkedIn
Connect with Revolut on LinkedIn

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The Federal Home Loan Banks (FHLBs) have been part of the financial landscape in this country since 1932. They were created (before the New Deal) in response to the housing crisis during the Great Depression. But their role has changed from a focus on housing to becoming a liquidity provider for large banks. And this has had a major impact on our financial system, including the fintech space.

My next guest on the Fintech One-on-One Podcast is Cornelius (Con) Hurley. He is a professor at the Boston University School of Law and was a founding member of the Online Lending Policy Institute that was folded into the American Fintech Council in 2021. Most importantly for this conversation, Professor Hurley was an independent director of the Federal Home Loan Bank of Boston for 14 years. He has become an outspoken critic of FHLBs in recent years and is a co-founder of the Coalition for FHLB Reform.

Professor Hurley provides a detailed history and the current state of play for FHLBs but also focuses on the role fintech companies can play here.

In this podcast you will learn:

• Why everyone should be interested in what Federal Home Loan Banks are doing.
• The origins of the Federal Home Loan Banks and why they were started.
• How the FHLBs are regulated.
• How the FHLBs can claim they have never made a loan that has defaulted.
• The governance culture of the FHLBs.
• Why FHLB loans to banks should be made public.
• How the mission of the FHLBs moved away from housing and community development.
• Why banks go to an FHLB for liquidity instead of the Federal Reserve.
• How the FHLBs are funded and what subsidies they receive.
• The recommendations for reform from the recent FHLB report.
• Why FHLB members will need to beef up their mortgage exposure.
• The potential role for fintech companies here.
• What comes next for FHLBs.

Connect with Cornelius on LinkedIn

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While most of us would agree that we have seen significant innovation in fintech and banking over the last decade, we still don't really have a new framework for how we look at banking.

My next guest on the Fintech One-on-One is someone who has thought deeply about innovation in banking and he has lived it as a co-founder of some of the biggest names in fintech. Jason Bates is currently the co-founder and Deputy CEO at consulting firm 11:FS but he is also a co-founder of both Starling Bank and Monzo, two of the big three in UK fintech. 

His framework of four layers for retail financial services provides an interesting perspective and a possible foundation for future innovation.

In this podcast you will learn:

• How Jason first got involved in fintech.
• What it was like in the early days of Starling Bank and Monzo.
• The founding story of 11:FS.
• How he described 11:FS today.
• The difference between digital banking and digitized banking.
• The four different layers of retail banking.
• What we still need to work on in digital banking.
• An explanation of the "Jobs to be Done" innovation philosophy.
• The best ways to apply AI to banking.
• The state of fintech in the UK today.
• Comparing the US and UK fintech landscapes today.
• What Jason is looking at as far as 2024 fintech trends.
• What he is most excited about for the next three to five years.

Connect with Jason on LinkedIn
Connect with 11:FS on LinkedIn

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There are many options for raising growth capital for established startups. With all the attention paid to venture capital, we sometimes forget that the vast majority of companies are not funded that way. Revenue-based financing has been around for more than a decade and it is a good alternative for certain types of companies.

My next guest on the Fintech One-on-One Podcast is Melissa Widner, the CEO of Lighter Capital, a pioneer in the revenue-based financing space. We learn all about how this space works, what types of companies it works best for and how Lighter Capital has become one of the market leaders.

In this podcast you will learn:

• How she first got involved with Lighter Capital.
• What attracted her to the CEO role.
• What it is like running a fintech company from Australia.
• The different countries where they are set up to lend.
• How revenue-based financing works (that was pioneered by Lighter).
• The types of companies that are in their sweet spot.
• The size and terms of their financing.
• How their underwriting works.
• Why most revenue-based financing lenders are not really doing revenue-based finance.
• The impact of the venture capital downturn on Lighter Capital.
• How the collapse of Silicon Valley Bank impacted demand for capital.
• Their historical loss rate.
• How loan demand has been overall in 2023.
• What it was like renewing their credit facility in the summer.
• Melissa's vision for the future of Lighter Capital.

