Today we're having an honest conversation about Buy Now, Pay Later (BNPL). 

The ease of use of BNPL products has been associated with increased spending and could drive negative consumer consequences, prompting US regulatory agencies to look deeper at this rapidly growing space. 

Last December, the CFPB launched an investigation into the business practices in BNPL sector due to mounting concerns about  “accumulating debt, regulatory arbitrage, and data harvesting in a consumer credit market already quickly changing with technology.”

Then the bureau issued orders to five BNPL lenders, asking for detailed information on the activities and risks inherent to their lending practices. Director Rohit Chopra ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that the bureau can report to the public about industry practices and risks. Now the report is out, and we're exploring it in today's episode with my guest Marshall Lux.

With a credit risk experience spanning over three decades, including serving as JPMorgan Chase’s Chief Risk Officer of consumer products during the global financial crisis, Marshall supports enhanced regulatory oversight in the BNPL space. 

He wrote a paper on the risks associated with BNPL, and on what regulation could look like in this space. You can check it out here: https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/files/182_AWP_final.pdf

To read the transcript of our conversation, please go to Tearsheet.co.

Where Credit's Due Ep. 11: Unpacking the CFPB's BNPL report with Marshall Lux

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Joining us today is Cory Kampfer, President of Small Business Lending at Enova, which operates the leading small business lending brands OnDeck and Headway Capital.

Cory has been immersed in the small business lending space since 2011 when he joined OnDeck. Over his tenure, he's witnessed the evolution of fintech lending and how it has transformed access to capital for Main Street businesses like retailers, contractors, accountants and more.

In this episode, Cory provides his unique perspective on the key financial needs and challenges facing small businesses today based on data insights from Enova's $18 billion in originated loans. He discusses how fintech lenders like OnDeck are able to better service this market compared to traditional banks and other financing sources.

Cory also shares how the borrower experience and application process has progressed over the years to become quicker and more digital-friendly. We'll learn what metrics and approaches Enova uses to continually improve that journey.

Whether you're a small business owner, entrepreneur, or just interested in the lending landscape, this is an insightful discussion you won't want to miss. Let's dive in!

The big ideas

SMBs struggle to access financing from traditional banks: "There still is a real gap in terms of traditional banks and financing sources lending to small businesses, not because I don't think they may want to, but they're just not calibrated to do it very well."

Online lending has become more accepted and appealing to SMBs: "What we see more that's very different from what we started with is, people, in many cases, go first to an online lender, because the application process is just so quick and easy. And they can get the answer that they need."

Using technology and data analytics is key to efficiently underwriting SMB loans: "We need to leverage technology. We have lending algorithms that help us through machine learning to give offers in a much more automated way...you need to leverage the data and the analytics, which our teams ingest, and then can give you a loan offer in the matter of minutes or hours."

A smooth application experience is crucial for attracting and retaining SMB borrowers: "In the application process, we want it to be a quick and easy process for them to be able to get through it...it's great to see that kind of repeat traffic because obviously what we did is working to help them grow their business."

SMBs are optimistic about growth despite challenges:
"The survey we just did, what it screams is that small businesses are very optimistic. They're hiring – you can see that in the data in terms of their investing more in employees. That's kind of putting their money, where their mouth is."

The data-driven playbook for growing a small business loan book with Enova's Cory Kampfer

Today, we're diving into the modern CFO stack, including corporate spend management and financial tech with our guest - Ben Gammell, the CFO of Brex.

Brex has been shaking up how companies large and small approach spending, providing an integrated platform for everything from corporate cards to spend analytics. It's been quite a journey for Ben, who started at Brex just as the firm was getting off the ground with 15 employees.

Ben gives us an inside look at Brex's evolution from scrappy startup to serving over 120 public companies today. We'll learn how the CFO role has transformed, expanding well beyond just finance into true cross-functional business partnership.

Ben doesn't hold back - offering refreshing insights about navigating the IPO journey for Brex clients – but also for Brex itself, managing finances through turbulent times, and the key transitions every CFO faces as their company goes public. You'll want to take notes!

But don't worry, we'll keep it fun too by tapping into Ben's lead generation skills honed from his Goldman days. Who knows, you may walk away wanting to sign up for Brex as a customer yourself!

So get ready for an engaging discussion blending savvy business strategy with the realities of life as a startup CFO. Settle in and let's get started with Ben Gammell of Brex.

The big ideas

Brex has evolved from serving just startups to also catering to larger enterprise clients, including public companies: "I think there's been a big dynamic of, you know, how do we think about, you know, when we're early stage, we're primarily supporting our businesses with financial services products. But as we moved up into the enterprise customers, there's a greater need for a software solution...We have over 120 public companies on our platform today. Many of them are very much household names, especially in the tech space."

The role of a CFO has expanded beyond just finance to being more integrated with understanding the business drivers and partnering across functions: "I think that there is definitely a case where CFOs are expected to have more of a integrated sense of understanding of the business, I think, even if you look at how finance teams are structured, that's kind of gone the trend where it's, you know, it's having embedded teams within different functions, providing kind of finance support."

Brex is taking time in 2023 to integrate their products into a seamless enterprise solution rather than building new products rapidly: "A big hairy goal is just making sure that we have a really great product from a user experience perspective, and making sure that all the products we've built over the last several years, really work seamlessly with one another and really integrated in a really delightful experience for our customers."

The CFO community is surprisingly collaborative and tight-knit, willing to share learnings: "I think it's an amazingly collaborative community, which I think is fantastic, especially for more new entrants, such as myself, I think there's definitely an openness to help each other out."

There are key transitions a CFO needs to make as a company goes public around measuring success beyond just valuation: "I think there's this transition phase, especially the CFOs have to go through, you know, going up to an IPO of making sure the company measures its success and things that aren't just what is the value of the company? Because I think if you do that you're setting yourself up for failure."

