520 New Perspectives Rise Up Amplify and B2C Aids B2B

Welcome to Breaking Banks, the number one global fintech radio show and podcast. I’m Brett King. And I’m Jason Henricks.

Every week since 2013, we explore the personalities, startups, innovators, and industry players driving disruption in financial services. From incumbents to unicorns and from cutting edge technology to the people using it to help create a more innovative, inclusive, and healthy financial future. I’m J.P. Nichols, and this is Breaking Banks.

Opening minds to new ideas and changing legacy behaviors can be challenging, to say the least. This week, we’re continuing some of my conversations from Money 2020 in Las Vegas. First I caught up with Jim Perry, senior strategist at Market Insights, about new perspectives that younger customers are bringing to money in the digital age, not just in practice, but in ways the industry can align its leadership better with today’s shifting demographics.

Rechanneling, retooling, and meeting customers where they are today to better represent the communities we serve and operate in across the entire spectrum can make for a more engaged workforce and help financial institutions stay relevant. We also talk about setting the bar where it needs to be on diversity, equity, and inclusion, beyond benchmarks and empty platitudes to bring real value through sharing and understanding different perspectives so financial institutions can build deeper relationships across a wider group of customers. Then we turn our focus to the B2B space with Brandon Speer, CEO of TreviPay.

Trade credit for business customers is still a complex, fragmented, and largely antiquated process. How can we apply some of the lessons learned from B2C to make for a better experience, especially when dealing across diverse geographies, ecosystems, and risk profiles? Well, one of the great things about Money 2020 is you get to catch up with old friends. So Jim Perry is here.

So Jim, tell us about why you’re here and what are you working on? Good morning, JP. It’s great to be here. It’s great to see you.

We actually don’t get to do that very often, except for in digital space, so it’s nice to be in person. I’m actually here as part of Money 2020’s Rise Up and Amplify initiative. They’re really working with a brilliant young cohort of up-and-coming leaders, women, people of color, non-binary individuals, trying to give them a step up to really hone their skills and make sure they’re positioned to lead the industry moving forward.

So we’re going to be talking about diversity, equity, inclusion, and belonging, and especially what they can do to change the culture within their institutions to make things not only better aligned with the general demographic of the country, but also to take advantage of the unique perspectives that they bring to thinking about Money 2020 and money in this digital age. So the cohort, are they from startups or financial institutions or VCs, kind of everywhere? Yeah, everywhere. Pretty much across the entire ecosystem, which is exciting.

Well, and let’s be honest, the diversity in the startup ecosystem is far different and far better than most typical financial institutions. Absolutely. One of these things is not like the other.

Exactly. I was saying to somebody the other day, I was at a particular banking conference where looking out over the audience, it kind of looked like a sea of spent dandelions. I mean, it was like all men my age, very few women, very few people of color.

And unfortunately, I mean, that means that senior leadership level, we’re often missing the perspectives that those individuals, diverse individuals bring to the table. I heard somebody describe it as male, pale, and stale. Well, and you hear that a lot from folks in this particular cohort as well, because there’s a lot of frustration when they don’t feel like they have the opportunities to really bring their entire self into the workforce or to really bring their voice to help kind of change that culture a bit.

So what do we need to do besides talk about it? That’s a good start, I guess, but… Right. Always a good start. But also, I think it’s time to examine your individual cultures at each of your institutions.

Pay attention to not only the diverse makeup, but look at the real issues that are impacting people. Look at gender equality, look at pay equality, look at how open your environment is to actually engage your workforce to get their perspectives around the strategic choices you’re making. It requires a big shift in thinking to kind of break through that C-suite and open up dialogue within an organization to really take advantage of their perspectives again.

It’s sadly true that it is a big shift in thinking, and it shouldn’t be, right? It’s so often viewed as a check-the-box exercise, and really anyone should want to have diverse views, should want to have multiple people involved in shaping the strategy and the execution moving forward, and having an engaged workforce, as you said, can bring their true selves to work. I don’t know why it’s so hard for some. I know.

I have a great friend out in Seattle, a community banker, who I remember years ago, some of her board, some of her institution’s employees were really freaking out over the number of people that were coming to work or coming to apply that had tattoos or earrings. It’s like, please, half of our customers show up that way. If they can’t see themselves reflected in the employees that they’re going to work with, what hope do we have of seeming relevant? We get stuck sometimes on the simplest things.

I’ve seen institutions just get all tied up and spend six months talking about whether or not to put pronouns on their email. It’s like, please, move past it to the things that are really going to make a difference. Well, again, from just a practical standpoint, look at upside-downside.

