Welcome back to The exchange, where we take a look at the hottest fintech news of the past week. If you want to get The Interchange straight to your inbox every Sunday, head over here to sign! This week, we look at the AI ambitions of spend management companies and the recent development of a UK fintech.
AI ambitions
Once upon a time, there was a running joke that every company would become a fintech. But now one has to ask, will every fintech become an AI company?
This week, we reported on Ramp’s new integration with Copilot, Microsoft’s brand of artificial intelligence technologies. The expense management company said that now, Microsoft Teams users can use natural language to access Ramp’s smart AI assistant from their workplace.
Of course, Staircase is not the first or only expense management company to leverage artificial intelligence. Brex in September introduced Brex Assistant, a flagship product of Brex AI. In addition to automating the collection of spending information, Brex Assistant can also do things like answer questions that employees have traditionally asked their finance teams, such as how much they are allowed to spend per day at an offsite location.
Brex co-CEO and co-founder Henrique Dubugras told TechCrunch+ that he believes “this is just the beginning of AI’s impact on rethinking both employee and user experience.”
Earlier this year, Navan claimed to be the first travel company to integrate OpenAI and ChatGPT APIs into its infrastructure and product suite.
The company said it uses genetic AI technology to write, test and patch code with the goal of increasing its operational efficiency and reducing overhead. Also, through Ava — Navan’s virtual assistant — travel managers are able to personalize recommendations and increase traveler engagement, executives claim.
One has to wonder, however, whether leveraging AI is not just about improving the customer experience but also about improving the bottom line of companies. It’s a valid question, especially considering reports that Brex has seen slower growth (just 1%, according to the information) in the third trimester compared to the second.
While Brex declined to confirm The Information’s report that it saw annualized revenue in the third quarter of $283 million, compared to $279 million in the second quarter and annual revenue of just under $200 million, one has to take these information with enough care. Brex likely saw an increase in event-related revenue following the collapse of Silicon Valley Bank in March. So the fact that it grew more slowly in the third quarter is less dramatic than if there wasn’t a big event that gave it a boost in business. Revenue is still up compared to last year, and according to the company, so are profits.
A spokesperson told me: “Looking at our year-on-year growth tells a significantly different story and shows how Brex compares favorably in this market. Year to date, three of Brex’s key revenue drivers (card revenue, deposit revenue and Empower revenue) are growing substantially and we’ve seen over 80%+ year-over-year growth in gross profit.” Empower, the company’s software product, has seen revenue grow nearly 50% this year, according to Brex.
The company, which was last valued at $12 billion, declined to comment on the timing of the IPO, which is rumored to be sometime in 2025.
In August, Ramp raised $300 million in a funding round co-led by existing backer Thrive Capital and new investor Sands Capital at a post-money valuation of $5.8 billion. At the time, the company said it had surpassed $300 million in annual revenue.
In the meantime, Navan According to reports grossed $300 million in 2022. This company (formerly TripActions) was last valued publicly at $9.2 billion.
In addition to competing with each other, these companies compete with similar legacy providers such as Concur and Expensify. So it’s no surprise that everyone would be leveraging AI to win over customers and make their businesses run more efficiently. – Anna Maria
PS You can hear Alex Wilhelm and I dive deeper into the topic on the latest episode of Equity here:
An update on Wise
I recently spoke with Wise CTO and interim CEO Harsh Sinha when he was in town for the opening of the British company’s new office in Austin. In case you hadn’t heard, Wise – which is known for facilitating cross-border payments – is doing pretty well these days. It recently reported that revenue rose 22% year over year in the second quarter of the fiscal year — to about $314.7 million. It also saw its revenue grow 51% year-over-year to about $420 million. The company has more than 5,000 employees worldwide, 180 of whom are based in Austin, where it is looking to grow its staff by 50% over the next 12 months.
With 16 million customers, Wise has been profitable since 2017, well ahead of its 2021 IPO, according to Sinha.
Interestingly, Sinha believes that part of the company’s success lies in the fact that it “never gives away its product for free.”
“We think charging for your product is something you should do — even if it’s $1,” he told TechCrunch.
Sinha also shared how Wise has evolved over time, moving beyond facilitating cross-border transactions to enabling users to hold/spend/send funds around the world.
