Fintech One-On-One

When it comes to fintechs getting bank charters we are entering a golden age. With zero fintech-oriented bank applications approved in the Biden administration we already have several fintechs with shiny new bank charters just a few months into the new administration. So, if you are a fintech and are thinking about bank charters now is the time.

To break all this down, I was delighted to chat recently with Michele Alt, Co-Founder and Managing Director at Klaros Group. She was last on the show in 2021 and certainly a lot has changed since then. Michele takes us through the different types of charters and explains the different options for fintech companies seeking charters.

On this podcast you will learn:

• The fundamental change in attitude for bank charters with the new administration in DC.
• The two paths that fintechs can take to get a bank charter.
• The pros and cons for each of these paths.
• Michele’s thoughts on the SmartBiz acquisition of Centrust Bank.
• Why she thinks the timelines for bank acquisitions will be shorter from now on.
• The difference between an ILC charter and a regular bank charter.
• Why most ILC banks are located in Utah.
• Why some of the big names in fintech are applying for the MALPB charter in Georgia.
• Why Wyoming created the SPDI charter.
• How the Federal Reserve is reacting to this change in the new bank formation environment.
• Why some of the crypto companies are looking for federal bank charters.
• Michele’s perspective on the big tech companies getting bank charters.
• What she would say if Amazon came calling looking to explore an ILC charter.
• What the fintech banking landscape might look like at the end of the Trump administration.

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Moving money internationally is mission-critical for many businesses in the world, particularly those outside the U.S. But, today, for businesses using traditional banks, moving money across borders is often expensive, slow and a terrible user experience. Wherever you have that combination you can be sure a fintech company is attacking the problem aggressively, which is certainly the case here.

My next guest on the Fintech One-on-One podcast is Ravi Adusumilli, the President and GM of the Americas for Airwallex. They have built their own payments rails, as an alternative to SWIFT, to serve businesses who want to move money and accept payments internationally. How they have done that makes for a fascinating conversation.

In this podcast you will learn:

• The target market for Airwallex in the Americas.
• How they help businesses expand internationally.
• Why they decided to build their own payments rails as an alternative to SWIFT.
• How the money moves exactly.
• The percentage of their payments that move in real time.
• What was behind their acquisition of MexPage in Mexico.
• Why they decided to build a business themselves in Brazil.
• How they are working with Brex.
• How Airwallex is able to serve smaller businesses.
• How they help tech companies offer embedded global payments as a profit center.
• How their multi-currency wallets work.
• Ravi’s perspective on stablecoins and other alternative payments rails.
• His view on the future of embedded finance and global payments.

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One of the big challenges for community banks and credit unions is that they often have a very concentrated base of customers. The vast majority of their accounts could be with people and businesses within a 100-mile radius. While setting up digital tools can allow these banks and credit unions to expand beyond their home base, this comes with a lot of expense and complexity. When it comes to lending programs there is a much simpler alternative.

My next guest on the Fintech One-on-One podcast is Vince Passione, the CEO and C0-Founder of LendKey. I last had Vince on the show all the way back in 2016, so a lot has changed since then. They have created this new technology they call network lending which solves for the problem of customer concentration for credit unions and banks, at least when it comes to the lending side of the balance sheet.

In this podcast you will learn:

• The highlights of LendKey's evolution over the last nine years.
• Their long partnership with Navy Credit Union.
• How they have expanded into the home improvement market.
• The impact of the CARES Act on their education financing business.
• How the needs of credit unions have been evolving.
• The changes that will impact the ParentPLUS and GradPLUS lending programs.
• What differentiates those credit unions that can go after the younger generation and those that can't.
• Why private student loans will have to take up the slack, particularly for graduate student loans.
• How their network lending programs work.
• Why network lending is a great way for credit unions to diversify their portfolio.
• How they decide who becomes the lender of record for these loans.
• Why they launched ALIRO in 2021 to allow others to set up their own lending networks.
• What the next five to ten years look like for LendKey.

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Most fintech companies, and increasingly banks, rely on API integrations to run their business. Yet, building and maintaining these integrations can be time consuming and complex, particularly when it is only a part of what an engineering team does. Today, you can outsource these integrations to companies that specialize in this type of connectivity with a unified API platform.

My next guest on the Fintech One-on-One podcast is Shensi Ding, the CEO and Co-Founder of Merge. She saw the challenges of API integrations in a previous role and decided this was a problem worth solving. She has built Merge to specialize in helping companies with their API integrations, leveraging one API to add hundreds of integrations.