What’s the downside of doing that? If the upside is people feel more included, more listened to, why not do that? Exactly. Plus, I think there needs to be a recognition that there’s a significant portion of consumers that really expect that because if they see things counter to that in their customer experience, whether it’s information on your website or information, just the visual experience of interacting with your institution, they’re going to say, maybe this isn’t the place for me anymore. At a time when, overall, I think our industry is still struggling with issues of attracting talent, you’ve got to make sure you’re casting that net as widely and broadly and inclusively as possible.

Well, and you spend a lot of time working with small and mid-sized banks, and so let’s kind of expand the scope outside of this bubble here in Las Vegas this week. What keeps you up at night as you think about the future of the banking industry and the nearly 5,000 institutions we have in the U.S. today? Honestly, the thing that keeps me up at night is the amount of effort it seems to take to open minds and change legacy behaviors. These things are related, aren’t they? Yes, absolutely.

And it’s the kind of thing that I think there are a lot of very well-meaning people that want to embrace new, innovative ideas, but then they also set very long timelines to do it without the understanding that the world is moving so quickly around them that if they take two years to implement something or three years, it’s going to be too late. I wish we could kind of bottle this whole effort right here and take it to every single institution because if bankers could see, if community bankers especially, could see what’s going on in kind of the vendor area here, the market at Money2020, they would see how dramatically the world of finance is changing because I think a lot of folks, I mean, we all default to what we know, and people who’ve been doing banking for a number of years simply kind of get stuck in that bubble instead of taking a broader look at how much their customer behaviors have changed and how much the industry overall is shifting in a way that’s going to make it very difficult for them to continue to be profitable in the future. Well, the CEO of one of the banks that we work with was doing exactly that.

He brought a handful of people with him here this year, and he’s rotating some of those people that said, look, these are people who are good, smart people doing interesting things, but they think they’re being very cutting edge. They think they’re very, very fast, and to your point, let’s come see what cutting edge and fast really look like. Really looks like.

And, you know, so part of this is about setting the bar where it needs to be, not where it’s comfortable to get over. Exactly. And oftentimes, I mean, I get it.

You know, most financial institutions are looking at this from the standpoint of what’s going to be the return on the investment, what’s going, you know, when they start engaging folks. But I realize there are a lot of institutions still that are struggling even with the notion of partnering with the kind of fintechs that are going to help them really compete in the future anyway. And until they wrestle that one to the ground.

Well, it’s another example in my book of really not thinking about it properly. How many conferences have you been to spoken at over the last, let’s say, 10 years at this point? And how many of them had a panel or a speaker or a topic on partnering with fintechs? So it’s not that that’s unknown. It’s that, in our view, many of them just are thinking about in the wrong way that it’s about who are the right vendors and how do we do vendor selection.

That’s important. That’s important. But even more important is figuring out, hey, can we deliver something of value to our customers and can we best do it by partnering with somebody who has a set of capabilities or a set of tools or an app or whatever it might be that we don’t have today? We don’t have to go build it.

We can partner with somebody right here. And how do we go and test that very quickly? And too often it’s paralysis by analysis instead of test and learn. Right.

I think a lot of times, too, it’s human behavior to kind of tune out buzzwords after a while. And I see the same thing happening now around the issue of AI. And people hear things at conferences.

People see things in various social media feeds and all the rest. And after a while, they tune it out thinking, this doesn’t apply to me because we’ll leave that to someone else. And again, that’s the mindset that has to shift because even if you’re not implementing some of these new technologies, if you’re not moving into multiple partnerships with FinTech today, you should be.

And at the very least, you should be talking about it and thinking about it and moving in that direction, setting the groundwork. I often see how far behind folks are in terms of their tech stack and their data, managing their data. That’s going to set up a very crazy dynamic where I was just talking about this the other day relative to CFPB’s new 1033 rule.

It’s like there’s so many institutions that just don’t have the infrastructure in place to even deal with the API technology that’s going to help them take advantage that this rule is trying to establish. So there’s work to be done. And that’s why it’s important to at least raise awareness.

Well, you do a lot of research in the marketplace and talking to consumers in different segments and so on. What’s emerging for you in your research in terms of how are customers dealing with this rapidly evolving world and things like AI and new technologies? What are you learning from your research? You know, one of the best moments is when I can actually be in the field talking to customers and getting the feedback because it generally will counter everything that the bank that we’re working with assumes about what their customers are thinking. Because in many ways, you know, in the industry we spent years trying to move people into new behaviors, you know, getting them to adopt mobile banking, all the rest.

