This episode is part of our occasional Fintech Revealed series, where we do an extended deep dive into one topic with two industry experts. The topic today is vertical fintech, and I am joined by Matt Hennessy, the Business Lead at Increase, the modern banking infrastructure company, and Jamie Fox, the General Manager of Fintech at Tekion, the AI-native cloud platform that runs the entire business for auto dealerships across the US, Canada, and the UK. 

Tekion built its embedded banking on Increase, so the two of them give us both sides of the same story: the platform that lives inside the dealership and the infrastructure that connects it to the banking system. We get into the surprisingly large money flows inside a single dealership, why paper checks still beat instant rails for many operators, how compliance and trust get engineered into the product, and just how big this embedded banking opportunity gets.

What We Covered

• What vertical fintech is and why it matters now
• The money flows hiding inside a single car dealership
• Why outbound dealer spend is roughly 2x inbound
• Operating account vs. ledgering account adoption paths
• Dealer-to-dealer payments as a ledger change with zero rail fees
• Instant rails: RTP, FedNow, and Request for Payment
• The persistence of paper checks and the cost to operationalize them
• Direct Fed access vs. layers of middleware
• Compliance as code, codified into the product
• Building trust in building blocks
• Where agentic payments and "know your agent" fit in
• How large the embedded banking opportunity ultimately gets

Key Takeaways

• Owning the financial system of record inside core operating software is the defensible position in an age when light "systems of engagement" can be replicated with AI.
• Outbound payments, not inbound, are the bigger prize: US auto dealerships pushed out roughly $1.3 trillion in 2024, about 2x what they took in.
• The barrier to instant rails is education, not technology. Many dealers do not know RTP or FedNow exists, or that they can pay a vendor any day of the week.
• Trust cannot be launched all at once. Holding a dealer's operating cash is a different level of trust than processing a payment they can fall back on, and it is earned in building blocks.

For the founding story and more about Increase, check out my conversation with CEO and Founder Darragh Buckley from last year.

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