In this podcast you will learn:

• The problem she saw that led to the founding of Merge.
• What a unified API is and how Merge offers this.
• The core categories where they are focused.
• Why AI is such an important category for Merge.
• Why large banks and fintechs trust Merge to manage their API integrations.
• The number of integrations they are working with today.
• What is involved in adding a new integration.
• How they make sure these integrations don't break.
• How they work with custom integration requests.
• What is needed to get these integrations up and running.
• How Merge is helping Ramp for their HR integrations.
• Their experience working with banks.
• Why they like working with companies that are having challenges with integrations.
• How they work with the non-technical customer success teams.
• Why the human element is so critical for Merge's success.
• The process in adding a new integration into the system.
• How they are using AI internally.
• How they work with companies that don't have a robust API yet.

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Welcome back to the occasional series on the podcast called Fintech Revealed. This is a sponsored show where we take a deep dive on one topic with a couple of industry experts.

Today, we have Nico Simko, CEO and Co-Founder of Clair and Dan Loomis, the General Manager and Head of Product for the Money Group at Gusto. The topic we are doing a deep dive in today is Earned Wage Access (EWA) - one of my favorite fintech innovations of the last decade. We cover a great deal of territory on this show as we delve into embedded finance and the evolution of EWA (for reference I interviewed Nico on the show last year). 

In this podcast you will learn:

• Why Clair focuses on being embedded with HR and payroll companies instead of going direct to consumer or direct to employers.
• What piqued the interest of Gusto to offer EWA.
• What was involved in getting Clair up and running at Gusto.
• The two pieces that had to be in place at Clair to be able to embed their tech at Gusto.
• What employees are using EWA for at Gusto.
• How EWA is presented to employees in the Gusto app.
• How Clair worked with Gusto to determine how exactly to integrate EWA into their wallet.
• How the roll out has been going.
• What Gusto users are telling them about EWA.
• How fast a user can get money to their card if they have never used EWA before.
• Why Clair took the regulatory approach of treating EWA as a loan.
• What resistance, if any, employers have to offering EWA.
• What is stopping more payroll companies from signing up for EWA.
• Some of the limitations of the direct to consumer EWA model.
• What it is going to take for EWA to become ubiquitous.

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There are not many US-based fintech companies that are global from day one. Nearly every company starts in the domestic market, gets established and after a few years starts looking at overseas markets. That was not the case for today's podcast guest. 

My next guest on the Fintech One-on-One podcast is John Mitchell, the CEO and Co-Founder of Episode Six. John started the company, which is based in Austin, in Hong Kong in 2015 and they are global-first, currently operating in 40 countries around the world. What they do is provide next generation payments infrastructure to large banks and non-finance brands. 

In this podcast you will learn:

• The founding story of Episode Six.
• Why they decided to start the company in Hong Kong.
• The financial infrastructure that they provide today.
• How they built their technology to work in any region of the world.
• Why it was so important to build their systems to evolve.
• How their infrastructure is able to interface with legacy banking cores.
• Why, in ten years time, legacy banking cores will still be in production in most places.
• The number of countries where Episode Six is working today.
• How easy it is to embed card issuance today.
• Why applying for a credit card form a large bank is still basically the same as it was 20 years ago.
• Why Episode Six mostly works on new programs when working with traditional banks.
• How they are working with Japan Airlines and why the airline invested in Episode Six.
• What John thinks about the new payments rails that are developing.
• Why he is bullish on programmable money.
• The work they are doing in instant payments.
• What he has learned from other countries that could be implemented in this country.

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Most of us have heard the term "AI agent" but it is only the minority of banks and fintechs that have done any kind of implementation. This is partly because it is not a trivial task and there are real risks to getting this wrong. What is needed is some kind of framework that helps reduce these risks and provides best practices for implementing AI agents in financial services.

My next guest on the Fintech One-on-One podcast is Simon Taylor, the Head of Strategy and Content for Sardine and the author of the Fintech Brainfood newsletter. Today, Sardine has released a white paper, titled The Agentic Oversight Framework - Procedures, Accountability, and Best Practices for Agentic AI Use in Regulated Financial Services. It is a how-to document for implementing AI Agents into your bank, credit union or fintech. We unpack the white paper in this podcast, with as little jargon as possible, making it approachable for any risk or compliance executive.

In this podcast you will learn:

• Simon's background and why he joined Sardine in 2022.
• How banks are approaching BSA/AML compliance today.
• What Sardine is trying to achieve with this new white paper.
• What concerns people in financial services have about hiring an AI agent.
• How AI agents interact with humans in compliance departments.
• How much more effective AI agents can be.
• The six different processes in the Agentic Oversight Framework (AOF).
• How you manage the risk of hallucination in your LLMs.
• How you can scale the AOF beyond BSA/AML into other areas.
• Some examples of the AOF in action.
• If you are starting at zero how you start working with AI agents.
• Why you should jump in now even though the models will continue to get better.
• Why data security is such a critical component of the implementation of AI agents.