But now they’re ahead of us in many ways. And that’s kind of across generations. I wish I had a dollar for every time I hear a banker make an assumption about somebody over 65 and their use of technology.

I’ve got news for them. You know, their customers are actually far happy to be like liberated from that transactional relationship that, you know, had to happen in a branch at one time. Yes.

Yeah. We are so comfortable with mass generalizations and using, you know, really technical segmentation like age. Right.

As long as you were born between these years. Mm hmm. This will be your preferences and that will never change.

Right. And clearly that’s that’s not true. It definitely isn’t true.

And oftentimes, you know, financial institutions aren’t always even looking at the data that’s going to reveal that to them, you know, looking at the transactional behavior, looking at the kind of information about their logins, who’s using mobile, all the rest. They would be surprised. And I think in the process, you know, one of the things you and I talked about a little bit yesterday is the idea that so many people are still worried about whether or not a consumer is going to move their entire banking relationship away from their institution to another.

It doesn’t happen that way anymore. There’s plenty of evidence that points to the fact that we’re dividing our relationships across any number of vendors, any number of fintechs and any number of digital only banks because of the value added. You’ve totally got it right that as long as banks are focusing on what additional value can we bring to our customers, that’s not so product centric, but it’s driven more by what the customer needs at whatever life stage they’re in.

Yeah, there’s a perceived barrier that no, no, no, it has to be bound by something with us gathering deposits and making loans because that’s the core business model. Right. Fair enough.

Right. But there are plenty of things you can do around that, on the edges of that, that really can drive new sets of value and create new forces for loyalty. And what you were talking about a minute ago with this idea of partial attrition, and do you think some of that is, if we’re worried about total attrition, is part of that because I can measure it? I know when an account is open and closed, and I may not know that they’re, the account’s still open, but they have a fraction of the balance they used to carry, they are engaging with the app and making transactions at a fraction of the rate they used to before.

You think that’s part of that? We pay attention to what we can measure? Absolutely. Because again, this is a situation where there’s so much information available for them, even in the data that they currently hold. The transactional data can often point to the kind of shifts in behavior that would be a great signal that that particular individual is at risk for a higher degree of churn.

But again, they don’t have the tools necessarily that help them analyze that, help them look at it, and they don’t necessarily have the talent in-house that’s going to help them do it. And again, that’s sometimes where partnerships really are required to help them get beyond the old ways of doing things. Well, let’s break that down a little bit, because I think when you say that a lot of bankers here, I need to spend millions of dollars and many years on building a data lake, a data platform, I need to hire teams of data scientists to be able to get any value out of it.

There’s a lot of gray area in between. Absolutely. And so how do they get started? What’s your advice for smaller institutions that don’t have the budget or the appetite for all that, but agree with what you’re saying? They want to do better.

What are some first steps that organizations can do? I think it’s important to just identify that first use case that you want to address. Is it a matter of really analyzing your existing customer base for churn? Is it about determining? One of the things I wish more banks would look at right now is the very simple age demographic of their customers, because a lot of them, once someone passes that 65-year-old threshold, they’re just assuming that eventually they’ll lose those deposits. Instead of looking at the kind of fintech tools and partnerships that would allow them to kind of keep that relationship, not only with those individuals, but the generations that follow.

Because I think there’s going to be such a huge kind of shockwave through the industry when we see this great generational transfer of wealth that’s coming in this next 10 years. I’ve seen some estimates that say upwards of $80 trillion. When I think about the impact that that can have in some of the smallest institutions that are serving some of the most rural areas in our country, that’s one of the things that concerns me most.

How can we help them? How can we continue to point them to the resources that will help them kind of chip away at those basic use case issues? Identify the problem, because there are plenty of solution providers out there, and they’re not all big budget solution providers. You’ve got a lot of community-based institutions that are already doing it. They’re already doing the work.

Talk to your colleagues in the industry. Learn from them. See what they’re doing.

I was just looking at a fintech that we’ve enjoyed working with quite a bit with some of our banks, and realizing how quick the ROI was for them. It was something that a lot of the banks that had looked at them and said, that’s interesting, but I’m not sure how to apply that. One of the drivers of ROI is managing the eye.

Right. We can’t always put as fine a pencil as we’d like to on the return part. How do we measure it? What do we look at? How far out do we go? We can measure what’s that initial investment, and it doesn’t have to be a lot.