“Now you can hold 50 different currencies in Wise and it works like an account product basically,” Sinha said. “You can pay your salary on it. you can pay your bills from it, you can do direct debits. And basically the proposition is for anyone who lives in multiple currencies who has an international lifestyle.”
He also talked about the speed of Wise’s offering.
“An example of how we transfer money around the world — you can make a transfer from us in Australia and it will reach the recipient’s account in less than 20 seconds. I will challenge you to do that with ACH today,” Sinha said. “And we’ve done this by creating a network that connects directly to local payment systems around the world. And 57% of our payments now on the network are instant, less than 20 seconds.” – Anna Maria
Weekly News
Journalist Manish Singh tells us about India’s central bank’s decision to put several measures in place to slow the rise in consumer spending. The new measures concern unsecured personal loans, credit cards, consumer durable loans from banks and non-bank financial companies. This comes as industry analysts report that 39% of retail loans originated in fiscal year 2023 went to borrowers who already had five or more active loans. Manish writes that this tightening will affect startups in the lending industry. He spoke to one fintech founder who said it would slow growth “a bit.” Read more.
Journalist Tage Kene-Okafor writes for Paystack laying off 33 employees in Europe and Dubai amid the African payments company’s focus on its home continent. Tage reports that the company maintains a footprint in Nigeria, Ghana, Kenya and South Africa and is now engaged in private beta testing in Ivory Coast, Egypt and Rwanda as part of expansion efforts. Read more.
Editor Frederic Lardinois debunked the term “FinOpsIn an article this week that has tech giants including AWS, Microsoft, Google and Oracle teaming up to make cloud spending more transparent. This is because each SaaS platform has its own definitions and how it does this. Enter the FinOps Foundation, a movement aimed at creating a better framework for how cloud spending is tracked and reported. Read more.
Editor Sarah Perez covered Venmo’The new feature that allows users to split expenses into groups. What’s interesting about this is that for groups like individual clubs, community organizations, and even roommates, you can get rid of the spreadsheets you’re currently using and track everything through Venmo. Everyone on the team can also manage expenses so that one person isn’t stuck with the role. Sarah points out that this new feature is likely to “cannibalize the user base of single-purpose apps that aim to organize group expenses, such as Splitwise.” Read more.
TC’s Tage Kene-Okafor reports that Chipper Cash recently announced an enhanced strategic partnership with Visa to promote growth and financial inclusion across the African continent. Having an established card-issuing partnership with Visa since 2021, this expanded agreement will see Chipper leverage Visa’s vast experience and investment in more areas of its business, including product licensing and marketing. “We are excited to announce our expanded partnership with Chipper Cash. This deepens our support for the growing demand for digital financial services in Africa and leads to meaningful impact across the continent,” said Meagan Rabe, senior director of fintechs for Sub-Saharan Africa at Visa. “We look forward to continuing our work with Chipper Cash to redefine and expand the boundaries of financial accessibility and convenience.” The announcement comes just two months after Chipper announced the launch of Chipper ID, its AI-powered verification and onboarding tool built specifically for the African continent. Read previous coverage of Chipper Cash here.
Other items we read:
ICYMI: Checkers officially jump into lending
Inside the war between Square and Cash App on Dorsey’s Block
Businesses love rewards credit cards. This startup facilitates their circulation (Check out TechCrunch’s previous coverage of Imprint’s $38 million round.)
Americans are being ‘ripped off’ by big banks, Robinhood CEO says. This comes as Robinhood raises the Robinhood Gold rate again to 5% APY on uninvested cash.
Dwayne Johnson ties up with Acorns to launch Mighty Oak Debit Card
Financing and mergers and acquisitions
As seen on TechCrunch:
Meet Tanda, your friendly neighborhood savings and loan network
Seen elsewhere:
Dwellsy’s first-time consumer rental search earns $11.5 million
Puzzle secures $30 million for revolutionary AI-powered accounting platform
Happy Money announces new funding
Defacto: French fintech raises funding expansion from Citi Ventures (Learn Defacto’s origin story and more in previous TechCrunch coverage.)
Image Credits: Bryce Durbin