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Many of us have used virtual credit or debit cards and haven't given them a second thought. In today's world of contactless payments, there is no difference between a virtual and physical card. But a virtual card is actually a piece of software and as such it can be programmed to act in very specific ways. 

My next guest on the Fintech One-on-One podcast is Andrew Jamison, the CEO and Co-Founder of Extend, the spend management platform that works with your existing credit card. They use the virtual card concept to extend an existing card with new functionality to manage and control spending for middle-market businesses.

In this podcast:

• How a sabbatical helped form the idea for Extend.
• The history of virtual cards and the two companies that pioneered their use.
• Why Andrew started using virtual cards while at American Express.
• Why we won't be running out of virtual card numbers any time soon.
• Extend's core virtual card offering and how it works.
• Why they decided not to offer their own card and use existing cards instead.
• How they go to market with their bank partners.
• The customer experience with Extend's technology for the end user .
• Some of the use cases for their virtual cards.
• The size of business that is the sweet spot for Extend.
• How they are able to interface with the digital wallets from Apple and Google.
• How they work with the main accounting software platforms.
• How Andrew sees the impact of AI on spend management.
• What is next for Extend.

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Every bank and fintech company has a suite of anti-fraud tools that they use to keep the bad guys out. Few tools are 100% effective, however, and often the implementation of these tools, along with their interfaces with other system leave gaps. And the fraudsters will exploit these gaps. So, how do you get a holistic view of your anti-fraud arsenal and discover where these gaps are?

My next guest on the Fintech One-on-One podcast is Jerry Tylman, the co-founder and partner at Greenway Solutions and the founder of their Fraud Red Team. The Fraud Red Team is all about discovering the gaps, where the weaknesses in the anti-fraud systems are. They are 100% focused on financial services, working with many of the largest banks in the country as well as several fintech companies.

In this podcast you will learn:

• How Greenway Solutions became focused on financial services.
• What a pen test is and the groundbreaking work they do with fraud controls.
• The different attack vectors that fraudsters use.
• Why banks and fintechs need the services of the Fraud Red Team.
• How successful they are in penetrating the fraud detection systems.
• How they interact with the anti-fraud providers to banks and fintechs.
• An example of a recent test they have done that penetrated anti-fraud systems.
• How they tackle the challenge of account onboarding.
• Why behavioral technology is a key piece of the puzzle.
• How deepfake video and audio are being used by fraudsters.
• The fascinating way that the Fraud Red Team works with deepfakes.
• Why companies have to completely rethink their internal authentication today.
• Some of the fintechs they have worked with recently.
• How they work with check fraud and why it is a growing problem.
• Why all financial institutions cannot stop investing in anti-fraud tools.

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Everyone in fintech knows about the Starbucks reloadable wallet. It has become wildly successful for Starbucks, to the extent that they now have over $1.6 billion in balances on these wallets. Now, Starbucks has unique scale that made this kind of tech investment feasible. But I have been wondering for many years why so few corporations have copied Starbucks' lead here. Enter Ansa.

My next guest on the Fintech One-on-One Podcast is Sophia Goldberg, the CEO and Co-Founder of Ansa. They call themselves the "modern stored value platform" and they have created the technology to allow any mid-market or enterprise chain to offer their own branded wallet to their customers. They have the capability to create a wallet that can work in app or online and they have recently rolled out the technology to use their wallets in-store.

In this podcast you will learn:

• Why Sophia decided to write a book on payments.
• The founding story of Ansa.
• What a branded stored-value wallet is exactly.
• The core value proposition for Ansa's closed-loop payments as a service.
• Why the Starbucks wallet hasn't been copied by others.
• The conditions that had to happen for Ansa's offerings to gain traction.
• How they decided what verticals they wanted to focus on.
• What is involved in bringing Ansa's tech live for merchants.
• What it looks like from the consumer side.
• How Ansa helps drive loyalty for their merchants.
• How they solved for in-person wallet adoption with Ansa Anywhere.
• What they learned by having to switch bank partners.
• How they are driving revenue.
• What they are doing to get the word out about Ansa.
• What success will look like.
• The feedback they are receiving from the end consumers.
• The ultimate goal for Ansa.

Connect with Fintech One-on-One:

• Tweet me @PeterRenton
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