If you can recoup that investment really quickly and be able to build on that, why would you not do that? Right. I’ve had the occasion to meet a fintech provider that provides a life insurance benefit, essentially, that’s tied to deposit accounts. It’s something that would not be a cost to the customer, but think of how that would deepen the relationship and add value to a customer relationship if they knew every time they made a deposit into their savings account that they were going to see an incremental raise in the amount of life insurance benefit that they have.

They could see that in their mobile app, and they could see it very simply. The investment in that is relatively small, but in terms of creating additional stickiness in the customer relationship, those kinds of solutions I don’t think are on a lot of people’s radar screen. That’s why conferences like this are so important.

What do you think the next few years look like from here, given the trajectory we’re on right now? Wow. I’ve had a couple of conversations here about that, and consensus seems to be around the idea of consolidation in the industry. Now obviously, regulatory hurdles, all of that set aside, and even the scrutiny currently on those kinds of issues, I do think we’re going to see a pretty significant increase over the next three to five years because there’s simply an acknowledgment happening around board tables right now that they cannot achieve scale on their own, and the best way for them to move forward and continue to serve their markets and their customers is going to be through either merging with another institution, or acquiring another institution, or merging or acquiring with a fintech to really shape things up.

I also think we’re going to see things that we can’t even anticipate today. That’s probably the bigger thing that is on my radar screen, because it is- A year ago, nobody was talking about Silicon Valley Bank or First Republic. Right.

They’re certainly not in any negative light. Exactly, exactly, and we have to be prepared to move quickly when these kind of major changes kind of ripple through the entire industry, and that requires a level of diligence that hasn’t been a part of daily banking for a lot of folks. It hasn’t, and yet, those consolidation trends are not new.

Not at all. That’s a 40-year trend. If you go back to roughly 1981, thereabouts, we’ve had fewer banks just about every single year since then, and for most of that period up until 2008, it was an era of, for the most part, rising asset prices, falling interest rates, and deregulation.

You’re right, you’re right. That’s the environment you would hope for, and we still reduce. I talk all the time, when I started in this industry in the late 1980s, we had over 13,000 institutions.

Right. We have less than 5,000 today, and that’s now pile on the challenges that you’ve just talked about, and then the other factor, and I’m no M&A expert, but it seems to me that many sellers are still carrying around multiple ideas in their head that aren’t realistic and aren’t being achieved, and realistically, why would I pay you any kind of premium? Jason’s talked about this a lot on the show. I don’t want your customers, I don’t want your tech stack, I don’t want many of your employees, I don’t want any of your branches.

Why would I pay you a premium? Right, exactly, exactly. Speaking of branches, that is the other piece that kind of keeps me up at night, is if we could just break through the kind of emotional connection that bankers have to their branch networks, because oftentimes, I think it’s that emotional connection more than the financial considerations that are keeping people holding on to no longer profitable real estate, and unfortunately, that means they’re not able to actually take that and redeploy that to do the kind of things in technology that they need to do. Well, it’s another one of those things where there’s a million shades of gray in between.

That doesn’t mean you have to close all branches and become totally mobile, but I think you do have to look really hard at that, and if we go back to ROI, the I is very high on the branch location today. And yeah, we’re seeing that already, right? The number of branches have been declining, what, four or five years in a row now, something like that? Absolutely, yeah. And I don’t see that abating anytime soon.

Doesn’t mean they’re all going to be gone, but we’re going to have fewer, and that means, I think as you put it well, it’s an emotional connection that we need to be able to re-channel into other ways to connect with our customers. And I hope, I honestly hope, that that shift in thinking isn’t just because the pain of losing customers and losing market share becomes so dramatic that they feel like they finally have to do something. I realize pain is a great motivator, but I hate to see institutions, especially those that serve their communities so well, miss opportunities to retool and realign themselves with where the consumers are at these days.

And all too often, the pain is self-inflicted. Truly, truly. Jim, thanks for being here.

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To learn more about the program, submit your resume for a candidacy review at stern.nyu.edu slash msft dash breakingbanks. Hi, I’m Brandon Speer. I’m the CEO of a company called Trevi Pay.

And, you know, we’re a business that really focuses on suppliers and that be the business business suppliers that are looking for help with how they deal with offering trade credit to their customers. So everything that we’re all about is about helping those suppliers be more efficient and effective in how they offer trade credit to their customers. And that’s so much more complex than the consumer space, which is much simpler.

So let’s back up a little bit. Tell us about the origins of Trevi Pay and your history. Right.

