What if the financial hurdles of running an e-commerce business — like cash flow struggles, banking complexities, and sales tax headaches — could be simplified into one seamless platform? In today’s episode of the Tearsheet podcast, our guest Vikram Anreddy, head of product for financial services at Shopify, addresses just that. He discusses how the platform is addressing the financial needs of e-commerce entrepreneurs. His experience stems from roles at companies like Instagram and McKinsey. Anreddy is passionate about creating tools, especially the ones that ease the financial struggles of small business owners.  

“Entrepreneurship is such a tough game,” Anreddy says. “The odds of success are very low, and there’s so much friction.” He explains that Shopify is focused on reducing friction for e-commerce merchants. The company builds tailored solutions to help them succeed. Shopify Finance helps manage cash flow and simplify sales tax. It provides tools designed for small business owners. This lets them focus on their craft, not administrative tasks.

Anreddy details how Shopify Finance integrates deeply into the platform's ecosystem. This allows merchants to manage their finances where they already operate their businesses. He also sheds light on innovative offerings like Shopify Capital Loans and Shopify Balance. These cater to the unique needs of small businesses. “Our goal is to stretch cash flows and end unnecessary complexities for our merchants,” Anreddy notes.

Shopify Finance: A suite of tools for e-commerce merchants

Shopify Finance addresses a critical pain point for merchants: managing their money. Traditional banking solutions often fail to cater to the unique needs of e-commerce entrepreneurs. This offers limited access to credit and complex processes. “Even opening a business bank account is hard for individual entrepreneurs,” Anreddy shares. The tech firm fills this gap with offerings like Shopify Balance, an alternative to traditional business banking. Merchants enjoy faster payouts, APY rewards, and seamless integrations.

Tackling cash flow management with Shopify Capital loans

Cash flow is a common challenge for small businesses, especially those managing inventory. Shopify Capital provides merchants with quick access to funds, enabling them to restock inventory or invest in growth opportunities. Since its launch in 2016, Shopify Capital has disbursed over $5 billion in funding. “It has become the rocket fuel for many of our merchants,” Anreddy highlights. He emphasizes the product’s impact on reducing cash flow constraints.

Building merchant-centric financial tools

Shopify Finance products are designed with a deep understanding of merchants' needs. They are derived from constant feedback and data insights. The platform integrates financial tools directly into its admin panel for ease. Features like APY rewards are designed to help merchants thrive. “Our merchants are incredibly driven and curious,” Anreddy says. “They adopt new tools quickly, which makes it easier to build for them.”

Future of Shopify Financial Services

Looking ahead, the platform plans to expand its financial services globally. It aims to integrate AI-driven insights to help merchants optimize their finances. “We are guided by two principles: stretch merchants’ cash flows and save them time,” Anreddy shares. The company also aims to enhance cross-product integrations. It wants to ensure seamless work management of features like Shopify Balance, credit cards, and sales tax management. This will help to reduce friction for merchants.

Franklin bridges the gap between Web3 and traditional finance, rethinking how businesses manage payroll and payments. Today’s podcast features Megan Knab, Franklin’s CEO. She shares insights into the transformative role of blockchain in financial operations. She has a vision: leveraging blockchain to modernize payroll and financial tools. Megan has a rich fintech background comprised of roles at Serotonin, DriveWealth, and Veriledger.

As an accountant by trade, Megan is no stranger to navigating financial systems. She became passionate about blockchain in business school after discovering an accounting fraud at work. “Public blockchains,” she recalls, “have the power to create an open financial system.”

Megan founded Franklin two years ago to simplify financial operations for Web3 businesses. She focuses on making finance easier and more efficient. She notes, “Anyone who’s used payroll software in the last 10 years knows it can be an antiquated experience.” Franklin integrates both fiat and on-chain payment capabilities. This strategy allows it to operate in both Web3 and traditional finance. As a result, Franklin is carving out a unique niche in both areas.

Crypto and financial tools

Megan highlights blockchain’s potential to enhance back-office operations for B2B organizations. She notes, “Stablecoins can leapfrog current payroll technologies by facilitating faster payments.” She also explains that blockchain’s immutability ensures greater accuracy in financial reporting. This also builds trust in the data. “By using public ledgers, businesses can reduce errors and streamline audits. This creates efficiencies that traditional systems struggle to match,” Megan adds.