Brex CFO on spend tech, IPO & cross-functional ties in building modern finance stack

Welcome to the Tearsheet Podcast, where we explore financial services together with an eye on technology, innovation, emerging models, and changing expectations. I’m Tearsheet’s editor in chief, Zack Miller.

What's up FinTech fam? On today's episode, we're going deep on an innovative new way to tap into your home's equity - without taking on more debt.

Our guest is John Green, co-founder and CEO of Nada, the first SEC-qualified platform allowing homeowners to access their home equity in exchange for a share of the future appreciated value. John breaks down how Nada's unique "home equity investment agreements" provide much-needed liquidity for owners while offering investors access to the $30 trillion residential real estate market.

We learn about the multi-year journey John and his team undertook to navigate the regulatory minefields of consumer finance and securities laws. John pulls back the curtain on Nada's business model, including their creative distribution partnerships and their plans to take these equity funds public as REITs.

You'll hear John's bold vision to make home equity as liquid and accessible as checking your savings account balance. From debt relief to fueling consumer spending, he shares how unlocking this massive asset class could drive huge economic empowerment.

John also gets candid about leadership lessons he's learned as an "unreluctant extrovert" and former full-time punk rocker! It's an insightful discussion at the intersection of fintech disruption, regulatory innovation, and an audacious founder's journey.

Join us for this fascinating look into making one of the largest asset classes finally available to everyone. Let's go!

Unlocking home equity: The future of residential real estate investing with Nada's John Green

On today's episode, we're going behind the scenes at one of the most successful money apps out there - Cash App. Our special guest is Ryan Budd, the head of financial products at Cash App, and he's giving us an inside look at Cash App's evolution into a financial powerhouse.

Cash App started as a simple way to send money to friends, but as Ryan explains, it has become so much more. We're talking full-service banking, investing, crypto trading, tax services - the works! Ryan opens up about Cash App's bold vision to be a "one-stop shop" for all your money needs.

But how has this ambitious fintech company maintained its startup hustle and breakneck innovation pace even as it has exploded to over 57 million monthly users? Ryan pulls back the curtain on Cash App's unique team structure filled with "mini CEOs" laser-focused on different product verticals.

He also shares insights into Cash App's drive to bank the underbanked and economically empower communities that have been overlooked by traditional finance. From automated money management to increasing access to credit, Cash App wants to be the #1 choice for how people take control of their financial lives.

Ryan maps out their goal to create the "next gen community bank" by intelligently merging banking, commerce, and that powerful network effect. It's a candid conversation that you won't want to miss!

The big ideas

Cash App as a Comprehensive Financial Platform

Ryan highlights Cash App's evolution from a money transfer service to a comprehensive financial platform: "Everyone knows Cash App has this place to send money to their friends and their families. But a lot of them don't really realise that we've become so much more than that."

Focus on Banking the Base

Cash App aims to deepen its user engagement by becoming the primary banking service for its users: "When we think about banking the base, it's how do we get more customers to actually use us as their primary banking utility?"

Automation and Financial Health

The platform's automation features aim to simplify financial management for users: "You can deposit your paycheck and then we rolled out this auto allocation feature a few months back automatically set a percentage of it to savings, automatically set a percent to investing into Bitcoin."

Incentives to Retain User Funds

Cash App provides significant incentives for users to keep their money within the app, such as high savings yields and overdraft features: "If you deposit your paycheck to Cash App, you get 4.5% savings yield, you get this incredible overdraft feature that allows you to go negative without any interest or fees or anything of the sort."

Synergy Between Cash App and Square

Integrating Cash App with Square's merchant services enhances user experience and creates a seamless ecosystem: "I'm sure you've probably seen at Square point of sale systems, there's oftentimes a little Cash App barcode that's there that you can scan and use Cash App Pay."

Innovative Team Structure and Culture

Cash App's success is driven by a lean, autonomous team structure that empowers employees to innovate: "Every single person knows that they're supposed to own that vertical and they look at name X competitor in that space, and they say we're going to beat them... And they're really incentivized and empowered to kind of really think outside the box and push things."

Inside Cash App's approach to banking its base: A conversation with Ryan Budd

Welcome to the Tearsheet Podcast, where we explore financial services together with an eye on technology, innovation, emerging models, and changing expectations. I’m Tearsheet’s editor in chief, Zack Miller.

Today I'm joined by Luke Voiles, CEO of Pipe, a high profile revenue-based lender that’s evolving into a platform – we’ll talk a lot about this evolution.
Luke has had an extensive career journey that has prepared him for his role at Pipe. After starting in private equity, he joined Intuit where he helped build and lead the QuickBooks Capital team, providing capital to small businesses during the PPP loan program. He then went to Square to run their banking division before being recruited to join Pipe as CEO. I’ve actually interviewed Luke in each one of these roles and it’s been fascinating for me to watch his own growth as a product-driven leader.

In our conversation, Luke shares insights from his experience at companies like Intuit and Square that have shaped his leadership approach and methodology for building products. We discuss how he has applied lessons around having a clear mission, focusing on the customer experience, and balancing speed with compliance in regulated industries like fintech.

Luke provides a look inside Pipe's evolution from its original vision to the newly launched "Capital as a Service" offering. He explains the strategic prioritization that enabled them to build a scalable product quickly. We also get a preview into Pipe's future plans, including AI-powered tools to streamline operations for small business owners.

Whether you're an entrepreneur, operator at a startup, or just interested in financial technology and product development, I think you'll find Luke's perspectives insightful. So enjoy my conversation with Luke Voiles of Pipe.

Where Credit's Due Ep. 11: Unpacking the CFPB's BNPL report with Marshall Lux

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