Absolutely. So if you unpack that, that whole idea of offering trade credit to your business customer, in a lot of ways, there’s all kinds of parallels you can draw with how the consumer space has worked. And so I’ll give you some examples of that.

You know, if you think about how consumer trade credit worked 50 years ago, you would go to a local store and you may or may not have enough cash to pay for everything you wanted to buy. And so you’d have it on account. And then basically you’d get an invoice at the end of each month from that particular store owner and you pay your bill.

And obviously what completely transformed that space was what credit cards did, where if you were a retailer now, you no longer had to worry about how you underwrote an individual customer and you no longer had to worry about collecting the funds and dealing with producing invoices. That was all done for you by the credit card company. So if you think about what we’re trying to do in the B2B space, a lot of it is very analogous to how that changed and unfolded in the consumer landscape.

Now to your point, what’s different between B2B and consumer is the level of complexity. You don’t just have a single person that you can deal with that’s making all the decisions. In any sort of buying process, there’s multiple stakeholders, there’s lots of complexity.

You have to know where invoices need to go. You have to know whose budget they’re coming out of, all those sorts of things. So as a consequence, this is not something that’s been tackled or solved to anywhere near the same level of digitization as what you see in the consumer space.

And so we’re systematically trying to help our customers with that. So how have we evolved? So if you think about that challenge, that’s the mission. That’s what we’re ultimately trying to do.

Basically, we’ve come from a place of helping our customers through each piece of that business process, whether it’s how do you onboard a new buyer? How do you give them a line of credit? How do you manage that credit line over time? There’s also then a situation that you see increasingly these days, by the way, which is kind of an evolution of this whole space, is there’s so much business identity theft. If you are in this space today and you’re a seller and you’re trying to acquire new buyers, you just need to be really aware of how much potential there is for fraud because of business identity theft. So just in a small way, you kind of think about how our business has to really had to evolve to help our customers deal with that challenge.

And if you extrapolate that further, the more customers you acquire online, so you don’t physically meet them in person, the higher that risk is, right? Because you don’t necessarily know where that customer is. You don’t have any history with them. And so some of the acquisitions that we’ve made, some of the technology that we’ve built out has been to solve some of those new problems that didn’t necessarily exist 10 or 15 years ago.

So that’s one piece of the business process. The next major piece is how do you produce an invoice and get it to your customer and what needs to be on it? And if you think about that piece of the business process, that’s gotten increasingly complex, too, as businesses have become more international. So if you were just a U.S.-based business, then it’s relatively simple to know how to produce an invoice.

But if you have customers in Canada or you have customers in Mexico, what constitutes a legal invoice in those places is all different. If you’re in Canada, you have to deal with VAT. If you’re in Mexico, you have to deal with the Mexican tax authority and how they operate and the way they need to basically approve all invoices before they even go out.

So a big part of how our business has evolved as we’ve helped our customers solve these problems is to then be able to say, can we create all these invoices for you so you don’t have to worry about that? And we now do that in 42 countries for the different clients we work with. And then last but not least, once you’ve delivered the invoice, you then have all of the interaction you have with your customer around, is the invoice correct? What happens if there’s a dispute? Do they pay on time? So if they have 30 days to pay, do they in fact pay on 30 days? And if they don’t, what do you then do? How do you follow up? How do you make sure that you do in fact get paid? And so our process, our platform supports that entire end-to-end lifecycle. But it has really had to evolve over the last 40 years, as you can imagine, as more and more of those processes have become digital, as there’s been a shift away from human interactions for purchasing to e-commerce-centric interactions or to interactions that are led machine-to-machine and ERP, communicating with an ERP.

So it’s been a pretty interesting journey over the last several years. It sounds like you’re starting to uncouple and unbundle some of those pieces. What’s the thinking behind that? Yeah, I think the thinking behind it is that that entire lifecycle of how you deal with a trade credit customer, I mean, these are usually the sellers we work with.

It’s their best clients. I mean, if you think about who do you offer trade credit to, you offer it to your best customer. You’re not going to offer it, perhaps, to a brand new customer or somebody who buys very little from you.

And so part of why we break this apart and why we’re in a position to let customers kind of get to know us, that’s a big piece of this. Because when we work with customers, there has to be a high level of trust that we are going to do a good job with their clients, that we’re going to represent their brand, that their customers are going to have a great experience when they work with us. And so being able to have pieces of this that the customer can consume is an easier way to try to build that trust over time.