Blockchain’s ability to integrate with existing payment systems is driving innovation. This is creating new financial tools for modern business needs.

Tax compliance and crypto

One of Franklin’s standout features is its focus on tax compliance. Megan explains, “We build tools that ensure every transaction adheres to federal and state regulations.” She emphasizes that Franklin’s proactive approach simplifies navigating the regulatory maze. “With over 675 tax jurisdictions in the U.S., automation is critical for ensuring accurate reporting. And avoiding costly errors,” Megan notes. This commitment makes Franklin a trusted partner for businesses handling complex payroll systems.

Decentralized finance for B2B

Megan believes decentralized finance (DeFi) has practical use cases for businesses. ” We’re helping companies operate seamlessly in fiat and crypto. Whether it is multi-currency payroll or international remittances,” she says.

She also highlights the cost advantages of DeFi. “Businesses can reduce transaction fees and enhance payment speed. It does so by eliminating intermediaries. These are critical factors for today’s global operations,” Megan explains.

Early Wage Access without loans

Franklin’s approach to early wage access differs from traditional models. Megan critiques typical earned wage access programs as “modern payday lending”. She advocates for faster money movement using stablecoins instead. She adds, “Why burden employees with hidden loan agreements when we can facilitate instant payouts?” This method empowers workers and also minimizes administrative overhead for businesses. Franklin uses stablecoins to provide an alternative to outdated payroll systems. This creates more flexibility for both employers and employees.

The Path Forward: Privacy and adoption of crypto

For broader blockchain adoption, Megan identifies a need for privacy technologies. “Financial institutions will continue experimenting rather than integrating. This will happen until we address privacy concerns.” she asserts.

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

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

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

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

The genesis of Uprise

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

Role of embedded finance in Small Business growth

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

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

Financial planning for entrepreneurs

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

Building successful partnerships with SMB platforms

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

Coast stands out in fintech with its interactive API demos.

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

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

How Coast pioneers API demos in fintech

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

Impact on sales cycle and Time to Value

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

Facilitating API integration and onboarding

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

How Coast meets the needs of Financial Institutions

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

Ensuring security and compliance within Coast

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

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

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

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

The evolution of fintech events

Renton's journey in the fintech world was punctuated with the creation of LendIt. It is a conference that grew from a small gathering of 350 people to a major industry event attracting 5,000 attendees. As the fintech landscape evolved, so did the event. It expanded its focus from peer-to-peer lending to encompass broader fintech topics.

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

The changing face of fintech conferences

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

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

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

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

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

The promise of Open Banking

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

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

Is the promise of Web3 in finance finally coming to fruition, or are we still in the early stages of a long journey from Bitcoin to tokenized assets?

As the cryptocurrency and Bitcoin market evolves, Bitcoin's price swings draw attention. Traditional banks explore blockchain cautiously. People are curious about the current stage of Web3 development. The question remains: where are we on the timeline?

Today's episode of the Tearsheet podcast features Rumi Morales. She is a partner and board member at Outlier Ventures. She discusses the current state and future potential of Web3 in the financial sector. Morales brings extensive experience from her roles at CME Group, Digital Currency Group, and Goldman Sachs.

Morales reflects on her decade-long journey in the cryptocurrency and Bitcoin space. She shares, "I would have answered this question a lot better 10 years ago when I first got into the space. I think I was full of hope and excitement and a lot of ambition." Her perspective offers a nuanced view of the industry's progress. She recognizes the progress and challenges of Web3 technologies in achieving mainstream adoption.

As the discussion unfolds, Morales provides valuable insights into the current state of Web3. She discusses the role of decentralization. She elaborates on the potential for blockchain technology to reshape traditional financial services. Her position bridges traditional finance and emerging technologies. This gives readers a well-rounded view of the future of digital assets and decentralized systems.

The Big Ideas

Morales emphasizes the importance of data ownership and privacy in the Web3 ecosystem. She states, "I do think when it comes to data and data ownership and privacy and individual rights, this idea that humans and individuals should be owning their data. And not giving it away to centralized entities is becoming more and more and more important."

There is tension between centralization and decentralization (such as with Bitcoin) in the Web3 space. Morales notes, "The question is, is that theory of decentralization ever gonna take over centralization? The jury is completely out for me on that one." This observation highlights a fundamental challenge in the Web3 ecosystem. It is balancing the ideals of decentralization with practical implementation and human nature.