Connect with Melissa on LinkedIn
Connect with Lighter Capital on LinkedIn

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The use of machine learning models in underwriting for consumer loans has been around for more than a decade. While fintech clearly took the lead here it has really only been the last couple of years where traditional lenders are engaging with this technology. While these AI/ML models are different from the Generative AI craze that has embraced the business world in the past year, this phenomenon has certainly helped with awareness.

My next guest on the Fintech One-on-One podcast is Laura Kornhauser, the CEO and Co-Founder of Stratyfy. Her company is on a mission to enable greater financial inclusion for people while also helping financial institutions better manage and mitigate risk. They do that by implementing their advanced AI models and, of course, through the dedication of their people.

In this podcast you will learn:

• The founding story of Stratyfy.
• The company's mission and how it has evolved?
• The different types of financial institutions they work with today.
• How they differentiate themselves from others in the space.
• How their UnBias product works.
• What being transparent means for adverse action notices.
• What is top of mind for most banks and fintechs today.
• The types of data their clients are using that are most important.
• What is involved in implementing Stratyfy into a lender's system.
• How their AI models have improved over time.
• How the popularity of AI through ChatGPT has impacted Stratyfy.
• What it was like raising an equity round in 2023.
• The biggest challenge Stratyfy is facing today.
• How AI will continue to improve when it comes to credit and risk decisions.

Connect with Laura Kornhauser on LinkedIn
Connect with Stratyfy on LinkedIn

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There has been endless talk in fintech over the past year and a half about the pullback from equity investors and how difficult it is to raise money in this environment. Less is being talked about the debt investment landscape.

So, I wanted to bring Jacob Haar, Founder and Managing Partner of Community Investment Management (CIM), back on the show (he was previously a guest in 2015 and 2020). He has been a debt investor in fintech for almost a decade now and he has deep experience with fintech lending not just in the United States but increasingly around the world.

In this podcast you will learn:

• How he describes CIM today.
• How the pandemic played out for them.
• What areas of fintech he finds most interesting today.
• What countries he is focused on.
• Examples of some recent deals CIM has closed.
• The size of the typical debt facilities they provide.
• The factors CIM considers today when making an investment decision.
• Why they decided to move outside small business lending.
• How their investors view impact versus a financial return.
• How the deal between Camino Financial (podcast here) and Fundation (podcast here) came together.
• Jacob's thoughts on transparency in small business lending and the regulatory movement there.
• Some of the key milestones that fintech lending has reached in the past 10 years.
• Why he is optimistic about the next decade.

Connect with Jacob on LinkedIn
Connect with Community Investment Management on LinkedIn

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Trillions of dollars is spent on credit and debit cards every year in the US. These payments are all processed on one of the most expensive card processing networks in the world, costing merchants tens of billions of dollars. Account-to-account payments, otherwise known as pay-by-bank, is yet to take off in this country but it does have the potential to put some of these card processing dollars back in merchants' pockets.

My next guest on the Fintech One-on-One podcast is Eric Shoykhet, the founder and CEO of Link Money. His company has built the infrastructure needed to bring scale to pay-by-bank in this country. After we recorded this conversation there were several big announcements in this space, so it looks like 2024 could be a big year for pay-by-bank.

In this podcast you will learn:

• The founding story of Link Money.
• Why the US has the highest card processing costs in the world.
• How Link Money's pay-by-bank offering works.
• The data access partners they are using.
• Why this is not an established payment option in the US yet?
• The different components that Link Money needed to develop.
• The coverage they have of the total number of deposit accounts.
• How you get consumers to adopt this new payment method.
• Where this makes the most sense for potential merchants.
• How Eric looks at the competitive payments rails in the U.S.
• Why pay-by-bank will be part of digital wallets.
• The challenges Link Money needs to overcome to be successful.
• His vision for the future of retail payments.

Connect with Eric on LinkedIn
Connect with Link Money on LinkedIn

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