What’s an example of some of the key verticals you’re operating in today? Yeah, so the ones that are most interesting for us are manufacturing is obviously a very broad vertical, and we have specific sub-verticals within that. But I’ll give you some examples there. We actually also play in the travel and hospitality space.

We work with airlines. We work with hotels. And I’ll give you some examples of how that operates there as well.

Believe it or not, we also have a lot of retail customers. When you think of retail, you think of only consumer. But retailers increasingly are trying to figure out how they uniquely deal with the needs of the business buyers who are coming into their locations.

And so those are sort of the three big verticals for us as well. We also obviously work a lot with marketplaces and other businesses that are looking to disrupt or change the way commerce happens. But the three biggest verticals for us are travel and hospitality, manufacturing, and retail.

Within retail, what’s most interesting there is that there’s a lot of the way the supply chains function and the way the distribution channels work in those industries are changing. And so a lot of the customers we work with are going through some sort of transformation in how they sell to their end client. So historically, customers like Lenovo, for example, have sold through distribution channels in countries and increasingly are trying to sell more directly to the end client.

And when you sell more directly to the end client, it becomes really important to know how to break apart the bulk of dealing with thousands of end clients versus a handful of distributors. And so we fit that use case really well. Part of that is changes in inventory management and who’s owning the risk up and down the supply chain.

No, exactly. Exactly. So I think all of those changing nature of how manufacturers are going to market, how they sell to their end client, how they support their end client, the fact that they want to really know who their end client is, and in many cases today, they can’t see that because there’s someone sitting in the way between them and the end customer.

And so knowing who those customers are is increasingly important for some of the clients we work with. I think the other interesting characteristic of the industries where we fit really well is where you have a multi-tier distribution model. So you’ve got an OEM or a manufacturer and they might be selling to an end client, but they need to have a service department or a dealer network.

In the case of some of the automotive manufacturers we work with, they’ve got a dealer network that actually does the work on the maintenance on a vehicle. And so what’s intriguing in those relationships is that you have these independent dealer networks that need to plug into these big peer-to-peer relationships between a manufacturer and a big end client, and they still have to be a part of that overall business process and how do you make all of that work. And so our solution works really well in those situations as well.

You’ve been making some acquisitions and you’ve been making some announcements recently. Tell us about how you’ve been repositioning the business. Where are you going from here? Yeah, so there’s a couple of acquisitions that we’ve made.

So the one is we bought a company called Baton Financial and what was interesting about that business and particularly the people in that business who came along with the acquisition is they had built an underwriting engine that was combining personal credit information with business credit information to be able to underwrite SMBs. And so one of the biggest challenges in this space overall is generally speaking, small business does not have large credit histories, they don’t have large credit histories. And so if you’re trying to underwrite them, it’s really difficult to find useful information on how to underwrite them.

And so if you combine that with some personal credit information, it puts you in a better space to know if you know the personal credit history of the owners of the business around whether you can underwrite the SMB. Now, we do this in a way that doesn’t hit people’s personal credit scores or anything else like that. It’s just another data point that we use in underwriting, but it’s very, very helpful with smaller businesses.

And so they built this really interesting technology set that allowed that to be done and done at scale. Then we also made an acquisition recently of a company called Approve, and Approve had built a pretty interesting business as well. We were a long-time partner of theirs, so we’d worked together with them for a long time, so we knew them very well.

But that started to build some really interesting relationships with banks and other financial partners that were the funders of the working capital. So obviously, there’s all of this workflow in this business process, but there’s also a money flow that’s occurring at the same time. And depending on the supplier, they might be more or less interested in getting paid early, for example.

If you’re a smaller supplier, generally you have less choice of credit and working capital, and often working capital is an interesting part of the value proposition. So Approve had built some really interesting capabilities around connectivity with banks to be funders. And so we acquired that business just over a year ago, and just recently had an announcement on something we’re calling the Financial Partner Gateway.

That’s a combination of some of the things that Approve had built, as well as some of the things we’d been doing for quite some time with other banks and other financial partners, and now allows a whole range of banks that are interested in getting exposure to this accounts receivable asset class and deploying their balance sheets against it, allows them to plug into all of the signals that come out of the workflow that is in our platform so that they can very confidently provide funds against invoices, for example. Is that on a syndicated basis or more one-to-one? Yeah, it’s a great question. So we have really three different operating models for this.

So one is a syndicated basis, which is kind of how we’ve historically operated. And we have a securitization with several banks that fund that securitization, and that’s how we work with some of those banks today. What we’re most interested with this, though, is that this could become an interesting way for the banks to go into their client base and basically say, are you interested in using this capability to finance your receivables? And to do that at scale, because that’s obviously the key component of this, is our platform allows us to scale.