Web3 startups face significant hurdles when trying to collaborate with traditional financial institutions. These challenges stem from mismatches in resources, bureaucracy, and operational timelines. Morales explains, "Many times to get that contract signed, it has to go through how many layers of checks. And you're just hoping that they don't run out of money to get something done to prove that you can do this."

 Accelerators are essential for nurturing Web3 innovation by supporting early-stage startups. This highlights the importance of investing in startups. Morales explains the role of Outlier Ventures in this ecosystem. She says, "We've probably accelerated around over 200 companies at this point, helping them in their earliest stages of growth. So these are pre-seed or seed stage companies."

Tokenization of real-world assets represents a promising area for convergence between Web3 and traditional finance. Morales states, "That is around being able to tokenize most anything. It doesn't have to be a traditional security in the stock or bond sense of things."

In an evolving financial landscape, US Bank has emerged as a leader in digital transformation. It has reshaped the way customers interact with their finances. Today's episode of the Tearsheet podcast features Gareth Gaston, Chief Product Officer of Digital Platforms at US Bank. He discusses the bank's decade-long journey of innovation and customer-centric development.

"We've been on a multi-year journey on digital transformation across all facets that you can think of digital," Gaston explains. This transformation has been more than just a technological upgrade. It's been a cultural shift that has positioned US Bank at the forefront of banking innovation.

The journey began with the recognition that customers were using more than just physical branches. "When we started this journey, we were renting all our digital tools," Gaston recalls. "We didn't have a mobile app. We were kind of renting our online banking and bill pay."

From these humble beginnings, U.S. Bank has built its own digital platform and in doing so, laid the groundwork for successful future product development. In doing so, it has created award-winning apps and platforms that serve millions of customers.

Here’s my conversation with U.S. Bank’s Gareth Gaston.

Most banks right now are at a crossroads: Either they choose to overhaul their legacy systems or come to a point where they will continue to battle the complex legacy spaghetti of multiple software systems, struggle to access talent that can manage their tech, and alienate customers that expect the best of everything. Although the choice is obvious, going through with core modernization is extremely hard. Guests on the show have been excited about moving to the cloud for many years, but very few have really taken it on, which is why when I have the chance to talk to not one, but two individuals that have hands-on experience with helping banks modernize, I really dive into their recipe of success.

Joining us on the show today is Russell Barrett, COO at Valley Bank, who shares the path to modernization his $60 billion institution took, how he and his leadership team devised the bank’s change management policies, the role of consultants in this process, and the challenges the bank faced. Pouring his deep experience into this conversation on Valley Bank’s work is David Feuer, CPO of Galileo Financial Technologies, who brings his expertise of handling and guiding multiple banks of all sizes on their transformation journey.

SMBs face critical challenges such as lack of access to credit, barriers for women entrepreneurs, and lower levels of digital enablement, which have limited their growth and success globally.

Salah Goss takes us through the Mastercard's SMB strategy, which through initiatives like Strive, focuses on easing credit access, providing digital tools, and building networks, with a particular emphasis on empowering women-led enterprises and fostering community-driven growth.

As the financial world evolves, open banking and digital transformation are opening up new opportunities. This comes with several challenges for banks and fintechs. In today's episode, I sit down with Alessandro Hatami. He is a managing partner of Pacemakers, a consulting firm that offers a systematic approach that allows its clients to find the partner that is right for them.

Today we discuss some of these seismic shifts in the fintech industry.

Hatami has a unique background in financial services, spanning both upstart tech companies like PayPal and traditional institutions like Lloyds Bank. His background offers a compelling perspective on the future of financial services. "Financial services is the ideal digital product," Hatami asserts. "because there isn't a real tangible exchange," he says. Yet, despite this potential, many institutions are struggling to embrace digital transformation.

I’ve been saying for years on this podcast that the ability for both larger and smaller institutions to partner – to partner well, at scale, quickly, and deeply – can be a differentiated, defensible model moving forward.

Hatami explains, "They have gone through an evolution. But they haven't gone through a transformation." The challenge facing the industry today lies in balancing adaptation with true transformation. from legacy systems to cultural barriers.

Through Pacemakers, Hatami aims to bridge this gap. He wants to improve partnerships between established financial institutions and agile fintech innovators.

Here’s my conversation with Pacemakers’ Alessandro Hatami.