So in that scenario, that would really be point to point. It would be the bank with their particular customer base, and they would be offering this to their customer base. And then the third scenario that we have is that it doesn’t just have to be a bank.

We actually have a lot of interest from the likes of hedge funds that are interested in certain industries or certain geographies that are a little more exotic, if I can say it that way. So in other words, there’s more inherent complexity in some of those markets. And you may not find banks that are as interested in that because there’s more risk in some of those markets.

And obviously, with the likes of hedge funds, that’s kind of how they make their money. They make their money in finding those places where there might be more risk, but there’s potentially a higher return. It sounds like a lot of what you’ve been focused on has been more large multinational enterprises and large financial institutions.

Is there a part of what you’re doing with this new platform that democratizes this for small to mid-sized businesses and banks? Yeah, it definitely does. So a big part of what we’re hoping with this financial partner gateway is that this will be because it’s very easy to consume and for the banks to consume. There isn’t a big sort of implementation, a lot of complexity that’s required to actually put this in place.

So our ultimate hope with this is that this can become something that’s relatively mainstream, that’s easy for any size bank, even a credit union, perhaps, to be able to offer to their customer base. And we think that that’s the most intriguing pathway to get down to smaller suppliers. So if you think about our history and you mentioned it, we’ve historically sold to enterprise sellers.

That’s where we can scale our sales force. That’s where we can scale our customer acquisition. However, if you want to get mid-market and smaller suppliers onto this network who are probably, frankly, some of the suppliers who need this the most, then the banks are a really interesting channel because they have these customers today.

They’re providing a range of banking services to them today. And so that’s our hope with this, is that by working with banks, partnering with banks, we’ll be able to get to a broader set of merchants. It’s very interesting because some aspects like connectivity has made the world much smaller.

So going international doesn’t mean you have to be a giant corporation. But some of these problems you’re talking about are still beyond the reach of a lot of smaller businesses. So it becomes very complex, very risky, and very expensive if you don’t have a lot of infrastructure built up.

No, it’s exactly right. And a lot of the customers we deal with, by the way, even some of the big guys, even some of the brands that you’d look at and go, I’m kind of surprised that they don’t want to do this themselves. The reason they don’t is that it’s not just complicated.

It’s ever-changing. When you think about the nature of commercial transactions and the underlying legal frameworks that govern those, there’s been a tremendous amount of change in that space in the last 15 years. If you’re in a place like Europe, there are emerging standards around invoicing something called PEPL that if you don’t want to have the burden of trying to track, well, where is that going? What do I have to do? How do I keep pace with it? Then we’re an interesting partner because you don’t then have to worry about it at all.

We take care of that complexity. So it’s an ever-changing world that’s getting, to your point, the world’s gotten smaller, but it’s also gotten more complex. And even in a place like Europe, where in theory, if you’re in the Eurozone, everything should be similar.

It’s really not. It’s really not. Every country is different, much like it is in the States, that every state deals with this differently.

Different tax rates. Different tax rates, even different requirements around. So, for example, if you’re in a place like California and you are providing trade credit to your customers, you actually have to apply for a lending license.

So every state’s different. So again, all of those sorts of nuances, differences, you can either try to, and if you can imagine if you’re a small business, you’re probably not even aware of that stuff, let alone keeping track of it, let alone worrying about whether you might fall afoul of some change to the law. So I think the role for players like us is increasingly important to just help let these businesses focus on what they’re good at, which is making the widget, providing the service, whatever it is they’re doing, and then have businesses like us deal with some of these complexities around the non-core assets or elements of their business.

Does that include, are you dealing with things like import-export, letters of credit, trade finance? Yeah, so import-export, not so much. Generally speaking, those processes, there’s really robust solutions in place from the carriers that offer that today. Depending on the sorts of stuff that you’re shipping, even the UPSs, FedExes of the world have really robust capabilities in that regard now where you don’t have to worry as much about that as you did before.

So this is more a situation of, I’ll give you an example. You’re a US supplier of something. You happen to have a customer in Germany.

The customer in Germany wants to get a VAT-compliant invoice in euros. Otherwise, they won’t do business with you. And so you really want to sell to those guys, but you have no ability of creating this invoice in euros.

You have no bank account in Europe that they can make a deposit into when they pay you, but you want to do business with them. And by the way, you want to get paid in US dollars because you don’t want to deal with foreign exchange risk. And so that’s an example of one of the things we do.

So we will produce that invoice on your behalf. We will deliver it to your German customer. We will provide a bank account for them to pay into in Germany, and we’ll pay you in US dollars here in the US.

And so that’s the sort of thing we help solve. Are you operating in China? We’re not operating in China directly. So an example of one of the banks that we’re working with is a partner for us in China.

So we have customers that have buyers that are based in China. China carries a tremendous amount of operational complexity with it. And so the approach we’ve rather taken there is to have one of our banking partners, who’s going to be one of these customers on the financial partner gateway, is to have them do a lot of the work we would normally do in a place like China.

I mentioned the hedge funds before. So in certain places like Brazil, for example, which they’re not as complicated as China, but it’s a complex environment to work in, we’re working with a hedge fund partner in Brazil. So we have 42 countries that we operate in, and then we’re partnering in some of these other markets where it makes sense because of the complexity of working there.

The 42 countries you’re operating in today, are they mostly more developed countries? Yeah, I wouldn’t necessarily characterize it as developed, but characterize it as where the way business is conducted and commerce is conducted is similar to the US. So, for example, we’re in US, Canada, Mexico. We’re in 27 countries in Europe.

We’re in Australia, New Zealand, Singapore. So it’s more a function of the legal frameworks that govern how commerce takes place, like what is required to be able to operate in those locations, et cetera. Less about whether they’re developed countries or not.

How about Southeast Asia? Yeah. Yeah. So Southeast Asia is particularly complicated because you’re not only with language, but with currency, time zones.

And so I think we have the one big relationship that’s operating in China for us today. I think that relationship is going to be transportable into most of Southeast Asia as we continue to expand that with them. Obviously, places like India are also relatively complicated to operate in.

But even places like Japan drag a bunch of complexity with them as well. And so we’re still working through which of those countries makes sense for us to do directly and do ourselves versus have a partner relationship with. And some of this has just got to do with market timing, too.

We’re a smaller business still, and so we’re very thoughtful about where we deploy our capital and where we want to go directly. And it’s obviously expensive. If you go into a new country, it costs a lot of money.

It takes a lot of time. And so, yeah, it’s really interesting. You know, one of the things that’s intriguing about Australia is it’s very similar to the U.S. in terms of how it operates.

But it’s also a market where experimentation happens because it’s a smaller market. And so, you know, what a lot of people may or may not know is that the whole buy now, pay later craze actually started in Australia. And it started as an experiment and it sort of gained traction there.

And then it very rapidly expanded to Europe and then to the U.S. So we have a relatively sizable footprint of customers in Australia. We’ve got about 50 staff down there and we see it as an interesting market in a lot of ways because it’s a place for us to try new things. Looking forward, what are you most excited about? You know, I think what I’m most excited about is we’re getting to a relative size now, but we have some meaningful scale.

And I think that, you know, for this new strategy we have of working with the banks, I think having some scale is really important. I think, you know, banks obviously are relatively risk averse. They obviously want to try to partner with people who are going to be around for a while, who are going to have some longevity.

And so I think we’re at a point now where we can demonstrate all of that, where we can show what we’ve done, where we’ve gotten to a size that we’re meaningful enough. And I think then coupled with, you know, we’re hoping that this new product line we have, this gateway, this financial partner gateway, will be a really exciting catalyst for banks to be able to take this into their clients and be something that’s valuable to them, be an interesting revenue stream for them, help empower their customers more. You know, in the current interest rate environment, people need cash.

People need credit. And so we’ll help streamline those things. How can people find out more? So I think, you know, the best thing to do is to go to our website.

We have a lot of this on trevipay.com. We love our name, by the way. So we grew up in the genesis of the businesses in Kansas City. And for those of you who don’t know, Kansas City is known as the city of fountains.

And so when we were naming the company, we wanted to have some connection back with that history of growing up in Kansas City. And then the other reason we picked Trevi, by the way, as the name is we are often at, we sit at the cross section or the crossroads between a buyer, a seller, and then our platform and obviously liquidity. And if you think about Trevi in and of itself, it’s where the three roads meet in Rome.

It’s where we provided water to the city. Water was the lifeblood for the city. In our world, capital is the lifeblood of commerce.

And so it was one of those times when you find a name in this kind of a Choirs of Angels moment because you just feel like you’ve found everything that just works. So trevipay.com is a good place to go and find out about us. Well, thanks for being here.

Thank you. Thanks for having me. It was a real pleasure.

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